In a highly contested matter, Arizona partner Jodi Mullis successfully argued a motion for summary judgment decided in favor of the client. This case arose out of a construction project for an assisted living facility. WSHB's client was the contractor for the project and entered an AIA Document A 102-2017 Standard Form Agreement. A fireplace subcontractor was retained to install and/or construct the fireplaces and chimneys at the facility. Construction on the project was completed in December 2020, and several weeks later a fire caused significant damage to the property. The plaintiff claimed that it suffered $2,777,183.40 in damages as a result. This amount included damage to real property, personal property, the cost of rehousing residents and loss of business income. Of the claimed loss only $713,172.00 was not covered by insurance.
The issue in this case was whether the subrogation waivers contained in the contract were ambiguous based upon other provisions requiring defect warranties and defining work. The plaintiff relied on several out-of-state decisions that found ambiguity in similar subrogation clauses. Those cases involved different contracts that did not involve the same type of subrogation clause present here. The contract in this case, explicitly extended the waiver for fire losses to incidents occurring after construction was completed, or after final payment.
The plaintiff also claimed that they should be allowed to present parole evidence to show that the parties didn't intend for the subrogation waiver to extend beyond the construction period, or after a substantial completion. The court disagreed and found that the applicable clause clearly extends the waiver to post-construction fire losses, even if they were determined to be the result of faulty construction work.
In addition, the court noted that the contract contained several pages of additions and deletions and the clause in question was purposely not deleted. The contract also specially allocated the risk of loss from fire damage to the owner and as such the plaintiff is not entitled to the portion of loss that was not reimbursed by insurance. Given these findings, the court ruled that the record did not present a genuine issue of material fact and granted summary judgment in favor of the defendants as well as all fees and costs.
It was a great day in court for the client thanks to the fierce advocacy of partner Jodi Mullis. Congratulations on a fantastic win!