Texas SC to decide if premises owner can also be a 'general contractor,' again

By David Yates | Oct 21, 2008

Last August, the Texas Supreme Court ruled that a premises owner can also be a "general contractor" in the Entergy v. John Summers worker's compensation case � a landmark decision allowing premises defendants to qualify for the exclusive-remedy defense.

The case clarified the distinction under Texas law between a premises-owner and a "general contractor" and holds that an owner acting as its own general contractor can obtain protection under the Texas Labor Code restricting an injured employee's remedies to workers' compensation benefits, according to the Law and Insurance Web site.

Now a rehearing on the case, which took place on Oct. 16, could see the ruling reversed and premises owners exposed to litigation.

"The Supreme Court, on rehearing, should affirm its prior decision in Entergy Gulf States v. Summers," wrote Lee Parsley, who authored an amicus brief for Texans for Lawsuit Reform in the rehearing.

"The Court ruled that a property owner could act as its own general contractor and could provide workers' compensation coverage to its subcontractors' employees, if the property owner met the statutory requirements. That decision was correct. The Texas Legislature amended the Texas Workers' Compensation Act to remove the barrier to a property owner acting as its own general contractor in 1989."

Court documents show that John Summers sued Entergy several years ago for injuries he received while working at Entergy's Sabine Station plant as an employee of International Maintenance Corp.

IMC had contracted with Entergy to perform construction and maintenance on Entergy's premises. This contract refers to IMC as an "independent contractor" and "contractor," not a general contractor, while referring to Entergy and its affiliates as "Entergy Companies."

Entergy agreed to provide worker's comp to IMC's Sabine Station employees in exchange for a lower contract price. When Summers was injured, he applied for and received benefits under the policy, then sued Entergy for negligence.

Entergy moved for summary judgment, arguing that it was a general contractor, and thus a deemed employer shielded from Summers' suit under the Texas Workers' Compensation Act, court papers say.

Former 58th District Judge James Mehaffy, who presided over the case, agreed with Entergy and granted summary judgment in the electric company's favor. However, the Texas Ninth District Court of Appeals reversed the decision, leading Entergy to petition the state's highest court.

On Aug. 31, 2007, the Texas Supreme Court delivered its first opinion.

"We hold that a premises owner that 'undertakes to procure' work falls within the statute's definition of a general contractor," stated an opinion authored by Justice Don R. Willett. "The fact that Entergy also owns the premises where the accident occurred is immaterial.

"Construing the statute according to its plain and ordinary meaning, Entergy is a general contractor because it '[undertook] to procure the performance of work' from IMC. That Entergy took on the task of procuring the performance of work from IMC is beyond dispute."

It may be months before the justices reach a decision from the recent rehearing.

SC case No. 05-0272

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