Business & Insurance Litigation Newsletter for Indiana

Defendant May Be Liable for Acts of Independent Contractor

The long-standing general rule in Indiana is that a principal will not be held vicariously liable for the negligence of an independent contractor. See Becker v. Kreilen, 770 N.E.2d 315, 317 (Ind. 2002). Of course, as with most general rules, there are exceptions to this rule: (1) where the contract requires performance of intrinsically dangerous work; (2) where the principal is by law or contract charged with performing a specific duty; (3) where the act will create a nuisance; (4) where the act to be performed will probably cause injury to others unless due precaution is taken; and (5) where the act to be performed is illegal. Id. at 318.

The exceptions to the general rule of no liability are implicated when a contractor engages in activity that causes chemical contamination or pollution. In Shell Oil Co. v. Meyer, 705 N.E.2d 962 (Ind. 1998), the Indiana Supreme Court considered whether a gasoline refiner could be liable for contamination caused by a leaking underground storage tank, when the tank is controlled and owned by an independent service operator. In Shell Oil, an independent contractor filled and checked the tanks with fuel sold by Shell Oil. Id. at 980. The Court determined that filling an underground storage tank with gasoline has elements of trespass and nuisance, and is abnormally dangerous. Id. at 978. Accordingly, the Court concluded that, in the context of underground storage tanks, the principal is liable for the actions of an independent contractor. Id. Shell was liable as a principal for contamination caused by the actions of its independent contractor. Id. at 981.