Court Opinion

ID: 9958617
Source: CourtListenerOpinion
Date Created: 2024-04-09 18:02:50.270688+00
Date Added: 2024-06-11T08:18:32.648606
License: Public Domain

NOTICE: NOT FOR OFFICIAL PUBLICATION.
 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
                 AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

                                    IN THE
             ARIZONA COURT OF APPEALS
                                DIVISION ONE

              GROVES PROPERTIES, LP, Plaintiff/Appellant,

                                        v.

LAYTON CONSTRUCTION COMPANY, LLC, et al., Defendants/Appellees.

                             No. 1 CA-CV 23-0351
                              FILED 4-9-2024

           Appeal from the Superior Court in Maricopa County
                          No. CV2022-050078
               The Honorable Melissa Iyer Julian, Judge

                                  AFFIRMED

                                   COUNSEL

Huber Barney PLLC, Gilbert
By Aaron C. Huber, Bryan W. Barney
Co-counsel for Plaintiff/Appellant

Tyson & Mendes LLP, Scottsdale
By Lynn M. Allen, Leah M. McKeever, Leslie K. Harrach
Co-counsel for Plaintiff/Appellant

Wood Smith Henning & Berman LLP, Phoenix
By Jodi L. Mullis
Counsel for Defendants/Appellees
                         GROVES v. LAYTON et al.
                           Decision of the Court

                      MEMORANDUM DECISION

Vice Chief Judge Randall M. Howe delivered the decision of the court, in
which Presiding Judge Anni Hill Foster and Judge Brian Y. Furuya joined.

H O W E, Judge:

¶1           Groves Properties, LP (“Groves”) appeals the trial court’s
grant of summary judgment to Layton Construction Company, LLC
(“Layton”) and Arizona Fasteners Corporation (“Fasteners”) on all of
Groves’s claims. We affirm.

                    FACTS AND PROCEDURAL HISTORY

¶2            In 2016, Layton contracted with AABS Properties, LLC to
build a two-story building in Gilbert, Arizona. Layton subcontracted
Fasteners to construct and install the fireplace and chimney in the building.
In 2019, AABS Properties, LLC transferred its rights and obligations under
the contract to Groves. Layton and Fasteners had substantially completed
the construction of the building by the end of December 2020. Then, about
two months later, the building caught on fire.

¶3               Groves had insurance on the building and its insurer covered
most of its damages resulting from the fire. However, Groves’s insurer did
not cover the costs of re-housing the residents or the loss of business
income, which totaled about $700,000. Groves then sued Layton and
Fasteners, alleging breach of contract, breach of implied warranty of
workmanlike construction, breach of express warranty, negligence, and
strict liability.

¶4             The contract included two provisions named “Waivers of
Subrogation.” The first provision, found in the contract’s Exhibit G,
provided that Groves waived all rights against Layton and its
subcontractors “for damages caused by fire or other causes of loss to the
extent covered by property insurance obtained pursuant to this Section
Exhibit G or other property insurance applicable to the Work.” The
contract’s second provision, Section 11.3.1, provided that Groves waived all
rights against Layton and its subcontractors “for damages caused by fire . .
. to the extent covered by . . . property insurance applicable to the Project.”
Under Section 11.3.2, the waiver applies “if, after final payment property

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                        GROVES v. LAYTON et al.
                          Decision of the Court

insurance is to be provided on the completed Project through a policy or
policies other than those insuring the Project during the construction period
[Groves] waives all rights in accordance with the terms of Section 11.3.1 for
damages caused by fire.” The “Work” is defined as “[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 obligation.” Finally, Section 11.4 of the contract stated that
Groves “waives all rights of action against [Layton and Fasteners] for loss
of use of [Groves’s] property, due to fire or other hazards however caused.”

¶5            Based on these contract provisions, Layton and Fasteners
moved for summary judgment on Groves’s claims, arguing that the
contract barred Groves’s suit because it had expressly waived its right to
subrogation for fire losses. In response, Groves argued that the contract was
ambiguous because the waiver provision in Exhibit G conflicted with the
waiver provision in Section 11.3. It argued that the waiver in Exhibit G was
controlling and did not waive claims that arose after the Work was
completed. It also argued that the waiver of subrogation did not apply to
uninsured losses because it would be left without a source of recovery.

¶6            After oral argument, the court granted Layton and Fasteners
summary judgment on all Groves’s claims. It found that Groves had waived
its claims under the contract, that the contract was unambiguous, and that
the waiver provisions, read together, were not susceptible to Groves’s
interpretation. It also found that Section 11.4 of the contract allocated the
risk of uninsured losses to Groves. Groves timely appealed. This court has
jurisdiction under A.R.S. § 12–2101(A)(1).

                              DISCUSSION

¶7              This court reviews “a grant of summary judgment de novo,
viewing the evidence in the light most favorable to the party against whom
summary judgment was entered.” Dabush v. Seacret Direct LLC, 250 Ariz.
264, 267 ¶ 10 (2021). Summary judgment is appropriate when the moving
party shows that no genuine dispute as to any material fact exists and that
it is entitled to judgment as a matter of law. Ariz. R. Civ. P. 56(a).

I.     Waiver Provisions

¶8           Groves argues that because Exhibit G does not include a
provision extending waivers to post-construction claims, like Section 11.3.2
does, the waiver provisions directly conflict. As a result, the principles of

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                         GROVES v. LAYTON et al.
                           Decision of the Court

contract interpretation dictate that the waivers of subrogation provisions
do not apply to post-construction claims.

¶9             This court interprets contracts de novo because contract
interpretation presents a question of law. Grosvenor Holdings, L.C. v.
Figueroa, 222 Ariz. 588, 593 ¶ 9 (App. 2009). We construe a contract to
determine the parties’ intent by considering “the plain meaning of the
words in the context of the contract as a whole.” United Cal. Bank v.
Prudential Ins. Co. of Am., 140 Ariz. 238, 259 (App. 1983); Taylor v. State Farm
Mut. Auto. Ins. Co., 175 Ariz. 148, 152 (1993).

¶10           The contract is unambiguous because the contract terms are
plain, and the waiver provisions do not conflict. As the trial court noted,
Section 11.3.2 explicitly extends the waiver of the rights to losses resulting
from fire occurring after the construction was completed. Moreover, the
parties modified the standard form contract to delete certain parts of it, but
not the provision applying waiver to post-construction claims. The trial
court thus properly granted Layton and Fasteners summary judgment.

¶11            Groves further argues that the waivers of subrogation do not
apply to post-construction claims because other provisions in the contract,
which require Layton to maintain general liability insurance to the
completed Work, would be rendered superfluous. It also argues that certain
warranties in the contract that extend post-construction support its
interpretation that the waiver of subrogation did not apply to post-
construction claims. Not so. As Layton and Fasteners point out, while they
may warrant or insure other losses, the contract expressly carves out an
express waiver for fire losses. Parties can insure or warrant certain losses
and waive other losses without rendering any of the provisions
superfluous. See 1800 Ocotillo, LLC v. WLB Grp., Inc., 219 Ariz. 200, 202 ¶ 8
(2008) (“Our law generally presumes, especially in commercial contexts,
that private parties are best able to determine if particular contractual terms
serve their interests.”). Groves has shown no error.

¶12            Next, Groves relies on John L. Mattingly Const. Co., Inc. v.
Hartford Underwriters Ins. Co., 415 Md. 313, 999 A.2d 1066 (2010), Auto. Ins.
Co. of Hartford, Conn. v. United H.R.B. Gen. Contractors, Inc., 876 S.W.2d 791
(Mo. Ct. App. 1994), and S. Ins. Co. v. CJG Enters., Inc., 315CV00131RGESBJ,
2017 WL 3449609 (S.D. Iowa May 11, 2017), which found ambiguity in
similar subrogation provisions. But those cases are not binding. See
Kotterman v. Killian, 193 Ariz. 273, 291 ¶ 68 (1999) (“We alone must decide
how persuasive the legal opinions of other jurisdictions will be to our
holdings.”). Even so, they are distinguishable. The contracts in those cases

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                        GROVES v. LAYTON et al.
                          Decision of the Court

did not include a provision that expressly extended the waiver to post-
construction claims, like Section 11.3.2 does in this case. We discern no
error.

II.   The Uninsured Losses

¶13           Groves argues that the waiver of subrogation was limited to
damages covered by the insurance and thus the uninsured damages are not
subject to the waiver provisions. But the contract accounted for the
uninsured damages. Section 11.4 provided that Groves waived all right of
action against Layton for loss of use of the property because of fire. Groves
had thus waived any rights to losses because of a fire. The trial court did
not err.

¶14            Groves also argues that the risk allocation provision of the
contract is void under Arizona law. But Groves failed to raise this argument
in the trial court and has therefore waived it. Englert v. Carondelet Health
Network, 199 Ariz. 21, 26 ¶ 13 (App. 2000) (“[W]e generally do not consider
issues, even constitutional issues, raised for the first time on appeal.”).

                                   CONCLUSION

¶15           We affirm. We deny Groves’s requests for attorneys’ fees and
costs under A.R.S. § 12–341.01 because it did not prevail in the action. In
our discretion, we grant Layton and Fasteners request for their reasonable
attorneys’ fees under A.R.S. § 12–341.01 upon compliance with Arizona
Rule of Civil Appellate Procedure 21 because this action arose out of a
contract, and they were successful on appeal.

                         AMY M. WOOD • Clerk of the Court
                         FILED: AA

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