Question: I own a rental company that rents augers, trenchers, mini excavators and other dirt-work equipment. What happens if one of my customers strikes an underground line and injures someone? Am I going to get sued? What can I do to protect myself?
Answer: Whenever someone gets injured in connection with the use of rented equipment, chances are good that the rental operator will wind up being named as a defendant in a personal injury lawsuit. The real question is, “How quickly can I get out of it?” The answer depends to a great extent on what you’ve done to protect yourself.
The recent surge in construction activity coupled with the ever-expanding array of potential lawsuits has underscored the need for carefully considering, and taking steps to enhance, the protections available to rental operators. As most people who deal regularly with large equipment realize, excavating poses certain risks, including the potential for striking underground lines.
Consequently, what seems like “common sense” to an experienced operator can be completely new and unfamiliar to someone who rarely, if ever, uses large equipment. This makes qualifying and educating customers critical. Few people readily admit, or even realize, how little they know, especially when “it seemed so simple.”
Taking the time to ask questions and carefully assess a customer’s knowledge and skill level can be invaluable for a rental operator, as can providing the necessary training, instructions and warnings. If you’re going to take the time to do so, make sure you document it in your rental contract. After a mishap and when a lawsuit has been filed is no time to find out whether your customer remembers or will acknowledge receiving the necessary information.
Here are some suggestions as to what you can do:
– Know what you are responsible for. Generally speaking, rental operators have three “implied” duties. They are to inspect the equipment they rent to customers before it is made available for rent, to instruct customers in the safe and proper use of that equipment and to warn customers of potential dangers associated with the use or foreseeable misuse of such equipment. Failure to satisfy any of these requirements or the inability to prove such requirements were satisfied can result in a lawsuit alleging “negligence” and/or “products liability” if someone is injured or someone’s property is damaged.
– Know what people get sued for most often. With few exceptions, rental operators tend to be fairly good at inspecting and repairing or removing from service the equipment they rent. They’re also generally good at instructing their customers in the safe and proper use of that equipment. However, few people, including rental operators, seem to be very good at satisfying the duty to warn of potential hazards associated with using and/or misusing rented equipment. This, in my experience, stems in large part from a lack of understanding of what really is required and the available case law isn’t altogether clear. Consequently, rental operators often find themselves dragged into products liability lawsuits because they failed to provide sufficient warnings of potential hazards, particularly with respect to “foreseeable” misuses of rented equipment, the question of what types of misuse should have been “foreseeable” being much easier to assess after the fact than before the equipment was rented.
– Warn your customers. It’s generally best to take a three-pronged approach to providing adequate warnings when renting equipment.
First, make certain your customers understand how to properly use the equipment and document that in writing. Second, take some time to think about specific ways a customer might misuse a piece of equipment — such as extending a boom lift on a steep grade, using a pallet to make a forklift into a man-lift, moving scaffolds with people on them or excavating in an urban area without marking underground utilities — and specifically warn them not to do so. Third, include in your rental contract the customer’s agreement to use the rented equipment only for its intended purpose, in accordance with the OEM’s instructions and warnings, in a reasonable and safe manner, and otherwise in full compliance with all applicable laws, rules and regulations, and to ensure that others who use the equipment will as well.
– Understand dig laws. Both federal and state laws have been enacted pertaining to excavating activities. For federal law, the applicable OSHA Standard (29 CFR § 1926.651) establishes specific excavation requirements designed to protect employees and prevent accidental damage to underground utility installations. The requirements include:
l Establishing the location of underground installations prior to opening an excavation.
l Contacting utility companies or owners within established timeframes.
l Determining the exact location of underground installations.
l While the excavation is open, underground installations must be protected, supported or removed as necessary.
Every state has enacted a law requiring the marking of underground utilities prior to commencing excavating activities. While the laws themselves vary, they generally include:
l A requirement that anyone planning to dig or excavate, including contractors, businesses, homeowners and individuals, notify the state’s
utility protection agency by calling 811 or the local equivalent — each state has at least one hotline for doing so — prior to commencing any form of excavating activities.
l A specific timeframe for notification of utility companies, generally two or three days, depending on the state, prior to the commencement of the dig.
The statutes don’t contain a specific requirement for rental operators to notify or warn customers of federal or state laws. However, the applicable case law is sparse and what does exist isn’t especially helpful. For example, the New York Supreme Court’s 1992 decision in Schaub Equipment Rental Inc. v Robert Marzec, et al, seemed to indicate that a rental company would not be held liable for failing to warn its customers of the need to locate and mark underground utilities — in this case, the customer struck a gas line and destroyed a rented trencher — when it held Marzec liable for replacing the trencher, despite the fact that the rental company didn’t warn him of the danger. In its ruling, however, the Court stated: “The risk of striking underground utility lines during excavation is an obvious one that should have been known to defendants, who are experienced construction contractors.”
This ruling, while apparently favoring rental operators, in fact implies that they might or should be held liable with respect to the same issue if the equipment were to be rented to a homeowner or an inexperienced construction contractor. In the final analysis, this case probably makes the provision of a dig warning more, rather than less, important.