Court Opinion

ID: 2725632
Source: CourtListenerOpinion
Date Created: 2014-09-08 20:51:32.630585+00
Date Added: 2024-06-11T15:39:20.282895
License: Public Domain

FOR PUBLICATION
                                                           FEB 04 2014, 11:47 am

ATTORNEYS FOR APPELLANT:               ATTORNEYS FOR APPELLEE
                                       TETON CORPORATION:
JULIA BLACKWELL GELINAS
MAGGIE L. SMITH                        RICHARD T. MULLINEAUX
FROST BROWN TODD, LLC                  CRYSTAL G. ROWE
Indianapolis, Indiana                  KIGHTLINGER & GRAY, LLP
                                       New Albany, Indiana

                                       ATTORNEYS FOR APPELLEE
                                       INNOVATIVE ROOFING SOLUTIONS,
                                       INC.
                                       SCOTT L.TYLER
                                       ERIC T. EBERWINE
                                       WATERS, TYLER, HOFFMANN &
                                       SCOTT, LLC
                                       New Albany, Indiana

                                       ATTORNEYS FOR APPELLEES
                                       GUTAPFEL ROOFING, INC. and
                                       DANIEL L. GUTAPFEL
                                       GROVER B. DAVIS
                                       JAMES T. FLANIGAN
                                       McCLURE McCLURE & DAVIS
                                       Indianapolis, Indiana

                            IN THE
                  COURT OF APPEALS OF INDIANA

THE BOARD OF COMMISSIONERS             )
OF THE COUNTY OF JEFFERSON             )
                                       )
     Appellant,                        )
                                       )
        and                            )    No. 72A04-1302-CT-00055
                                       )
TETON CORPORATION, INNOVATIVE          )
ROOFING SOLUTIONS, INC., GUTAPFEL      )
ROOFING, INC. and DANIEL L. GUTAPFEL   )
                                       )
     Appellees.                        )
                      APPEAL FROM THE SCOTT CIRCUIT COURT
                          The Honorable Roger L. Duvall, Judge
                             Cause No. 72C01-1108-CT-15

                                     February 4, 2014
                            OPINION – FOR PUBLICATION

MATHIAS, Judge

         The Board of Commissioners of Jefferson County (“Jefferson County”) appeals

the Scott Circuit Court’s entry of summary judgment in favor of Teton Corporation,

Innovative Roofing Solutions, Inc., Gutapfel Roofing Inc., and Daniel L. Gutapfel

(collectively “the Appellees”). The trial court determined that Jefferson County waived

its right to subrogate damages pursuant to the terms of the American Institute of

Architects Contract (“the AIA Contract”) it entered into with the general contractor,

Teton.

         On appeal, Jefferson County raises the following dispositive issue: whether the

trial court erred when it determined that the County waived its right to subrogate damages

to non-Work property. We conclude that Jefferson County waived its right to subrogate

any and all claims covered by its property insurance, and therefore, we affirm the trial

court.

                              Facts and Procedural History

         In 2008, Jefferson County decided to repair and renovate the courthouse in

Madison, Indiana. An architect was hired to design the renovation, and the renovation

involved repairs to the roof of the courthouse, its flashing, gutters, and downspouts.

                                            2
Jefferson County accepted Teton Corporation’s bid for the repairs. Teton subcontracted

with Innovative Roofing to furnish labor and materials for the roofing work. Innovative

Roofing sub-subcontracted with Gutapfel Roofing to repair the courthouse’s downspouts.

      Jefferson County’s agreement with Teton Corporation incorporated a form

construction project contract prepared by the American Institute of Architects (“AIA”).

The relevant AIA contractual provisions relating to insurance and subrogation provide:

      11.3.1 Unless otherwise provided, the Owner [Jefferson County] shall
      purchase and maintain . . . 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, unless otherwise provided in
      the Contract Documents or otherwise agreed in writing by all persons and
      entities who are beneficiaries of such insurance, until final payment has
      been made . . . or until no person or entity other than the Owner has an
      insurable interest in the property required by this Paragraph 11.3 to be
      covered, whichever is earlier. This insurance shall include interests of the
      Owner, the Contractor, Subcontractors and Sub-subcontractors in the Work.

      11.3.1.1 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, without duplication of coverage, theft, vandalism,
      malicious mischief, collapse, falsework, 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.

      11.3.1.2 If the Owner does not intend to purchase such property insurance
      required by the Contract and with all of the coverages in the amount
      described above, the Owner shall so inform the Contractor in writing prior
      to commencement of the Work. The Contractor may then effect insurance
      which will protect the interests of the Contractor, Subcontractors and Sub-
      subcontractors in the Work, and by appropriate Change Order the cost
      thereof shall be charged to the Owner. If the Contractor is damaged by the
      failure or neglect of the Owner to purchase or maintain insurance as

                                           3
      described above, without so notifying the Contractor, then the Owner shall
      bear all reasonable costs properly attributable thereto.

                                           ***

      11.3.3. Loss of Use Insurance. The Owner, at the Owner’s option, may
      purchase and maintain such insurance as will Insure the Owner against loss
      of use of the Owner’s property due to fire or other hazards, however caused.
      The Owner waives all rights of action against the Contractor for loss of use
      of the Owner’s property, including consequential losses due to fire or other
      hazards however caused.

      11.3.5 If during the Project construction period the Owner insures
      properties, real or personal or both, adjoining or adjacent to the site by
      property insurance under policies separate from those insuring the Project,
      or if after final payment property insurance is to be provided on the
      completed Project through a policy or policies other than those insuring the
      Project during the construction period, the Owner shall waive all rights in
      accordance with the terms of Subparagraph 11.3.7 for damages caused by
      fire or other perils covered by this separate property insurance. All separate
      policies shall provide this waiver of subrogation by endorsement or
      otherwise.

                                           ***

      11.3.7 Waivers of Subrogation. The Owner and Contractor waive all
      rights against [] each other and any of their subcontractors, sub-
      subcontractors, agents and employees, each of the other . . . for damages
      caused by fire or other perils to the extent covered by property insurance
      obtained pursuant to this Paragraph 11.3 or other property insurance
      applicable to the Work, except such rights as they have to the proceeds of
      such insurance held by the Owner as fiduciary. . . .

Appellant’s App. pp. 585-86. The AIA contract also defines the term “Work” as “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 fulfill the Contractor’s obligations. The

Work may constitute the whole or part of the Project.” Id. at 571.

                                            4
       Jefferson County did not obtain separate property (or builder’s risk) insurance for

the courthouse project, but relied instead on its existing property and casualty insurance

policy with St. Paul Fire and Marine Insurance Company. Jefferson County also did not

inform Teton Corporation that it did not intend to obtain separate insurance for the

project. The AIA contract also required Teton to obtain contractor’s liability insurance.

       On May 20, 2009, during the renovation, a devastating fire occurred at the

Jefferson County Courthouse, which caused over six million dollars in damage. Per the

terms of its insurance policy, St. Paul made payments to Jefferson County for damages

caused by the fire.

       Thereafter, on May 16, 2011, Jefferson County filed a complaint against the

Appellees alleging negligence, breach of implied warranties, and breach of contract.

Specifically, Jefferson County alleged that Appellee Gutapfel Roofing’s negligence was

the primary cause of the fire, but also alleged that Appellees Teton Corporation and

Innovative Roofing were negligent as well.

       All Appellees later filed separate motions for summary judgment.               Each

Appellee’s motion argued that Jefferson County agreed to provide insurance for the

project, and the County waived its subrogation rights against the Appellees; therefore,

Jefferson County was not entitled to recover damages from the Appellees that were

caused by the fire. Jefferson County responded to the Appellees’ motions and also filed

its own motion for partial summary judgment. The trial court held a hearing on the

motions on September 25, 2012.

                                             5
       On November 21, 2012, the trial court granted the Appellees’ motions for

summary judgment and determined that as a result, Jefferson County’s motion for partial

summary judgment concerning the issue of vicarious liability was moot. The trial court

issued the following pertinent findings of fact to support its decision:

       4. The Plaintiff was obligated to provide insurance to cover the remodeling
       project, commonly referred to as builder’s risk insurance. Plaintiff chose
       not to obtain a separate policy and instead the property was covered by the
       general policy of insurance maintained by Jefferson County.
       5. In addition to the requirement for the Plaintiff to provide insurance for
       the project is the provision found in section 11.3.7 of the contract between
       Plaintiff and Defendant, Teton Corporation. In summary form that
       provision of the contract provided for a mutual waiver of the right of
       subrogation between the Plaintiff and Defendant, Teton Corporation, and
       all “subcontractors, sub-subcontractors, agents and employees . . . .”
       6. Of these facts there is no genuine issue in dispute. The contractual
       provisions reflect the agreement that Plaintiff as owner was to provide
       insurance and that insurance, along with the insurance maintained by the
       various Defendants, would be the source of compensation in the event of a
       loss and each and every party would waive the right to seek recovery of the
       loss covered by the policy of insurance.
       7. Contractual provisions such as those existing in the present case do not
       reflect an effort to avoid or escape responsibility. On the contrary, such
       provisions serve a public interest by defining the costs to which a party
       obligates itself, allocating risk and thereby reducing litigation.

Appellant’s App. p. 14.

       Jefferson County subsequently filed a motion to correct error arguing that the

Appellees failed to submit evidence to the trial court to establish that Jefferson County’s

claimed damages were paid by insurance and asked the court to reconsider its decision

concerning the applicability of the waiver of subrogation provision. In its motion, the

County alleged that not all damages were covered by its St. Paul insurance policy, and

the County spent a considerable amount of its own funds for repairs to the courthouse

                                              6
after the fire. The trial court denied the County’s motion to correct error on January 11,

2013, and this appeal ensued.1

                                    Standard of Review

       Jefferson County argues that the trial court erred when it granted the Appellees’

motions for summary judgment. Our standard of review of summary judgment appeals is

well established:

       When reviewing a grant of summary judgment, our standard of review is
       the same as that of the trial court. Considering only those facts that the
       parties designated to the trial court, we must determine whether there is a
       “genuine issue as to any material fact” and whether “the moving party is
       entitled to a judgment as a matter of law.” In answering these questions, the
       reviewing court construes all factual inferences in the non-moving party’s
       favor and resolves all doubts as to the existence of a material issue against
       the moving party. The moving party bears the burden of making a prima
       facie showing that there are no genuine issues of material fact and that the
       movant is entitled to judgment as a matter of law; and once the movant
       satisfies the burden, the burden then shifts to the non-moving party to
       designate and produce evidence of facts showing the existence of a genuine
       issue of material fact.

Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904 N.E.2d 1267, 1269-70 (Ind. 2009)

(citations omitted). The party appealing a summary judgment decision has the burden of

persuading this court that the grant or denial of summary judgment was erroneous.

Knoebel v. Clark County Superior Court No. 1, 901 N.E.2d 529, 531-32 (Ind. Ct. App

2009). Where the facts are undisputed and the issue presented is a pure question of law,

we review the matter de novo. Crum v. City of Terre Haute ex rel. Dep’t of Redev., 812

N.E.2d 164, 166 (Ind. Ct. App. 2004). Finally, our standard of review is not altered by

1
  We held oral argument in this case on November 21, 2013. We commend counsel for the quality of
their written and oral advocacy.
                                               7
the fact that the parties filed cross-motions for summary judgment. Ind. Farmers Mut. Ins.

Grp. v. Blaskie, 727 N.E.2d 13, 15 (Ind. Ct. App. 2000).

      Furthermore, resolution of this case turns primarily upon interpretation of the

parties’ contract. “The construction of a contract is particularly well-suited for de novo

appellate review, because it generally presents questions purely of law.”        Holiday

Hospitality Franchising, Inc. v. AMCO Ins. Co., 983 N.E.2d 574, 577 (Ind. 2013). The

primary goal of contract interpretation is “‘to determine the intent of the parties at the

time the contract was made as disclosed by the language used to express their rights and

duties.’” Id. at 577-78 (quoting First Fed. Sav. Bank of Ind. v. Key Markets, Inc., 559

N.E.2d 600, 603 (Ind. 1990)). Clear, plain, and unambiguous language is conclusive of

the parties’ intent, and we will neither construe unambiguous contract language nor add

provisions not agreed to by the parties. Vincennes University ex rel. Bd. of Trustees of

Vincennes v. Sparks, 988 N.E.2d 1160, 1165 (Ind. Ct. App. 2013), trans. denied. “A

contract is not ambiguous merely because the parties disagree as to its proper

construction; rather, a contract will be found to be ambiguous only if reasonable persons

would differ as to the meaning of its terms.” Id. We must attempt to interpret a contract

by reading it as a whole and construing its language so as not to render any words,

phrases, or terms ineffective or meaningless. Id. When reading all the terms of a

contract together, more specific terms control over any inconsistent general statements.

Id.

                                            8
                                 Discussion and Decision

       Jefferson County concedes that pursuant to the terms of the AIA contract

subrogation is barred when a property owner seeks to recover damages to its insured

“Work” property, but maintains that “this case involves damage to non-Work property.”

Appellant’s Br. at 10 (emphasis in original). And therefore, Jefferson County argues that

under the AIA contract, Teton was responsible for procuring insurance to cover damages

for claims “other than to the Work.” Appellant’s Br. at 7. In support of its argument,

Jefferson County relies on our court’s prior decision concluding that under the AIA

contract there is a distinction between Work and non-Work property, and the scope of the

waiver is limited to damages to the Work. See Midwestern Indemnity Company v.

Systems Builders, Inc., 801 N.E.2d 661 (Ind. Ct. App. 2004), trans. denied.

       The waiver of subrogation clause at issue is well known and often used in the

construction industry. See American Zurich Ins. Co. v. Barker Roofing L.P., 387 S.W.3d

54 (Tex. Ct. App. 2012). Interpretation of the waiver provision has been litigated in

courts throughout the country, including in our court. However, our supreme court has

not addressed this issue, and therefore, the Appellees urge us to consider decisions from

other states in support of their interpretation of the AIA contract provisions at issue.

       A. The Indiana Decisions to Date (i.e. the Minority Approach)

       In South Tippecanoe School Building Corp. v. Shambaugh & Son, Inc., the school

corporation sought damages for losses sustained in a gas explosion and fire at a school

that was under construction. The school corporation sued various contractors, alleging

negligence among other theories of recovery. 182 Ind. App. 350, 395 N.E.2d 320 (Ind.

                                              9
Ct. App. 1979). After the school corporation’s insurer paid the corporation $74,628.63

for the damages under a builder’s risk policy it had issued, the insurance company

pursued a subrogation action against the contractors. The insurer claimed that the AIA

contract’s waiver of subrogation provision did not bar recovery of amounts covered by

the builder’s risk policy.

       We disagreed and concluded that “‘an agreement to provide insurance constitutes

an agreement to limit recourse of the party acquiring the policy solely to its proceeds

even though the loss may be caused by the negligence of the other party to the

agreement.’” 395 N.E.2d at 326-27 (quoting Morsches Lumber, Inc. v. Probst, 180

Ind.App. 202, 203, 388 N.E.2d 284, 285 (1979)). The AIA contract established the

“intent to place any risk of loss on the Work on insurance,” and the “requirement of

waivers, . . . [was] consistent with an intent to place the risk of loss on insurance.” Id. at

360, 395 N.E.2d at 326. Moreover, our court observed that the insurance provisions of

the AIA standard contract “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 326. Finally, our court concluded that if

a construction project owner failed to take out sufficient insurance “‘to cover the cost of

the undertaking,’” the owner—not the contractors—was required to bear the loss caused

by such a miscalculation. Id. at 334 (quoting Morsches, 180 Ind. App. at 206, 388

N.E.2d at 387).

       Much later, in Midwestern Indemnity, the parties raised an issue not addressed in

South Tippecanoe: whether the property owner waived subrogation rights for damage to

                                             10
“non-Work” property. In that case, the general contractor and property owner entered

into substantially the same AIA contract at issue in this appeal. The general contractor

was hired to construct an addition to a commercial building. Approximately six months

after the building addition was completed, a portion of the addition collapsed during a

snowstorm. The property owner was insured by Midwestern Indemnity under a policy

issued after completion of the construction. Midwestern Indemnity paid the property

owner nearly $1.4 million for the loss, and of that amount approximately $45,000 was for

damage to the contents of the building. Midwestern Indemnity, as subrogee of the

property owner, filed a complaint against the general contractor and its subcontractors to

recover what it had paid. The trial court ultimately entered summary judgment in favor

of the subcontractor, which Midwestern Indemnity appealed.

      That panel of our court observed that under the AIA contract, “waiver of

subrogation applies to recovery for damages from perils insured against under the

property insurance policy.” 801 N.E.2d at 672. However, the panel also stated that “the

waiver of subrogation is limited in scope as to what property is covered.” Id. The

Midwestern Indemnity panel stated that the waiver of subrogation is limited to the work

performed under the contract and concluded:

      By definition, “Work” does not include the contents that were placed in the
      building after it was completed. Further, the waiver of subrogation applies
      to damage caused by perils insured against by the “property insurance
      obtained pursuant to this Paragraph 11.3 or other property insurance
      applicable to the Work....” Accordingly, the scope of the waiver of
      subrogation is limited to the value of the Work performed under the
      contract, i.e., the building addition. Because the contents are not part of the
      Work or completed building addition and because there was no requirement
      to waive subrogation rights as to property damage to property other than the

                                            11
        Work, we hold that the waiver of subrogation does not bar recovery for
        damage to the contents of the building.

Id. at 673 (citation omitted).2 Jefferson County relies heavily on the “Work” v. “non-

Work” distinction recognized by the Midwestern Indemnity panel.

        Recently, another panel of our court decided Allen County Public Library v.

Shambaugh & Son, L.P., et al., 997 N.E.2d 48 (Ind. Ct. App. 2013). In that case, the

Library hired contractors to renovate and add to its main library branch building. Before

construction commenced, the Library obtained a “Builders Risk Plus” insurance policy

specifically to cover the library renovation and addition jobsite.

        While installing a concrete floor in the Library’s basement to support the

installation of an emergency diesel generator and two diesel fuel storage tanks, a steel

stake driven into the ground pierced a copper pipe. This caused approximately 3000

gallons of diesel fuel to leak into the ground underneath the Library. The Library cleaned

up the leaked fuel and filed a claim under its “Builders Risk Plus” policy. The policy

excluded coverage for damage to the water, land, grading or fill. However, “the policy

also contained a specific ‘coverage extension’ for ‘Pollutant Clean Up and Removal’ to

cover expenses to extract pollutants ‘from land or water at a job-site’ resulting in loss to

‘Covered Property.’ This coverage carried its own separate policy limit of $5,000.” Id.

2
  In reaching this conclusion, the panel relied on Town of Silverton v. Phoenix Heat Source System, Inc.,
948 P.2d 9 (Colo. Ct. App. 1997), a decision from the Colorado Court of Appeals. In that case, the Town
of Silverton entered into a contract for installation of a new roof on the town hall, which included the
terms of the AIA contract. The project was completed in May 1991, and in November 1992, the town
hall was damaged by fire. The Town argued that the waiver of subrogation was limited to damage to the
roof and not to other parts of the town hall damaged by the fire. The Colorado court agreed and
concluded that “the waiver of subrogation is limited to the value of the work performed under the contract,
i.e., the new roof, and is inapplicable to other parts of the town hall damaged in the fire.” Id. at 12.

                                                   12
at 51 (record citation omitted). The Library’s carrier paid the $5000 policy limit to the

Library. The Library subsequently sued the general contractor and subcontractors to

recover the nearly $500,000 it had incurred to clean up the diesel fuel leak.

        The general contractor and subcontractors argued that the Library had waived its

right to seek subrogation for the diesel fuel cleanup under the terms of the AIA contract.

Citing extensively to our court’s holding in Midwestern Indemnity, the Allen County

Public Library panel concluded that the Library was not contractually prohibited from

seeking recovery in subrogation from the contractors for the pollution remediating costs.

Specifically, the panel stated:

        the Library is alleging that the diesel fuel leak spread beyond the strict
        confines of the library construction project and seeped into the surrounding
        land, and that the Library has incurred and will continue to incur significant
        costs associated with remediating that seepage from the land. The Library
        was only required by Section 11.3.1 of the AIA contract to cover the cost of
        “the entire Work at the site on a replacement cost basis,” just as in
        Midwestern. The definition of “the Work” likewise is identical to the
        definition in Midwestern—”the construction and services required by the
        Contract....” This evidences an intent that the Library was under no
        obligation to procure insurance for damage to property surrounding the
        jobsite or to property outside of the building project itself. Such damages
        could well exceed and be completely unrelated to the total replacement cost
        of “the Work.” As such, the waiver of subrogation provision in Section
        11.3.7 does not apply to damaged, contaminated land outside of “the
        Work”—i.e ., the library building addition and renovation.

Id. at 54 (record citation omitted).3

        B. The Majority Approach

3
  This case is not yet certified. It was handed down on October 22, 2013, and the Appellees filed a
petition for rehearing. On January 28, 2014, the Allen County Public Library panel issued an opinion on
rehearing to address certain arguments raised in the petition, but reaffirming the original decision in all
respects.
                                                    13
          The majority of courts that have addressed the waiver of subrogation issue under

AIA contract documentation has rejected the “Work” v. “non-Work” approach adopted

by the Midwestern Indemnity panel and followed by the Allen County Public Library

panel. Their approach turns on both the standardized language of the AIA contract and

the public policy behind it.

          For example, the Nebraska Supreme Court declined to adopt the “Work” v. “non-

Work” approach in Lexington Insurance Co. v. Entrex Communication Services, Inc.,

749 N.W.2d 124 (2008). In that case, the property owner entered into an AIA contract

with Entrex to remove an analog antenna from its broadcast tower and replace it with a

digital antenna. To provide insurance coverage for the project, the property owner relied

upon its existing “all-risk” property insurance policy instead of obtaining a separate and

specific “builder’s risk” property insurance policy to cover the Project. The broadcast

tower collapsed approximately six months after the antenna was replaced causing damage

to the antenna (the “Work” property), tower, transmission building, and personal property

within the building. The property owner sued the contractor alleging the contractor’s

gross negligence caused the collapse.

          Rejecting the minority “Work” v. “non-Work” approach, the Nebraska Supreme

Court discussed the provision equivalent to Section 11.3.54 in the contract in this case and

stated:

4
 The Lexington Insurance AIA contract contained the relevant and analogous property insurance
provisions in Article 11, Chapter 4. As we noted in the Facts and Procedural History section, Section
11.3.5 of the AIA contract at issue here states:
          If during the Project construction period the Owner insures properties, real or personal or
          both, adjoining or adjacent to the site by property insurance under policies separate from
                                                      14
       We understand this provision to mean that if the owner acquires a separate
       property insurance policy to cover non-Project property —a policy that did
       not cover the Project or Work property— and the non-Project property is
       damaged, the owner waives subrogation rights for the insurer as to those
       damages. So even though the damage occurred to non-Work property, the
       owner waived subrogation rights because the damages were insured. This
       provision shows that the contracting parties were not opposed to waiving
       damages to non-Work property.

Id. at 135.

       In response to the property owner’s citation to cases holding that the waiver of

subrogation does not apply to non-work property, the Court stated:

       the minority approach is inconsistent with the waiver’s purpose of avoiding
       disruption and disputes among the parties to the project by eliminating the
       need for litigation. Adopting the minority approach would actually
       encourage litigation about whether the claimed loss was damage to the
       Work or non-Work property. More important, we are unable to reconcile
       subparagraph 11.4.5 with the minority approach. If we applied the minority
       approach, we would be left with two disparate results depending on
       whether the owner (1) purchased a single policy covering both the Work
       and the non-Work or (2) purchased two separate policies. An owner relying
       on a single policy, as Hearst did here, would waive only damages to the
       Work (11.4.7). But an owner purchasing two separate policies, as in the
       example above, would waive damages to both the Work (11.4.7) and the
       non-Work (11.4.5). We do not believe the parties intended this disparity.
       Because we must construe the contract as a whole, subparagraph 11.4.5 is a
       hurdle that prevents us from deciding that the minority approach is a
       reasonable interpretation of subparagraph 11.4.7.

Id. at 136. Ultimately, the Nebraska Supreme Court concluded that “the waiver of

subrogation applies to all damages covered by a property insurance policy ‘obtained

       those insuring the Project, or if after final payment property insurance is to be provided
       on the completed Project through a policy or policies other than those insuring the Project
       during the construction period, the Owner shall waive all rights in accordance with the
       terms of Subparagraph 11.3.7 for damages caused by fire or other perils covered by this
       separate property insurance. All separate policies shall provide this waiver of
       subrogation by endorsement or otherwise.

Appellant’s App. p. 586.
                                                  15
pursuant to . . . Paragraph 11.4’ or other property insurance policy that covers the Work.

When that policy is broad enough to cover both the Work and the non-Work property, the

waiver extends to non-Work damages.” Id.

       The Lexington Ins. Co. case relied extensively on a much earlier decision from the

California Court of Appeals, Lloyd’s Underwriters et al. v. Craig and Rush, Inc., et al., 26

Cal. App. 4th 1194 (1994), in reaching its conclusion. In that case, the property owner

hired Craig and Rush to perform repairs to its roof.         During the construction, rain

intruded and caused damage to the interior of the facility.          The property owner’s

insurance company, Lloyd’s Underwriters, paid for the damage (less the deductible) and

then sued Craig and Rush and additional contractors for the contractors’ alleged

negligence.

       The property owner and contractors had entered into the standard AIA contract,

which obligated the owner to maintain property insurance for “the Work” and contained a

waiver of claims that were covered by insurance. Notably, the provisions of the AIA

contract in Lloyd’s Underwriters were substantially the same as the provisions at issue in

this appeal. Also, as in this case, the property owner in Lloyd’s Underwriters elected not

to purchase a separate “builder’s risk” policy but relied on its existing “all risk” policy to

satisfy its obligations under the AIA contract.

       After the losses to “non-Work” property, Lloyd’s as the subrogee of the owner

argued that under the AIA contract a loss “outside the Work” would remain the

contractors’ responsibility.   Id. at 1200.    The California Court of Appeals rejected

Lloyd’s argument stating:

                                              16
       This contention, however, ignores the language defining the scope of
       claims falling within the waiver clause. The waived claims are not defined
       by what property is harmed (i.e., “any injury to the Work”); instead, the
       scope of waived claims is delimited by the source of any insurance
       proceeds paying for the loss (i.e., whether the loss was paid by a policy
       “applicable to the Work”).

Id.

       The Massachusetts Court of Appeals’ decision in Haemonetics Corp. v. Brophy &

Phillips Co., Inc. et al., 501 N.E.2d 524 (Mass. Ct. App. 1986) is yet another example of

the majority approach. In Haemonetics, the property owner entered into a 1977 standard

AIA form contract for the construction of a mezzanine in its building.           While a

subcontractor was engaged in electric arc welding during the construction, a fire occurred

causing damage to the property owner’s real and personal property. The property owner

had relied on an existing property insurance policy to meet its obligation to provide

property insurance under the terms of the AIA contract, and the owner was compensated

for its loss by the “all risks” insurance carrier that provided that coverage. The parties

further agreed that the damage sustained by the property owner for which it received the

insurance proceeds was not damage to the “Work” as that term is defined in the AIA

contract.

       The property owner argued that under the terms of the AIA contract its waiver of

subrogation only applied to damages to the Work property. The Massachusetts Court of

Appeals disagreed and concluded that “the preexisting insurance policy . . . was the

insurance the owner chose to provide to comply with § 11.3 even though that policy may

have been more extensive than what was required. By the terms of [the waiver of

                                           17
subrogation provision], the waiver of rights extends to the proceeds of any insurance

provided under § 11.3.” Id. at 526.

        The Ohio Court of Appeals recently considered this issue in Westfield Insurance

Group v. Affinia Development, LLC., 982 N.E.2d 132 (Ohio Ct. App. 2012), and adopted

the majority approach. In that case, the property owner entered into an AIA contract with

certain contractors for renovations and improvements to its headquarters. As in the case

before us, during the construction, a fire ensued which damaged the entire structure. The

property owner did not purchase a builder’s risk policy, but relied on its commercial

property insurance policy to cover both the structure and contents of the building, and

Westfield Insurance paid the property owner’s claim in excess of $100,000. Westfield, as

a subrogee of the property owner, sued the contractors alleging that their negligence

caused the fire.

        After reviewing the differing reasoning of courts across that country interpreting

the AIA contract’s waiver of subrogation, the Ohio Court of Appeals concluded that the

majority approach “is consistent with the plain and unambiguous language of the

Contract and furthers the purpose of the waiver clause as a risk-shifting provision.”5 Id.

at 144. The court observed: “The Contract defined the waived claims by the source of

5
  Like the Nebraska court, the Ohio court relied on section 11.3.5 in arriving at its conclusion. There are
two minor differences between section 11.3.5 in the above cited cases and the contract language at issue
in this case. Jefferson County’s AIA contract with the contractors substitutes the word “adjoining” for “at”
and the word “causes of loss” for “perils.” See Appellant’s App. p. 586.

                                                   18
the insurance proceeds, not by the property damaged. It is not relevant to the analysis as

to whether the damage was to Work or non-Work property.”6 Id.

       C. The AIA Contract between Jefferson County and the Appellee Contractors

       Applying the law to this case, we begin and end with the standard language of the

AIA contract the parties chose to use to memorialize their agreement regarding the

construction project. That form contract has long been recognized as having as a central

tenet its intention to liquidate and settle construction-related claims through non-

subrogated insurance coverage purchased specifically for the project. See Lexington Ins.

Co., 749 N.W.2d at 135; Haemonetics Corp., 501 N.E.2d at 526.

       Under the plain language of this AIA contract, Jefferson County was directed to

insure the construction project and the building or property it pertains to, and to waive

claims against the associated contractors for losses covered by its insurance. The contract

contains the following specific requirements concerning property insurance coverage:

       Unless otherwise provided, the Owner [Jefferson County] shall purchase
       and maintain . . . 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, unless otherwise provided in the
       Contract Documents or otherwise agreed in writing by all persons and
       entities who are beneficiaries of such insurance, until final payment has
       been made . . . or until no person or entity other than the Owner has an
       insurable interest in the property required by this Paragraph 11.3 to be

6
  See also American Zurich Ins. Co. v. Barker Roofing, L.P., 387 S.W.3d 54, 64-65 (Tex. Ct. App. 2012)
(observing that “waived claims are not defined by what property is harmed, but by the source of any
insurance proceeds paying for the loss”); ASIC II Ltd. v. Stonhard, Inc., 63 F.Supp.2d 85, 92 (D.Me.
1999) (concluding that waiver clause did not restrict waiver of damages to Work but to proceeds of any
insurance provided under the contract); Employers Mut. Cas. Co. v. A.C.C.T., Inc., 580 N.W.2d 490, 493
(Minn. 1998) (concluding that if owner relies on an existing policy broad enough to cover the Work and
the non-Work property, it waives right to sue for all damages so long as that damage is covered by the
policy).
                                                 19
        covered, whichever is earlier. This insurance shall include interests of the
        Owner, the Contractor, Subcontractors and Sub-subcontractors in the Work.

Appellant’s App. p. 585.

        The unambiguous contract language instructed Jefferson County not only to have

in force or even just maintain insurance on the project, but rather, to both “purchase and

maintain” the insurance. Subsection 11.3.1.1 further requires the Owner, i.e. Jefferson

County, to purchase “property insurance on an all-risk policy form,” which “shall insure

against the perils of fire and extended coverage and physical loss or damage. . . .” Id.

        The AIA contract also contains specific provisions requiring Teton, as the general

contractor, to purchase liability insurance. Section 11.1.1 of the AIA contract obligated

Teton to purchase liability insurance to protect itself from certain specifically delineated

types of claims “which may arise out of or result from the Contractor’s operations under

the Contract and for which the Contractor may be legally liable, whether such operations

be by the Contractor or by a Subcontractor or by anyone directly or indirectly employed

by any of them, or by anyone for whose acts any of them may be liable.”7 Id. at 584.

And the Contractor was required to file certificates of insurance with the Owner before

the Work began. Id. at 585.

7
  In support of its argument that it did not waive its subrogation rights to non-work damages, Jefferson
County cites to 11.1.1.5 of the AIA contract which required Teton to “purchase and maintain” liability
insurance to protect itself from “claims for damages, other than to the Work itself, because of injury to or
destruction of tangible property, including loss of use resulting therefrom[.]” Appellant’s App. p. 585.
However, the purpose of the Section 11.1.1 liability insurance requirement is to assure the Owner that the
Contractor is insured against claims by third parties for alleged damages or negligent acts for which the
Contractor is liable. Moreover, there is no language in Section 11.1.1 that would allow Jefferson County
to recover damages to non-Work property insured under its own property insurance.
                                                    20
       The AIA contract also required Jefferson County to notify Teton if it chose not to

purchase the “all risk” property insurance called for in section 11.3.1.2, and granted

Teton the right to obtain the coverage and pass its premium cost on to Jefferson County

through a change order. See id. Section 11.3.1.2 specifically provides:

       If the Owner does not intend to purchase such property insurance required
       by the Contract and with all of the coverages in the amount described above,
       the Owner shall so inform the Contractor in writing prior to
       commencement of the Work. The Contractor may then effect insurance
       which will protect the interests of the Contractor, Subcontractors and Sub-
       subcontractors in the Work, and by appropriate Change Order the cost
       thereof shall be charged to the Owner.

Id. (emphasis added).

       While Jefferson County had the right not to purchase separate “all risk” insurance

under Section 11.3.1, it breached the contract by failing to notify Teton under Section

11.3.1.2 of its decision to rely on existing coverage, and that breach had several important

effects. First, because such separate, non-subrogated coverage is so important to the

parties’ relationships under the contract, Jefferson County’s failure to notify rendered

Teton unable to take advantage of the provisions of Section 11.3.1.2, which would have

allowed Teton to purchase the contemplated separate coverage at Jefferson County’s

cost.8 Next, Section 11.3.1.2 provides that “[i]f the Contractor is damaged by the failure

or neglect of the Owner to purchase or maintain insurance as described above, without so

notifying the Contractor, then the Owner shall bear all reasonable costs properly

8
  We cannot agree with the dissent’s conclusion that Jefferson County’s blanket property and casualty
insurance policy “meets the definition of an ‘all risk’ policy.” Slip op. at 31 (Brown, J., dissenting).
Conflation of the two very different types of insurance is what allows work v. non-work litigation to
proliferate. Jefferson County’s existing, subrogated insurance coverage did not provide the independent,
non-subrogated coverage that Jefferson County was required either to purchase or to notify Teton of its
decision not to purchase under the AIA contract at issue.
                                                  21
attributable thereto.” Id. The Owner’s separate “all-risk” and Contractor’s liability

policies required under the AIA contract, together with the notice thereof that each was

properly insured before work on the project would begin, clearly indicate all parties’

reasonable expectations that their insurers’ subrogation rights would be waived under

their respective coverages for the Project.

       While the Owner’s obligation to purchase “all-risk” insurance is clearly stated in

the AIA contract, Jefferson County points to alleged ambiguity in the waiver of

subrogation clause in Section 11.3.7 of the contract. That section provides:

       The Owner and Contractor waive all rights against [] each other and any of
       their subcontractors, sub-subcontractors, agents and employees, each of the
       other . . . for damages caused by fire or other perils to the extent covered by
       property insurance obtained pursuant to this Paragraph 11.3 or other
       property insurance applicable to the Work, except such rights as they have
       to the proceeds of such insurance held by the Owner as fiduciary. . . .

Id. at 586 (emphasis added). The Jefferson County Commissioners rely on this language,

and the minority view of the language, to claim that Teton Corporation is liable for the

damages claimed to areas that were not part of the project, i.e., to “non-Work.”

       However, we believe that Jefferson County’s limited interpretation of the waiver

of subrogation does not further the underlying purpose of the waiver, i.e. “encouraging

parties to anticipate risks and to procure insurance covering those risks, thereby avoiding

future litigation, and facilitating and preserving economic relations and activity.” See

Lexington Ins. Co., 749 N.W.2d at 131. Furthermore, Jefferson County’s proposed

interpretation ignores the language defining the scope of claims falling within the waiver

clause. Id. at 135. In this regard, Section 11.3.7 also provides:

                                              22
       A waiver of subrogation shall be effective as to a person or entity even
       though that person or entity would otherwise have a duty of
       indemnification, contractual or otherwise, did not pay the insurance
       premium directly or indirectly, and whether or not the person or entity had
       an insurable interest in the property damaged.

Appellant’s App. p. 586.     In our view, this language “reconciles any inconsistency

between the waiver of subrogation and the [AIA] agreement’s allocation of insurance

responsibilities.” See Lexington Ins. Co., 749 N.W.2d at 136.

       When Section 11.3.7 is considered within the context of the entire AIA contract,

the Owner’s contractual obligation to purchase “all-risk” insurance leads us to conclude

that the majority view is the better interpretation of this ambiguity and the better

approach to risk allocation in construction projects in general. We agree with the Ohio

Court of Appeals that “[w]aiver of subrogation is useful in construction contracts because

it avoids disrupting the project and eliminates the need for lawsuits because it offers

certainty as to the liability of the parties. . . . [B]y applying the waiver to all losses

covered by the owner’s property insurance, the parties avoid the predictable litigation

over liability issues and whether the claimed loss was damage to Work or non-Work

property.” Id. at 145. See also American Zurich Ins. Co. v. Barker Roofing, L.P., 387

S.W.3d 54, 62 (Tex. Ct. App. 2012) (stating “a waiver of subrogation clause substitutes

the protection of insurances for the uncertain and expensive protection of liability

litigation”). Adoption of the minority, non-Work distinction would throw many projects

into protracted litigation, possibly even years after project completion and acceptance.

       Each and every major construction project adds both value and risk to the owner’s

property. Section 11.3.1 of the AIA contract therefore requires owners to insure their

                                            23
interests in the construction project at least to the value of the underlying contract. The

AIA contract expressly requires property owners to separately insure these interests and,

in order to facilitate the completion of the project without delaying and debilitating

litigation, to obtain an “all-risk” insurance policy that waives the carrier’s rights to be

subrogated to any loss arising within the extremely broad coverage described in the

contract.9 If the owner does not secure such insurance, then it still waives its subrogation

rights for any loss described within the AIA contract that it sustains. See e.g. Westfield

Ins. Group, 982 N.E.2d at 141; Lexington Ins. Co., 749 N.W.2d at 135. This waiver is

the product of both the language of the contract and longstanding public policy. See

South Tippecanoe School Bldg. Corp., 182 Ind. App. at 360, 395 N.E.2d at 326

(recognizing that the purpose of insurance and waiver of subrogation provisions of the

AIA contract constitute 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”). This is the conclusion reached by the majority of states who have

9
  Property owners must take care to insure the project-related risks for which they desire coverage when
purchasing and maintaining non-subrogated builder’s risk insurance required by AIA documentation.
The AIA contract language clearly allows an owner to purchase coverage in excess of that generally or
specifically described in the contract, and in a modern world of ever-larger environmental risks, it is
certainly prudent to purchase environmental coverage for a large construction project. However, under
the majority view that we adopt in this case, owners would be limited in their recovery to the description
and amount of such environmental coverage they “purchase[d] and maintain[ed]” and would waive
subrogation rights under such coverage. Cf. Allen County Public Library v. Shambaugh & Son, L.P., et
al., 997 N.E.2d 48 (Ind. Ct. App. 2013). Specifically, applying the majority view that we adopt in this
appeal to the facts and circumstances in the Allen County Public Library case would limit the Library’s
recovery to the amount of environmental insurance coverage purchased by the Library, i.e. $5000. This
result is in keeping with the underlying rationale of AIA contractual documentation, which seeks to
liquidate and cover such losses according to the builders risk coverage obtained by the Owner for that
purpose. This result also eliminates the inevitable work v. non-work disputes driven by owners’ generic,
subrogated property and casualty insurance.

                                                   24
considered the waiver of subrogation, and we find it to be the more logical and

compelling resolution.

        For all of these reasons, we disagree with the Midwestern Indemnity panel and

hold that, under the terms of the AIA contract, Jefferson County’s claims for damages

against the Appellees are barred.10 We therefore affirm the trial court’s entry of summary

judgment in favor of the Appellees.

        Affirmed.

NAJAM, J., concurs.

BROWN, J., dissents with separate opinion.

10
   In its brief, Jefferson County argued that a property owner does not waive its right to subrogate when
the conduct at issue was grossly negligent, willful or wanton, and that it designated evidence creating a
genuine issue of material fact as to whether the Appellees were grossly negligent, or acted willfully and
wantonly. Although stated in dicta, our court has observed that where a property owner’s loss is caused
by a contractor’s gross negligence or willful and wanton acts, the property owner may assert its
subrogation rights despite a contractual waiver of such rights. See S.C. Nestel, Inc. v. Future Const., Inc.,
836 N.E.2d 445, 451 (Ind. Ct. App. 2005); Morsches Lumber v. Probst, 388 N.E.2d 284 (Ind. Ct. App.
1979).
          Gross negligence is defined as “‘[a] conscious, voluntary act or omission in reckless disregard
of . . . the consequences to another party.’” Ind. Pub. Serv. Co., v. Sharp, 790 N.E.2d 462, 465 (Ind.
2003) (quoting Black’s Law Dictionary 1057 (7th ed. 1999). And conduct is wanton and willful if the
intentional act is done with reckless disregard of the natural and probable consequence of injury to a
known person under the circumstances known to the actor at the time. See Davidson v. Bailey, 826
N.E.2d 80, 89 (Ind. Ct. App. 2005).
          Jefferson County argues that Teton and Innovative Roofing were grossly negligent for failing to
supervise Gutapfel Roofing and by allowing Gutapfel to hot solder a historically significant building
without any training or assistance. But, the designated evidence establishes that Gutapfel was aware of
the risks inherent in its work and took precautions to guard against fire. Moreover, Gutapfel proposed use
of an adhesive bond instead of solder to attach new copper gutters to the existing copper box gutters.
Jefferson County rejected Gutapfel’s proposal and instructed him to use solder. Gutapfel also extensively
checked the downspout area for heat and smoke after it finished soldering. Jefferson County has not
designated any evidence that would establish that Gutapfel or the other Appellee contractors were grossly
negligent (or acted willfully or wantonly) in this case.
                                                    25
                             IN THE
                   COURT OF APPEALS OF INDIANA

THE BOARD OF COMMISSIONERS                      )
OF THE COUNTY OF JEFFERSON,                     )
                                                )
      Appellant,                                )
                                                )
             vs.                                )    No. 72A04-1302-CT-00055
                                                )
TETON CORPORATION, INNOVATIVE                   )
ROOFING SOLUTIONS, INC., GUTAPFEL               )
ROOFING, INC. and DANIEL L. GUTAPFEL,           )
                                                )
      Appellees.                                )

BROWN, Judge, dissenting

      I respectfully dissent. This court, in Midwestern Indem. Co. v. Sys. Builders, Inc.,

801 N.E.2d 661, 664 (Ind. Ct. App. 2004), trans. denied, examined a contract containing

identical versions of Section 11.3.5 and 11.3.7 as are present here. In Midwestern, a

snowstorm caused the collapse of a building which had been completed six months

previously, causing $1,391,818.90 worth of damages, $44,971.21 of which pertained to

damage of the contents of the building. 801 N.E.2d at 665. Among other issues, this

court examined “whether the waiver of insurance and subrogation provisions of the

construction contract bar recovery for amounts paid for damages to the contents of the

building.” Id. at 672. We noted that although the waiver provisions apply “to recovery

for damages from perils insured against under the property insurance policy,” they are

                                           26
“limited in scope as to what property is covered.” Id. We held that “[b]ecause the

contents are not part of the Work or completed building addition and because there was

no requirement to waive subrogation rights as to property damage to property other than

the Work,” the scope of such waiver did not include the contents of the building. Id. at

673. This court recently affirmed the reasoning of Midwestern in Allen Cnty. Pub.

Library v. Shambaugh & Son, L.P., 997 N.E.2d 48, 53-56 (Ind. Ct. App. 2013)

(“Consistent with our holding in Midwestern, we conclude that the Library is not

precluded by Section 11.3.7 of the standard AIA contract from seeking recovery for

pollution cleanup costs for property contaminated by the Defendants’ allegedly faulty

construction that is outside the scope of ‘the Work’ for which the Defendants were

contracted to perform.”), reh’g pending.

      Furthermore, to the extent that the majority relies upon Lexington Ins. Co. v.

Entrex Comm’n Servs., Inc., 749 N.W.2d 124 (Neb. 2008), and Westfield Ins. Grp. v.

Affina Dev’t, LLC, 982 N.E.2d 132 (Ohio Ct. App. 2012), I believe the relevant contract

provisions in those cases are distinguishable and materially impact their applicability to

the instant case. As noted above, Section 11.3.5 provides:

      If during the Project construction period the Owner insured properties, real
      or personal or both, adjoining or adjacent to the site by property insurance
      under policies separate from those insuring the Project . . . the Owner shall
      waive all rights in accordance with the terms of Subparagraph 11.3.7 for
      damages caused by fire or other perils covered by this separate property
      insurance.

                                           27
Appellants’ Appendix at 586 (emphasis added). As noted by the majority, the versions of

this provision used in Lexington Ins. Co. and Westfield Ins. Grp. substitute the word “at”

for the word “adjoining” in the emphasized portion above. See Draft at 18 n.5.

       The majority declares the versions used in Lexington Ins. Co. and Westfield Ins.

Grp. to be “equivalent” or “analogous” to the version at issue here, deeming any

differences to be “minor.” Id. at 14, 14 n.4, 18 n.5. I disagree. The American Heritage

Dictionary defines the word “at” as follows: “1a. In or near the area occupied by; in or

near the location of: at the market; at our destination. b. In or near the position of:

always at my side; at the center of the page. . . .” AMERICAN HERITAGE DICTIONARY 112

(4th ed. 2006).       Conversely, the dictionary defines the term “adjoining” as

“[n]eighboring; contiguous,” and “adjoin” as: “1. To be next to; be contiguous to:

property that adjoins ours. 2. To attach: ‘I do adjoin a copy of the letter that I have

received’ . . . To be contiguous. . . .” Id. at 21. The dictionary also defines “adjacent,”

which is present in both versions of Section 11.3.5., as “1. Close to; lying near: adjacent

cities. 2. Next to; adjoining: adjacent garden plots. . . .” Id.

       Thus, the plain meaning of the terms “adjoining” and “adjacent” are synonymous,

while the term “at,” which is not present in the instant version of Section 11.3.5, carries a

different meaning. Because the damaged personal property at issue was contained within

the work property, the courthouse, the fact that the term “at” is not used in Section 11.3.5

is material. Simply put, the waiver provision in the instant version of Section 11.3.5 is

applicable only to damage occurring to sites adjoining or adjacent to the courthouse, not

personal property contained within the courthouse. Accordingly, I find that reliance upon

                                             28
Lexington Ins. Co. and Westfield Ins. Grp. is misplaced. As discussed by the majority

and in Lexington Ins. Co., the Nebraska Supreme Court adopted the “Majority Approach,”

concluding that “the scope of the waiver clause was not defined by the property damaged,

but, rather, by the extent the damages were covered by those policies described in the

clause.” 749 N.W.2d at 134. After reciting subparagraph 11.4.5, which, as noted above,

is akin to Section 11.3.5 except that it applies to policies insuring property “at or adjacent

to the site,” the court stated: “We understand this provision to mean that if the owner

acquires a separate property insurance policy to cover non-Project property—a policy

that did not cover the Project or Work property—and the non-Project property is

damaged, the owner waives subrogation rights for the insurer as to those damages.” 749

N.W.2d at 134-135 (emphasis added). The court observed that “Subparagraph 11.4.5

reinforces our conclusion that the waiver in subparagraph 11.4.7 applies to all damages—

including Work and non-Work damages—covered by the owner’s property insurance

policy.” Id. at 135. However, because Section 11.3.5 in the contract at issue here does

not apply to property at the project site, the reasoning contained in Lexington Ins. Co.

does not apply.

       Thus, only the waiver language contained in Section 11.3.7 is applicable to the

circumstances, and in my view the Work/non-Work or Minority Approach applies with

equal force. Section 11.3.7, titled “Waivers of Subrogation,” provides that “[t]he owner

and Contractor waive all rights against [] each other and any of their subcontractors, sub-

subcontractors, agents and employees, each of the other . . . for damages caused by fire or

other perils to the extent covered by property insurance obtained pursuant to this

                                             29
Paragraph 11.3 or other property insurance applicable to the Work . . . .” Appellant’s

Appendix at 586 (emphasis added). This “either/or” language in the provision lets an

owner choose between purchasing a builder’s risk policy or relying upon another all-risk

policy, and here Jefferson County chose to rely upon its general all-risk policy in

accordance with the emphasized language. This reading gives effect to both clauses in

Section 11.3.7. The “Work” involves refurbishing the courthouse building, and the

general policy protects against damage to the building. Indeed, the record appears to

indicate that the policy did pay Jefferson County based upon such Work-related damages,

and, in light of the fact that at the time of the contract Midwestern was valid Indiana law,

I believe it was precisely what the parties agreed upon in allocating risk when they chose

to use the term “adjoining” in place of the word “at.”

       Additionally I am not convinced by the majority’s conclusion that Jefferson

County was in material breach of the contract when it did not notify Teton of its intent to

rely upon its existing all-risk policy rather than purchase a “builder’s risk” policy. Again,

Section 11.3.1 provides that “[u]nless otherwise provided, the Owner [Jefferson County]

shall purchase and maintain . . . property insurance in the amount of the initial Contract

Sum as well as subsequent modifications thereto for the entire Work at the site . . . .”

Appellant’s Appendix at 585. Section 11.3.1.1 denotes the specifics of the type of

property insurance policy and states that such 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, without
       duplication of coverage, theft, vandalism, malicious mischief, collapse,
       falsework, temporary buildings and debris removal including demolition
       occasioned by enforcement of any applicable legal requirements, and shall

                                             30
          cover reasonable compensation for Architect’s services and expenses
          required as a result of such insured loss.

Id.

          “All-risk policies cover all losses, except those specifically excluded.” Copper

Mountain, Inc. v. Industrial Sys., Inc., 208 P.3d 692, 694 n.7 (Colo. 2009) (citing Heller v.

Fire Ins. Exch., 800 P.2d 1006, 1007 n.1 (Colo. 1990)). The property insurance policy

owned by Jefferson County was titled as “BLANKET BUILDING AND BUSINESS

PERSONAL PROPERTY AT LOCATIONS SCHEDULED BELOW” which included

the courthouse located at 300 West Main Street in Madison, Indiana.              Appellee’s

Designation of Evidence at Tab 4, pages 358, 360. The limit of coverage to the building

is listed at $25,859,000, and the policy notes that for “Business Personal Property” that

the limit of coverage is “Incl W Bldg.” Id. at 358. The policy also states, under the

heading “Covered Causes Of Loss,” that “[w]e’ll protect covered property against risks

of direct physical loss or damage except as indicated in the Exclusions – Losses We

Won’t Cover section.” Id. at 369. Thus, the policy meets the definition of an “all-risk”

policy.

          The majority concludes that the County breached the agreement because it did not

notify Teton of its decision to rely on existing coverage rather than procure separate all-

risk insurance, relying on Section 11.3.1.2 which states: “If the Owner does not intend to

purchase such property insurance required by the Contract and with all of the coverages

in the amount described above, the Owner shall so inform the Contractor in writing prior

to commencement of the Work.” Supra at 21; see also Appellants’ Appendix at 585.

                                             31
Section 11.3.1.2 specifically provides that the purpose of the notification would be that

the contractor could “then effect insurance which will protect the interest of the

Contractor, Subcontractors and Sub-subcontractors in the Work.” Appellants’ Appendix

at 585 (emphasis added). However, there is no dispute that Jefferson County’s property

insurance policy covered the courthouse for work-related damages.                  It would have been

superfluous for Teton to have purchased additional property insurance for the courthouse.

Thus, any breach of the agreement by Jefferson County was not a material breach and

should not dictate the outcome.

       By adopting the Majority Approach, the majority extinguishes Jefferson County’s

ability to attempt to recoup damages from Teton’s liability insurer based upon alleged

negligence on the part of Teton and its subcontractors.11 For the reasons discussed above,

       11
          At oral argument, Teton’s counsel suggested that Section 11.1.1, which obligated Teton to
purchase liability insurance, applied only to claims by third parties. Section 11.1.1 provides:

       11.1.1 The Contractor shall purchase from and maintain in a company or companies
       lawfully authorized to do business in the jurisdiction in which the Project is located such
       insurance as will protect the Contractor from claims set forth below which may arise out
       of or result from the Contractor’s operations under the Contract and for which the
       Contractor may be legally liable, whether such operations be by the Contractor or by a
       Subcontractor or by anyone directly or indirectly employed by any of them, or by anyone
       for whose acts any of them may be liable:

               .1 claims under workers’ or workmen’s compensation, disability benefit
                  and other similar employee benefit acts which are applicable to the
                  Work to be performed;
               .2 claims for damages because of bodily injury, occupational sickness or
                  disease, or death of the Contractor’s employees;
               .3 claims for damages because of bodily injury, sickness or disease, or
                  death of any person other than the Contractor’s employees;
               .4 claims for damages insured by usual personal injury liability coverage
                  which are sustained by (1) by a person as a result of an offense
                                                  32
I believe this to be error, and I would uphold Midwestern and the so-called “Minority

Approach” as valid Indiana law, and allow Jefferson County to bring suit under these

circumstances to recoup liability damages to non-Work property. I respectfully dissent.

                  directly or indirectly related to employment of such person by the
                  Contractor, or (2) by another person;
               .5 claims for damages, other than to the Work itself, because of injury to
                  or destruction of tangible property, including loss of use resulting
                  therefrom;
               .6 claims for damages because of bodily injury, death of a person or
                  property damage arising out of ownership, maintenance or use of a
                  motor vehicle; and
               .7 claims involving contractual liability insurance applicable to the
                  Contractor’s obligations under Paragraph 3.18.

Appellants’ Appendix at 584-585. Although certain subsections of Section 11.1.1 are intended to apply
to third parties, including Subsection .3 and the second part of Subsection .4, other portions, notably
Subsection .5, do not appear to be so constrained.
                                                  33