Gables Construction, Inc. v. Red Coats, Inc., No. 23, 2020 BL 193791, 2020 MD LEXIS 264 (Md. May 26, 2020)

Upper Rock II, LLC (“Upper Rock”) contracted Gables Construction, Inc. (“GCI”) to construct a multi-building apartment complex in Rockville, Maryland (the “Project”) per the terms of the American Institute of Architects (“AIA”) A102TM-2007, Standard Form Agreement Between Owner and Contractor and AIA A201TM – 2007, General Conditions of the Contract for Construction.  The General Conditions required Upper Rock to purchase and maintain a property insurance policy.  It also contained a waiver of subrogation provision under which Upper Rock waived all rights against GCI and other Project participants for damages caused by fire to the extent covered by insurance.
Continue Reading Maryland Court Holds No Right of Contribution Where a Waiver of Subrogation Precludes Common Legal Responsibility

Aquatherm, LLC v. CentiMark Corp, 2019 BL 13240 (D. Utah Apr. 12, 2019)

Stag II Lindon LLC and Stag Industrial Inc. (collectively “Stag”) owned a building in Lindon, Utah.  Stag contracted with CentiMark Corp. (“CentiMark”) to perform work on the building’s roof.  CentiMark’s work required it to manipulate, move, and reinstall existing heating cables on the roof.  Shortly after completion of the work, in March of 2014, a fire occurred on the roof which was traced to the location of heat tape, which CentiMark had removed and replaced.

Continue Reading District Court in Utah Grants Summary Judgment for Contractor Against Insurance Subrogation Claim Based on Contractual Waiver Provision and Statute of Limitations

Allstate Insurance Company v. Structures Design/Build, LLC, 2016 U.S. Dist. LEXIS 34349 (WD VA March 17, 2016)

This construction dispute case arises from a failed pipe connector that caused water damage to a facility and insured personal property, which Hillel at Virginia Tech, Inc. (“Hillel”) owned in Blacksburg, Virginia. Hillel contracted Structures Design/Build, LLC (“Structures”) to design and construct the facility. Structures, in turn, subcontracted PJ Little Plumbing, Inc. (“PJ”) for plumbing and mechanical installation. PJ purchased the failed pipe connector from CMC Supply, Inc. (“CMC”). Allstate Insurance Company (“Allstate”) insured Hillel for the damage to the facility and the personal property.

As Hillel’s subrogee, Allstate filed a complaint against Structures and PJ. Allstate sued Structures for various state law claims. It sued PJ for negligence and breach of express and implied warranties. PJ filed a third-party complaint to join CMC on a breach of implied warranty theory. PJ and CMC moved to dismiss the claims against them.


Continue Reading Western District of Virginia Confronts Several Legal Issues That Frequently Impact Multi-Party Construction Disputes – Economic Loss, Damage to Other Property, Third Party Beneficiary Status, Warranties, Subrogation, and Third-Party Joinder

Turner Constr. Co. v. BFPE Int’l, Inc., No. JKB-15-368, 2016 U.S. Dist. LEXIS 39161 (D. Md. Mar. 25, 2016)

The University of Maryland Medical Center (“UMMC”) entered into a contract (the “Prime Contract”) with Turner Construction Company (“Turner”), pursuant to which Turner agreed to renovate UMMC’s hospital offices.  Turner then entered into a subcontract (the “Subcontract”) with BFPE International, Inc. (“BFPE”), pursuant to which BFPE agreed to perform work associated with the fire protection system, including demolishing sprinkler piping and coordinating sprinkler outages to accommodate the renovations.
The Prime Contract included a waiver of subrogation, under which UMMC and Turner waived all rights against each other and any subcontractors for damages covered by property insurance, even if the subcontractor would otherwise have a duty to indemnify.[i]  The Subcontract incorporated the Prime Contract by reference and included flow down provisions, but the Subcontract also stated that if any provision “irreconcilably conflicts” with a provision of the Prime Contract, “the provision imposing the greater duty or obligation on [BFPE] shall govern.”  The Subcontract included an assumption of liability, under which BFPE assumed liability for all property damage in connection with its work and agreed to indemnify Turner from any claims that result.[ii]  This assumption of liability seemed inconsistent with the waiver of subrogation in the Prime Contract.


Continue Reading Federal Court in Maryland Denies Summary Judgment, Holding That Subcontract Provision Placing Responsibility for Property Damage on Subcontractor Would Likely Trump Prime Contract Waiver of Subrogation Incorporated by Reference

Travelers Indem. Co. v. Crown Corr, Inc., 2014 U.S. App. LEXIS 21101 (9th Cir. 2014)

This action arose out of the construction of the University of Phoenix Stadium (the “Stadium”), home of the Arizona Cardinals.  Tourism and Sports Authority (the “Owner”) entered into a Design/Build Agreement with the Arizona Cardinals and Hunt Construction Group (the “Contractor”) for the design and construction of the Stadium (the “Prime Contract”).  The Contractor then entered into a subcontract with Crown Corr, Inc. (the “Subcontractor”) for the design of the Stadium’s exterior enclosure system (the “Subcontract”).


Continue Reading Ninth Circuit Enforces Waiver of Subrogation Clause in Design/Build Agreement Against Post-Construction Property Insurer

Bd. of Comm’rs v. Teton Corp., 3 N.E.3d 556, 2014 Ind. App. LEXIS 43 (Ind. Ct. App. 2014)

This action arose out of a repair and renovation project to the Jefferson County Courthouse in Madison, Indiana (the “Project”). The Jefferson County Board of Commissioners (the “Owner”) contracted with Teton Corporation (the “Contractor”) for the work. The parties’ agreement incorporated a form construction contract prepared by the American Institute of Architects (the “AIA Contract”). The AIA Contract required the Owner to provide builder’s risk insurance for the Project, or to notify the Contractor so that the Contractor could procure the insurance and pass the cost on to the Owner through a change order. The AIA Contract also provided for a mutual waiver of the right to subrogation between and among the Owner, Contractor, and all subcontractors. The Owner did not obtain separate property (or builder’s risk) insurance for the Project, instead relying on its existing property and casualty insurance policy. And, the Owner also did not inform the Contractor that it was not securing separate insurance for the Project.

During the renovations, a fire broke out, causing over $6 million in damage to the property, including damage beyond the scope of the Contractor’s “Work” as defined in the AIA Contract. After the Owner’s insurance company paid under the terms of its policy, the Owner sued the Contractor and its subcontractors for the damages. The Contractor moved for summary judgment. The Contractor argued that the Owner agreed to provide insurance for the Project, and the Owner waived its subrogation rights against the Contractor; therefore, the Owner was not entitled to recover damages from the Contractor that were caused by the fire. The trial court agreed with the Contractor and granted summary judgment. The Owner appealed.


Continue Reading Indiana Court of Appeals Holds Waiver of Subrogation Clause in Standard AIA Contract Not Limited to Damage to Contractor’s “Work”