342 P.3d 1135
Utah Ct. App.2015Background
- Hemingways hired Anderson in Oct 2010 to remodel kitchen/sun room; Agreement defined Work and required Hemingways to carry insurance for the Work; Article 12.4 waives all rights against each other for fire damages to the extent covered by Article 12 insurance; a fire during construction damaged Work and Non-Work portions of the home; Liberty Mutual paid Non-Work damages and pursued subrogation against Anderson; district court granted summary judgment favoring Anderson under a source-of-coverage reading; dispute whether the Hemingways’ policy actually covered the Work under Article 12.1; court remanded to determine coverage first and then the waiver’s scope; appeal by Hemingways followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of Article 12.4 waiver for subrogation | Waiver applies only to damages covered by insurance for the Work, requiring Work coverage. | Waiver bars all damages paid under the owner-provided policy, including Non-Work if covered. | Remanded to resolve whether the preexisting policy covers the Work. |
| Whether Utah should adopt source-of-coverage or type-of-damages approach | Advocates the type-of-damages approach focusing on Work vs Non-Work. | Advocates the source-of-coverage approach tying waiver to insurance that covers the Work. | Remanded; court declined to resolve the approach without first resolving Work coverage. |
| Whether the preexisting homeowners’ policy constitutes Article 12.1 coverage | Liberty Mutual policy did not cover the Work; Hemingway did not obtain separate Work coverage. | The Liberty Mutual policy was the insurance contemplated by Article 12.1. | Remanded to determine the policy’s scope of coverage for the Work. |
Key Cases Cited
- Trinity Universal Ins. Co. v. Bill Cox Constr., Inc., 75 S.W.3d 6 (Tex. App. 2001) (majority approach; source of coverage vs type of damages distinction)
- Allen County Pub. Library v. Shambaugh & Son, LP, 2 N.E.3d 132 (Ind. Ct. App. 2014) (indicates waiver scope hinges on insurance covering the Work; partial coverage possible)
- Sellen Constr. Co. v. Public Emps. Mut. Ins. Co., 740 P.2d 913 (Wash. Ct. App. 1987) (ripeness and interpretation of waiver in construction contracts)
- Haemonetics Corp. v. Brophy & Phillips Co., 501 N.E.2d 524 (Mass. App. Ct. 1986) (presence of preexisting policy contemplated to cover Work; waiver scope analyzed under policy)