Nationwide Prop. & Cas. Ins. Co. v. DPF ARCHITECTS

• Decision Date: 22 November 2000
• Citation: 792 So.2d 369
• Parties: NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY v. DPF ARCHITECTS, P.C., et al. K-2, Inc. v. Nationwide Property and Casualty Insurance Company.
• Court: Alabama Supreme Court

792 So.2d 369

NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY v. DPF ARCHITECTS, P.C., et al.

K-2, Inc. v. Nationwide Property and Casualty Insurance Company.

1992.

Supreme Court of Alabama.

November 22, 2000.

Opinion Modified on Denial of Rehearing February 23, 2001.

Charles J. Potts and C. Mark Erwin of Janecky Newell, P.C., Mobile, for appellant/cross appellee Nationwide Property and Casualty Insurance Company.

Christopher G. Hume III of Miller, Hamilton, Snider & Odom, L.L.C., Mobile, for appellee and cross appellant G.E. Simpson Company, Inc.

John M. Laney, Jr., of Rives & Peterson, Birmingham, for appellee and cross appellant DPF Architects, P.C.

James P. Green of Brown, Hudgens, P.C., Mobile, for appellee and cross appellant Jim Boothe Contracting & Supply Company, Inc.

C. Michael Ellingburg of Daniel Coker Horton & Bell, P.A., Jackson, Mississippi, for appellee and cross appellant Stuart Construction Company, Inc.

D. Charles Holtz, Mobile, for appellee and cross appellant K2, Inc., f/k/a Anthony Industries, Inc.

Augustine Meaher III, Mobile, for appellee and cross appellant Arrow Aluminum Manufacturing, Inc.

Jeffrey L. Luther of Luther, Oldenburg & Rainey, P.C., Mobile, for appellee and cross appellant Mobile Glass Company.

David A. Hamby, Jr., and Jene W. Owens, Jr., of Brooks & Hamby, P.C., Mobile, for appellee and cross appellant The Sands, L.L.C.

Opinion Modified on Denial of Rehearing (in case no. 1990385) February 23, 2001.

BROWN, Justice.

These appeals arise from a subrogation action filed by Nationwide Property and Casualty Insurance Company ("Nationwide") concerning moneys it had paid to The Sands Condominium Association, Inc. ("the Association") and to individual condominium owners for damage to, and/or defects in, the Sands Condominium development in Orange Beach.

I. Facts and Procedural History

The Sands, L.L.C. ("Developer"), entered into a contract with Stuart Construction Company, Inc. ("Stuart"), for Stuart to construct a condominium complex. Upon completion, the units were sold to individuals, who then collectively formed the Association.

Nationwide issued two insurance policies to the Association, and it insured many of the individual condominium units. When Hurricane Danny came across the Alabama Gulf Coast in July 1997, many of the condominiums sustained wind and water damage. Pursuant to the two policies issued to the Association, Nationwide paid claims totaling $347,308.34; it also paid a total of $259,969.12 for covered losses under the various policies issued on the individual condominium units. All claims were paid subject to the payment of each policy's deductible.¹ On July 30, 1997, the Association filed a lawsuit in the Mobile Circuit Court against Stuart; DPF Architects, P.C.; The Sands, L.L.C.; G.E. Simpson Company, Inc.; 2, Inc., f/k/a Anthony Industries, Inc.; Arrow Aluminum Industries, Inc.; Jim Booth Contracting & Supply, Inc.; and Mobile Glass Company, claiming that these defendant companies had breached warranties and had been negligent and wanton in their construction of The Sands Condominiums.

Nationwide moved to intervene as a plaintiff; the court granted its motion. Nationwide's complaint in intervention contained six counts. In counts one through three, Nationwide asserted a subrogation right as to the moneys it had paid to the Association, and it alleged that Stuart; DPF Architects, P.C.; G.E. Simpson Company, Inc.; K-2, Inc.; Arrow Aluminum Industries, Inc.; Jim Booth Contracting & Supply, Inc.; and Mobile Glass Company (collectively referred to as "the Contractors") had breached warranties and had been negligent and wanton in their construction of The Sands Condominiums. Counts four through six of Nationwide's complaint asserted a subrogation right as to the moneys paid pursuant to the policies held by the individual unit owners, and those counts contained the same allegations as counts one through three. In addition to the defendants named above, Nationwide's complaint named the Developer as an additional defendant in the final three counts.

All claims made by the Association in the original complaint were settled and dismissed. The Contractors then moved for summary judgments. As grounds for their motions, the Contractors asserted (1) that Nationwide could not maintain a subrogation action because its insureds had not been "made whole" (contending they had not been "made whole" because they had paid the policy deductibles); (2) that Nationwide's subrogation claims were barred because, they contended, the damage claimed by the Nationwide insureds did not fall within the "covered losses" enumerated in the Nationwide policies, so that Nationwide's payment of the claims had been voluntary; (3) that Nationwide's subrogation claims were barred because of the "waiver-of-subrogation" clause contained within the initial construction contract between the Developer and Stuart; and (4) that Nationwide's claims for subrogation as to the Association assessments were barred because, the Contractors asserted, the insureds lacked standing to recover for those payments. As an additional ground for a summary judgment, 2, Inc., asserted that it was entitled to a judgment because its product had not been installed correctly; it argued that the incorrect installation eliminated any liability on its part for negligence, wantonness, and breach of warranty. Separately, the Developer argued that it was entitled to a summary judgment on counts four, five, and six of the Nationwide complaint because, it claimed, it was an additional insured under the Nationwide policy issued to the Association, and therefore, could not be sued by the Association's insurer.

Nationwide responded to the motions by asserting (1) that the Contractors had no standing to argue the "made-whole" doctrine, (2) that the issues whether the payments had been made voluntarily and whether the insured's claims were excluded from coverage were jury questions, and (3) that the waiver-of-subrogation clause did not apply because neither the Association nor any individual unit member was a party to the original construction contract between the Developer and Stuart.

The trial court entered a summary judgment for the Contractors, holding that the Nationwide insureds had not yet been "made whole" because they had paid the applicable deductibles on their policies. However, the court denied the Contractors' summary-judgment motion as it related to the issues whether Nationwide's payments were "voluntary" and whether Nationwide was barred from recovery because of the "waiver-of-subrogation" clause contained in the original construction contract. Further, the court denied K-2's separate summary-judgment motion. Finally, the court entered a summary judgment for the Developer, concluding that Nationwide could not assert a claim...