May 8, 2015

Should businesses be punished for making premise improvements?

By Wen Fa Attorney

Businesses make permanent premise improvements all the time. These improvements, called “fixtures,” include manufacturing equipment, storage tanks, and the like. These fixtures improve business efficiency and workplace safety. But, because fixtures are permanent, a business cannot remove them (after it sells the property) without severely damaging the rest of the property. Should a business be forever liable for a fixture it once installed? We say “no” in this brief we filed today in Occidental Chemical v. Jenkins, a case currently pending in the Supreme Court of Texas.

In 1992, Occidental Chemical permanently installed a pH-balancing system on its property, so that its workers wouldn’t have to go up ladders carrying containers of acid. Six years later, Occidental Chemical sold the property to Equistar and relinquished all control of the premises. After another eight years, an Equistar employee was injured while using the pH-balancing system, and sued Occidental. An appellate court in Houston held Occidental responsible for the employee’s injury despite the fact that it has not owned, possessed, or controlled the premises since it sold it eight years ago.

The Supreme Court of Texas should reverse. Tort law is about creating the right incentives (e.g. discouraging undesirable behavior). Thus, it makes no sense to impose liability on a former premises owner, especially one who has had no control over the property for the past eight years. Property law grants the current property owner the right to exclude, thus preventing any previous owner from conducting inspections or making repairs.

Tort law is also about encouraging good behavior (e.g. the type of premise improvement that Occidental made here). Smoke alarms, carbon monoxide detectors, and other premise improvements increase workplace safety and offer employees peace of mind. But few would make these improvements if they would be subject to indefinite tort liability as soon as they sell the property. That’s not the result the law seeks to achieve, and PLF hopes that the Supreme Court of Texas will return tort law to its proper role: creating the right incentives.

What to read next