A Defense for When Service Allegedly Falters

Your author discusses what elevator contractors need to know to minimize legal liability.

With the growth of cities around the world, the use of vertical transportation has increased. While technology has improved the function and reliability of vertical-transportation equipment, it still requires proper maintenance and inspection to ensure safe and efficient operation. 

Most malfunctions simply result in equipment shutting down. However, there are occasions where erratic operation or component failure results in injury. In many cases, accidents occur due to improper use of equipment. However, when someone is injured, people’s first reaction is often to assume one of the device’s components failed. The average person has virtually no knowledge of how elevators or escalators operate, yet these are the people who will eventually sit on a jury and determine the legal fate of the elevator contractor who installed, serviced or inspected the device. Jurors come to court with a general expectation the elevator or escalator will always operate properly, and, if something goes wrong, they blame the parties responsible for the unit’s maintenance and operation.

Over the years, liberal jurisdictions, minimal burdens of proof and legal trends have all contributed to an increased number of liability cases and resulted in adverse verdicts for contractors. Even when a company exceeds industry standards in equipment inspection, maintenance and repair, there is no guarantee of insulation from lawsuits. For example, an intermittent problem a service manager dismisses as being unfounded after a trouble call or a dispatched mechanic finding equipment fully operational without incident for several hours can, in the world of litigation, translate into an allegedly defective condition.

The defense team from the National Elevator Insurance Program at leading global insurance brokerage HUB International stays current with the industry trends and legal issues that may affect the elevator industry. The program provides insurance solutions for elevator contractors, inspectors, consultants, distributors and manufacturers. In this article, your author examines some steps that can be taken to help minimize the risks a contractor may face in the event of a claim or litigation.

Generally, the law imposes a duty upon a contractor to perform work properly and in accordance with industry standards. It will impose liability for work not done in such a manner. The law will also impose liability for failure to correct conditions of which the company has knowledge or failure to use reasonable care to detect conditions the company should have found.

More often than not, a contractor’s duties and obligations (and potential liabilities) will be based upon the contractual terms under which it performs its work. As such, it is extremely important the contract be drafted in such a way that favors the contractor, rather than the building owner, managing agent or general contractor. It should:

• Clearly establish that the contractor assumes no responsibility for any elevator equipment parts not specifically included in the agreement.
• In situations not calling for a resident mechanic and where service is being performed on a monthly or biweekly basis, include language that requires the owner or manager to keep the equipment under continuous and proper observation by competent personnel. They should be trained to detect any irregularities in the operation of the equipment and to carefully monitor the use and operation of the equipment on a 24-hr. basis.
• Require the immediate shutdown of the equipment and prompt notification of the service company in the event of any complaint or erratic operation that could possibly cause injury.
• State that the equipment consists of electrical and mechanical components subject to wear, tear, deterioration, malfunction and/or intermittent failure from causes or circumstances beyond the contractor’s control.
• State that the service provided cannot guarantee against any or all equipment failure/malfunction.
• When dealing with older equipment, include language notifying the owner of the need to repair, upgrade or modernize the equipment. It is also beneficial to send a written proposal to the customer advising that equipment is old, outdated or beyond its useful life expectancy. It is compelling evidence to a jury if a contractor advised a property owner of the need to repair, upgrade or modernize equipment, and the owner refused to do so.

It is impossible to anticipate and eliminate all workplace hazards a mechanic may encounter. However, it is important to include contract language requiring an owner to provide a safe workplace for mechanics and helpers. The owner should inspect and observe the workplace and provide clear and safe access to equipment, removing any hazardous materials or conditions. The owner should be required to post any signs or warnings relating to the use of the equipment, while maintaining necessary instructions regarding the equipment’s safety.

Experience has shown that in various jurisdictions, many people who use elevator equipment (including those who will sit on a jury) have an innate fear of it and a complete lack of understanding about how it actually works.

The most problematic trend the industry has faced in recent years has been the inclusion of contractual indemnification provisions. Depending on how a contract is written, once a party is required to be named as an additional insured, the elevator contractor’s general liability carrier is obligated to defend and indemnify that party. Since the claims costs associated with defending the additional insured will end up on the loss runs of the elevator contractor, they should be limited when possible.

Should the contract require an owner, managing agent or general contractor to be added as an additional insured on the elevator contractor’s general liability policy, it is recommended language be added limiting the requirements only to those situations in which liability arises out of the negligent acts or omissions of the elevator contractor.

This information is not intended to encompass all provisions of a service contract, but is merely a guideline for provisions to be considered when drafting an agreement. One should always consult an attorney with experience in this area when drafting an agreement and before any agreement is signed. Unfortunately, no amount of contract language can guarantee a contractor immunity from litigation. However, it is best to go in as prepared as possible.

Once litigation starts, the focus of most attorneys turns to paperwork and recordkeeping. For a lawsuit reported one to two years after an incident takes place, it is difficult for a mechanic to state with certainty which specific work was performed. Good recordkeeping will enable him or her to clearly prove what was actually checked at the time and describe its condition. It is critical that mechanics be diligent about filling out the logs during each visit.

Good recordkeeping will enable [a mechanic] to clearly prove what was actually checked at the time and describe its condition.

The industry trend seems to be moving away from handwritten work tickets to handheld personal digital assistants (PDAs). PDAs allow for input of general or specific information, usually based on programmed categories. If PDAs are used, there should be consistency as to which information is entered. However, one factor remains constant: if one’s company generates records, the records should be kept for at least the period of time that the statute of limitations exists for personal injury/property damage liability cases in one’s jurisdiction.

Comprehensive risk management and safety programs that ensure employees are educated about safe-work practices are vital to reducing workplace accidents. Staff meetings should be held regularly to address the hazards workers face when performing their duties. Supervisors must ensure employees are provided with appropriate safety equipment for their work, and meetings should include an inspection of the safety equipment to make sure it is in proper condition.

Given the inherent nature of mechanical equipment and the humans who use it, incidents or accidents will still occur, even when all proper precautions are taken. When a lawsuit does occur, the elevator contractor needs the expertise of an experienced defense team to establish what actually occurred, determine if the incident was related to a foreseeable malfunction and, potentially, properly educate a jury as to the role of the elevator contractor that installed or serviced the equipment. This process must be done in a methodical, strategic and time-sensitive manner in order to achieve the best results for the elevator contractor.

Experience has shown that in various jurisdictions, many people who use elevator equipment (including those who will sit on a jury) have an innate fear of it and a complete lack of understanding about how it actually works. Successful defense of an elevator or escalator claim involves educating jurors on how the devices operate, what the equipment can and cannot do and the duties and role of the elevator contractor. Changing a juror’s mindset from accepting a “falling elevator” claim to understanding “clipping a door lock” can make all the difference in the outcome of a case.

When it comes to reducing the chances for equipment failure, there is no substitute for proper installation, maintenance, repair and inspection practices. When coupled with a comprehensive safety program, accidents involving the riding public and employees can be minimized. The inclusion of favorable contract language, proper recordkeeping and retention practices, along with an experienced defense team on one’s side, are important factors in effectively managing and defending claims against your company.