(November 2023 George Bogris, Esquire)

On November 13, 2023, the Brockton Division Superior Court in Massachusetts granted a Joint Motion for Summary Judgement in Bare Cove Investors, LLC vs. Callahan, Inc. & others, Civil Action #2283CV00104, holding that the Plaintiff waived any claims for damages under a contractual waiver of subrogation.  George Bogris of Murphy Sanchez, PLLC’s Fire & Life Safety Practice was counsel to Platinum Fire Protection & Services, LLC and argued the Joint Motion at the hearing on September 22, 2023.

Plaintiff Bare Cove Investors, LLC (“BCI”) owned a residential apartment complex in Massachusetts known as the Bare Cove Apartments (“the Cove”). In January 2018, BCI and Cube 3 Studio, LLC (“Cube”) executed an agreement under which Cube was to be the architect for the Cove construction project (“the Project”).

On November 17, 2018, Cube retained Wozny/Barbar & Associates, Inc (“WBA”) as a design subconsultant tasked with providing various professional engineering services for the Project. On February 9, 2018, Cube and WBA issued the Construction Document specifications for the fire protection scope of work used to solicit bids for the general contractor. WBA designed and engineered the fire suppression system for the Cove.

On February 22, 2019, BCI and Callahan, Inc. executed a Standard Form of Agreement (“General Contract”) naming Callahan as the general contractor for the Project. The General Contract expressly incorporated the AIA General Conditions. The “Contract Documents” included the General Conditions and Cube’s drawings and specifications.

On May 4, 2018, Callahan contracted with Platinum Fire Protection & Services, LLC (“Platinum”) to be the fire protection system installation subcontractor for the Project. On October 8, 2018, Platinum submitted shop drawings depicting a proposed layout of the fire protection system. On October 24, WBA returned the approved shop drawings to Platinum and Callahan, though subject to certain comments and suggestions. WBA made comments on the shop drawings that related to freeze protection. WBA recommended the use of side wall sprinklers and piping in Unit 1328. However, no revised shop drawings were prepared prior to construction. It was argued in the case that the fire suppression system in Unit 1328 that the sprinklers did not comply with the shop drawing review and was located in an unheated space that was subject to freezing.

On October 24, 2018, Callahan hired Quality Insulation and Building Products of Massachusetts, Inc. (“Quality”) to be the insulation installation subcontractor for the Project. WBA, Platinum, and Quality were tasked with performing certain scopes of work within the Contract documents for the Project, including the General Conditions. On March 27, 2020, WBA stamped and submitted its Final Construction Control Documents, documenting the completion of construction on the Project, and shortly after, BCI began accepting residential tenants for occupancy of the Cove in May of 2020.

On February 2, 2021, a section of the fire suppression system pipe located above the ceiling of unoccupied Unit 1328 on the third floor of Building I cracked, causing water to flow into that apartment, twenty-five adjacent and lower apartments, three common area hallways, and the underground garage ceiling. The cracked pipe was caused by water in the fire suppression system freezing; when the temperature surrounding the frozen pipe warmed, an ice block which had formed around the CPVC piping system thawed and allowed water to flow out of cracks in the pipe. The water damage caused BCI to incur property damage, lost rents, and extra expenses. BCI’s insurers compensated BCI for the damages incurred.

This action to recover was filed by BCI on February 9, 2022, alleging negligence by Callahan, Platinum, Cube, WBA, and Quality, respectively, as well as a breach of contract claim against Callahan. BCI’s insurers paid to BCI $862,407.75 and BCI incurred $28,375 in deductible payments.

The defendants filed their joint Motion for Summary Judgment, contending that all of BCI’s claims in the lawsuit were barred by the subrogation waiver in Section 11.3.7 of the General Conditions.  BCI argued that Section 11.3.7 did not bar its contract claim against Callahan, and made various arguments against each of the other defendants in order to avoid summary judgment on the negligence counts asserted against all defendants.

In looking at the relevant agreements, the waiver in the General Conditions provided that BCI and Callahan would “waive all rights against (1) each other. . . for damages caused by fire or other causes of loss to the extent covered by property insurance … obtained pursuant to Section 11.3 or other property insurance applicable to the work”. Citing MiddleOak Ins., Co v. Tri-State Sprinkler Corp., 77 Mass. App . Ct. 336, 337 n.3 (2010), the Court noted that “such a waiver of subrogation provision serves as an allocation of risk between the parties and reflects their intent to relieve each other of liability and look only to the insurer to bear the risk of the loss”, and such a “… waiver of subrogation applies to both losses that occur during construction and post construction losses. Thus, the Court held that the plain language of the waiver of subrogation section precluded BCI from pursuing claims against Callahan.

As for the Subcontractor Defendants (Platinum and Quality), BCI argued that the General Contract waiver of subrogation provision did not inure to the benefit of the subcontractors claiming that the provision required BCI and Callahan to waive subrogation only against their own subcontractors, but not the other’s subcontractors. The Court held that the clear language of the provision extended the waiver to the subcontractors of each other and that BCI had no viable claims as a result of the subrogation waiver found in the General Conditions of the Contract between BCI and Callahan, which provision provided:

The Owner and Contractor waive all rights against (1) each other and any of their subcontractors, sub-subcontractors, agents and employees, each of the other, ….

 BCI also contended that the subcontracts that Callahan had with Platinum and Quality included a waiver of subrogation provision that did not require BCI to waive its claims against subcontractors and that therefore there was an ambiguity between the General Contract and the Subcontracts. The relevant section read:

The Contractor and Subcontractor waive all rights against each other and against the Owner, the Architect, separate contractors and all the other subcontractors for damages caused by the fire or other perils to the extent covered by property insurance provided by Owner under the General Conditions to the General Contract, except such rights as they may have to the proceeds of such insurance.

BCI argued this section was ambiguous when considered with the General Contract. The subcontractors argued that there was no ambiguity because BCI could not waive subrogation in a contract to which it was not a party and that the General Contract that Callahan had with BCI required Callahan to obtain this waiver from its subcontractors. The Court agreed with the subcontractor defendants finding that the language was “clear and unambiguous” and that there was no contradiction between the contracts.  The Court dismissed the action against all Defendants.