Delaware Supreme Court holds that general contractor is not liable to the injured employee of its subcontractor where the subcontractor failed to obtain workers' compensation insurance.

The claimant was injured while working for his employer Wilson Builders, which was the subcontractor at a residential construction site. Wilson had contracted with Country Life as the general contractor to obtain liability and workers' compensation insurance and provide proof of insurance. However, Wilson failed to do so. The claimant filed for and was awarded $72,670.65 in workers' compensation benefits. But Wilson, as the claimant's employer, declared bankruptcy, and the claimant was unable to collect from them. The claimant then sued Country Life as the general contractor arguing that he was a third party beneficiary of the contract to procure insurance between the general contractor and its subcontractor. The lower court granted summary judgment in favor of the general contractor, and the Supreme Court affirmed. In rejecting the appeal, the Supreme Court pointed out that, even if the claimant were an intended beneficiary of the contract (a point the Court does not answer), his recourse is only against the promisor who failed to fulfill its obligation. In this case, that would be Wilson Builders as his employer. Consequently, the claimant does not have a viable claim against the general contractor.

Case Law Alert - 1st Qtr 2010