An Injured Party's Contractual Subrogation Waiver Shields A Third-Party From Joint Tortfeasor Contribution

• Published date: 03 September 2020
• Law Firm: Wilson Elser Moskowitz Edelman & Dicker LLP
• Author: Ms Maryan Alexander

As a matter of first impression, and in a reported opinion of significance to the construction industry, the Court of Appeals in Gables Construction, Inc. v. Red Coats, Inc., et al., No. 23, September Term, 2019, held that a party against whom the injured party contractually waived subrogation cannot be a joint tortfeasor liable in tort to a third-party under the Maryland Uniform Contribution Amount Joint Tort-Feasors Act ("UCATA") Md. Code (1974, 2013 Repl. Vol., 2019 Cum. Supp.), Courts and Judicial Proceedings Article ("CJ") ' 3-1401, et. seq. This decision is significant in that it precludes the beneficiary of a contractual waiver, which is a common provision in construction contracts, from being brought into litigation by a thirdparty who seeks contribution, and it serves as a reminder to legal practitioners to examine the rights and obligations set forth in the relevant contracts.

Gables v. Red Coats arose from litigation relating to a large fire occurring in 2014 that caused $22,150,000 in property damage to a 139-unit apartment building. Gables Construction, Inc. ("Gables"), the general contractor on the project, had a standard construction contract ("the Prime Contract") with Upper Rock II, LLC ("Upper Rock"), the property owner, to perform work at the site. Upper Rock contractually agreed to insure the property against fire loss and to transfer the risk of loss for fire-related claims to its' insurer, to waive all claims against Gables caused by fire loss, and to waive rights by its' insurer to subrogate any such losses against Gables. These contractual waivers prevented Upper Rock and its' insurer from pursuing a direct claim against...