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Subrogation Group Secures Significant Recovery After Summary Judgment Win in Condominium Fire Loss

Feb 5, 2020 - About the Firm by

On December 21, 2016, a fire originated in a condominium unit under renovation in Greenbelt, Maryland. Causing over $750,000.00 in damages, it was determined that the fire originated in the HVAC closet as a result of hot work being performed on copper piping. The investigation revealed that the renovation was being undertaken by the unit owner as general contractor and several hired contractors.

MSZL&M recommended suit and the client agreed to bring suit against the homeowner, as the general contractor for the project. This was a leap of faith since Maryland Condominium law precludes subrogation against homeowners with a very specific and unambiguous statute that provides:

(2) The insurer waives its right to subrogation under the policy
against any unit owner of the condominium or members of his
household. . . Md. Code Ann., Real Prop. § 11-114

After discovery and several depositions, the following was discovered:

a. The homeowner was securing units and flipping them without permits, undertaking work that was not up to code.

b. The homeowner had lied about the work being performed in the unit at issue.

c. The homeowner lied about securing permits for the work in the unit at issue.

d. The homeowner claimed that he had no timeline to complete the work, but a lease was already signed for a new tenant beginning in January, 2017.

e. The homeowner claimed that the identified contractors only pulled wires through the walls and had not connected them to the circuit breakers when they stopped working 5 days before the fire. He also testified that all circuit breakers were in the off position. All experts found new electrical wiring tied into circuit break panel and some breakers energized.

f. The homeowner did not have a homeowner’s insurance policy, as required by the condominium by-laws, but did procure a business owners policy.

Defendant filed a Motion for Summary Judgment on the defense that a condominium association cannot subrogation against an owner. Understanding this was an uphill battle, MSZL&M defended the motion, arguing that a bad actor could move into a unit and then perform contracting work throughout a complex all under the statutory waiver above and be immune from suit. The Court understood our argument and denied the Motion for Summary Judgment.

Within days of prevailing on the Motion for Summary Judgment, the case was resolved with the carrier for the homeowner.