* District Judge for the Western District of Texas,

sitting by designation. 

 

**Pursuant to Local Rule 47.5, the court has determined

that this opinion should not be published and is not precedent

except under the limited circumstances set forth in Local Rule

47.5.4.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 95-60805

FIDELITY & GUARANTY INSURANCE CO.,

Plaintiff-Appellee,

versus

CRAIG-WILKINSON, INC.,

Defendant-Appellant.

Appeal from the United States District Court

for the Southern District of Mississippi

(3:93-CV-694)

October 23, 1996

Before JONES and WIENER, Circuit Judges, and FURGESON,* District

Judge. 

PER CURIAM**:

This is an appeal from an adverse judgment of the district

court following a bench trial in a diversity case that essentially
2

pitted one insurance company against another. The litigation was

a result of claims produced when fire destroyed a single-family

residence during the course of construction of an addition to it.

Concluding that the district court correctly ruled that mutual

waivers of subrogation by the homeowners and the general contractor

did not affect the policy of homeowner’s insurance covering the

principal residence, to which the contractor was building the

addition, we affirm. 

I

Defendant-Appellant Craig-Wilkinson, Inc. (Contractor) insists

that the district court erred in holding that mutual waivers of

subrogation by the Contractor and the homeowners (the persons

insured by Plaintiff-Appellee Fidelity & Guaranty Insurance Company

(F&G) under a homeowner’s policy) were ineffective against F&G.

This ruling allowed F&G to sue the Contractor in subrogation to

recover amounts paid by F&G to its insureds under the homeowner’s

policy for fire damage to their principal residence and its

contents. The thrust of Contractor’s argument is that (1) under

article 17.6 of the construction agreement, F&G’s homeowner’s

policy constitutes “other property insurance applicable to the

Work,” and (2) despite the construction contract’s definition of

the “Project” as “[t]he addition to the residence,” and despite the

statement in that contract that the “Work might constitute the

whole or a part of the Project,” the principal residence does fall

within the contract’s definition of the “Work” as 
3

the construction and services required by the contract

documents, whether completed or partially completed, and

includes all other labor, materials, equipment and

services provided or to be provided by the Contractor to

fulfil the Contractor’s obligations. 

Thus, insists the Contractor, inasmuch as its services in

constructing the addition necessarily included work on the existing

residence (such as connecting the addition to the residence,

including plumbing, electrical, and physical portions of the

existing dwelling), the term “Work” had to comprise the existing

house as well as the addition. Indeed, notes the Contractor, the

very electrical fixture that caused the fire was one that the

Contractor had moved from its existing location on the original

residence and placed in another part of that structure in

conjunction with constructing the addition and connecting it to the

house so as to make the addition an integral part of it. 

The Contractor also perceives support in its letter of May 19,

1993, addressed to the homeowners, which varied the insurance

responsibilities of the parties from those specified in the

contract documents. In an effort to obtain the “most coverage at

the best price” during the period of construction, the homeowners

and the Contractor agreed that (1) the Contractor would obtain a

policy of Builders Risks insurance on the new addition only and

would name the homeowners as additional insureds; (2) the

homeowners would leave the F&G homeowner’s policy “as is” (covering

only the existing residence at its current, pre-addition value,

without naming the Contractor as an additional insured, and without
4

increasing either the value of the insured property or the

premiums) until completion of the addition; and, (3) the Contractor

would send the owner a copy of the Builders Risks Certificate “as

well as a Certificate on our personal [general liability]

coverage,” indicating that the Contractor would continue to

maintain its comprehensive general liability insurance in effect to

cover the Contractor’s responsibility for any and all damages

arising from its negligence. 

II

We have now carefully considered the essentially undisputed

facts revealed by the record, as found by the district court and as

addressed by able counsel in their respective briefs and oral

arguments to this court. With equal care we have considered the

applicable law, as explained by counsel both orally and in briefs,

as applied by the district court in reaching its decision, and as

independently researched and analyzed on our own. In the end, we

are convinced that the district court committed no reversible error

in holding that the homeowner’s insurance policy issued by F&G was

neither obtained pursuant to article 17 of the construction

contract (it clearly had been obtained by the homeowner well in

advance of the construction contract) nor “other property insurance

applicable to the Work” (the F&G policy was applicable to the

existing residence only and the contract’s definition of the Work

is not broad enough to include that residence). 

Regardless of the incidental involvement of the Contractor and
5

its subcontractors with the existing residence (such as sending the

plumber under the house to check on plumbing connections, removing

and relocating the fateful flood light, and the like), the concept

of the “Work” is not mystically expanded to include the entire

existing residence. This is particularly so when as here the 

concept of the “Project,” which the construction agreement defines

as “an addition to the residence,” can never be less than the Work:

The Work is defined as constituting “the whole or a part of [and

thus can never be more than] the Project.” As noted, the

Contractor’s letter of May 19, 1993, advocated retaining the

existing F&G policy “as is,” i.e., applicable only to the existing

residence, throughout the entire construction period of the

addition. 

Simply put, as the existing residence cannot be deemed to be

a component part of the Work, it follows that F&G’s homeowner’s

policy —— insuring as it did only the existing residence ——

provided no coverage of the Work, i.e., the new addition. That in

turn precludes the homeowners’ and the Contractor’s reciprocal

waivers of subrogation from affecting F&G’s homeowner’s policy; by

definition, the waivers applied only to policies (1) obtained

pursuant to article 17 of the contract or (2) applicable to the

Work. F&G’s homeowner’s policy was neither, so it was not affected

by the waivers. 

This hiatus in the effect of the waivers of subrogation frees

F&G to pursue subrogation against the Contractor (in reality,
 

3 556 N.E.2d 1097 (N.Y. 1990). 

6

against the issuer of the Contractor’s comprehensive general

liability policy) for the costs and expenses incurred by F&G under

the homeowner’s policy as a result of the fire attributable to

Contractor’s negligence. When the homeowners and the Contractor

elected to maintain and provide insurance in the manner proposed by

Contractor in the letter of May 19, 1993, the seeds were sewn for

the creation of that hiatus in the effectiveness of the waiver of

subrogation. The facts considered by New York’s Court of Appeals

in S.S.D.W. Co. v. Brisk Waterproofing Co., Inc.3 are essentially

indistinguishable from those presented by the instant case; at

best, any distinctions are without a difference. And, like the

district court before us, we agree with the analysis of the

majority opinion in Brisk and its applicability to the instant

facts and circumstances. 

III

Finding no reversible error in the district court’s conduct of

the bench trial in this case or in that court’s findings,

reasoning, and ultimate holding, we affirm the judgment of the

district court in all respects. 

AFFIRMED.