The Honorable Richard G. Kopf, United States District Judge for the District 1 of Nebraska, sitting by designation.



## United States Court of Appeals FOR THE EIGHTH CIRCUIT



## ___________ No. 97-2712 Rahr Malting Company, * * Plaintiff-Appellant, * * * Appeal from the United States v. * District Court for the * District of Minnesota * Climatic Control Company, * Inc., * * Defendant-Appellee. *

___________ Submitted: March 13, 1998 Filed: July 24, 1998

___________ Before BEAM and HEANEY, Circuit Judges, and KOPF, District Judge. 1

___________ KOPF, District Judge. Rahr Malting Company (Rahr) appeals from the decision on cross motions forThe Honorable Richard H. Kyle, United States District Judge for the District 2 of Minnesota. -2- declaratory judgment entered in favor of Climatic Control Company, Inc. (Climatic). Rahr asserts that the district court erred in construing a waiver clause contained in a stand ard American Institute of Architects’ contractor agreement. After carefu l consideration, we conclude the district court’s decision was correct and we affirm. 2
I. Factual Background
Rahr owns and operates a production plant in Shakopee, Minnesota, whic h processes barley into malt for the beer industry. This processing occurs in buildings referred to as “malthouses.” In 1992, Rahr decided to build a new malthouse, an d contracted with Climatic to design and install the computerized Proces s Control System (PCS) for Malthouse 5. Rahr alleges Climatic was negligent in th e installation of the PCS for Malthouse 5 which regulates movement of malt from the malthouse to conveyors and storage silos duri ng the drying process. On June 16, 1994, Rahr was processing barley in th e malt house. As a result of alleged negligence of Climatic, the finished malt wa s div erted to the malthouse instead of the storage silos and explosive malt dus t accumulated i n a conveyor, ignited, and exploded. There was a fire and two workers were injured. In the aftermath of the explosi on Rahr suffered damages in excess of six million dollars. Rahr’s losses have been paid by its insurer subject to this subrogation claim against Climatic.-3- Contract Provisions
The parties asked the district court to interpret a waiver provision in th e construction contract between Rahr and Climatic. The co ntract is a standard American Institute of Architects (AIA) A201/CM contract.
The contra ct requires that each party to “the work” obtain insurance. “Th e work” is defined as “the completed construction required of the Contractor by th e Contract Documents, and includes all labor necessary to produce such construction and all materials and equipment incorporated or to be incorporated in such construction.” Article 1.1.3. The contract obligated Climatic to purchase and mai ntain insurance covering the co ntractor’s operations for “claims for damages other than to the work itself because of injury to or destruction of tangible property, including loss of use resultin g therefrom.” Article 11.1. (Emphasis added.) On the other hand, Rahr was required to purchase a

nd maintain insurance “upon the entire Work ” covering “the interests of the Ow ner, the Construction Manager, the Contractor, the Subcontractor and Sub

subcontractors in the Work .” (Article 11.3.1) (Emphasis added.) Specifically, Rahr was to “ insure against the perils of fire and extended coverage and shall include ‘al l risk’ insurance for physical loss or damage.” (Article 11.3.1.)
At the heart of this dispute is the waiver clause. It provides: “The Owner and Contractor waive

all rights against each other . . . for damages caused by fire or other perils to the extent covered by insurance obtained pursuant to this paragraph 11.3 or any other property insurance applicable to the work. ” Article 11.3.6. (Emphasi s added.)
To fulfil the insurance obligations under the contract, Rahr utilized its existing insurance. Rahr’s existing insurance covered both “work” and “nonwork” property.-4-

In other words, the insurance that Rahr used to satisfy its obligation under the contract was more extensive than the contract required. Climatic obtained the insurance that it was required to carry under the contract. Procedural History
The question presented to the district court was whether Rahr had waived th e claim against Climat

ic for damages when it elected to satisfy its contractual insurance obligation with insurance that covered both “work” and “nonwork” related property. Rahr argue d that the waiver extended only to its insurance covering the “work” since that was the only insurance it was contractually obligated to carry. Climatic argued, in contrast, that when Rahr elected to use insurance that was broader than required by the contract, it likewise waived any claims against Climatic to the extent of tha t coverage. The district court found in favor of Climatic. Applying Minnesota law, as th e pa rties agreed was appropriate, the court held that “Rahr waived all claims agains t Climati c for damages caused by fire or other perils to the extent that: 1) Rahr’ s insur ance obtained pursuant to Paragraph 11.3 covered the damage; or 2) Rahr’ s property insurance applicable to the Work covered the damage.”
At the time the district court entered judgment, neither this court nor th e Minnesota state courts had construed the waiver clause in an AIA contract. During oral argum ent, we were advised that the Minnesota Supreme Court had recently grante d review in a case seeking interpretation of a similar AIA waiver clause. Consequently, we held this case in abeyance and directed the parties to advise us when the Minnesota Supreme Court issued its opinion. The Minnesota Supreme Court has now issued its opinion. See Emp loyers Mut. Cas. Co. v. A.C.C.T., Inc. , No. C0-97-7, 1998 WL 334653 (Minn., June 25, 1998).-5-

Th e court held that the subrogation waiver clause found in the standard America n Institute of Architects’ contractor agreement acts as a complete bar to any subsequent subrogation claim made by the owner’s insurance company when the ow ner relies upon an existing all-risk insurance policy whi ch is broader in scope than what is required by the contrac t, regardless of whether the damaged property can be classified as “work” or “nonwork” property. Id. at * 4-5. In reaching this decision, the Minnesota Supreme Court acknowledged that the “same iss ue is currently pending before the Eighth Circuit Court of Appeals in Rah r Malting Co. v. Climatic Control.” Id. at * 5 n.3. In fact, the parties or their counsel in this case submitted briefs in the Employers Mutual case. Id.
II.
When a district court has interpreted an unambiguous written document, th e standard of review by this court is de novo. See , e.g. , H orton Mfg. Co., Inc. v. Tol-OMatic, Inc. , 973 F.2d 649, 650 (8th Cir. 1992). Likewise, when we review a district court’s determination of state law, the standard of our review is also de novo. See , e.g. , Haugen v. Total Petroleum, Inc. , 971 F.2d 124, 126 (8th Cir. 1992).
Did th e district court properly apply Minnesota law when construing th e unam biguous waiver clause in the standard AIA contract? Given the Employer s Mutual decision , it is apparent that the district court ably predicted and then correctly applied Minnesota law. Accordingly, we affirm. A true copy. Attest: CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.