El Paso Field Services, L.P. and Gulfterra South Texas, L.P. F/K/A El Paso South Texas, L.P. v. Mastec North America, Inc. and Mastec, Inc.
389 S.W.3d 802 | Texas Supreme Court | 2012
What This Case Means for Subcontractors
El Paso hired MasTec to build a new pipeline to replace an old one. During construction, MasTec hit undiscovered foreign pipelines that weren't properly marked on the site plans El Paso provided. MasTec sued for the extra costs. Texas's highest court ruled that the contract clearly put all risk of unknown underground obstacles on MasTec, even though El Paso failed to give accurate information about what was buried there. This means contractors can't recover extra costs for surprises underground if the contract says they assume all subsurface risks.
Key Takeaways
- •Read risk-allocation clauses carefully. If your contract says you assume 'all risks' related to site conditions or subsurface work, courts will enforce that broadly—even if the owner didn't give you complete information.
- •Don't rely on the owner's site plans or representations as a defense. Courts view contractor assumptions of risk as absolute, regardless of owner negligence or incomplete due diligence.
- •Negotiate specific carve-outs before signing. If you must accept subsurface risk, require the owner to provide certified utility locates, previous surveys, and written warranties about known obstacles. Make exceptions for conditions that differ materially from provided documents.
All risks in connection with subsurface conditions fall on MasTec notwithstanding anything else.
Frequently Asked Question
If the owner gave me wrong information about what's buried underground and I hit something unexpected, can I get paid for the extra work?
Probably not, if your contract says you assume all subsurface risks. Texas courts will enforce that language strictly, even if the owner was negligent or gave you incomplete site plans. Your only protection is to negotiate specific exceptions in the contract before you sign, such as requiring the owner to warrant the accuracy of utility locates or to pay for conditions that materially differ from provided documents.
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