The Subrogation Strategist

Often times, subrogation practitioners take the “kitchen sink” approach when pursuing claims: they name all potentially liable parties under all available legal theories and whittle down from there. With construction defect cases in particular, the difficulty of identifying exactly who did what and which contractual provisions have which effect can lead to the decision to throw everything against the wall and see what sticks. However, in some cases, dealing with the ensuing motion practice from that approach just is not worth it.

In Proe, et. al. v. Diamond Homes et. al., 2025 OK Civ. App. 18, the Court of Appeals of Oklahoma (Appellate Court) took a restrictive approach when analyzing the plaintiffs’ various claims. In limiting both who the plaintiffs could sue and under which theories, it reigned in the plaintiffs’ ability to cast a wide net.

The plaintiffs (collectively, the Proes) originally sued the defendants based on a dispute over the construction of their residential home. In July of 2017, Diamond Homes, through Mike Emery, entered into a construction contract with the Proes to build a new home. Despite issues with the home’s foundation, the Proes moved into the home on July 5, 2018. They then began correcting the defects.

The Proes filed suit in Oklahoma District Court, where a bench trial resulted in a judgment against Denny Emery d/b/a Diamond Homes on the breach of contract claim. The court found in favor of Mike Emery on the breach of contract claim and against all defendants for the plaintiffs’ negligence claims. The plaintiffs raised both judgments against them as issues on appeal and the Appellate Court affirmed.

First, the Proes claimed that the lower court erred in finding that Mike Emery was not a co-owner of Diamond Homes. Despite the Proes’ claim that the Emery brothers acted as partners, the court looked to the facts and found that they were not. Specifically, Denny paid Mike a pre-determined amount, not a share of the profits, which is typical of an employer/employee relationship. In addition, Mike did not sign the material and labor affidavits, did not employ others and did not pay for materials with money he received from Diamond Homes. Thus, even though he supervised the construction and was a brother to the owner of Diamond Homes, he was not an owner himself and could not enter into a contract with the Proes.

The court also found no basis for the Proes’ negligence claims against the defendants. Conducting its own “gist of the action” type analysis, the court said that while it is possible to prove an independent basis for a tort duty, negligent lack of diligence is simply proof of the breach of implied duties in the contract. Finding nothing in the actions of Denny Emery or the ensuing damages that went beyond the scope of the contract, the court found no independent tort claim. Furthermore, holding that Mike Emery was insulated from liability due to his standing as an agent of Diamond Homes, there was no tort theory against him either.

While all analysis should be done on a case-by-case basis, the two holdings in the case are examples of why subrogation practitioners should carefully consider who they name as defendants and how to plead complaints before filing suit. While casting the widest net possible may seem like the safest approach, if there is damaging case law against doing so in the relevant jurisdiction, pursuing extraneous claims may be a waste of time and money. If such claims fly directly in the face of prevailing precedent, pursuing them may even be sanctionable.