Court Opinion

ID: 4216490
Source: CourtListenerOpinion
Date Created: 2017-10-31 17:08:36.794825+00
Date Added: 2024-06-11T07:47:07.917504
License: Public Domain

FILED
                                                                        Oct 31 2017, 8:41 am

                                                                              CLERK
                                                                        Indiana Supreme Court
                                                                           Court of Appeals
                                                                             and Tax Court

ATTORNEYS FOR APPELLANT                                    ATTORNEY FOR APPELLEE
Richard T. Mullineaux                                      Peter S. Kovacs
Crystal G. Rowe                                            Peter Kovacs Law PC
Alyssa C.B. Cochran                                        Fishers, Indiana
Kightlinger & Gray, LLP
New Albany, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Performance Services, Inc., an                             October 31, 2017
Indiana Corporation and                                    Court of Appeals Case No.
Huntingburg Machine Works,                                 19A01-1607-CT-1743
Inc., an Indiana Corporation,                              Appeal from the Dubois Circuit
Appellants-Defendants,                                     Court
                                                           The Honorable Nathan A.
        v.                                                 Verkamp, Judge
                                                           Trial Court Cause No.
Hanover Insurance Company, as                              19C01-1408-CT-476
Subrogee of the Southwest
Dubois County Schools,
Appellee-Plaintiff.

Brown, Judge.

Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017                     Page 1 of 18
[1]   This interlocutory appeal involves a subrogation action that arose from a

      property insurance claim made by Southwest Dubois County School

      Corporation (“Southwest”) with its insurer, Hanover Insurance Company

      (“Hanover”), in connection with damage which occurred during a multi-phase

      construction and renovation project to a high school that Southwest owns and

      operates. The claim was settled, and Hanover, as subrogee for Southwest,

      brought an action against two subcontractors who worked on the project

      seeking reimbursement for the insurance claim. The subcontractors,

      Performance Services, Inc. (“PSI”) and Huntingburg Machine Works, Inc.

      (“Huntingburg”), appeal the trial court’s order denying their joint motion for

      summary judgment. They raise two issues, one of which we find dispositive:

      whether the trial court erred in denying PSI and Huntingburg’s summary

      judgment motion because Hanover’s subrogation rights are waived. We reverse

      and remand.

                                       Facts and Procedural History

[2]   Southwest owns and operates Southridge High School located in Huntingburg,

      Indiana. Hanover is the property insurer for the school. In 2009, Southwest

      decided to undertake a construction and renovation project (“Project”) at the

      school which was to occur in phases. Phase 1A consisted of adding a new

      auxiliary gym and boiler room to the existing school. Phase 1B was the

      renovation of the entire school, one section of the school at a time.

      Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017   Page 2 of 18
[3]   On April 1, 2009, Southwest contracted with The Skillman Corporation

      (“Construction Manager”) to serve as the construction manager for the Project

      and to oversee the renovations and coordinate the activities of contractors that

      subsequently would be hired to perform the work on the Project. The executed

      contract between Southwest and the Construction Manager (the “Construction

      Manager Contract”) was comprised of the American Institute of Architects’

      (AIA) standard form B801TM CMa-1992 titled “Standard Form of Agreement

      Between Owner and Construction Manager.” The Construction Manager

      Contract incorporated by reference the AIA Document A201/CMaTM General

      Conditions of the Contract for Construction, Construction-Manager Advisor

      Edition (the “A201/CMa”) which, among other things, defined certain terms

      not defined in the Construction Manager Contract. The Construction

      Manager’s services were contracted to span a thirty-six month period. The

      Construction Manager was responsible for reviewing Southwest’s construction

      plan, approving a detailed estimate of probable construction costs, assisting

      Southwest in achieving a budget for construction costs, reviewing design

      documents, preparing a project schedule, updating the project schedule,

      advising on the division of work among contractors, and inspecting the

      contractors’ final work product. The Construction Manager also was

      responsible for awarding contracts on Southwest’s behalf, even though the

      contracts would be signed by Southwest and the various contractors. Under

      Section 10.4 of the Construction Manager Contract, Southwest and the

      Construction Manager agreed to waive all subrogation rights against each other

      Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017   Page 3 of 18
      and all contractors for any damage that might occur during the Project that was

      covered by property insurance. Appellants’ Appendix Volume 2 at 92.

[4]   One aspect of the Project included the installation of an energy-efficient

      heating, ventilation, and air conditioning (“HVAC”) replacement system. On

      July 12, 2010, Southwest contracted with PSI for the purchase and installation

      of the system (the “PSI Contract”). The PSI Contract did not include a

      subrogation waiver, and it did not incorporate by reference the Construction

      Manager Contract. The PSI Contract did include an integration clause,

      providing: “all previous conversations, correspondence, agreements, or

      representations not included in the Agreement are not part of the Agreement.”

      Id. at 26.

[5]   On January 11, 2011, PSI contracted with Huntingburg, as a subcontractor, to

      complete the piping and sheet metal work for the HVAC replacement system

      (the “Huntingburg Subcontract”). The Huntingburg Subcontract contained a

      subrogation-waiver clause that provided that Huntingburg’s insurance carriers

      had “no right of subrogation against” PSI or Southwest “with respect to losses

      arising out of or in connection with the Work on the Project under the

      Subcontract,” and also included a liability-indemnification provision. Id. at

      165, 171.

[6]   At some point during the construction process, water escaped from an

      uncapped pipe and flowed through the ceiling of Southridge High School’s

      technology room and onto the school’s computer, phone, and intercom

      Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017   Page 4 of 18
      processing equipment. The damage was discovered on September 26, 2011.

      Southwest reported the loss to Hanover on September 29, 2011. The damages

      totaled $698,661.71. On August 10, 2012, Hanover settled Southwest’s

      insurance claim for the full amount of the damages. Southwest released

      Hanover from any further claims related to the property damage. The release

      was executed on August 6, 2012.

[7]   On August 18, 2014, more than two years after the release was executed,

      Hanover, as Southwest’s subrogee, filed suit against PSI and Huntingburg for

      negligence and to be reimbursed for the insurance claim. PSI and Huntingburg

      filed a joint motion for summary judgment arguing that Hanover’s claims were

      barred by the waiver of subrogation clause in the Construction Manager

      Contract. Hanover filed a cross-motion for summary judgment, a hearing was

      held on the motions, and the trial court denied both summary judgment

      motions. PSI and Huntingburg timely moved the trial court to certify for

      interlocutory appeal the denial of their summary judgment motion. The trial

      court granted their motion and certified the order, and this Court has granted

      permission to bring the interlocutory appeal.

                                                    Discussion

[8]   The issue is whether the trial court erred in denying PSI and Huntingburg’s

      joint summary judgment motion because Hanover’s claims are barred by the

      waiver of subrogation clause found in the Construction Manager Contract. Our

      standard of review of a summary judgment motion is the same standard used in

      the trial court:
      Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017   Page 5 of 18
              [S]ummary judgment is appropriate only where the evidence
              shows there is no genuine issue of material fact and the moving
              party is entitled to judgment as a matter of law. All facts and
              reasonable inferences drawn from those facts are construed in
              favor of the non-moving party. The review of a summary
              judgment motion is limited to those materials designated to the
              trial court.

      Tom-Wat, Inc. v. Fink, 741 N.E.2d 343, 346 (Ind. 2001) (internal citations

      omitted). The moving party bears the initial burden of making a prima facie

      showing that there are no genuine issues of material fact and that it is entitled to

      judgment as a matter of law. Reed v. Reid, 980 N.E.2d 277, 285 (Ind. 2012).

      Summary judgment is improper if the movant fails to carry its burden, but if it

      succeeds, then the nonmoving party must come forward with evidence

      establishing the existence of a genuine issue of material fact. Id. We construe

      all factual inferences in the nonmoving party’s favor and resolve all doubts as to

      the existence of a material issue against the moving party. Id.

[9]   PSI and Huntingburg argue that the trial court erred by denying their motion

      for summary judgment because “the undisputed material facts demonstrate that

      Hanover’s claims against [them] are barred” by the waiver-of-subrogation

      clause contained in the Construction Manager Contract. Appellants’ Brief at

      13-14. According to PSI and Huntingburg:

              [W]hen Southwest entered the [PSI Contract], it no longer
              possessed subrogation rights (because Southwest had waived all
              such rights in the [Construction Manager] Contract) . . . .
              Accordingly, Southwest’s waiver of subrogation for property
              damage . . . to the extent covered by property insurance, has full

      Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017   Page 6 of 18
               force against Hanover’s rights as Southwest’s subrogee. . . .
               Regardless of whether the subsequent [PSI Contract] . . .
               contained an integration clause, Southwest did not recoup a right
               [to subrogation] it had already contracted away.

       Id. at 14, 17, 21. Hanover maintains that the PSI Contract was a “separate and

       distinct contract executed over 15 months after the [Construction Manager]

       Contract,” and that the PSI Contract, “along with the Huntingburg Subcontract
                                                                                                    1
       (which incorporates the PSI Contract), are the controlling agreements.”

       Appellee’s Brief at 16. It argues that “the PSI Contract does not incorporate the

       terms of any prior contracts, including the waiver of subrogation in the

       [Construction Manager Contract].” Id. Therefore, according to Hanover,

       “there simply is no waiver of subrogation that applies to Hanover’s claims.” Id.

[10]   Interpretation and construction of contract provisions are questions of law.

       Fischer v. Heymann, 943 N.E.2d 896, 900 (Ind. Ct. App. 2011), trans. denied. As

       such, cases involving contract interpretation are particularly appropriate for

       summary judgment. Westfield Cos. v. Knapp, 804 N.E.2d 1270, 1274 (Ind. Ct.

       App. 2004), trans. denied. We review the contract as a whole, attempting to

       ascertain the parties’ intent and making every attempt to construe the contract’s

       language “so as not to render any words, phrases, or terms ineffective or

       meaningless.” Fischer, 943 N.E.2d at 900 (citation omitted). We examine the

       1
        Hanover asserts that neither the PSI Contract nor the Huntingburg Subcontract contains a waiver of
       subrogation clause. However, as discussed below, the Huntingburg Subcontract does contain a waiver of
       subrogation clause. See Appellants’ Appendix 2 at 165, Article 5.10.

       Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017                  Page 7 of 18
       parties’ intent at the time the contract was made. Dave’s Excavating, Inc. v. City

       of New Castle, 959 N.E.2d 369, 376-377 (Ind. Ct. App. 2012), trans. denied.

[11]   Where terms of a contract are clear and unambiguous, we will apply the plain

       and ordinary meaning of the terms and enforce the contract according to its

       terms. Claire’s Boutiques, Inc. v. Brownsburg Station Partners LLC, 997 N.E.2d
1093, 1098 (Ind. Ct. App. 2013). If necessary, the text of a disputed provision

       may be understood by referring to other provisions within the four corners of

       the document. Id. The four corners rule states that where the language of a

       contract is unambiguous, the parties’ intent is to be determined by reviewing the

       language contained within the “four corners” of the contract, and “parol or

       extrinsic evidence is inadmissible to expand, vary, or explain the instrument

       unless there has been a showing of fraud, mistake, ambiguity, illegality, duress

       or undue influence.” Adams v. Reinaker, 808 N.E.2d 192, 196 (Ind. Ct. App.

       2004). Extrinsic evidence cannot be used to create an ambiguity. Id.

[12]   Regarding integration clauses, the Indiana Supreme Court has held that the

       determination of whether the parties intended a writing to be totally integrated

       must be based on all the relevant evidence. Franklin v. White, 493 N.E.2d 161,

       166 (Ind. 1986); see I.C.C. Protective Coatings, Inc. v. A.E. Staley Mfg. Co., 695
N.E.2d 1030, 1035 (Ind. Ct. App. 1998), trans. denied. An integration

       clause does not control the question of whether a writing is or was intended to

       be a completely integrated agreement. Id. The weight to be given

       an integration clause will vary depending on the facts and circumstances of

       each particular case. Id.

       Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017   Page 8 of 18
[13]   A contract may incorporate external documents by reference. See I.C.C.

       Protective Coatings, 695 N.E.2d at 1036 (“Other writings, or matters contained

       therein, which are referred to in a written contract may be regarded as

       incorporated by the reference as a part of the contract and, therefore, may

       properly be considered in the construction of the contract.”). Where a written

       contract refers to another instrument and makes the terms and conditions of

       such other instrument a part of it, the two will be construed together as the

       agreement of the parties. Id.

[14]   Here, the contracts at issue are the Construction Manager Contract along with

       the incorporated A201/CMa general conditions, the PSI Contract, and the

       Huntingburg Subcontract. Article 10.4 of the Construction Manager Contract

       addresses waivers of subrogation and provides as follows:

               Waivers of Subrogation. [Southwest] and Construction Manager
               waive all rights against each other and against the Contractors,
               . . . for damages, but only to the extent covered by property
               insurance during construction, except such rights as they may
               have to the proceeds of such insurance as set forth in the
               [A201/CMa general conditions]. [Southwest] and Construction
               Manager each shall require similar waivers from their
               Contractors, Architect, consultants, agents, and persons or
               entities awarded separate contracts administered under
               [Southwest’s] own forces.

       Appellants’ Appendix Volume 2 at 92. Article 3 of the A201/CMa addresses

       the duties of the “Contractor,” and Paragraph 3.1.2 of the Article provides that

       the term “Contractors” in the plural “refers to persons or entities who perform

       Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017   Page 9 of 18
construction under [the] Conditions of the Contract that are administered by

the Construction Manager . . . .” Id. at 126. Article 11.3 of the A201/CMa

addresses the property insurance Southwest was required to maintain, and

Paragraph 11.3.1 of the Article specifically provides:

        Unless otherwise provided, [Southwest] shall purchase and
        maintain, in a company or companies lawfully authorized to do
        business in the jurisdiction in which the Project is located,
        property insurance in the amount of the initial Contract Sum as
        well as subsequent modifications thereto for the entire Work at
        the site on a replacement cost basis without voluntary
        deductibles. Such property insurance shall be maintained . . .
        until final payment has been made . . . or until no person or
        entity other than [Southwest] has an insurable interest in the
        property . . . whichever is earlier. This insurance shall include
        interests of [Southwest], the Contractor, Subcontractors, and
        Sub-subcontractors in the Work.

Id. at 140. Paragraph 11.3.1.1 of the Article states:

        Property insurance shall be on an “all-risk” policy form and shall
        insure against the perils of fire and extended coverage and
        physical loss or damage, including . . . theft, vandalism,
        malicious mischief, collapse, false work, temporary buildings and
        debris removal including demolition occasioned by enforcement
        of any applicable legal requirements, and shall cover reasonable
        compensation for Architect’s services and expenses required as a
        result of such insured loss. Coverage for other perils shall not be
        required unless otherwise provided in the Contract Documents.

Id. The A201/CMa defines “Work” as follows:

Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017   Page 10 of 18
               [T]he 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 fulfill the
               Contractor’s obligations. The Work may constitute the whole or
               a part of the Project.

       Id. at 124.

[15]   Under the provisions of the PSI Contract, PSI was required to maintain liability

       insurance in certain minimal amounts. Id. at 25. Southwest was to “assume

       full responsibility for any risk of loss to the Work after it [was] installed and

       operational.” Id. PSI was “responsible for risk of loss after the Work [was]

       installed and operational to the extent that the loss was caused by PSI’s

       negligence or willful misconduct in connection with the performance of the

       Work.” Id. The “Work” was to take place during Phase 1A of the Project and

       included a replacement HVAC system. Id. at 27. The contract included an

       integration clause that reads as follows: “The Agreement, with its attachments

       and exhibits, is the full Agreement between PSI and [Southwest] . . . . All

       previous conversations, correspondence, agreements, or representations not

       included in the Agreement are not part of the Agreement between PSI and

       [Southwest].” Id. at 26.

[16]   The Huntingburg Subcontract “concern[ed]” PSI as “Contractor,” Huntingburg

       as “Subcontractor,” and Southwest as “Owner.” Id. at 156. The “Project

       Description” under the subcontract reads as follows: “Additions and

       Renovation – Phase 1B Southridge High School and Middle School &

       Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017   Page 11 of 18
       Guaranteed Energy Savings Project.” Id. The “Project Location” is listed as

       “Southridge High School.” Id. Paragraph 1.1 of the subcontract incorporates

       by reference the PSI Contract. Id. at 158. Paragraph 5.10 of the subcontract

       includes a subrogation-waiver clause that reads as follows:

               The insurance carriers shall have no right of subrogation against
               [PSI and Southwest] . . . and [Huntingburg] shall obtain from
               each of its insurers a waiver of subrogation on all insurance
               coverages required in this Article, including, but not limited to,
               Commercial General Liability, Workers Compensation,
               Employer’s Liability and Business Auto Liability, in favor of the
               parties identified herein with respect to losses arising out of or in
               connection with the Work on the Project under the Subcontract.

       Id. at 165.

[17]   The insurance policy that Hanover issued to Southwest contains a section that

       allows the insured, Southwest, to waive subrogation rights. The section

       provides:

               If any person or organization to or for whom we make payment
               under this Coverage Part has rights to recover damages from
               another, those rights are transferred to us to the extent of our
               payment. That person or organization must do everything
               necessary to secure our rights and must do nothing after loss to
               impair them. But you may waive your rights against another
               party in writing . . . . This will not restrict your insurance.

       Appellants’ Appendix Volume 3 at 86.

       Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017   Page 12 of 18
[18]   In Bd. of Comm’rs of Cnty. of Jefferson v. Teton Corp., 30 N.E.3d 711, 713 (Ind.

       2015), cited by PSI and Huntingburg, Jefferson County awarded the first phase

       of its courthouse remodeling plan to Teton Corporation, and both parties signed

       a contract that incorporated a 1987 version of the standard form of the

       American Institute of Architects (“AIA”) contract and the general conditions.

       The AIA contract contained a broad waiver of subrogation provision for all

       damages covered by property insurance. A fire destroyed much of the Jefferson

       County courthouse while the renovation work was being performed, and it was

       alleged that a roofing subcontractor started the fire while it was soldering

       downspouts near the wood frame of the building. The fire destroyed both

       property that was the subject of the construction contract (the work) as well as

       property that was not subject to the contract (non-work property). Jefferson

       County’s property insurer paid the county for the loss. Jefferson County then

       filed a subrogation claim (presumably on behalf of its insurance company)

       against Teton and other subcontractors to recover the loss associated with the

       non-work. The Indiana Supreme Court found that the subrogation waiver

       barred Jefferson County’s claim and held as follows:

               [T]he plain meaning of the contract defines the scope of the
               waiver based on the extent and source of coverage, not the nature
               of the property damaged. Accordingly, we agree with the majority
               of jurisdictions that have applied this plain meaning to bar
               recovery for all damages covered by the same property insurance
               policy used to cover construction-related damages – commonly
               referred to as the “any insurance” approach. Because [Teton and
               the subcontractors] have shown that [Jefferson County’s]

       Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017   Page 13 of 18
               insurance covered all damages, the subrogation waiver applies to
               bar [Jefferson County’s] claim.

       Id. at 712-713.

[19]   PSI and Huntingburg also cite cases from other jurisdictions, Best Friends Pet

       Care, Inc. v. Design Learned, Inc., 77 Conn. App. 167, 823 A.2d 329 (2003), and

       Behr v. Hook, 173 Vt. 122, 787 A.2d 499 (2001), maintaining that “[t]hese courts

       have expressly held that subrogation-waiver clauses contained in the contract

       for the project apply to subsequent contracts entered for particular phases of

       construction, and each subsequent contract need not contain a separate waiver-

       of-subrogation clause when subrogation has already been broadly waived.”

       Appellants’ Brief at 22.

[20]   Best Friends and Behr both addressed whether the waiver-of-subrogation

       provision in the general construction AIA contract between the owner of the

       project and the general contractor could still be enforced even though the

       general contractor failed to obtain subrogation waivers from subcontractors. In

       Best Friends, the Connecticut Court of Appeals held that:

               [T]he failure of [construction manager] to obtain a waiver of
               subrogation provision from [subcontractor] does not thwart the
               intent of the parties to the contract. The [trial] court found that
               the clearly expressed intent of the contract was that parties to the
               contract waive all subrogation claims against each other and their
               consultants. Additionally, it found that the absence of a similar
               agreement between [construction manager and subcontractor]
               does not obscure that clarity, nor does its absence “affect the
               validity of the waiver provision in the [AIA contract] between

       Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017   Page 14 of 18
               Best Friends[, owner,] and [construction manager].” We agree
               with the [trial court].

       Best Friends, 77 Conn. App. at 180, 823 A.2d at 337 (footnote omitted). In Behr,

       the Vermont Supreme Court noted the general construction AIA contract “[did]

       not make obtaining the waivers from subcontractors a condition precedent to

       application of the waiver-of-subrogation provision;” the “plain intent of the

       parties was to make the [owners’] insurer bear the risk of property damage

       resulting from fire or other perils;” and, “[b]ecause the waiver-of-subrogation

       provision required that the waiver be recognized in the insurance policy, the

       insurer knew the risk when it insured [the owners] and presumably set the rates

       based on that risk.” Behr, 171 Vt. at 130-131, 787 A.2d at 505. The court held

       that “the absence of mutual waivers with respect to the subcontractors was not

       a material breach affecting the primary purpose of the [subrogation waiver]

       provision, which was to protect the contractor and its subcontractors from

       liability for accidental property loss.” Id. at 131, 787 A.2d at 505-506.

[21]   In South Tippecanoe Sch. Bldg. Corp. v. Shambaugh & Son, Inc., 182 Ind. App. 350,

       360, 363, 395 N.E.2d 320, 326-328 (1979), another case cited by PSI and

       Huntingburg, we addressed the issue of waiver of subrogation in the context of

       an AIA construction contract. In South Tippecanoe, the loss occurred during

       construction. Id. at 352-353, 395 N.E.2d at 322. However, we noted that the

       AIA construction contract indicated an “intent to place any risk of loss on the

       Work on insurance,” and that the “requirement of waivers, . . . [was] consistent

       with an intent to place the risk of loss on insurance.” Id. at 360-361, 395

       Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017   Page 15 of 18
N.E.2d at 326. Moreover, we reasoned that “provisions of Article 11 of the

       General Conditions reveal a ‘studied attempt’ by the parties to require

       construction project risks to be covered by insurance and to ‘allocate among the

       parties the burden of acquiring such insurance.’” Id. at 360, 395 N.E.2d at

       326. Ultimately, we held that certain parties were intended insureds and could,

       therefore, enforce the AIA construction contract’s waiver of subrogation clause.

       Id. at 362-363, 395 N.E.2d at 327-328.

[22]   Property owners and contractors routinely agree to waive subrogation rights for

       damages. Teton, 30 N.E.3d at 712. “The AIA subrogation waiver is well-

       known in the construction industry and it plays a critical role in the AIA

       contract’s scheme of remedying construction losses through insurance claims,

       not lawsuits.” Id. at 715 (citing American Zurich Ins. Co. v. Barker Roofing, L.P.,

       387 S.W.3d 54 (Tex. Ct. App. 2012)).

[23]   Southwest and the Construction Manager entered into the Construction

       Manager Contract pursuant to which they agreed to waive subrogation rights

       “against each other and against the Contractors” in the event that damage to

       property occurred during the Project. Appellants’ Appendix Volume 2 at 92.

       There is no dispute that PSI and Huntingburg constitute “Contractors” under

       Paragraph 3.1.2 of the A201/CMa. The Construction Manager Contract

       further required Southwest and the Construction Manager to obtain similar

       waivers from contractors. Id. The language of the Construction Manager

       Contract supports the conclusion that the intent of the parties was to waive all

       subrogation claims against contractors and subcontractors. We observe that the

       Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017   Page 16 of 18
       requirement of waivers in the Construction Manager Contract is consistent with

       an intent to place the risk of loss on insurance, and as the Court noted in Teton

       this is a common practice in the construction industry. We also observe that

       the Construction Manager Contract did not make obtaining waivers from

       subcontractors or other contractors a condition precedent to application of the

       waiver-of-subrogation provision. While the PSI Contract did not include a

       subrogation-waiver clause, the absence of that mutual waiver is not a material

       breach affecting the primary purpose of the subrogation-waiver provision to

       protect the contractors from liability for a loss under these circumstances. We

       also note that the insurance policy which Hanover issued to Southwest

       contemplated that Southwest may waive its subrogation rights. Specifically, the

       insurance policy provided that Southwest “may waive [its subrogation] rights

       against another party.” Appellants’ Appendix Volume 3 at 86.                  When the

       water damage occurred, Southwest, PSI, and Huntingburg acted according to

       the waiver-of-subrogation clause found in the Construction Manager Contract,

       as Southwest sought compensation for its loss from its insurer.

[24]   The language of the contracts evidenced an intent of the parties to allocate

       construction risks to their insurers – a business decision as to who would pay if

       damage to property occurred during the Project. The total effect of all the

       contracts was to distribute the risks incidental to the Project to an insurance

       carrier. The absence of waiver-of-subrogation language and the inclusion of an

       integration clause in the PSI Contract do not convince us otherwise. The

       waiver-of-subrogation clause in the Construction Manager Contract waived any

       Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017       Page 17 of 18
       rights of Hanover to seek compensation from PSI and Huntingburg. Based

       upon the record and the authority discussed above, we conclude that PSI and

       Hanover are entitled to summary judgment.

                                                     Conclusion

[25]   For the foregoing reasons, the judgment of the trial court is reversed, and we

       remand for entry of summary judgment in favor of PSI and Huntingburg.

[26]   Reversed and remanded.

       May, J., and Pyle, J., concur.

       Court of Appeals of Indiana | Opinion 19A01-1607-CT-1743 | October 31, 2017   Page 18 of 18