Opinion
C.A. NO. 97C-09-181.
June 27, 2000.
NON-ARBITRATION TRIAL BY JURY OF 12 DEMANDED
ORDER
This 27th day of June, 2000, upon consideration of the Motion for Summary Judgment of Hart Construction Co., in which the remaining Defendants joined, seeking summary judgment on all claims against it by St. Catherine of Sienna Catholic Church and the record in this case, it appears that:
1. The initial action was filed on September 22, 1997 by St. Catherine of Sienna Catholic Church ("St. Catherine") against Hart Construction Co., Inc. ("Hart") and Sundew Painting Co. ("Sundew") based on negligence and an alleged breach of contract entered into between the parties on November 9, 1995, for the performance of certain construction services. The property in question, specifically the rectory and garage, was involved in a fire on or about February 26, 1996. St. Catherine alleges that the fire occurred as a result of the breach of contract and negligence of Hart. On February 25, 1999, Hart filed a third party complaint against J. R. Pini Electrical Contractors, Inc. ("J.R. Pini") and Wyman Improvement Co. ("Wyman") based on negligence and the doctrine of respondeat superior. Damages were requested in the amount of $267,200.40.
2. Motions for summary judgment may be granted where the evidence shows that no genuine issue of material fact exists and the record must be viewed in the light most favorable to the non-moving party. Borish v. Graham et. al., Del. Super., 655 A.2d 831, 833 (1994). If there is any evidence to support an outcome favorable to the non-moving party, summary judgment must be denied. Plant v. Catalytic Construction Co., Del. Super., 287 A.2d 682, 684 (1972). Having reviewed the record and the submissions of the parties, the Court finds that this matter is appropriate for disposition by means of summary judgment.
3. The contract between St. Catherine and Hart contained the following provisions relative to the purchase of insurance:
7.3.1 Unless otherwise provided under this Part 2, the Owner shall purchase and maintain. property insurance upon the Work at the site to the full insurable value thereof. Property insurance shall include interests of the Owner, the Design/Builder, and their respective contractors and subcontractors in the Work. It shall insure against perils of fire and extended coverage and shall include all risk insurance for physical loss or damage. . . .
The term "work" is defined in Section 1.1.3 of the agreement as:
[T]he completed construction designed under the project and includes labor necessary to produce such construction, and materials and equipment incorporated or to be incorporated in such construction.
4. The contract described the project as the Restoration of the Rectory and Garage of Saint Catherine of Sienna. The specifications appear to have covered those structures in their entirety. In addition, the contract contained a waiver of subrogation provision in Section 7.3.6 which reads:
The Owner and Design/Builder waive all rights against each other and the contractors, subcontractors, agents and employees, each of the other, for damages caused by fire or other perils to the extent covered by property insurance obtained pursuant to this Paragraph 7.3 or other property insurance applicable to the Work, except such rights as they may have to proceeds of such insurance held by the Owner as trustee.
St. Catherine maintained the insurance required under this contract through an existing policy with Lloyd's of London Insurance Co. It included coverage for areas other than those for which coverage was required under the contract.
5. On July 11, 1996, Lloyds and St. Catherine entered into a subrogation agreement for the sum of $267,200.40 in full settlement of all claims by St. Catherine arising out of the losses and damage by fire to the church which occurred during the February fire. The instant litigation was instituted in the name of St. Catherine by Lloyds against Defendants Hart and Sundew and against Third Party Defendants J. R. Pini and Wyman requesting the same amount. No other losses have been distinguished or claimed.
6. Hart raised two contentions in the presentation of its motion for summary judgment. First, Hart contends that it is entitled to judgment as a matter of law because whenever a property is insured under circumstances such as exist here and there is a recovery under an insurance policy, the owner has waived the right of subrogation on behalf of any successors in interest. There cannot therefore be any recovery against the contractors for "the work" or the "non work" areas given the fact that the insurance company stands in no better position than its insured. See Employers Mutual Casualty Co. v. A.C.C.T., Minn. Supr., 580 N.W.2d 490 (1998). Alternatively, Hart asserts that based on the definition of the work as well as the scope of the project set forth in Section 1.12 and 1.13 in the contract, it is entitled to summary judgment since "the work" included the rectory and garage in their entirety. They received compensation from Lloyds for those damages and waived the right to any further compensation. Again, Lloyds stands in the same position as its insured.
7. Generally speaking, an agreement between the building owner and construction company to waive all rights against each other for damages to work under the contract caused by fire or other perils "to the extent covered by insurance," does not relieve the construction company from liability for negligently inflicted harm to "non-work" areas. Travelers Insurance Co. v. Dickey, Okla. Supr., 799 P.2d 635 (1990). See also S.S.D.W. Co. v. Brisk Waterproofing Co., Inc., N.Y. Ct. App., 556 N.E.2d 1097 (1990). This case is no different. The language of Section 7.3.6 confines the scope of the waiver to the areas included in the definition of the work to be performed under the contract.
8. St. Catherine acknowledged that the waiver of subrogation clause applies to damages to "the work." However, they assert that most of the damages being claimed by St. Catherine are portions of the structure which were going to be "worked" on, as opposed to that which had already been completed, under the contract and the waiver is not applicable to those claims. It also claims that the majority of the damage related to the fire was inflicted upon areas not involved in the contract and there was no waiver of subrogation as to that portion of the church's claim. Lastly, St. Catherine maintains that what work is or is not covered is a factual issue and not a legal issue that should be resolved by the jury.
9. The Court is not persuaded by Hart's argument that if St. Catherine were compensated by insurance for any of the losses suffered during the February 26 fire without regard to whether they related to work called for under the contract, St. Catherine or any insurer acting in its stead by way of subrogation, cannot recover against the Defendants. Similarly unpalatable is the contention by St. Catherine that the portions of the site which were not worked on before the fire, but which were to be a part of the renovations under the contract, are not within the definition of the "work" for purposes of the waiver of subrogation clause in Section 7.3.6. Again, the language of the waiver applies to work to be performed under the contract. It does not depend upon whether that work has or has not been completed. Consequently, the only question remaining is whether the losses occasioned by the fire were included within the insurable work.
10. The agreement between St. Catherine and Hart specifically refers to the project as the restoration of the rectory and garage. The contractual documents submitted by Hart detail the areas of the rectory and garage that were to be reconstructed. Moreover, since the agreement defines "the work" as the completed construction of the rectory and garage, the Court must find that "the work" included the entire structure.
11. Nothing has been submitted to distinguish "the work" areas from the "non work" areas. The Court must conclude as a result that the entire amount claimed is for work covered under the contract. Having reached that conclusion, the Court must also conclude that summary judgment in favor of Hart and the Defendants joining in its motion is therefore appropriate. Stated differently, St. Catherine cannot recover damages paid pursuant to insurance obtained by virtue of Section 7.3.1 of the contract.
Based on the foregoing, Hart's motion for summary judgment is granted. Given this disposition, it is unnecessary to dispose of the remaining motions which are pending.
IT IS SO ORDERED.
TOLIVER, Judge.