United States District Court, D. Hawaii
ANDERSON BURTON CONSTRUCTION, INC., a California corporation, Plaintiff,
ENVIRONMENTAL CONTROL SPECIALISTS, INC., a Hawaii corporation; IN & OUT BUILDERS, INC., a Hawaii corporation; and DOES 1-10, Defendants.
ORDER (1) GRANTING IN PART AND DENYING IN PART MOTION
FOR SUMMARY JUDGMENT NO. 1 RE: WAIVER OF SUBROGATION, ECF NO.
98; AND (2) GRANTING IN PART AND DENYING IN PART MOTION FOR
SUBSTANTIVE JOINDER, ECF NO. 108
Michael Seabright, Chief United States District Judge
October 2, 2017, Anderson Burton Construction, Inc.
(“Plaintiff” or “ABC”) filed its
First Amended Complaint (the “FAC”), ECF No. 38,
bringing claims against Environmental Control Specialists,
Inc. (“ECS”) and In & Out Builders, Inc.
(“IOB”) (collectively, “Defendants”)
for declaratory judgment, breach of contract, breach of
implied and/or express warranties, and negligence.
suit involves weather-related damage to the Haleakala Visitor
Center at Haleakala National Park (the “Visitor
Center”) that occurred during remodeling of the Visitor
Center involving Plaintiff, the general contractor, and
Defendants, the subcontractors. FAC ¶¶ 8-14; ABC
Concise Statement of Fact (“CSF”) ¶ 3, ECF
No. 135. Plaintiff alleges that the weather-related damage
occurred as a result of one or both of Defendants improperly
installing a temporary roof covering on the Visitor Center.
FAC ¶¶ 15-20.
moves for summary judgment (and is substantively joined by
ECS), arguing that Plaintiff waived its right to subrogation
in the IOB Subcontract. The court agrees, and accordingly,
only Plaintiff's $5, 000 deductible, which is not covered
by the waiver, remains at issue.
IOB's Motion for Summary Judgment No. 1 Re: Waiver of
Subrogation is GRANTED IN PART, as to the $698, 799.99
payment by Navigators Specialty Insurance Company
(“Navigators”), and DENIED IN PART, as to the $5,
000 deductible; ECS's Motion for Substantive Joinder is
likewise GRANTED IN PART and DENIED IN PART, as to the Motion
for Summary Judgment No. 1 Re: Waiver of
August 31, 2015, the National Park Service entered into a
contract with Plaintiff, the general contractor, to remodel
the Visitor's Center. FAC ¶ 8. Plaintiff then
entered into two subcontracts, one with ECS on September 15,
2015 (the “ECS Subcontract”), and one with IOB on
September 18, 2015 (the “IOB Subcontract”)
(collectively, the “Subcontracts”). FAC
¶¶ 9, 10; ECF Nos. 38-2, 38-3. Defendants were
hired as subcontractors to “Replace Built-Up Roof and
Strengthen Building Structure for Seismic Resistance . . .
[and] Reconfigure Vestibule/Entrance Doors” of the
Visitor Center. ECF Nos. 38-2 at 7, 38-3 at 7.
September 21, 2015 through September 25, 2015, ECS worked on
the roof of the Visitor's Center, removing old
asbestos-containing roofing material. IOB CSF ¶ 5, ECF
No. 101. ECS installed temporary protective plastic sheeting
on the roof to protect the Visitor's Center from the
weather. Id. IOB was not working on the roof on
September 21, 2015 to September 24, 2015. Id.
¶¶ 8, 9. On September 25, 2015, IOB repaired the
tongue and groove on part of the roof, which involved
removing the protective plastic sheeting installed by ECS.
Id. ¶¶ 9, 10.
about September 25 and 26, 2015, the interior of the
Visitor's Center sustained weather-related damage.
Id. ¶ 17. The parties dispute whether the
weather that caused the damage was typical weather for the
location or more extreme weather caused by Tropical Storm
Niala. ABC CSF ¶ 3, ECF No. 135. The parties also
dispute whether Plaintiff, IOB, or ECS was responsible for
the plastic sheeting failure. See FAC ¶ 26; ECS
Answer ¶ 12, ECF No. 43; IOB CSF ¶¶ 7, 12, ECF
carried commercial general liability insurance issued by
Navigators for the policy period of May 12, 2015 to May 12,
2016. ECF No. 141-2 at 10. Plaintiff submitted a claim to
Navigators for $731, 805 for the damage to the Visitor's
Center. ABC CSF ¶ 4, ECF No. 135. Navigators paid
Plaintiff's claim, under Plaintiff's commercial
general liability policy, in the amount of $698, 799.99. IOB
CSF ¶ 8, ECF No. 99. Plaintiff paid a $5, 000
deductible. Waters Decl. ¶ 6, ECF No. 136-1.
October 2, 2017, Plaintiff filed its FAC, bringing claims for
declaratory judgment, breach of contract, breach of implied
and/or express warranties, and negligence against ECS and
IOB. ECF No. 38. On April 4, 2018, IOB filed several motions
for summary judgment, including: Motion for Summary Judgment
No. 1 Re: Waiver of Subrogation, ECF No. 98. Plaintiff filed
an Opposition on May 23, 2018, ECF No. 123, and IOB filed a
Reply on May 30, 2018, ECF No. 140. On April 11, 2018, ECS
moved for substantive joinder, ECF No. 108, which Plaintiff
opposed on May 23, 2018, ECF No. 131. A hearing was held on
June 21, 2018. ECF No. 170.
STANDARD OF REVIEW
judgment is proper where there is no genuine issue of
material fact and the moving party is entitled to judgment as
a matter of law. Fed.R.Civ.P. 56(a). Federal Rule of Civil
Procedure (“FRCP”) 56(a) mandates summary
judgment “against a party who fails to make a showing
sufficient to establish the existence of an element essential
to that party's case, and on which that party will bear
the burden of proof at trial.” Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986); see also
Broussard v. Univ. of Cal. at Berkeley, 192 F.3d
1252, 1258 (9th Cir. 1999).
party seeking summary judgment bears the initial burden of
informing the court of the basis for its motion and of
identifying those portions of the pleadings and discovery
responses that demonstrate the absence of a genuine issue of
material fact.” Soremekun v. Thrifty Payless,
Inc., 509 F.3d 978, 984 (9th Cir. 2007) (citing
Celotex, 477 U.S. at 323). “When the moving
party has carried its burden under Rule 56[(a)], its opponent
must do more than simply show that there is some metaphysical
doubt as to the material facts [and] come forward with
specific facts showing that there is a genuine issue for
trial.” Matsushita Elec. Indus. Co. v. Zenith
Radio, 475 U.S. 574, 586-87 (1986) (citation and
internal quotation signals omitted); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)
(stating that a party cannot “rest upon the mere
allegations or denials of his pleading” in opposing
issue is ‘genuine' only if there is a sufficient
evidentiary basis on which a reasonable fact finder could
find for the nonmoving party, and a dispute is
‘material' only if it could affect the outcome of
the suit under the governing law.” In re
Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (citing
Anderson, 477 U.S. at 248). When considering the
evidence on a motion for summary judgment, the court must
draw all reasonable inferences on behalf of the nonmoving
party. Matsushita Elec. Indus. Co., 475 U.S. at 587;
see also Posey v. Lake Pend Oreille Sch. Dist. No.
84, 546 F.3d 1121, 1126 (9th Cir. 2008) (stating that
“the evidence of [the nonmovant] is to be believed, and
all justifiable inferences are to be drawn in his
favor.” (citations omitted)).
argues that this action is a subrogation action brought by
Plaintiff's insurer, Navigators, through Plaintiff, and
that “Plaintiff contractually waived subrogation rights
against IOB.” ECF No. 98-1 at 6. Plaintiff responds
that it had contractually waived subrogation rights only for
“property insurance” claims, and not for
liability insurance claims. ECF No. 123 at 2. Applying
California law pursuant to the choice of law provisions in
the Subcontracts, the court determines that Plaintiff's
commercial general liability insurance is “other
property insurance, ” and thus is included under the
subrogation waiver clauses of the Subcontracts. As a result,
Plaintiff may not recover the $698, 799.99 payment made by
Navigators, and the only recovery available to Plaintiff is
its $5, 000 deductible. The court allows ECS to join
IOB's motion for summary judgment concerning waiver of
California Law Applies
initial matter, IOB argues that Hawaii law should apply, even
though the IOB and ECS Subcontracts' choice of law
clauses both provide that California law should apply. These
choice of law clauses, identical in both Subcontracts,
provide in relevant part, “[d]isputes arising under
this Subcontract solely between PRIME CONTRACTOR and
SUBCONTRACTOR shall be governed by the laws of the State of
California.” ECF Nos. 38-3 at 16, 38-2 at 16 (emphasis
added). IOB argues that the word “solely” in the
choice of law clause supports its position that the choice of
law clause does not apply here because this case involves a
dispute between Plaintiff, IOB, and ECS. The court
disagrees, and determines that California law governs.
a diversity case, ‘federal courts apply the substantive
law of the forum in which the court is located, including the
forum's choice of law rules.'” Downing v.
Abercrombie & Fitch, 265 F.3d 994, 1005 (9th Cir.
2001) (quoting Ins. Co. of N. Am. v. Fed. Express
Corp., 189 F.3d 914, 921 (9th Cir. 1999)). And,
“[u]nder Hawaii law, courts ‘look to the state
with the most significant relationship to the parties and
subject matter' in a choice-of-law analysis.”
Standard Register Co. v. Keala, 2015 WL 3604265, at
*6 (D. Haw. June 8, 2015) (quoting Mikelson v. United
Servs. Auto. Ass'n, 107 Haw. 192, 198, 111 P.3d 601,
607 (2005) (square brackets omitted).
a general rule, the construction and legal effect to be given
a contract is a question of law.” Found. Int'l,
Inc. v. E.T. Ige Constr., Inc., 102 Haw. 487, 494-95, 78
P.3d 23, 30-31 (2003) (citation and internal quotation marks
omitted). “[A]bsent an ambiguity, . . . contract terms
should be interpreted according to their plain, ordinary, and
accepted sense in common speech.” Id. at 495,
78 P.3d at 31 (citation and internal quotation marks
omitted); see also Amfac,Inc. v. Waikiki
Beachcomber Inv. Co., 74 Haw. 85, 108, 839 P.2d 10, 24
(1992) (providing that “terms of a contract should be
interpreted according to their plain, ordinary and accepted
use in common speech, unless the contract indicates a
different meaning” (citation omitted)). “[A]
contract should be construed as a whole and its meaning
determined from the entire context and not from any
particular word, phrase, or clause.” Haw. Med.
Ass'n v. Haw. Med. Serv. Ass'n,Inc.,113 Haw. 77, 92, 148 P.3d 1179, 1194 (2006) (citations and
internal quotation marks omitted). The court looks “no
further than the four corners of the document to determine
whether an ambiguity exists, ” and “[t]he
parties' disagreement as to the meaning of a contract or
its terms does not render clear language ambiguous.”
Stanford Carr Dev. Corp. v. Unity House, ...