Seay v. Travelers Indem. Co.

• Decision Date: 09 April 1987
• Docket Number: No. 05-86-00307-CV,05-86-00307-CV
• Citation: 730 S.W.2d 774
• Parties: Willie Rhoneta SEAY, Individually and as Administratrix of the Estate of Jack Lewis Seay, Appellant, v. The TRAVELERS INDEMNITY COMPANY, Appellee.
• Court: Texas Court of Appeals

Page 774

730 S.W.2d 774

Willie Rhoneta SEAY, Individually and as Administratrix of

the Estate of Jack Lewis Seay, Appellant, v. The TRAVELERS INDEMNITY COMPANY, Appellee.

No. 05-86-00307-CV.

Court of Appeals of Texas,

Dallas.

April 9, 1987.

Rehearing Denied June 1, 1987.

Morton A. Rudberg, John M. Weaver (Houston Gen. Ins. Co.), Dallas, for appellant.

Timothy R. McCormick, Arthur K. Smith, Dallas, for appellee.

Before DEVANY, McCLUNG and THOMAS, JJ.

THOMAS, Justice.

This is an appeal from the granting of summary judgment in favor of the TRAVELERS INDEMNITY, CO. (Travelers). Appellant, WILLIE RHONETA SEAY, brings forth three points of error: (1) that the granting of summary judgment for Travelers was error because Travelers failed to establish as a matter of law that no legal duty existed as to its allegedly negligent actions; (2) that the granting of summary judgment was error because Travelers failed to establish as a matter of law that TEX.R.CIV.P. 51 bars a suit such as this; and (3) that the trial court erred in granting Travelers' motion for summary judgment. We agree, and therefore, reverse the judgment and remand the matter to the trial court for further proceedings.

Mrs. Seay is the surviving widow of the decedent, Jack Seay. Mr. Seay was a maintenance employee of Gaston Episcopal Hospital (Gaston). On October 21, 1979, Mr. Seay and another employee were performing maintenance work on one of the boilers located in the boiler room of Gaston when a safety relief valve on an adjacent boiler discharged scalding water onto Mr. Seay. Six days later, Mr. Seay died of these injuries.

Mr. Seay's wife and children then brought suit against Travelers, alleging that Travelers had negligently inspected the boiler which injured Mr. Seay and, as a result of the negligent inspection, Mr. Seay had been injured. Travelers moved for summary judgment on two separate grounds: (1) that as a matter of law, it had no duty toward Mr. Seay which could form the basis of a cause of action; and (2) that TEX.R.CIV.P. 51, as a matter of law, barred the suit. The trial court judge, in granting the motion for summary judgment, found there were no genuine issues of material fact and that Travelers was entitled to judgment as a matter of law.

The crucial issue raised by this appeal is whether Texas recognizes a duty flowing from an insurance company, which voluntarily conducts inspections of the water boilers of its insured, to employees of the insured and, if so, whether the plaintiff in this suit has raised issues of fact regarding breach of that duty. We hold that Texas recognizes such a duty and that plaintiff has raised issues of fact regarding a breach of that duty.

The boilers in question were subject to the provisions of the Texas Boiler Inspection Act, TEX.REV.CIV.STAT.ANN. art. 5221c (Vernon Supp.1987) (the Act). They are required to be periodically inspected and certified as a condition to their operation. The inspections are required to be carried out by the Chief Inspector, a Deputy Inspector, or an Authorized Inspector. The Chief and Deputy Inspectors are civil servants employed by the State of Texas and charged with enforcement of the provisions of the Act. Authorized Inspectors are employees of insurance companies that have been commissioned by the Department of Labor and Standards of the State of Texas to inspect boilers. If any Inspector determines that the boiler meets standards promulgated by the Department of Labor and Standards, the Commissioner of that Department issues a "certificate of operation" which allows the boiler to be lawfully used. If the boiler does not meet the standards, the Commissioner may order the owner to repair it, prohibit its use, or, in extreme instances, condemn it.

Travelers insured the boilers used at Gaston. For a number of years, employees of Travelers, as Authorized Inspectors, conducted inspections of those boilers and gave favorable reports to both Gaston and the Commissioner. As a consequence of the favorable reports, the Commissioner periodically issued new "certificates of operation" which allowed Gaston to continue to use the boilers.

Mrs. Seay contends that, as a result of undertaking to inspect the boilers, Travelers owed a duty to Mr. Seay pursuant to the common law and the RESTATEMENT (SECOND) OF TORTS § 324A (1977). That section states:

One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if

(a) his failure to exercise reasonable care increases the risk of harm, or

(b) he has undertaken to perform a duty owed by the other to the third person, or

(c) the harm is suffered because of reliance of the other or the third person upon the undertaking.

Mrs. Seay alleged no theory of recovery other than that sounding in tort; therefore, the lack of a duty owed by Travelers to Mr. Seay would preclude Appellant's recovery, and the granting of summary judgment would be proper. Mercola v. City of San Antonio, 487 S.W.2d 763, 764 (Tex.Civ.App.--Beaumont 1972, writ ref'd n.r.e.). Conversely, if a duty is owed, then the burdens cast upon a defendant moving for summary judgment in a personal injury case based on negligence will ordinarily make such a motion futile. Taylor v. Southwestern Bell Telephone Co., 483 S.W.2d 330, 332 (Tex.Civ.App.--El Paso 1972, no writ).

Travelers argues that it had no duty toward Mr. Seay because section 324A is contrary to public policy and is not the law of Texas. Travelers further argues that even if section 324A is the law of Texas, the evidence in this case disproves issues of fact under one or more elements of section 324A. We do not agree.

Initially, we address the argument of Travelers that section 324A is not the law of Texas. Although no holding of a Texas court has explicitly adopted section 324A, it is apparent that this section describes the scope of the duty concept prevailing in this state. The rule underlying section 324A was adopted by the Supreme Court of Texas in Fox v. Dallas Hotel Company, 111 Tex. 461, 240 S.W. 517, 520-21 (1922). In that case, the defendant, Dallas Hotel Company, had entered into a contract with decedent's employer to maintain and repair elevators in a building which was under the control of the employer. As a result of negligent maintenance and repair, plaintiffs' decedent was killed by an elevator in the building. The Supreme Court held that Dallas Hotel was liable in tort, stating that,

"Upon defendant in error taking over the control and repair of the elevators ... it became charged with the duty ... to exercise ordinary care...."

240 S.W. at 520. The Court's discussion makes clear that the basis of liability, like that of section 324A, accrues when the tortfeasor undertakes to perform services for another which are "attended by grave risks" and which constitute a duty owed by the other to a third person.

Further, the Texas Supreme Court has adopted section 323 of the Restatement as the law of Texas. Colonial Savings Association v. Taylor, 544 S.W.2d 116, 120 (Tex.1976). Section 323 is identical to section 324A except that the duty delineated in section 323 extends to the person for whom the services were rendered rather than to the third party described in section 324A. This distinction will not impede recognition of section 324A as law inasmuch as Texas courts have repeatedly recognized that existence of a duty will not be defeated by the fact that the duty is claimed by a third party not in privity with the transaction giving rise to the tort. A subcontractor performing dirt grading services for a general contractor that was resurfacing a road owed a duty in tort to a passing motorist despite absence of privity. Strakos v. Gehring, 360 S.W.2d 787, 796 (Tex.1962). A manufacturer owed a duty in tort to innocent bystanding third parties despite absence of privity. Darryl v. Ford Motor Company, 440 S.W.2d 630, 633 (Tex.1969). Accountants owed a duty in tort to third parties despite absence of privity. Blue Bell, Inc. v. Peat, Marwick, Mitchell and Co., 715 S.W.2d 408, 411 (Tex.App.--Dallas 1986, writ ref'd n.r.e.); Shatterproof Glass Corp. v. James, 466 S.W.2d 873, 880 (Tex.Civ.App.--Ft. Worth 1971, writ ref'd n.r.e.) (citing Restatement section 552). A surveyor owed a duty in tort to third parties despite absence of privity. Cook Consultants, Inc. v. Larson, 700 S.W.2d 231, 234 (Tex.App.--Dallas 1985, writ ref'd n.r.e.) (citing Restatement of Torts section 552). The operator of a grain elevator owed a duty in tort to all third parties in the public. Goodpasture, Inc. v. Hosch, 568 S.W.2d 662, 665 (Tex.Civ.App.--Houston 1978, writ ref'd n.r.e.).

The adoption of section 323 necessarily implies the validity of section 324A as Texas law. Johnson v. Abbe Engineering Company, 749 F.2d 1131, 1132 (5th Cir.1984); Canipe v. National Loss Control Service Corporation, 736 F.2d 1055, 1059 (5th Cir.1984); City of Denton v. Van Page, 701 S.W.2d 831, 836 (Tex.1986); Bernard Johnson, Inc. v. Continental Constructors, Inc., 630 S.W.2d 365, 374 (Tex.App.--Austin 1982, writ ref'd n.r.e.); and RESTATEMENT (SECOND) OF TORTS § 324A comment a (1965).

Traveler's argument that application of section 324A to create a duty in tort by an insurance company to the employee of its insured as a result of boiler inspections is contrary to the law of Texas, is a reliance in part upon Philadelphia Manufacturers Mutual Ins. Co. v. Gulf Forge Co., 555 F.Supp. 519, 526 (S.D.Tex.1982); and Brownstone Park, Ltd. v. Southern Union Gas Co., 537 S.W.2d 270, 274 (Tex.Civ.App.--Austin 1976, writ ref'd n.r.e.). In Brownstone, the owner of an apartment complex had entered into a maintenance and repair contract with Southern Union Gas Company for servicing a boiler in the...