District Court in Utah Grants Summary Judgment for Contractor Against Insurance Subrogation Claim Based on Contractual Waiver Provision and Statute of Limitations

Aquatherm, LLC v. CentiMark Corp, 2019 BL 13240 (D. Utah Apr. 12, 2019)

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John H. Conrad

Stag II Lindon LLC and Stag Industrial Inc. (collectively “Stag”) owned a building in Lindon, Utah.  Stag contracted with CentiMark Corp. (“CentiMark”) to perform work on the building’s roof.  CentiMark’s work required it to manipulate, move, and reinstall existing heating cables on the roof.  Shortly after completion of the work, in March of 2014, a fire occurred on the roof which was traced to the location of heat tape, which CentiMark had removed and replaced.

Stag and certain building tenants filed insurance claims for the fire-related damage.  American Economy Insurance Co., Travelers Property Casualty Co., Liberty Mutual Insurance Company, and Hartford Fire Insurance Co. (collectively “Insurers”) paid in full for all damages.  In September of 2016, the Insurers sued CentiMark, in the name of Stag, as the building owner, and the tenants, via a subrogation action.  CentiMark filed a motion for summary judgment to dismiss the Insurers’ claims based on a claim waiver provision in its contract with Stag.  It also argued that the Insurer’s claim was time barred.  The court granted CentiMark’s motion.

CentiMark’s contract with Stag waived certain potential claims, as follows:

Section 5.5: Unless specifically precluded by [Stag]’s property insurance policy, [Stag] and [CentiMark] waive all rights against (1) each other… for damages caused by fire or other causes of loss to the extent covered by property insurance or other insurance applicable to the Work.

The court found that the language of Section 5.5 was complete, clear, and unambiguous.  The court also found that nothing within the insurance policies specifically precluded the waiver set forth in Section 5.5, and that the insurance policies applied to the Work and covered all of the damages that the Insurers sought to recover.  The court thus held that Section 5.5 waived Stag’s and the tenants’ claims.

CentiMark also based its motion on Utah’s statute of limitations, Utah Code § 78B-2-225, which provides:

Negligence-based actions against a “provider” are to be commenced within two years from the earlier of the date of discovery of a cause of action or the date upon which a cause of action should have been discovered through reasonable diligence.

The court found that for the purpose of the statute a “provider” includes any person providing construction, and an “improvement” includes the building of any structure.  The court also found that the Insurers conducted an investigation after the fire, which concluded in April of 2014.  The Insurers filed their lawsuit in September of 2016, which was more than two years from the date the Insurers’ discovered the facts supporting their claims.  Thus, the court held that Utah’s statute of limitations barred the Insurers’ claims.

The court ultimately granted CentiMark’s motion for summary judgment and dismissed all claims with prejudice.

To view the full text of the court’s decision, courtesy of Bloomberg Law, click here.