Procedural Posture

Procedural Posture

Defendant, subcontractor to insured general contractor, challenged the decision of the Superior Court of Los Angeles County (California), which denied defendant’s motion for summary judgment made on the ground that the subrogation waiver incorporated by reference into the contract between general contractor and defendant barred plaintiff insurance agent’s claims against defendant.

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Overview

Defendant, subcontractor to insured general contractor, worked as the welding subcontractor on a construction project. A fire at the site damaged property of the general contractor. Plaintiff insurance agent reimbursed the general contractor, and the general contractor assigned all of its claims to plaintiff. Plaintiff sought subrogation from defendant, alleging breach of contract, negligence and related claims. Defendant unsuccessfully moved for summary judgment on the ground that the general contractor had waived its subrogation rights; therefore, plaintiff had no right to seek subrogation from defendant. The court reversed and ordered summary judgment in favor of defendant. The contract between the owner and the general contractor waived subrogation rights against each other; the contract between defendant and the general contractor did not address subrogation specifically, but it incorporated by reference the contract with the owner. The court held that the subrogation terms of the contract with the owner also applied to defendant, that the subrogation waiver was plain and unambiguous, and that it covered all of plaintiff’s claims.

Outcome

The court issued a peremptory writ of mandate commanding the trial court to vacate its order denying defendant’s, subcontractor to insured general contractor, motion for summary judgment and to enter summary judgment in favor of defendant because the subrogation waiver was plain and unambiguous, and covered all claims that plaintiff insurance agent might otherwise have had against defendant for breach of contract or negligence.

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