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Great American Insurance Co. of New York v. Superior Contracting Corporation

United States District Court, N.D. Indiana, Hammond Division

November 4, 2014

GREAT AMERICAN INSURANCE COMPANY OF NEW YORK, subrogee, and SERENITY LAKE SENIOR LLC, Plaintiffs,
v.
SUPERIOR CONTRACTING CORPORATION, d/b/a AMERICAN NATIONAL INSULATION, FIRE PROS INC., ECONOMIDES ARCHITECTS LLC, C.D. BARNES ASSOCIATES INC., Defendants.

OPINION AND ORDER DENYING MOTIONS TO DISMISS

PHILIP P. SIMON, Chief District Judge.

Serenity Lake Senior LLC contracted with the defendants to have a senior independent living facility built in Gary, Indiana. The winter after the facility was completed, the sprinkler system pipes froze and burst, causing damage to the building and its contents. Serenity's insurer (Great American) paid on Serenity's claim for the damage. Great American, as Serenity's subrogee, and Serenity sued a number of parties and two of those defendants, Economides Architects and Superior Contracting Corporation, now seek dismissal on the grounds that the complaint fails to state a claim. For the reasons stated herein, I DENY both Economides's and Superior's Motions to Dismiss for Failure to State a Claim. (DE 16, 21.)

Factual Background

Serenity hired Barnes Associates as Construction Manager and General Contractor for the construction of a senior citizen independent living complex. (Compl. ¶ 12.) Economides was the architect for the facility, and Serenity alleges that it was responsible for designing and specifying the insulation necessary to protect the sprinkler pipes from freezing and bursting. (Compl. ¶ 16.) Barnes hired Superior Contracting and Fire Pros as subcontractors to handle insulation and sprinkler design. (Compl. ¶ 13.) Fire Pros installed a wet sprinkler system on the ceiling of the third floor of the facility, its top floor. (Compl. ¶ 14.) Superior installed insulation in the facility's attic and the third floor ceiling under and over the sprinkler piping such that, Serenity alleges, the sprinkler pipes weren't properly protected. (Compl. ¶ 15.) Serenity further alleges that Fire Pros didn't check the insulation around the pipes immediately after installation, but certified the system ready to go nonetheless, and despite having the contract to do maintenance on the sprinkler system didn't ever notice the insulation issues. (Compl. ¶¶ 17-20.) Barnes also did inspections during construction, and didn't discover the insulation issues. (Compl. ¶ 21.)

During the winter after the facility was completed, in January 2012, the pipes froze and burst. (Compl. ¶ 22.) The broken pipes leaked water, which caused substantial damage, some of which was insured for and some of which wasn't. (Compl. ¶¶ 23-24.) Great American paid Serenity $200, 833.90, and then became Serenity's subrogee for those payments. (Compl. ¶ 25.) Serenity alleges that it suffered uninsured loss of $30, 000, as well as loss of business income. (Compl. ¶ 24.) Great American and Serenity sued the parties who had a hand in designing and building the facility and the errant sprinkler system - Economides (the architect), Barnes (the general contractor), and Superior and Fires Pros (the subcontractors). (DE 4.) The ten claims sound in res ipsa loquitur (against Barnes, Superior and Fire Pros), negligence (against all four defendants), breach of an implied warranty of workmanship (against Superior and Fire Pros), and breach of express contract (against Barnes). Barnes also filed cross-claims against Fire Pros and Superior Contracting. (DE 37.) Presently before the Court are motions to dismiss for failure to state a claim filed separately by Economides and Superior Contracting. (DE 16 and 21, respectively.)

The contract between Serenity and Economides addresses the sprinkler system:

SERVICES DO NOT INCLUDE the following; therefor, if required, shall be billed to the Owner:
...
* Fire Suppression design and drawings if needed.

(DE 18 Ex. 1 at 3.) It also addresses Economides's responsibilities for overseeing the contractors performing the work of building the facility:

CONSTRUCTION: The Architect shall not have control over or charge of and shall not be responsible for construction means, methods, techniques, sequences or procedures, or for safety precautions and programs in connection with the Work, since these are solely the Contractor's responsibility. The Architect shall not be responsible for the Contractors schedules or failure to carry out the Work in accordance with the Contract Documents. The Architect shall not have control over or charge of acts or omissions of the Contractor, Subcontractors, or their agents or employees, or of any other persons performing portions or ( sic ) the Work.

(DE 18 Ex. 1 at 4-5.) However, Economides was responsible for visiting the construction site to determine compliance with the "Contract Documents":

ARCHITECT'S BASIC SERVICES for the Project shall include the following:
...
* Periodic Site Visits for the determination of compliance with the Contract Documents. Construction observation services shall be as set forth in the [Indiana Housing & Community Development Authority ("HCDA")] General Conditions of the Contract, which shall ...

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