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Continental Western Insurance Co. v. Opechee Construction Corp.

United States District Court, D. New Hampshire

October 6, 2015

Continental Western Insurance Company
Opechee Construction Corporation, et al. Opinion No. 2015 DNH 194



Continental Western Insurance Company (“Continental”) brings a subrogation action against the general contractor, Opechee Construction Company (“Opechee”), that built the Hampton Inn in Dover, New Hampshire (“the hotel”), and two plumbing subcontractors, North American Plumbing & Heating, LLC and Linx Ltd. The claims arise from extensive water damage at the hotel caused by a pipe failure. Opechee moves for summary judgment on the ground that a waiver of subrogation provision in the construction contract bars Continental’s claims, and North American Plumbing & Heating, LLC has joined the motion. Continental objects.

Standard of Review

Summary judgment is appropriate when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Santangelo v. New York Life Ins. Co., 785 F.3d 65, 68 (1st Cir. 2015). “A genuine issue is one that can be resolved in favor of either party and a material fact is one which has the potential of affecting the outcome of the case.” Gerald v. Univ. of Puerto Rico, 707 F.3d 7, 16 (1st Cir. 2013) (quoting Perez-Cordero v. Wal-Mart Puerto Rico, Inc., 656 F.3d 19, 25 (1st Cir. 2011). In deciding a motion for summary judgment, the court draws all reasonable factual inferences in favor of the nonmovant. Kenney v. Floyd, 700 F.3d 604, 608 (1st Cir. 2012) (internal citations omitted).

When the party moving for summary judgment bears the burden of proof at trial, the movant “cannot prevail unless the evidence that he provides on that issue is conclusive.” E.E.O.C. v. Union Independiente dela Autoridadde Acueductosy Alcantarillados de P.R., 279 F.3d 49, 55 (1st Cir. 2002) (internal quotation marks omitted). Evidence is conclusive when the moving party’s showing is sufficient to preclude any reasonable trier of fact from finding against it. Id. (citing Calderone v. United States, 799 F.2d 254, 258 (6th Cir. 1986); Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986)).

That standard applies here because waiver is an affirmative defense, see Fed.R.Civ.P. 8(c)(1), and the burden of proving it is on Opechee. Balamotis v. Hyland, 159 N.H. 803, 811 (2010) (party using affirmative defense of release bears burden of proof); Gianola v. Cont'l Cas. Co., 149 N.H. 213, 214 (2003) (party using waiver defense bears burden of proving it).


In September of 2006, Opechee and the hotel’s owner, Lafrance Bowden Hospitality, LLC (“Lafrance”), entered into a written contract (the “Agreement”) governing the construction of the hotel. Lafrance and Opechee drafted the Agreement by modifying an Associated General Contractors (“AGC”) form agreement, entitled “Standard Form of Design-Build Agreement and General Conditions Between Owner and Contractor.”

One of the provisions that Lafrance and Opechee modified in the form AGC agreement was a waiver of subrogation provision. That waiver of subrogation provision (the “Waiver”), as modified, provides in pertinent part:

The Owner waives subrogation against the Contractor . . . under property and consequential loss policies purchased for the Project after its substantial completion.

Defendant Opechee Construction Corp’s Motion for Summary Judgment, Agreement (Ex. B), at ¶9.6.3.

The Agreement also provided that Opechee had “about 12 months” to achieve “substantial completion, ” which was the date when Lafrance could “occupy or utilize the Project . . . for the use for which it [was] intended.” See Agreement, at ¶¶5.1, 5.2. Upon substantial completion, Lafrance and Opechee were to sign a Certificate of Substantial Completion which would include, among other things, a “punch list” identifying any outstanding items that Opechee had to complete before finishing the project. Paragraph 8.4 permitted Opechee to seek “the unpaid balance of the Project” at substantial completion, except for 150% of the estimated cost of the items on the punch list. Lafrance was not required to pay the amount retained for each punch list item until Opechee had completed that item.

There is no dispute that Opechee substantially completed the hotel in July of 2007, that Opechee then issued a Certificate of Substantial Completion which included a punch list, and that Lafrance made final payment to Opechee in December of 2007.

Nearly six years after the final payment, a pipe flange in the hotel’s mechanical room separated from a vertical pipe, causing flooding throughout the building. As a result of the flooding, the hotel sustained substantial damage. At the time, Lafrance held a “businessowners” insurance policy that it had purchased from Continental at some time after substantial completion. Under the terms of the policy, Continental paid Lafrance $3, 777, 252.22 for the damage sustained during the flooding. Continental, as subrogee for Lafrance, brings tort and contract claims against Opechee, North American ...

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