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Board of Comm'rs of County of Jefferson v. Teton Corp.

Supreme Court of Indiana

May 13, 2015

THE BOARD OF COMMISSIONERS OF THE COUNTY OF JEFFERSON, Appellant (Plaintiff),
v.
TETON CORPORATION, INNOVATIVE ROOFING SOLUTIONS, INC., GUTAPFEL ROOFING, INC., AND DANIEL L. GUTAPFEL, Appellees (Defendants)

Appeal from the Scott Circuit Court, No. 72C01-1108-CT-15. The Honorable Roger L. Duvall, Judge. On Petition to Transfer from the Indiana Court of Appeals, No. 72A04-1302-CT-55.

FOR APPELLANT: Julia Blackwell Gelinas, Maggie L. Smith, Frost Brown Todd LLC, Indianapolis, Indiana.

FOR TETON CORPORATION, APPELLEE: Richard T. Mullineaux, Crystal G. Rowe, Dustin L. Howard, Kightlinger & Gray, LLP, New Albany, Indiana.

FOR INNOVATIVE ROOFING SOLUTIONS, INC., APPELLEE: Scott L. Tyler, Eric T. Eberwine, Waters, Tyler, Hofmann & Scott, LLC, New Albany, Indiana.

FOR GUTAPFEL ROOFING, INC. AND DANIEL L. GUTAPFEL, APPELLEES: Grover B. Davis, James T. Flanigan, McClure McClure & Davis, Indianapolis, Indiana.

Rush, Chief Justice. Dickson, Rucker, David, and Massa, JJ., concur.

OPINION

Page 712

Rush, Chief Justice.

Property owners and contractors routinely agree to waive subrogation rights for damages. Here, the parties did so by incorporating an American Institute of Architects (" AIA" ) standard form into their contract for the repair of the Jefferson County courthouse. While the repairs were underway, a fire severely damaged the courthouse. The AIA contract waives subrogation rights for all " damages caused by fire or other perils to the extent covered by property insurance." The parties now dispute the meaning of the subrogation waiver. Owner seeks to subrogate all damages unrelated to repairs, arguing that the subrogation waiver applies only to construction-related damages. Contractor argues that all damages covered by Owner's property insurance policy are waived. Both parties cite other states' precedent to support their position, and the decision below created a split of authority in our own Court of Appeals. We granted transfer in this matter of first impression to establish the Indiana approach.

We hold the plain meaning of the contract defines the scope of the waiver based on the extent and source of coverage, not the nature of the property damaged. Accordingly, we agree with the majority of jurisdictions that have applied this plain meaning to bar recovery for all damages covered by the same property insurance policy used to cover construction-related damages--commonly referred to as the

Page 713

" any insurance" approach. Because Contractors have shown that Owner's insurance covered all damages, the subrogation waiver applies to bar Owner's claim. Accordingly, we affirm summary judgment in favor of Contractors.

Standard of Review

On summary judgment, our appellate review is de novo. Schwartz v. Heeter, 994 N.E.2d 1102, 1105 (Ind. 2013). The meaning of the subrogation waiver is " particularly well-suited for de novo appellate review" because, like all matters of contract interpretation, it presents a pure question of law. Holiday Hospitality Franchising, Inc. v. AMCO Ins. Co., 983 N.E.2d 574, 577 (Ind. 2013). Here, that question is whether we should interpret the subrogation waiver according to either (1) the " Work versus non-Work" approach, under which the Owner waives subrogation only for losses related to " the Work" (i.e., the contracted-for construction and services); or (2) the " any insurance" approach, under which the Owner waives subrogation for all losses covered by Owner's insurance policy " applicable to the Work," regardless of whether the damage was to work or non-work property.

Facts and Procedural History

On May 20, 2009, a fire destroyed much of the Jefferson County courthouse, located in Madison, Indiana. Jefferson County alleged that the fire began while Daniel Gutapfel--a roofing subcontractor--was soldering copper downspouts near the wood frame of the courthouse as part of a four-phase plan to remodel and renovate the entire building. The damages far exceeded the remodeling costs, but were fully covered by Jefferson County's property insurer, which paid ...


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