Travelers Lloyds Insurance Company v. Dyna Ten Corporation

Citation: Not availableDocket: 02-08-00502-CV

Court: Court of Appeals of Texas; August 26, 2009; Texas; State Appellate Court

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Travelers Lloyds Insurance Company appealed a summary judgment favoring Dyna Ten Corporation regarding a water damage incident at 'The Tower' condominium in Fort Worth, caused by a ruptured HVAC condenser water line attributed to improper installation by Dyna Ten. The construction project was overseen by Turner Construction Company under a contract with TLC Green Property Associates I, L.P., which included a waiver of subrogation clause. This clause prevented any claims for damages covered by insurance, mandating similar waivers from all subcontractors. Travelers, which provided insurance for the Tower, paid TLC $119,922.09 and sought to recover those costs from Dyna Ten as TLC's subrogee. Dyna Ten filed for summary judgment based on the waiver of subrogation, asserting it barred Travelers' claim. The trial court granted Dyna Ten's motion but did not specify the basis for its decision. The appellate court reviewed the summary judgment de novo, highlighting that an insurer's subrogation rights are limited to the rights of the insured. The case emphasizes the legal implications of subrogation waivers in construction contracts and insurance policies.

Insurer's subrogation claim against Dyna Ten is not barred by the waiver provision in the contract between TLC and Turner. The waiver specifically states that TLC and Turner waive rights against each other for damages covered by insurance, but does not extend this waiver to Turner’s subcontractors like Dyna Ten. The contract includes a requirement for Turner to obtain waivers in favor of TLC from its subcontractors, but it does not indicate TLC waived subrogation rights on behalf of those subcontractors. A contrasting case showed that a clear waiver against subcontractors led to the owner's subrogation rights being barred; however, TLC's waiver lacks such explicit language. Consequently, the court holds that the waiver does not prevent Travelers from pursuing claims against Dyna Ten, and if the trial court's summary judgment relied on this waiver, it constituted an error.

Dyna Ten contends that a subrogation waiver in the Travelers insurance policy prevents Travelers from pursuing claims against it. Travelers counters that the waiver pertains to the commercial general liability coverage, which is not applicable in this instance. The Travelers policy includes three distinct coverages: Deluxe Property Coverage, Commercial General Liability Coverage, and Employee Benefits Liability Coverage, each with its own terms, exclusions, and definitions.

The subrogation waiver referenced by Dyna Ten is included in the 'Xtend Endorsement' of the commercial general liability coverage, which waives Travelers's right to recover payments made for injuries or damages related to premises owned or occupied by Dyna Ten. However, the commercial general liability coverage specifically excludes property damage to TLC's owned, rented, or occupied properties, while the Deluxe Property Coverage encompasses damage to the Tower.

The court emphasizes that each coverage must be interpreted separately, aligning with Texas case law that views them as distinct contracts. Since the subrogation waiver applies solely to the commercial general liability coverage and not to the property coverage, any payments made by Travelers for the HVAC water line leak damage would fall under the property coverage, negating the applicability of the subrogation waiver.

Consequently, the trial court erred in granting summary judgment based on the subrogation waiver. The court sustains Travelers's argument, reverses the trial court's decision, and remands the case for further proceedings.