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No Signature, No Problem: Texas Court Holds Contractual Subrogation Waiver Still Enforceable


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In Chubb Lloyds Inc. Co. of Tex. v. Buster & Cogdell Builders, LLC, No. 01-21-00503-CV, 2023 Tex. App. LEXIS 676, the Court of Appeals of Texas, First District (Court of Appeals) considered whether the lower court properly dismissed the plaintiff’s subrogation case by enforcing a subrogation waiver in a construction contract which was not fully executed.  The contract was signed by only one of the two subrogors and was not signed by the defendant general contractor.  The Court of Appeals affirmed the trial court’s decision, holding that despite the lack of signatures, the evidence established mutual assent to the contractual terms by all parties.

The plaintiff’s subrogors, Jeffrey and Mary Meyer (collectively, the Meyers), retained defendant Buster & Codgell Builders (BCB) to expand their residence.  BCB drafted a contract using the American Institute of Architects (AIA) standard form contract for residential construction.  The AIA contract included, by reference, a subrogation waiver that applied to BCB and its subcontractors.  Prior to beginning the work, BCB emailed Jeffrey Meyer a version of the contract that only had one signature block for both Jeffrey and Mary Meyer.  Minutes later, BCB sent a second version of the contract which had a signature line for each of the Meyers.  However, Jeffrey Meyer signed the first version of the contract and emailed it back to BCB.  In the subject line of his email, Mr. Meyers asked that BCB countersign and return the contract.  BCB did not sign and return the contract.

The contract required a nonrefundable deposit “upon execution” of the contract, After Mr. Meyer emailed the signed contract, Ms. Meyer issued a check to BCB for the deposit.  BCB subsequently began the work.  While BCB was performing the work, Ms. Meyer and BCB exchanged several emails regarding the project.  Ms. Meyer also approved a change order for certain carpentry work.

BCB subcontracted defendant Newco Welding, Inc. (Newco) to perform some welding work.  After most of the expansion project was completed, a fire occurred at the residence because of Newco’s welding.  As their property casualty insurance carrier, the plaintiff paid the Meyers nearly $4 million for the damage.  The plaintiff then sued BCB and Newco to recover the money paid to the Meyers. The defendants filed motions for summary judgment, asserting that the subrogation waiver in the contract barred the plaintiff’s subrogation claim. The plaintiff argued that the contract was not valid because neither Ms. Meyer nor BCB executed the contract.  The lower court found that the subrogation waiver was enforceable and dismissed the plaintiff’s case.

The Court of Appeals acknowledged that under Texas law, contracts require mutual assent, which is also referred to as a “meeting of the minds.” The court explained that mutual assent exists “when the parties agree to the same thing, in the same sense, and at the same time.” The court noted that signatures are often evidence of mutual assent but are not required to establish mutual assent.  Parties can also manifest mutual assent through communications and conduct, such as making payments or beginning the performance of the contract.

The court held that Mr. Meyer’s signing and emailing of the first version of the contract constituted a rejection of the second version and a counteroffer, which BCB accepted when they began performing the work.  Ms. Meyer signed the checks to BCB and sent several emails to BCB regarding the work, which established her mutual assent.

The court distinguished this case from other cases where the signature was deemed required.  Unlike those cases, the contract at issue did not have a provision requiring a signature before the contract was binding on the parties.  The Court of Appeals found sufficient evidence to establish mutual assent and affirmed the lower court’s ruling that the subrogation waiver was enforceable, thereby barring the subrogation claim.

The Buster & Cogdell Builders case establishes that, in Texas, a signature may not be required to enforce a construction contract.  If the parties establish their mutual assent through conduct, then an unsigned contract may be deemed enforceable. Subrogation professionals looking to overcome subrogation waivers in unsigned contracts should check for provisions in the contract that require signatures before determining whether a contract is binding.  Without such a provision, the lack of signatures may not be sufficient to invalidate the contract.

This entry was posted in AIA Contracts, Contracts, Subrogation, Texas, Waiver of Subrogation and tagged , , , , , .

Consumer Product Safety Commission Recalls


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In subrogation cases where the insured’s damages were caused by a defective product, the fact that the product at issue is or was subject to a recall announced by the Consumer Product Safety Commission (CPSC) may help to establish that the product was defective when it left the manufacturer’s possession and control.  Recently, the CPSC announced the following recalls related to products that present fire hazards:

  1. STIHL Incorporated Recalls Docking Stations Sold with STIHL iMOW Robotic Lawn Mowers Due to Fire Hazard. According to the CPSC’s website, “[t]he docking station’s printed circuit board can short circuit when exposed to moisture, posing a fire hazard.”
  2. Polaris Recalls Sportsman All-Terrain Vehicles Due to Fire and Crash Hazards (Recall Alert). According to the CPSC’s website, “[a]n improperly assembled wiring harness can contact the brake line and/or vehicle frame during use which can result in a loss of the use of the front brakes and/or fire, posing fire and crash hazards.”
  3. Sunbeam Heated Blankets Recalled Due to Burn and Fire Hazards; Distributed by Star Elite. According to the CPSC’s website, “[t]he recalled heated blankets can overheat, posing fire and burn hazards.”
  4. Kawasaki Motors USA Recalls Engines Sold on Ferris and SCAG Riding Lawn Mowers Due to Burn and Fire Hazards. According to the CPSC’s website, “[t]he high-pressure fuel line can get damaged by contact with the fuel pump cover, causing a fuel leak that poses burn and fire hazards.”

 

This entry was posted in CPSC Recalls, Products Liability and tagged .
Signing Agreement

Florida Passes Tort Reform Bill


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On Friday, March 24, 2023, Florida’s governor, Ron DeSantis, signed into law a tort reform bill, HB 837.  The bill impacts, among other things, bad faith actions and attorney’s fee awards.  Of particular importance to subrogation professionals are provisions impacting comparative fault, the statute of limitations and premises liability with respect to the criminal acts of third persons.

With respect to the statute of limitations, the bill amended Fla. Stat. § 95.11(3) and (4), to reduce the statute of limitations for negligence actions from four (4) years to two (2) years.

As for comparative fault, Fla. Stat. § 768.81 was amended to move Florida from a pure comparative fault jurisdiction for negligence actions to a modified comparative fault jurisdiction.  Pursuant to § 768.81(6), as revised, in a negligence action subject to that section, “any party found to be greater than 50 percent at fault for his or her own harm may not recover any damages.”  Section 768.81(6), however, does not apply to actions for damages for personal injury or wrongful death arising out of medical negligence.

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This entry was posted in Comparative-Contributory Negligence, Contribution-Apportionment, Florida, Negligence, Statute of Limitations-Repose and tagged , , , , , , .

Help Me Help You – How Working With Claimant’s Counsel Can Maximize Your Lien Recovery – “Part 2: The Investigation”


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This is the second part of the three-part series entitled “Help Me Help You – How Working With Claimant’s Counsel Can Maximize Your Lien Recovery.”

In “Part 2: The Investigation,” Partner Brett Tishler and Associate Michael Abed take a deeper dive into the crucial steps that subrogation professionals execute immediately after a workers’ compensation third party claim is filed. Some of the topics covered in this episode include, gathering facts from the insured/employer, talking to witnesses, gaining access to the premises and gathering information about the machine that caused the injury to boost lien recovery.

Mark your calendar to listen to Brett and Michael for “Part 3 – The War Story: Successes and Failures” on Tuesday, April 18th!

This entry was posted in Podcast, Workers' Compensation and tagged .

Consumer Product Safety Commission Recalls


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In subrogation cases where the insured’s damages were caused by a defective product, the fact that the product at issue is or was subject to a recall announced by the Consumer Product Safety Commission (CPSC) may help to establish that the product was defective when it left the manufacturer’s possession and control.  On March 9, 2023, the CPSC announced the following recalls related to products that present fire hazards:

  1. Fantasia Trading Recalls Anker Power Banks Due to Fire Hazard | CPSC.gov. According to the CPSC’s website, “[t]he lithium-ion batteries in the recalled power banks can overheat, posing a fire hazard.”
  2. Monoprice Recalls Pure Outdoor Cooking System Due to Fire Hazard (Recall Alert). According to the CPSC’s website, “[t]he insulation coating on the stove can ignite during use, posing a fire hazard.”
  3. Bedshe International Recalls Bedsure Electric Heating Blankets and Pads Due to Fire and Thermal Burn Hazards (Recall Alert). According to the CPSC’s website, “[t]he controller for the electric heating blankets and pads can malfunction, posing fire and thermal burn hazards.”
  4. Vornado Air Recalls Portable SRTH Small Room Tower Heaters Due to Fire Hazard. According to the CPSC’s website, “[t]he heaters have a miswiring due to a manufacturing error which can cause the tower heater to overheat, posing a fire hazard.”
This entry was posted in CPSC Recalls, Products Liability and tagged .

Relion Battery Recalls Relion Insight Series Lithium Batteries


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In subrogation cases where the insured’s damages were caused by a defective product, the fact that the product at issue is or was subject to a recall announced by the Consumer Product Safety Commission (CPSC) may help to establish that the product was defective when it left the manufacturer’s possession and control.  On March 2, 2023, the CPSC announced the following recall related to a product that presents a fire hazard:

Relion Battery Recalls Relion Insight Series Lithium Batteries Due to Thermal Burn and Fire Hazards.

According to the CPSC’s website, “[t]he batteries can overheat, posing thermal burn and fire hazards.”

Product images from the CPSC website are set forth below:

This entry was posted in CPSC Recalls, Products Liability, Uncategorized and tagged .
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A Tort, By Any Other Name, is Just a Tort: Massachusetts Court Bars Contract Claims That Sound in Negligence


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In University of Massachusetts Building Authority v. Adams Plumbing & Heating, Inc., 2023 Mass. App. Unpub. LEXIS 28, 102 Mass. App. Ct. 1107, the Appeals Court of Massachusetts (Appeals Court) considered whether the lower court properly held that the plaintiff’s breach of contract and indemnification claims were time-barred by the statute of repose because they sounded in tort.  The Appeals Court held that while the six-year statute of repose only applies to tort claims, they can also bar claims for breach of contract and indemnification if they sound in tort.  The Appeals Court affirmed the lower court’s ruling, finding that the plaintiff’s breach of contract and indemnification claims were just negligence claims disguised as non-tort claims.

In 2013 and 2014, the University of Massachusetts (UMass) retained various contractors to renovate the dining hall for one of its campus buildings, which included the installation of new ductwork for the kitchen’s exhaust system.  The dining hall opened for service in September 2014.  In the Spring of 2018, it was discovered that the ductwork for the kitchen had collapsed.  Further investigation revealed other deficiencies with the exhaust system.  On December 1, 2020, UMass filed a lawsuit against various contractors, asserting negligence, breach of contract, and indemnification. The breach of contract claims alleged breach of express warranties.

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This entry was posted in Construction Defects, Contracts, Massachusetts, Negligence, Statute of Limitations-Repose, Subrogation and tagged , , , , , , .

Consumer Product Safety Commission Recalls


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In subrogation cases where the insured’s damages were caused by a defective product, the fact that the product at issue is or was subject to a recall announced by the Consumer Product Safety Commission (CPSC) may help to establish that the product was defective when it left the manufacturer’s possession and control.  On February 23, 2023, the CPSC announced the following recalls related to products that present fire hazards:

  1. Two Million COSORI® Air Fryers Recalled by Atekcity Due to Fire and Burn Hazards (Recall Alert). According to the CPSC’s website, “[a] wire connection in the air fryers can overheat, posing fire and burn hazards.”
  2. More than 1.2 Million Mainstays Three-Wick Candles Recalled by Star Soap Star Candle Prayer Candle Due to Fire and Laceration Hazards; Sold Exclusively at Walmart. According to the CPSC’s website, “[t]he candle wicks can burn too close to the side of the container, causing the glass to break, posing fire and laceration hazards.”

 

This entry was posted in CPSC Recalls, Products Liability and tagged .
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Michigan Court Waives Goodbye to Subrogation Claims, Except as to Gross Negligence


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In Ace American Insurance Company, et. al. v. Toledo Engineering Co., Inc., et. al., No. 18-11503, 2023 U.S. Dist. LEXIS 15222 (Ace American), the United States District Court for the Eastern District of Michigan determined whether insurers could pursue their subrogation claims against the defendants despite a waiver of subrogation in each of the contracts the insured had with the respective defendants. Based on the language of the contracts and the circumstances leading up to the loss, the court held that the insurers could not pursue their subrogation claims – other than their claims for gross negligence – due to waivers of subrogation in the applicable contracts.

In Ace American, the insured, Guardian Industries, LLC (Guardian), retained Toledo Engineer Co., Inc. (TECO) and Dreicor, Inc. (Dreicor) to renovate a glass furnace in the insured’s glass manufacturing plant. Guardian and TECO entered into a contract on December 6, 2016. Guardian and Dreicor entered into a contract on September 29, 2013, that the parties later updated on June 3, 2016. Both defendants began work on the project in the spring of 2017 and were finished with the portion of the work known as the “Cold Tank Repair” prior to the loss.

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This entry was posted in Michigan, Subrogation, Uncategorized, Waiver of Subrogation and tagged , , .
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Florida Court Puts the Claim of Landlord’s Insurer In The No-Fly Zone


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In United States Aviation Underwriters v. Turnberry Airport Holdings, LLC, No. 3D22-270, 2023 Fla. App. LEXIS 1207 (U.S. Aviation), the Court of Appeal of Florida, Third District (Appellate Court) considered whether the insurer for a commercial landlord could pursue subrogation against the landlord’s tenant.  Based on the terms of the lease between the landlord and the tenant, the Appellate Court held that the landlord’s insurer could not pursue subrogation.

In U.S. Aviation, the defendant, Turnberry Airport Holdings, LLC (Turnberry Airport) leased space to an insured aircraft owner.  The lease contained the following provision:

TENANT agrees that all policies of insurance obtained by it in connection with the Space or as required hereunder shall contain appropriate waiver of subrogation clauses.

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This entry was posted in Florida, Landlord-Tenant, Subrogation, Sutton Doctrine and tagged , , .