{"id":896553,"date":"2019-10-08T16:23:23","date_gmt":"2019-10-08T22:23:23","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=896553"},"modified":"2019-10-08T16:23:30","modified_gmt":"2019-10-08T22:23:30","slug":"applicability-of-waivers-of-subrogation-non-signatory-3rd-parties","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/applicability-of-waivers-of-subrogation-non-signatory-3rd-parties\/","title":{"rendered":"\u201cI Didn\u2019t Sign That!\u201d \u2013 Applicability of Waivers of Subrogation to Non-Signatory Third Parties"},"content":{"rendered":"\n<p>Rahul Gogineni | <a href=\"https:\/\/subrogationstrategist.com\/2019\/06\/27\/i-didnt-sign-that-applicability-of-waivers-of-subrogation-to-non-signatory-third-parties\/\">The Subrogation Strategist<\/a> | June 27, 2019<\/p>\n\n\n\n<p>In<em>&nbsp;Gables Construction v. Red Coats<\/em>, 2019 Md. App. LEXIS 419, Maryland\u2019s Court of Special Appeals considered whether a contractual waiver of subrogation in the prime contract for a construction project barred a third party \u2013 a fire watch vendor hired to guard the worksite \u2013 from pursuing a contribution claim against the general contractor. The court concluded that the general contractor could not rely on the waiver of subrogation clause to defeat the contribution claim of the vendor, who was not a party to the prime contract. As noted by the court, holding that a waiver of subrogation clause bars the contribution claims of an entity that was not a party to the contract would violate the intent of the Maryland Uniform Contribution Among Tortfeasors Act (UCATA).<\/p>\n\n\n\n<p>When dealing with claims involving construction projects, there may exist multiple contracts between various parties that contain waivers of subrogation. The enforceability of such waivers can be limited by several factors, including the jurisdiction of the loss, the language of the waiver and the parties to the contract.<\/p>\n\n\n\n<p>In&nbsp;<em>Gables Construction<\/em>, Upper Rock, Inc. (Upper Rock), the owner, contracted with a general contractor, Gables Construction (GCI) (hereinafter referred to as the \u201cprime contract\u201d), to construct an apartment complex. After someone stole a bobcat tractor from the jobsite, Gables Residential Services Incorporated (GRSI), GCI\u2019s parent company, signed a vendor services agreement (VSA) with Red Coats to provide a fire watch and other security services for the project.<\/p>\n\n\n\n<p>Within the prime contract, there was a waiver of subrogation clause. The waiver of subrogation clause barred subrogation claims between Upper Rock, GCI and their subcontractors with respect to insurance applicable to the work. Within the VSA, there was also a waiver of subrogation clause. This waiver of subrogation clause barred subrogation claims between GRSI (as well as its affiliates, including GCI) and Red Coats.<\/p>\n\n\n\n<p>Approximately one month prior to completion of the project, a fire occurred within Building G of the project causing significant damage to the property. Subsequent to the fire, Upper Rock sued Red Coats and its security guard, Tamika Shelton. After settling with Upper Rock for $14 million (Red Coats paid $4 million of the settlement directly with the other $10 million being paid by insurance), Red Coats sued GCI for contribution. GCI, relying on the waivers of subrogation clause in the prime contract, filed a motion for summary judgment seeking dismissal of Red Coat\u2019s contribution claim. The trial court denied GCI\u2019s the motion, and after a trial, the jury awarded Red Coats $7 million in damages, GCI\u2019s pro rata share of the settlement amount.<\/p>\n\n\n\n<p>GCI appealed the lower court\u2019s decision on its motion for summary judgment. Discussing the waiver of subrogation clause in the prime contract, the Maryland Court of Special Appeals held that, because Red Coats was not a party to the contract and could not enforce its terms, the waiver of subrogation did not extinguish Red Coats\u2019 right of contribution. With respect to the waiver of subrogation clause in the VSA, the court held that it applied to Red Coats\u2019 claims against GCI and barred Red Coats\u2019 insurer from recovering the $10 million it contributed to the settlement. Accordingly, the court reduced the verdict to $2 million, which constituted half of Red Coats\u2019 out-of-pocket expense.<\/p>\n\n\n\n<p>Based upon the court\u2019s reading of the contract in conjunction with the UCATA, it is arguable that the court has left an opening for pursuing subrogation claims against parties not specifically named within a prime contract. If that was not the court\u2019s intent, then in the alternative, it is implicit in the court\u2019s holding that Red Coats was not a subcontractor within the meaning of the waiver of subrogation clause in the prime contract. Presumably, this was because Red Coats was hired after the fact by GRSI and not to perform any of the construction work related to the project.<\/p>\n\n\n\n<p>This case serves as a good reminder that contribution claims may be governed not only by a different subset of laws within respective jurisdictions but also by the terms of any applicable contracts. As such, practitioners should be aware that the mere presence of a waiver of subrogation clause may not preclude pursuit of a contribution claim.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Rahul Gogineni | The Subrogation Strategist | June 27, 2019 In&nbsp;Gables Construction v. Red Coats, 2019 Md. App. LEXIS 419, Maryland\u2019s Court of Special Appeals considered whether a contractual waiver of subrogation in the prime contract for a construction project barred a third party \u2013 a fire watch vendor hired to guard the worksite \u2013&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/applicability-of-waivers-of-subrogation-non-signatory-3rd-parties\/\">Continue reading <span class=\"screen-reader-text\">\u201cI Didn\u2019t Sign That!\u201d \u2013 Applicability of Waivers of Subrogation to Non-Signatory Third Parties<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[9895,224,234],"class_list":["post-896553","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-advise-consult","tag-construction-contract","tag-waiver-of-subrogation","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>\u201cI Didn\u2019t Sign That!\u201d \u2013 Applicability of Waivers of Subrogation to Non-Signatory Third Parties - Advise &amp; 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