Gables Constr., Inc. v. Red Coats, Inc.

241 Md.App. 1

207 A.3d 1220

GABLES CONSTRUCTION, INC.

v.RED COATS, INC., et al.

No. 907, Sept. Term, 2017

Court of Special Appeals of Maryland.

May 10, 2019

Argued by: Robert L. Ferguson, Jr. (Timothy J. Dygert, Jr., Ferguson, Schetelich & Ballew PA on the brief), all of Baltimore, MD, for Appellant.

Argued by: Alex J. Brown (David B. Applefeld, Shapiro, Sher, Guinot & Sandler, PA of Baltimore, MD) (Joseph T, Mallon, Jr,, James M. Ray, 11, Mallon & McCool, LLC of Baltimore, MD), all on the brief, for Appellee.

Panel: Fader, C.J., Wright, James R. Eyler (Senior Judge, Specially Assigned), JJ.

Wright, J.

This appeal presents a question of first impression in Maryland: whether, and under what circumstances, a contractual waiver can shield a contracting party from both third-party contribution and direct liability, in addition to other issues. We shall affirm the Circuit Court for Montgomery County's rulings and hold that a contractual waiver of subrogation does not bar contribution under the Maryland Uniform Contribution Among Joint Tort-Feasors Act ("UCATA"), but part ways with the jury verdict and hold that the contractual waiver in the Vendor Services Agreement ("VSA") and the settlement agreement and release controls the relationship between appellant, Gables Construction ("GCI"), and the appellees, Red Coats, Inc./Admiral ("Red Coats"), appellee, a security and fire watch company.

In the overnight hours between March 31, 2014, and April 1, 2014, a fire damaged a 139-unit apartment building (the "Project") that was nearing completion. The building sustained damages in excess of $ 22,150,000.00. Due to the fire, Upper Rock, Inc. ("Upper Rock"), the Project's owner, sued Red Coats, a security and fire watch company for gross negligence and breach of contract. In turn, Red Coats filed a third-party claim against GCI, the general contractor, seeking contribution under the UCATA in the circuit court. GCI responded by filing a Motion for Summary Judgment, which proved unsuccessful.

After a hearing on April 1, 2016, the circuit court found that a waiver of subrogation involved in a contract between GCI and Upper Rock limited any indemnification claims, but did not limit GCI's liability for contribution. A jury found that GCI was a joint-tortfeasor which was liable for damages, and the court awarded $ 7,000,000.00 to Red Coats, half of the damages owed to Upper Rock. GCI timely appealed and presents the following questions for our review:

I. Whether the judgment should be reversed because GCI is not a "joint tortfeasor" under the UCATA.

II. Whether the judgment should be reduced because Red Coats contractually waived claims against [GCI] to the extent covered by insurance.

III. Whether the trial court erred when it entered partial summary judgment on the issue of [GCI's] negligence.

IV. Whether the trial court erred in giving ambiguous, misleading, and confusing answers to questions asked by the deliberating jury.

V. Whether the trial court erred in granting the motions for judgment made against [GCI] by Retana Contractors and Rosa's Painting.

VI. Whether the trial court erred in declining to give the superseding cause instruction.

We answer question II in the affirmative and question I, III, IV, V, and VI in the negative and remand for proceedings consistent with this opinion. For the reasons to follow, we will affirm in part and reverse in part the circuit court's judgments.

FACTUAL AND PROCEDURAL BACKGROUND

The Prime Contract

In 2012, Upper Rock and GCI entered into a Document A102-2007 Standard Form of Agreement Between Owner and Contractor Contract (the "Prime Contract") to govern the construction of a complex, which included Building G, a 139-unit apartment building. The Prime Contract listed Upper Rock as the Owner and GCI as the Contractor.¹

Section 3.18.1 of the General Conditions of the Prime Contract contained an indemnification provision which read:

To the full extent permitted by law the Contractor shall indemnify and hold harmless the Owner, Architect, Architect's consultants, and agents and employees of any of them from and against claims, damages, losses and expenses, including but not limited to attorneys' fees, arising out of or resulting from performance of the Work, provided that such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property (other than the Work itself), but only to the extent caused by the negligent acts or omissions of the Contractor, Subcontractor,anyone directly or indirectly employed by them or anyone for whose acts they may be liable, regardless of whether or not such claim, damage, loss or expense is caused in part by a party indemnified hereunder. Such obligation shall not be construed to negate, abridge, or reduce other rights or obligations of indemnity which would otherwise exist as to a party or person described in this Section[.]

Section 10.2 of the General Conditions which governed the safety of persons and property, stated, in relevant part:

10.2.4 When use or storage of explosives or other hazardous materials or equipment or unusual methods are necessary for execution of the Work, the Contractor shall exercise utmost care and carry on such activities under supervision of properly qualified personnel.

* * *

10.2.6 The Contractor shall promptly remedy damage and loss (with respect to any damage or loss insured under property insurance required by the Contract Documents, Owner shall provide the insurance proceeds therefor to Contractor) to property referred to in Sections 10.2.1.2 and 10.2.1.3 caused in whole or in party by the Contractor, a Subcontractor, a Sub-subcontractor or anyone directly or indirectly employed by any of them, or by anyone for whose acts they may be liable and for which the Contractor is responsible under Sections 10.2.1.2 and 10.2.1.3, except damage or loss attributable to acts or omissions of the Owner or Architect or anyone directly or indirectly employed by either of them, or by anyone for whose acts either of them may be liable, and not attributable to the fault or negligence of the Contractor. The foregoing obligations of this Contractor are in addition to the Contractor's obligations under Section 3.18.

Section 11.1.2 required GCI to carry different types of insurance including Workers Compensation and Employers' Liability Insurance, and General Liability Insurance.² Section 11.3.7 included a Waiver of Subrogation, at issue in this case. The Waiver reads, in pertinent part:

The Owner and Contractor waive all rights against (1) each other and any of their subcontractors, sub-subcontractors, agents and employees, each of the other, and (2) any of their subcontractors, sub-subcontractors and employees, for damages caused by fire or other causes of loss to the extent covered by property insurance obtained pursuant to this Section 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 and Contractor. Furthermore, if and to the extent Contractor has its personal property located on or about the site which is not covered by the insurance obtained pursuant to this Section 11.3.7, the Contractor waives and releases Owner from all rights or causes of action (including rights of recovery and subrogation) resulting from any loss or damage to such other property, regardless of whether the same is insured by the Contractor and regardless of whether the cause for such damage is due to the NEGLIGENCE OF THE OWNER. The Owner or Contractor, as appropriate, shall require of the Architect, Architect's consultants, separate contractors described in Article 6, if any, and the subcontractors, sub-subcontractors, agents and employees of any of them, by appropriate agreements, written where legally required for validity, similar waivers each in favor of other parties enumerated herein. The policies shall provide such waivers of subrogation by endorsement or otherwise.

(Emphasis in original).

Notwithstanding anything to the contrary herein contained, in the event that either Owner or Contractor ("First Party") incurs a loss by fire or other casualty, which fire or other casualty shall have been caused in whole or in party by the negligence or acts or omissions of the other party or the other party's agents, contractors, employees or servants, then to the extent that the First Party is compensated by the Builder's Risk Insurance Coverage obtained pursuant to Section 11.3 or any other property insurance of the First Party applicable to the Project, then the First Party (for itself and its successors and assigns) hereby waives and releases any claim that it might have against the other party and no party shall have any rights against either Owner or Contractor by reason of any fire or casualty damage either by subrogation or assignment.

The VSA between Gables Residential Services, Inc. ("GRSI") and Red Coats

Gables Residential Services Incorporated ("GRSI"), the 100% owner of GCI, contracted with Red Coats, for the provision of fire watch and security services for the Project. This contract included a 2-page VSA and a 1-page Extra Coverage/Temporary Insurance Request Form.

The VSA provided, in relevant part:

Vendors providing any type of good and/or service that require their company to send a representative to the apartment community must have a current certificate of insurance on file with Compliance Depot for general liability, auto liability, excess liability if applicable, and workers' compensation. All coverage shall be primary and non-contributory. The following parties must be added to the general liability policy as an additional insured as their interests may appear in regard to work performed by Vendor: GABLES RESIDENTIAL SERVICES, INC., ITS PARENT, MEMBERS, SUBSIDIARIES AND AFFILIATED COMPANIES; AND THEIR PARTNERS, JOINT VENTURERS; AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND REPRESENTATIVES. A

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