The Subrogation Strategist

In American Fam. Ins. Co. v. NB Elec., Inc., No. A24-0377, 2025 Minn. App. LEXIS 12, the Court of Appeals of Minnesota (Court of Appeals) considered whether an insurer’s subrogation action was time barred under Minnesota’s two-year statute of limitations period. At issue was whether the statute of limitations began to run when the insured homeowner terminated the general contractor or when construction, with a new general contractor, was complete. Because the construction project did not terminate upon the replacement of the general contractor, the Court of Appeals found ... Continue Reading

In Gallery Community Association v. K. Hovnanian at Gallery LLC, No. 1 CA-CV 23-0375, 2024 Ariz. App. Unpub. LEXIS 696 (Ct. App.), the Court of Appeals of Arizona (Court of Appeals) discussed whether a homeowners’ association can file an action for breach of the implied warranty of workmanship and habitability arising from construction defects. At issue was whether the implied warranty extended to the areas within the community that the association maintained, including the common areas. The Court of Appeals held that homeowners’ associations can sue builder-vendors for breach of the implied warranty arising from construction defects.Continue Reading

In Mutual Benefit Ins. Co. a/s/o Michael Sacks v. Koser, No. 1340 MDA 2023, 2023 Pa. Super. LEXIS 574, 2023 PA Super 252 (Mutual Benefit), the Superior Court of Pennsylvania discussed whether a landlord’s property insurer could file a subrogation action against tenants that had negligently damaged the landlord’s property. Despite there being more than one clause in the lease holding the tenants liable for the damages, the court held that because there was a provision requiring the landlord, not the tenants, to insure the leased building, the insurer could not subrogate against the tenants.

In Pennsylvania, a tenant’s liability for damage to a leased premises in a subrogation action brought by a landlord’s insurer is determined by the reasonable expectation of the parties to the lease agreement. Under this approach, to determine if subrogation is permitted, the court considers the circumstances of the case and examines the terms of the lease agreement.

In United States Automatic Sprinkler Corporation v. Erie Insurance Exchange, et al., No. 2SS-CT-264, 2023 Ind. LEXIS 105, the Supreme Court of Indiana (Supreme Court) reversed an order of the trial court that denied a motion for summary judgment filed by a sprinkler contractor. At issue was whether commercial tenants – one who contracted with the sprinkler contractor and others who did not – could recover for their respective property damages. The court held that under the contract’s subrogation waiver and agreement to insure, the contracting tenant waived its insurer’s rights to recover through subrogation. With respect to the non-contracting tenants, who sought to recover only property damages, the court held that the absence of contractual privity barred their recovery.

The case centered around a sprinkler system that malfunctioned and flooded the Sycamore Springs Office Complex (Landlord), causing extensive property damage to four commercial tenants. Surgery Center, one of the four tenants, requested permission from the Landlord to install a sprinkler system inside the building. Landlord agreed, in exchange for Surgery Center agreeing to be solely responsible for maintaining the sprinkler system. Surgery Center hired United States Automatic Sprinkler (Automatic Sprinkler) to both install and conduct periodic inspection and testing of the sprinkler system. The contract terms outlined the scope of work to be performed by Automatic Sprinkler and the work was limited to the inspection and testing of the sprinkler system. Although repairs and emergency services were excluded from the contract, each could be performed upon the request and authorization of Surgery Center for an additional cost. The contract also contained certain risk allocation provisions including a waiver of subrogation and an agreement to insure.Continue Reading

In a recent unpublished opinion, Hale v. Bassette, No. HHD-CV-20-6124046-S, 2022 Conn. Super. LEXIS 2292, the Superior Court of Connecticut held that the plaintiff was entitled to recover building code upgrade costs associated with repairing a 150-year-old home damaged by the defendant’s negligence. In reaching its decision, the court applied the eggshell plaintiff doctrine, a legal principle that is more commonly applied in personal injury actions.  The doctrine says that a negligent defendant takes the injured plaintiff as he or she is found, making the defendant responsible for any injury that is magnified by the plaintiff’s pre-existing condition or injury.  The court found the fact that the home was 150 years old and susceptible to greater damage did not relieve the defendant of its obligation to make the plaintiff whole.Continue Reading

In United States Automatic Sprinkler Corp. v. Erie Ins. Exch., et al., No. 21A-CT-580, 2022 Ind. App. LEXIS 87 (Automatic Sprinkler), the Court of Appeals of Indiana (Court of Appeals) considered whether there is a privity requirement for property damage claims against contractors. The court imposed a privity requirement. The court also addressed whether a subrogation waiver in a contract with a tenant applied to damage caused by work done outside the contract, at the landlord’s request. The court held that the waiver did not apply.Continue Reading