Federal District Court in Illinois Holds “All Risk” Insurer’s Claim Against Contractor For Breach Of Contract And Negligence Defeated By A Waiver Of Subrogation With Respect To “[Insurance] Carried Or Required To Be Carried Pursuant To This Agreement” – Rejects Insurer’s Interpretation As To Scope Of Waiver As Too Restrictive – Indemnity Claim Survives

Federated Dep’t Stores, Inc. v. M.J. Clark, Inc.
2007 U.S. Dist. LEXIS 51826 (N.D. Ill. July 17, 2007)

After a flood caused by a leak in the sprinkler system during remodeling at a Bloomingdale’s store in Chicago damaged the first five floors of the store, plaintiffs, Bloomingdale’s and its owner Federated, sued defendant contractor, subcontractor, and building manager for breach of contract, negligence, and indemnification.

The agreement between the contractor and owner provided the contractor agreed to indemnify the owner. It further provided that each party waived all rights against the other for any loss or damage “for which property insurance is carried or required to be carried pursuant to [the parties’] Agreement.” Specifically excepted from the waiver were the contractor’s indemnification responsibilities. During the time of the flood, the owner was covered by an “all risk” insurance policy. Among other things, the policy excluded ordinary wear and tear and errors in design or faulty workmanship. Continue reading “Federal District Court in Illinois Holds “All Risk” Insurer’s Claim Against Contractor For Breach Of Contract And Negligence Defeated By A Waiver Of Subrogation With Respect To “[Insurance] Carried Or Required To Be Carried Pursuant To This Agreement” – Rejects Insurer’s Interpretation As To Scope Of Waiver As Too Restrictive – Indemnity Claim Survives”

Federal Circuit Court of Appeals Reverses ASBCA Holding That ROICC Was Authorized to Commit Government To Compensable Contract Changes

Donald C. Winter v. CATH-DR/BALTI JOINT VENTURE
2007 U.S. App. Lexis 19565 (Fed. Cir., August 17, 2007)

The United States Court of Appeals for the Federal Circuit (“CAFC”) affirmed in part, reversed in part, and vacated and remanded in part the United States Armed Services Board of Contract Appeals (“ASBCA”) decision that CATH-dr/Balti Joint Venture (“CATH-Balti”) was entitled to an equitable adjust for contract modifications, issued by the Resident Officer in Charge of Contracts (“ROICC”), that called for work not covered under its contract with the United States Navy (“Navy”). The primary basis for reversal was the unambiguous language of the Federal Acquisition Regulation (“FAR”), e.g., 48 C.F.R. § 1.601(a) and 48 C.F.R. § 43.102, Defense Federal Acquisition Regulation Supplement (“DFARS”), 48 C.F.R. § 201.602-2, and FAR Clause 48 C.F.R. § 52.243-4 (Changes Clause), DFARS Clause 48 C.F.R. § 52. 201-7000 (Contracting Officer’s Representative), and Naval Facilities Engineering Command (“NAVFAC”), 5252.201-9300 (Contracting Officer Authority) and 5252.242-9300 (Government Representatives), which were incorporated into the contract and clearly indicated that the ROICC did not have the authority to change the scope of work or authorize compensable changes. Continue reading “Federal Circuit Court of Appeals Reverses ASBCA Holding That ROICC Was Authorized to Commit Government To Compensable Contract Changes”

Fourth Circuit Court of Appeals Holds Owner’s Negligence Cause of Action Against Subcontractor Barred by the Economic Loss Rule

Dur v. Western Branch Diesel, Inc.
2007 U.S. App. LEXIS 16237 (4th Cir. July 9, 2007)

Following the precedent of the Supreme Court of Virginia in Sensenbreunner v. Rust. Orling & Neale, Architects, Inc., 374 S.E.2d 55 (Va. 1988), the Fourth Circuit Court of Appeals upheld the district court’s grant of a motion for summary judgment. The Court held that damage to an owner’s boat caused by an electrical fire fell within the scope of the contract between the owner’s general contractor and the subcontractor and amounted to nothing more than economic loss, which barred the owner from maintaining a cause of action for negligence against the subcontractor. Continue reading “Fourth Circuit Court of Appeals Holds Owner’s Negligence Cause of Action Against Subcontractor Barred by the Economic Loss Rule”