Affilliated F M Insurance Co v. Slack
Filing
64
MEMORANDUM RULING re 31 MOTION for Partial Summary Judgment filed by Wieland Davco Corp. Signed by Judge S Maurice Hicks on 08/24/2015. (crt,McDonnell, D)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION
AFFILIATED FM INSURANCE CO.
CIVIL ACTION NO. 14-0661
VERSUS
JUDGE S. MAURICE HICKS, JR.
C. STEWART SLACK, ET AL.
MAGISTRATE JUDGE HAYES
MEMORANDUM RULING
Before the Court is a Motion for Partial Summary Judgment (Record Document 31)
filed by Defendant, The Wieland-Davco Corporation (“Wieland-Davco”). Wieland-Davco
seeks the dismissal with prejudice of all of the claims, demands, and causes of action
asserted by Plaintiff, Affiliated FM Insurance Company (“Affiliated FM”), against WielandDavco in excess of The Tire Rack, Inc.’s (“Tire Rack”) $100,000 insurance deductible. See
id. Affiliated FM has opposed the motion. See Record Document 33. For the reasons set
forth below, Wieland-Davco’s Motion for Partial Summary Judgment is GRANTED.
BACKGROUND
On March 1, 2011, Tire Rack entered into a lease (“the Lease”) with TenCal Shreve
Park, LLC (“TenCal”) for land, in addition to a building of 257,400 square feet yet to be
constructed. The building was to serve as Tire Rack’s tire distribution facility. Pursuant
to the Lease, Tire Rack was required to obtain property insurance for the building, its
fixtures anc contents located thereon:
…[Tire Rack] shall carry and maintain special causes of loss coverage
insurance covering the Building and all Building fixtures and systems for one
hundred percent (100%) of the full replacement value thereof, including
debris removal and demolition. Such insurance will provide coverage for
direct physical loss from special causes of loss. All policy proceeds shall be
payable to [TenCal] or at [TenCal’s] option [TenCal’s] mortgagee, provided
that all policy proceeds shall be utilized for the repair or replacement of the
Building . . .
...
[Tire Rack shall carry] [i]nsurance covering [Tire Rack’s] Work and all of [Tire
Rack’s] furniture and fixtures, machinery, equipment, stock and any other
personal property owned and used in [Tire Rack’s] business and found in, on
or about the Building, and any leasehold improvements to the Premises
made by [Tire Rack] . . .
Record Document 31, Exhibit 1 at AFFILIATED/TIRE RACK-000107 - 000108. The Lease
also contained a waiver of subrogation clause:
15.5 Waiver of Subrogation. [TenCal] and [Tire Rack] each waive any and
all rights to recover against the other or against the agents, employees and
contractors of such other party for any loss or damage to such waiving party
in excess of the deductible amounts arising from any cause covered by any
insurance required to be carried by such party pursuant to Section 15 or any
other insurance actually carried by such party to the extent of the limits of
such policy. [TenCal] and [Tire Rack], from time to time, will cause their
respective insurers to issue appropriate waiver of subrogation rights
endorsements to all insurance policies carried in connection with the
Premises or the contents of the Premises. [Tire Rack] agrees to cause all
other occupants of the Premises claiming by, under or through [Tire Rack],
to execute and deliver to [TenCal] such a waiver of claims and to obtain such
waiver of subrogation rights endorsements.
Id., Exhibit 1 at AFFILIATED/TIRE RACK-000109 (emphasis added).
Tire Rack obtained a policy of insurance from Affiliated FM that insured “against all
risks of direct physical loss or damage to the building and its contents.” Id., Exhibit 2. The
policy provided that Affiliated FM would “not acquire any rights of recovery that [Tire Rack]
has expressly waived prior to a loss.” Id., Exhibit 2 at AFFILIATED/TIRE RACK-000046.
Wieland-Davco entered into a Standard Form of Agreement Between Owner and
Design-Builder, AIA-Document A14-2004 (“Design-Build Agreement”), with TenCal on May
10, 2011 for the construction of the Tire Rack distribution center located at 5417 Campus
Drive in Shreveport, Louisiana. See id., Exhibit 3-A. The Design-Build Agreement also
contained a waiver of subrogation clause:
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§ A.11.4.7 Waivers of Subrogation. [TenCal] and [Wieland-Davco] waive
all rights against each other and any of their consultants, separate
contractors described in Section A.6.1, if any, Contractors, Subcontractors,
agents and employees, each of the other, and any of their contractors,
subcontractors, agents and employees, for damages caused by fire or other
causes of loss to the extent covered by property insurance obtained pursuant
to this Section A.11.4 or other property insurance applicable to the Work,
except such rights as they have to proceeds of such insurance held by the
Owner as fiduciary.
Id., Exhibit 3-A at 27. After Wieland-Davco entered into the Design-Build Agreement, it
entered into several agreements and contracts with design professionals and contractors
for the design and construction of the distribution center. See id., Exhibit 3.
A certificate of substantial completion was filed in the Caddo Parish mortgage
records on May 18, 2012. See id., Exhibit 3-B. On or about March 30, 2013, less than 2
years after the construction was completed, the roof of the distribution center collapsed,
causing substantial damage to Tire Rack.
Affiliated FM contends that the defendants were negligent in design and
construction of the roof drainage system and structural supporting members, which
allegedly led to the partial roof collapse. Affiliated FM filed the instant subrogation action
seeking recovery of $2,591,821, inclusive of Tire Rack’s $100,000 deductible, in payments
it made pursuant to the aforementioned insurance policy it issued to Tire Rack. In its
Motion for Partial Summary Judgment, Wieland-Davco seeks dismissal with prejudice of
all of the claims, demands, and causes of action asserted by Affiliated FM against
Wieland-Davco in excess of Tire Rack’s $100,000 insurance deductible.
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LAW AND ANALYSIS
I.
Partial Summary Judgment Standard.
Rule 56(a) provides, in pertinent part:
Motion for Summary Judgment or Partial Summary Judgment. A party may
move for summary judgment, identifying each claim or defense–or the part
of each claim or defense–on which summary judgment is sought. The court
shall grant summary judgment if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a
matter of law.
F.R.C.P. 56(a) (emphasis added); see also Quality Infusion Care, Inc. v. Health Care Serv.
Corp., 628 F.3d 725, 728 (5th Cir.2010).1 “A genuine issue of material fact exists when the
evidence is such that a reasonable jury could return a verdict for the nonmoving party.”
Quality Infusion Care, Inc., 628 F.3d at 728. “Rule 56[(a)] mandates the entry of summary
judgment, after adequate time for discovery and upon motion, against a party who fails to
make a showing sufficient to establish the existence of an element essential to that party’s
case, and on which that party will bear the burden of proof at trial.” Patrick v. Ridge, 394
F.3d 311, 315 (5th Cir.2004).
If the movant demonstrates the absence of a genuine dispute of material fact, “the
nonmovant must go beyond the pleadings and designate specific facts showing that there
is a genuine issue for trial.” Gen. Universal Sys., Inc. v. Lee, 379 F.3d 131, 141 (5th
Cir.2004). Where critical evidence is so weak or tenuous on an essential fact that it could
not support a judgment in favor of the nonmovant, then summary judgment should be
granted. See Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir.2005).
1
The Court notes that amended Rule 56 requires that there be “no genuine dispute
as to any material fact,” but this change does not alter the Court’s analysis. F.R.C.P. 56(a)
and Advisory Committee Notes.
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“A partial summary judgment order is not a final judgment but is merely a pre-trial
adjudication that certain issues are established for trial of the case.” Streber v. Hunter, 221
F.3d 701, 737 (5th Cir.2000). Partial summary judgment serves the purpose of rooting out,
narrowing, and focusing the issues for trial. See Calpetco 1981 v. Marshall Exploration,
Inc., 989 F.2d 1408, 1415 (5th Cir.1993).
II.
Waiver of Subrogation Clause.
Subrogation is the substitution of one person to the rights of another. See McAuslin
v. Grinnell Corp., No. CIV. A. 97-803, 1999 WL 203279, at *2 (E.D. La. Apr. 8, 1999), citing
La. C.C. Art. 1825. A subrogee has no greater rights than those of its subrogor. See id.,
citing Complaint of Admiral Towing and Barge Co., 767 F.2d 243, 250 (5th Cir.1985).
Thus, if an insured-subrogor is barred from bringing a particular claim, its subrogated
insurer may not bring that claim, even if the insurer refused to waive its subrogation rights.
See id.
There is no dispute that Affiliated FM can legally be subrogated to the rights of Tire
Rack, its insured. Yet, here, the fate of Affiliated FM’s claim against Wieland-Davco is
dependent on the interpretation of the waiver of subrogation clause quoted above. Thus,
the Court must determine whether the Lease barred Tire Rack, the subrogor, from bringing
a claim against TenCal’s contractor, Wieland-Davco, in excess of Tire Rack’s $100,000
deductible. If so, Tire Rack’s insurer and the subrogee, Affiliated FM, is also barred from
bringing such a claim. See McAuslin, 1999 WL 203279, at *2.
The Lease contract is the law between TenCal and Tire Rack. See Carriere v. Bank
of Louisiana, 95-3058 (La. 12/12/96), 702 So.2d 648, 666. It defines their respective rights
and obligations. See id. The Court finds that the waiver of subrogation clause in the
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Lease is clear and explicit. See La. C.C. Art. 2046; Kappa Loyal, LLC v. Plaisance
Dragline & Dredging Co., Inc., 03-124 (La.App. 5 Cir. 6/19/03), 848 So.2d 765, 769. It
clearly provides that TenCal and Tire Rack “each waive any and all rights to recover
against the other or against the agents, employees and contractors of each other party
for any loss or damage to such waiving party in excess of deductible amounts arising from
any cause covered by insurance required to be covered by such party pursuant to [the
Lease] or any other insurance actually carried by such party to the extent of the limits of
such policy.”
Record Document 31, Exhibit 1 at AFFILIATED/TIRE RACK-000109
(emphasis added). As a matter of law, this wording is clear, explicit and does not lead to
absurd consequences. Based on the waiver of subrogation clause, together with the
insurance requirements in the Lease, this Court finds that TenCal and Tire Rack’s intent
was to waive claims against each other and some classes of third parties, such as each
other’s contractors, for damage and losses to the building and contents covered by
insurance.
Wieland-Davco argues in its motion that it is a third party beneficiary to the waiver
of subrogation clause contained in the Lease. Affiliated FM has not challenged WielandDavco’s position on this point. Stipulations in favor of third persons, also known as
stipulations pour autrui, are favored under Louisiana law. See Andrepont v. Acadia Drilling
Co., 255 La. 347, 357, 231 So. 2d 347, 350 (1969).
There are “three criteria for
determining whether contracting parties have provided a benefit for a third party: 1) the
stipulation for a third party is manifestly clear; 2) there is certainty as to the benefit provided
the third party; and 3) the benefit is not a mere incident of the contract.” Joseph v. Hosp.
Serv. Dist. No. 2 of Parish of St. Mary, 2005-2364 (La. 10/15/06), 939 So. 2d 1206, 1212.
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Here, the Court finds that all three criteria are met because the waiver of subrogation
clause is clear and unambiguous; the benefit to contractors such as Wieland-Davco is
certain, as the waiver extends to all losses covered by insurance; and the inclusion of
“contractors” in the waiver of subrogation clause was a stipulated benefit.
In opposing the Motion for Partial Summary Judgment, Affiliated FM makes two
arguments. First, it argues that summary judgment is not proper because the record is
incomplete. More specifically, Affiliated FM contends that the copy of the Lease, Exhibit
1, upon which Wieland-Davco relies is not fully executed by both the landlord and tenant.
Next, it argues that Wieland-Davco has failed to establish that Affiliated FM had notice of
the waiver of subrogation provision. The Court finds both of these arguments to be
unconvincing.
There is no dispute that the Lease attached as Exhibit 1 to Wieland-Davco’s motion
is unsigned by the Landlord, TenCal.
See Record Document 31, Exhibit 1 at
AFFILIATED/TIRE RACK-000126. However, the Court notes that Wieland-Davco, as part
of its reply, has produced a signed copy of page 41 of the Lease, which bears the
signatures of a representative of Tire Rack and a representative of TenCal. See Record
Document 34, Exhibit 4.
Wieland-Davco has also submitted the “All Purpose
Acknowledgment” dated March 2, 2011, which notarized the signature of TenCal’s
representative to the Lease. See id., Exhibit 5. Therefore, this Court finds that there is
now a fully executed Lease - and the waiver of subrogation clause therein - as part of the
summary judgment record.
Affiliated FM contends that summary judgment is inappropriate because WielandDavco has no presented no evidence that Affiliated FM had knowledge of or consented to
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the waiver of subrogation provision. This argument fails, as Affiliated FM relies upon a
Pennsylvania case and an Eastern District of Louisiana admiralty case to support this
contention, but ignores Louisiana case law upholding waiver of subrogations clauses
contained in construction contracts and leases. See Gray Ins. Co. v. Old Tyme Builders,
Inc., 2003-1136 (La. App. 1 Cir. 4/2/04), 878 So. 2d 603, 605 (La. Ct. App.), writ denied,
2004-1067 (La. 6/18/04), 876 So. 2d 814 & McAuslin, 1999 WL 203279. Neither of these
Louisiana cases limit the application of waiver of subrogation clauses to only those cases
in which the insurer had notice of or consented to the waiver.
This Court finds that the undisputed material facts establish that TenCal and Tire
Rack expressly agreed to a waiver of subrogation clause that included any and all claims
against each other and their contractors, such as Wieland-Davco, “in excess of deductible
amounts arising from any cause covered by any insurance” for loss or damage to the
building and its contents. Consequently, Affiliated FM has no greater rights against
Wieland-Davco than Tire Rack. Affiliated FM’s potential recovery against Wieland-Davco
is limited to Tire Rack’s $100,000 deductible.
CONCLUSION
Based on the foregoing, this Court finds that Affiliated FM has failed to raise a
genuine dispute as to any material fact concerning the enforceability of the waiver of
subrogation clause. Wieland-Davco is entitled to judgment as a matter of law and
dismissal with prejudice of all claims, demands and causes of action Affiliated FM has
asserted against it in excess of Tire Rack’s $100,000 deductible.
Accordingly,
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IT IS ORDERED that the Motion for Partial Summary Judgment (Record Document
31) filed by Wieland-Davco be and is hereby GRANTED. All of the claims, demands and
causes of action Affiliated FM has asserted against Wieland-Davco in excess of Tire
Rack’s $100,000 deductible be and are hereby DISMISSED WITH PREJUDICE.
THUS DONE AND SIGNED, in Shreveport, Louisiana, this 24th day of August,
2015.
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