On Friday, the First District Court of Appeal issued an opinion that vindicated a waiver and release of a contractor as signed by a condo association.
A straightforward decision, but the concurring opinion reveals facts important to associations and homeowners alike.
In Landmark American Insurance Co. v. Santa Rosa Beach Development Corp I, a condominium development suffered structural damages allegedly caused by Hurricanes Ivan and Dennis. The insurance claim developed into a lawsuit, wherein the insurer attempted to join the developer and general contractor, alleging property defects stemming from the original construction two years before the hurricanes.
Santa Rosa County’s Judge Marci Goodman, in reading certain release provisions contained in repair contracts, let the developer and general contractor off the hook. Specifically, the development suffered water intrusion damage due to problems with exterior cladding, which the developer and contractor agreed to repair.
The repair contract release stated, in pertinent part, as follows:
Association … shall proceed directly against the manufacturer and applicator in the event any claim arises with respect to the sufficiency or adequacy of such repairs, or otherwise arising out of or relating to such repairs in any way, and shall make no claim against Developer or Contractor with respect thereto.
… Association … will not sue or seek any relief whatsoever against Developer or Contractor … for the conditions which Developer undertakes herein to correct.
In a broad release, the Developer and Contractor protected themselves against claims based both on their repairs and their original workmanship. The First DCA upheld the trial court’s conclusion that this release protected the Developer and Contractor.
In a special concurrence, Judge Makar indicated that this holding gives strength to a claim by an insurer against the insured for breach of the insurance contract. The wrongful impairment of an insurer’s right to subrogate may act as a complete defense to an action on the policy.
The warning is clear: beware of construction and repair contracts after you obtain your property owner’s policy. To the extent those contracts contain waivers of any rights against the contractor, you may be breaching your own insurance policy and might find yourself out in the cold when disaster strikes.
As discussed in Dennis Wall’s insurance law blog, an Iowa appellate court also addressed the issues presented last week and ruled similarly, holding that waivers in the contractor’s documents impaired the insurer’s subrogation rights.