Business Negligence and Texas Law: What you Need to Know

In the commercial context, negligence occurs when one party fails to live up to perform a duty despite a legal obligation to do so. Texas law recognize and impose legal duties in several scenarios whereby the failure to meet a minimum standard of care could expose you to liability. This note discusses various scenarios when such a duty arises and how breach of that duty constitutes negligence in the business context.

What happens when a business hires an employee that is somehow dangerous? If that employee injures someone, the business could be liable for negligent hiring. This is not the same thing as theory of respondeat superior, where the employer assumes direct liability for an employee’s actions. This is a separate tort that falls under the umbrella of negligence because the law requires an employer to hire, train, retain, and supervise safe employees.

Employers occasionally fail to meet this duty. Employer must perform a reasonable investigation to ensure employees are competent to perform his or her position. If the job requires specific skills or experience, the employer must ensure that the employee has those skills. For example, the employment of a truck driver should also require verification of the employee’s driving record. In other words, a business can’t just take the word of every applicant. These principles are not limited to the employer/employee relationship – independent contractors are also implicated. Just last year, a Texas jury delivered an astounding verdict against a business – $7 billion, one of the largest verdicts in American history – in a negligent hiring case where an employee murdered an elderly woman inside her home. Courts will look at the employer’s investigation in light of a variety of factors to determine whether liability exists.

Professional Negligence

The word ‘malpractice’ tends to raise eyebrows, and for good reason. Any professional (doctor, lawyer, financial advisor, or other) may make a mistake or offer incorrect advice. Medical malpractice is when a health care provider administers “treatment, lack of treatment or other claimed departure from accepted standards of medical care” that results in injury or death to the patient. While most professionals go to great lengths to provide the highest level of care, mistakes can be made by even by most diligent. A doctor may make an error in surgery or misdiagnose a patient. A lawyer must comply with thousands of procedural and substantive rules which itself presents numerous areas of danger. Real estate agents and financial advisors are also subject to minimum standards of professional care that expose them to potential professional negligence claims. Any damages that stem from these errors may be compensable in a malpractice or negligence action.

In Texas, there are limitations for a medical malpractice case; if an individual sues a physician or a single healthcare institution, there is a cap of $250,000 on non-economic damages. Other professionals aren’t so lucky.

Negligent misrepresentation.

In the business world, a misrepresentation made with reckless disregard for its truth could give rise to liability. The elements of a negligent misrepresentation claim are:

The elements of a negligent misrepresentation cause of action are:

1. the defendant made a representation to the plaintiff in the course of defendant’s business or in a transaction in which the defendant had an interest;

2. the defendant supplied false information for the guidance of others;

3. the defendant did not exercise reasonable care or competence in obtaining or communicating the information;

4. the plaintiff justifiably relied on the representation; and

5. the defendant’s negligent misrepresentation proximately caused the plaintiff’s injury.

Consider the case of John and Caroline Redic (Redic), awarded damages for their landlord’s (Rhey’s) failure to follow through on promises to repair property’s roof. The Redics had leased commercial strip center from Rhey for years despite observing the property deterioration. Prior to signing the lease renewal, the Redics requested and, importantly, received Rhey’s assurance the roof would be repaired. After Rhey sent an electrician out to start repairing the property the Redics signed the lease renewal. Rhey, however, never repaired the roof. After torrential rains flooded the space and destroyed much of the contents and ultimately the Redics business, they sued alleging negligent misrepresentation. Finding the record contained “ample evidence that Rhey represented to the Redics that the roof would be repaired when she did not indtend to do so”, the court affirmed the jury finding of negligent misrepresentation.

Business Owner Premises Liability

Finally, every business owner must be aware of the possibility a customer could slip and fall (or otherwise injure themselves). Texas requires business owners to maintain safe premises. If a business fails to protect its customers from a known or obvious risk, it could be held responsible. The elements of a premises liability claim are: (1) a premises condition posing an unreasonable risk of harm, (2) the owner or occupier with actual or constructive knowledge of the condition, (3) the owner or occupier failed to use reasonable care to reduce or eliminate the unreasonable risk, and (4) the owner’s or occupier’s failure to use reasonable care proximately caused the claimant’s injuries.

A predicate requirement for a premises liability claim is the existence of actual or constructive knowledge of a condition on the premises. Property owners are not responsible for conditions of which they are not aware.

One thing’s for sure – if you own a business of any size, you should be informed and protected from various claims of negligence. Call our experienced dispute resolution and trial team today! We are your business and commercial lawyer and we are here to protect your rights.