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MSZL&M Fire and Life Safety Practice Group Secures Dismissal Based Upon Clients Terms and Conditions

On March, 2020, George Bogris, Esquire, Jeffrey C. Sotland, Esquire and the Fire Life and Safety Practice Group of Mintzer Sarowitz Zeris Ledva & Meyers, LLP  were retained by Certain Underwriters at Lloyds of London to investigate a recent loss at a condominium building in New Jersey on behalf of its insured.  We undertook the investigation and subsequent defense of the client.

The underlying facts are that on March 3, 2020 our client was refilling an anti-freeze system when it suddenly ruptured in multiple locations, causing significant damages throughout a condominium building.  The system had no expansion tank and the condominium association previously refused to invest any money into the system.  Upon adjustment of the loss, the insurance carrier for the condominium association filed suit alleging our client failed to properly install and service the system.

Upon a careful review of the history of the system, it was confirmed that the client had purchased the installer of the fire sprinkler system, but only the assets and specifically excluding all liabilities.   Subrogation counsel focused on service invoices but did not appear to ever meet with the condominium association, leading to a lack of knowledge about the communications between the two parties.  Upon receiving records from the Authority Having Jurisdiction, MSZL&M was able to secure documents authored by counsel for the condominium association establishing the history of discussions between the association and the fire sprinkler company.

Upon the request for depositions of condominium association board members, specific unit owners, and the property manager, subrogation counsel agreed to dismiss the action with prejudice.  A significant part of the defense was the inclusion of terms and conditions on the client’s service invoices that included waiver of subrogation, limitation of damages, and indemnity language.   This language, while state specific, is paramount to waging a strong defense for any fire sprinkler company. 

Another aspect of the case was the two lawsuits by insurance carriers for unit owners against the client.  Upon being served, MSZL&M joined the condominium association and property manager into the suit placing the insurance carrier in a position of subrogating for, and defending against, the same loss.  With indemnity obligations running from the subrogating carrier to the client, any third-party claim against the insured was covered by that carrier, creating a catch-22 situation.  Since the subrogating carrier would need to also pay the liability claims of unit owners that were riding its coat tails, the subrogation carrier was fighting a losing battle.  Once the subrogation carrier dismissed its suit, the unit owners followed shortly thereafter.