Exxon Corp. v. Tidwell

• Decision Date: 08 December 1993
• Docket Number: No. D-1639,D-1639
• Citation: 867 S.W.2d 19
• Parties: EXXON CORPORATION, Petitioner, v. Mary TIDWELL and Terry Tidwell, Respondents.
• Court: Texas Supreme Court

Page 19

867 S.W.2d 19

EXXON CORPORATION, Petitioner, v. Mary TIDWELL and Terry Tidwell, Respondents.

No. D-1639.

Supreme Court of Texas.

Dec. 8, 1993.

Molly H. Anderson, Tyler, William R. Hurt, Peggy O. Donley, Houston, Michael A. Hatchell, Tyler, for petitioner.

Robert C. Fults, Timothy M. Fults, Dallas, Smith E. Gilley, Greenville, for respondents.

CORNYN, Justice, delivered the opinion of the Court, in which PHILLIPS, Chief Justice, and GONZALEZ, HIGHTOWER and HECHT, Justices, join.

The issue in this case is whether an oil company owes a duty of ordinary care to protect a tenant service station's employees from the criminal acts of third parties. We hold that whether such a duty exists depends on whether the oil company possessed a right of control over the safety and security of the station. Because we announce a change in the legal standard applied by both the court of appeals and the trial court, we reverse the judgment of the court of appeals and in the interest of justice remand this cause to the district court for a new trial. TEX.R.APP.P. 180.

Jerry Morgan leased a twenty-six year old full-service gas station located at the intersection of I.H. 30 and U.S. Highway 69 in Greenville, Texas, from the Exxon Corporation. Morgan employed Terry Tidwell at the station as an attendant. At approximately 10:00 p.m. on November 4, 1987, Tidwell was shot during a robbery attempt by Todd Jones, who entered the service station through an open garage bay door. Tidwell, the only attendant on duty at the time, suffered gunshot wounds to the face and arm.

Tidwell and his mother ¹ subsequently sued Exxon for failure to maintain a safe workplace. Following a bench trial, the Tidwells secured a judgment against Exxon for $382,716.48, plus prejudgment interest. The court of appeals reversed the portion of the judgment awarding mental anguish damages to Tidwell's mother and affirmed the judgment in all other respects. 816 S.W.2d 455. We granted Exxon's application for writ of error to consider its argument that the court of appeals erred in holding that Exxon owed a duty of ordinary care to protect its tenant's employees from the criminal acts of third parties.

Oil companies typically sell gasoline, oil, and related automobile products through individual dealers who lease service stations and enter into sales agreements to sell that company's products. In such an arrangement, the relationship between the oil company and the operator is formally controlled by two documents: a lease, which usually restricts the tenant's right to make certain alterations and requires certain business practices and standards to be maintained, and a sales agreement, which also contains restrictions and standards to protect the oil company's name and to maximize the profits of the enterprise. Because of these two contracts, the current legal principles governing an oil company's tort liability for injury to business patrons or dealer employees arise out of two distinct areas of the law: landlord-tenant and agency. ²

Generally a landowner has no duty to prevent criminal acts of third parties who are not under the landowner's supervision or control. See El Chico Corp. v. Poole, 732 S.W.2d 306, 313 (Tex.1987). A landowner does, however, have a duty to protect invitees on the premises from criminal acts of third parties if the landowner knows or has reason to know of an unreasonable risk of harm to the invitee. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 550 (Tex.1985). This duty developed out of the premise that the party with the "power of control or expulsion" is in the best position to protect against the harm, and when that party "by reason of location, mode of doing business, or observation or past experience, should reasonably anticipate criminal conduct on the part of third persons, ... [that party] has a duty to take precautions against it." Morris v. Barnette, 553 S.W.2d 648, 649-50 (Tex.Civ.App.--Texarkana 1977, writ ref'd n.r.e.).

In the landlord-tenant relationship, a duty to the tenant also attaches when the landlord has the right of control over the leased premises. See Jones v. Houston Aristocrat Apartments, Ltd., 572 S.W.2d 1, 2 (Tex.Civ.App.--Houston [1st Dist.] 1978, writ ref'd n.r.e.). The general rule is that a landlord is not liable to a lessee for injuries caused by an unsafe condition, which can include the unreasonable risk of harm from criminal intrusions, unless the landlord was aware of the latent dangerous condition at the time the premises were let. Daniels v. Shell Oil Co., 485 S.W.2d 948, 951 (Tex.Civ.App.--Fort Worth 1972, writ ref'd n.r.e.); see also RESTATEMENT (SECOND) OF PROPERTY § 17.3 cmt. 1 (1977). But when a landlord retains possession or control of a portion of the leased premises, the landlord is charged with the duty of ordinary care in maintaining the portion retained. Flynn v. Pan Am. Hotel Co., 183 S.W.2d 446, 451 (Tex.1944); RESTATEMENT (SECOND) OF PROPERTY § 17.3 cmt. 1 (1977). In such a situation the duties and liabilities owed by a landlord to an employee of the tenant are ordinarily the same as those owed by the landlord to the tenant. Flynn, 183 S.W.2d at 449.

Under the principles of agency law, employers are responsible for providing a safe workplace to their own employees. Farley v. M M Cattle Co., 529 S.W.2d 751, 754 (Tex.1975). However, even in an employer-employee relationship, the employer is not an insurer of the employee's safety. The standard of conduct required of the employer is ordinary care based on general negligence principles. See El Paso Elec. Co. v. Gregston, 170 S.W.2d 515, 517 (Tex.Civ.App.--El Paso 1943, writ ref'd w.o.m.). One who retains the right of control or exercises actual control over the work of an independent contractor also owes a duty of reasonable care to the contractor's employees. Redinger v. Living, Inc., 689 S.W.2d 415, 418 (Tex.1985); RESTATEMENT (SECOND) OF TORTS § 414 (1965). When determining whether a party is an employee or an independent contractor, the law focuses on the right of control over the details of the work to be performed. Newspapers, Inc. v. Love, 380 S.W.2d 582, 591 (Tex.1964).

From these basic principles a hybrid body of law has developed governing oil companies and their service station lessees. In previous cases, when an oil company leased a service station to a tenant, we have focused on whether the oil company retains a right to control the details of the work performed at the service station. ³ If no right of control over the details of the operation exists, a landlord-tenant relationship exists, in which case no duty arises to the tenant's employees other than to make the tenant aware of latent dangerous conditions that exist at the time the premises are let. Texas Co. v. Wheat, 168 S.W.2d 632, 635 (Tex.1943) (explaining that no master-servant relationship is created so long as oil company "did not undertake to direct the details by which the results were to be accomplished"). Yet when the oil company has the right to control the details of the service station operation, something more than a landlord-tenant relationship exists, and the oil company's duty is one of ordinary care. Humble Oil & Ref. Co. v. Martin, 148 Tex. 175, 222 S.W.2d 995, 998 (1949) (finding a master-servant relationship created because "there [was] essentially little difference between [the station operator's] situation and that of a mere store clerk who happens to be paid a commission instead of a salary"). In determining where a particular relationship falls on the spectrum from landlord-tenant to independent contractor to employer-employee, courts have looked to the facts and details of the two contracts governing the relationship and any evidence of actual exercise of control by either party.

A number of courts, including ours, have considered the nature of the relationship between an oil company and its lessee and the duty flowing from that relationship. See, e.g., Humble Oil & Refining Co. v. Martin, 148 Tex. 175, 222 S.W.2d 995 (1949); Texas Co. v. Wheat, 140 Tex. 468, 168 S.W.2d 632 (1943); Texas Co. v. Freer, 151 S.W.2d 907 (Tex.Civ.App.--Waco 1941); O'Neill v. Startex Petroleum, Inc., 715 S.W.2d 802 (Tex.App.--Austin 1986, no writ); Edwards v. Neely Oil, Inc., 556 S.W.2d 114 (Tex.Civ.App.--Amarillo 1977, writ ref'd n.r.e.); Beckham v. Exxon Corp., 539 S.W.2d 217 (Tex.Civ.App.--Houston [1st Dist.] 1976, no writ); Willman v. Texaco, Inc., 535 S.W.2d 774 (Tex.Civ.App.--Amarillo 1976, writ ref'd n.r.e.); Space City Oil Co. v. McGilvray, 519 S.W.2d 257 (Tex.Civ.App.--Beaumont 1975, no writ); Daniels v. Shell Oil Co., 485 S.W.2d 948 (Tex.Civ.App.--Fort Worth 1972, writ ref'd n.r.e.); Swift v. Aetna Casualty & Sur. Co., 449 S.W.2d 818 (Tex.Civ.App.--Houston [14th Dist.] 1970, no writ); McGee v. Phillips Petroleum Co., 373 S.W.2d 773 (Tex.Civ.App.--El Paso 1963, writ ref'd n.r.e.); Hayes v. The Travelers Ins. Co., 358 S.W.2d 254 (Tex.Civ.App.--Waco 1962, writ ref'd); Gulf Ref. Co. v. Rogers, 57 S.W.2d 183 (Tex.Civ.App.--Waco 1933, writ dism'd by agreement); see also Greenberg v. Mobil Oil Corp. 318 F.Supp. 1025 (N.D.Tex.1970). Because each lease or sales agreement may be different, as may be the evidence of actual control by the oil company or station operator, each case has turned on its own facts.

Two of the cases, however, are very similar to the present controversy. In Startex Petroleum, an employee sued for injuries suffered during an armed robbery of a gas station and convenience store. The court of appeals reversed a summary judgment for the defendant because "genuine issues of material fact exist regarding [the lessor's] right to control the use of the premises and operation of the business." 715 S.W.2d at 804. The court stated that "the retention of such right to control would impose upon [the oil company] a duty of reasonable care to make the premises safe or warn employees of dangers inherent on them." Id.

The court...