Michael Chiles was working at an oil and gas processing facility in West Texas when pressurized fluid unexpectedly shot out of the end of a hose he was carrying. Chiles was thrown to the ground and taken to the hospital shortly thereafter, where he was diagnosed with a torn rotator cuff that required two separate surgeries to repair. Chiles sued Priority Artificial Lift Services, LLC (“Priority”) and EP Energy E&P Company, L.P. (“EP Energy”) for damages caused by the incident. The parties proceeded to trial and the jury returned a verdict finding Priority and EP Energy liable for Chiles’ injuries and assessing approximately $4 million in damages. The trial court signed a final judgment incorporating the jury’s findings.

All parties filed an appeal on various issues with the Houston (14^th) Court of Appeals. The appellate court only ruled on the issue of the trial court’s refusal to submit its borrowed employee jury question. That issue was whether two workers involved in the incident were “borrowed employees” of EP Energy at the time of the incident. The Houston Court of Appeals reversed the trial court’s final judgment, vacated the jury award of $4 million and remanded the case back to trial court for further proceedings.

EP Energy is a Houston-based oil and gas company. At the time of the incident, EP Energy held an oil and gas lease and a commercial surface lease to operate an oil and gas processing facility near Big Lake, Texas. EP Energy operated vertical heater treater tanks at this location, which were used to separate produced fluid into oil, gas, and water.

In 2011, EP Energy entered into a Master Service Agreement with Priority, pursuant to which Priority agreed to provide EP Energy with lease operators and other employees. The agreement states that Priority would operate as an independent contractor and its employees were “subject to [Priority’s] sole and exclusive supervision, direction and control, and shall not be deemed, in fact or in law, to be employees of” EP Energy. Pursuant to this Agreement, Priority supplied EP Energy with two lease operators involved in the underlying incident: Clay Mateo and Abel Martinez. EP Energy entered into a separate Master Service Agreement with Hawk Trucking. Hawk Trucking also operated as an independent contractor for EP Energy and provided the company with vacuum trucks and water hauling services. Chiles was working for Hawk Trucking at the time of the incident.

The issue before the Houston Court of Appeals was whether Mateo and Martinez were borrowed workers by EP (contrary to the Master Service Agreement) and as a result, the duties and obligations owed to these workers by EP were as if EP was their employer on the job site.

The borrowed employee doctrine is a tort doctrine addressing vicarious liability and apportionment of responsibility for employees who have more than one master. See Reliance Nat’l Indem. Co. v. Advanced Temporaries, Inc., 227 S.W.3d 46, 49 (Tex. 2007). The Texas Supreme Court “has long recognized that a general or regular employee of one employer may become the borrowed employee of another with respect to some activities.” St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 537 (Tex. 2002); see also Davis-Lynch, Inc. v. Asgard Techs., LLC, 472 S.W.3d 50, 70 (Tex. App.—Houston [14th Dist.] 2015, no pet.).

If an employee of a general employer becomes the borrowed employee of another, he is no longer considered an employee of the general employer for liability purposes. The shift of the right to direct and control the details of the work (normally belonging to the employer) transitions a general employee of one employer into a borrowed employee of another. This then can render the new employer liable for the borrowed employee’s actions as if the borrowed employee was originally their own employee.  Therefore, the essential inquiry under the borrowed employee doctrine involves whether which employer had the right of control of the details and manner of the employee’s work at the time of the incident in question. Depending on the answer, this employer alone will bear liability for the employee’s action.

In the circumstances involving Chiles’ accident, the actions of Mateo and Martinez, in particular, were at issue and which employer – Priority or EP — were they working for at the time of the incident. The evidence presented by the parties in the Chiles’ trial showed that the actions of Mateo and Martinez may have caused the injuries to Chiles. The evidence presented by the parties in the Chiles’ trial also presented a fact issue as to whether EP’s foreman on the job should have properly trained and supervised Mateo and Martinez during their work and actions.

The Houston Court of Appeals ruled that Priority was entitled to a jury question on the borrowed employee doctrine. As a result, the Court vacated the jury verdict and remanded the case to the trial court for a new trial and for inclusion of a jury question on whether Mateo and Martinez were borrowed workers.

As an employer of workers on a project site, the company must be aware of its contractual and statutory obligations to its employees (i.e. safety, training, details of scope of work, and methods) but then also be cognizant of another company controlling or “borrowing” these workers and directing their actions and conduct while on the job. The difference between these two sets of circumstances can determine which company may be vicariously liable for the actions of those workers.

If you would like to consult with an attorney on issues presented in this article and/or on issues involving contract responsibilities and/or agreements to lend out workers to other companies on site, the attorneys in our Austin and Dallas offices are available to answer any questions you may have. Please contact us at info@gstexlaw.com.

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