Town of Silverton v. Phoenix Heat Source Sys., Inc
In Town of Silverton v. Phoenix Heat Source Sys., Inc., 948 P.2d 9, 11 (Colo. Ct. App. 1997), the Town entered into a contract with a builder to install a new roof on the town hall.
A little more than a year after the new roof was completed and paid for, it was damaged by fire. The loss was covered by the Town's property insurance. After the insurer assigned its subrogation rights to the Town, the Town sued the builder and various subcontractors, alleging that their defective work on the new roof had caused the fire.
The lower court granted summary judgment against the Town based on a subrogation waiver provision in the construction contract.
On appeal, the court examined the contract's Waivers of Subrogation clause in tandem with its Completed Project Insurance clause, and concluded they were not ambiguous as to temporal scope.
Noting that nothing in the Waivers of Subrogation clause reflected an intention on the part of the contracting parties to limit the waivers to liability for damages occurring before final payment, and that, consistent with that, the Completed Project Insurance clause expressly allowed the owner (the Town) to obtain property insurance on the project after completion and final payment, the court found the co-existence of property insurance and subrogation waivers after project completion and payment significant:
Because property insurance applicable to the work . . . may remain in effect after the final completion date, so too may a waiver of subrogation rights in the contract remain in effect. Id. at 13.
On that basis, the Silverton court held that "the waiver of subrogation clause in the contract barred subrogation for insured losses to the Work occurring after the final completion date and the date final payment was made." Id.