Bd. of Comm’rs v. Teton Corp., 3 N.E.3d 556, 2014 Ind. App. LEXIS 43 (Ind. Ct. App. 2014)
This action arose out of a repair and renovation project to the Jefferson County Courthouse in Madison, Indiana (the “Project”). The Jefferson County Board of Commissioners (the “Owner”) contracted with Teton Corporation (the “Contractor”) for the work. The parties’ agreement incorporated a form construction contract prepared by the American Institute of Architects (the “AIA Contract”). The AIA Contract required the Owner to provide builder’s risk insurance for the Project, or to notify the Contractor so that the Contractor could procure the insurance and pass the cost on to the Owner through a change order. The AIA Contract also provided for a mutual waiver of the right to subrogation between and among the Owner, Contractor, and all subcontractors. The Owner did not obtain separate property (or builder’s risk) insurance for the Project, instead relying on its existing property and casualty insurance policy. And, the Owner also did not inform the Contractor that it was not securing separate insurance for the Project.
During the renovations, a fire broke out, causing over $6 million in damage to the property, including damage beyond the scope of the Contractor’s “Work” as defined in the AIA Contract. After the Owner’s insurance company paid under the terms of its policy, the Owner sued the Contractor and its subcontractors for the damages. The Contractor moved for summary judgment. The Contractor argued that the Owner agreed to provide insurance for the Project, and the Owner waived its subrogation rights against the Contractor; therefore, the Owner was not entitled to recover damages from the Contractor that were caused by the fire. The trial court agreed with the Contractor and granted summary judgment. The Owner appealed.
Continue reading “Indiana Court of Appeals Holds Waiver of Subrogation Clause in Standard AIA Contract Not Limited to Damage to Contractor’s “Work””