Facts
- Jerri Bush worked as a temporary employee at Rumpke Recycling, Inc., an Indianapolis aluminum-can recycling plant.
- Rumpke used a conveyor system that carried cans from a deep pit up to a hopper.
- Rumpke hired SECO Electric Company (and its owner/employee, Jack Satkamp) to install the conveyor’s electrical wiring.
- The conveyor sometimes left cans behind in the pit; employees would enter the pit to gather the leftover cans and remove them in containers.
- Rumpke’s safety protocol was to shut off the conveyor using controls located outside the pit before anyone entered.
- No emergency shut-off switch was installed inside the pit where employees worked during cleanup.
- About one month after SECO completed the wiring work, Bush performed pit duty for the first time.
- Unaware of the safety protocol, Bush left the conveyor running and manually shoveled loose cans onto the moving conveyor from within the pit.
- The moving conveyor caught Bush’s clothing, and she lost her arm.
- Bush sued SECO and Satkamp for negligence, alleging they failed to wire an emergency shut-off switch in the pit.
- SECO moved for summary judgment, arguing Indiana’s “acceptance rule” ended any duty to Bush once Rumpke accepted SECO’s work; the district court agreed and entered summary judgment for SECO.
- Bush appealed.
Issues
- Under Indiana law, does the acceptance rule automatically eliminate an independent contractor’s duty of care to third parties once the owner accepts the contractor’s completed work?
- Can a contractor still owe a duty to a non-contracting third party when the contractor’s completed work is alleged to be dangerously defective and poses a reasonably foreseeable risk of serious physical harm?
- Did the district court err in granting summary judgment on the ground that lack of privity and acceptance by the owner categorically barred Bush’s negligence claim?
Decision
- The Seventh Circuit reversed the grant of summary judgment and remanded for further proceedings.
- The court held that Indiana law did not justify treating the acceptance rule as a blanket bar to any duty owed by a contractor to third parties after the work is accepted.
- The court concluded that, on Bush’s allegations and the summary-judgment record, a jury could find that SECO’s wiring work (including the absence of an emergency shut-off in an area where workers were expected to enter) created a foreseeable risk of grave injury to workers like Bush.
- Because Indiana recognizes contractor liability to third parties in at least some situations involving dangerous defects and foreseeable harm, the case could not be resolved as a matter of law solely on privity and acceptance.
Legal Principles
- Indiana’s acceptance rule generally provides that, after the owner accepts a contractor’s completed work, responsibility for defects and resulting injuries ordinarily shifts to the owner, and the contractor is typically not liable to third parties based only on the completed work.
- The acceptance rule is not absolute; Indiana law allows contractor liability to third parties when the completed work is dangerously defective (or otherwise poses a serious risk) and injury to foreseeable third parties is reasonably expected.
- In negligence, duty analysis is not limited to contractual privity; foreseeability of harm to people expected to be exposed to the condition can support a duty of reasonable care.
- Summary judgment is improper when the governing state-law doctrine permits third-party duty in circumstances involving foreseeable, severe risk, and the facts could support that finding.
Conclusion
The Seventh Circuit held that Indiana’s acceptance rule did not automatically extinguish SECO’s duty to Bush once Rumpke accepted SECO’s work; because the alleged failure to provide an emergency shut-off in a pit where employees were expected to work could present a foreseeable risk of catastrophic injury to third parties, summary judgment for SECO was reversed and the case was remanded for further proceedings on Bush’s negligence claim.