Lexington Insurance Company v. Paddock Swimming Pool Company

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

____________________________________
)
LEXINGTON INSURANCE CO., et al., )
)
Plaintiffs, )
)
v. ) No. 1:19-cv-3131 (GMH)
)
PADDOCK SWIMMING POOL CO., )
et al., )
)
Defendant. )
____________________________________)
)
PADDOCK SWIMMING POOL CO., )
)
Cross Claimant, )
)
v. )
)
P&F SERVICES, LLC, )
)
Cross Defendant. )
____________________________________)

MEMORANDUM OPINION AND ORDER

In this contract and negligence action, Plaintiffs are seven insurance companies (Lexington

Insurance Co., Westchester Surplus Lines Insurance Co., Aspen Insurance UK Ltd., Endurance

American Specialty Insurance Co., Certain Underwriters at Lloyd’s London, The Princeton Excess

and Surplus Lines Insurance Co., and General Security Indemnity Co. of Arizona) that proceed as

subrogees of their insureds, a number of interrelated companies connected with the ownership and

operation of a hotel (the “Hotel”) located in the District of Columbia. Defendant Paddock

Swimming Pool Company (“Paddock”) was hired to renovate the rooftop pool at the Hotel. The

claims arise out of water damage to Hotel property from a rainstorm that occurred while the
renovation was in progress. The motions currently before the Court—Plaintiffs’ motion for partial

summary judgment and Paddock’s motion for summary judgment—concern, primarily, the proper

interpretation of the renovation contract between DC I&G Capital Lessee (“DC I&G”), the lessee

and operator of the Hotel and Paddock (the “Renovation Contract”). 1 More specifically, the

motions turn chiefly on the construction and legal consequences of a waiver-of-subrogation clause

in the Renovation Contract. For the reasons that follow, Plaintiffs’ motion for partial summary

judgment is denied and Paddock’s motion for summary judgment is granted.

I. BACKGROUND

The following undisputed facts are derived from the Court’s review of the record before

it. 2 During the relevant time period, La Salle Hotel Properties (“La Salle”) was a Real Estate

1
The documents relevant to the resolution of those motions are (1) Plaintiff’s motion for partial summary judgment
(ECF No. 60); (2) Paddock’s motion for summary judgment (ECF No. 62); (3) Paddock’s opposition to Plaintiff’s
motion for partial summary judgment (ECF No. 63); (4) Plaintiff’s opposition to Paddock’s motion for summary
judgment (ECF No. 66); (5) Plaintiff’s reply in further support of its motion for partial summary judgment (ECF No.
67); and (6) Paddock’s reply in further support of its motion for summary judgment (ECF No. 68). Plaintiffs have
moved for partial summary judgment only against Paddock, and not against Defendant/Cross Defendant P&F Services
(P&F), the subcontractor on the job, and Defendant Freddie Beall, P&F’s principal. Similarly, Paddock has moved
for summary judgment only against Plaintiffs, and not against P&F. Neither P&F nor Mr. Beall have filed a motion
for summary judgment in this case.
2
The Court’s understanding of the facts of this case has been hampered by failures to comply with Local Civil Rule
7(h). That rule requires a motion for summary judgment to be “accompanied by a statement of material facts as to
which the moving party contends there is no genuine issue” and an opposition to a motion for summary judgment to
be “accompanied by a separate concise statement of genuine issues setting forth all material facts as to which it is
contended there exists a genuine issue necessary to be litigated.” LCvR 7(h). Here, Paddock did not file a separate
statement of facts with its motion for summary judgment—arguably a violation of the Local Rule, which requires such
a motion to be “accompanied by” that statement. Paddock’s motion does, however, include a section entitled “Material
Allegations and Facts” that sets out the facts on which it relies and cites the support in the record. ECF No. 62-1 at
2–3. Notwithstanding the presence of that section, Plaintiffs asserted in their opposition that, because Paddock “[did]
not include a separate Statement of Material Facts to Which There is No Genuine Dispute, [they] cannot dispute or
respond to each allegation separately,” but generally denied Paddock’s representations about the “ownership and
decision making” for the Hotel, its representations as to its reasonable efforts to protect the Hotel, and its “factual
assertions related to the scope of the waiver of subrogation clause.” ECF No. 66 at 2. Plaintiffs then included in their
opposition a counter statement of material allegations and facts, citing the record. Id. at 2–6.

As to Plaintiffs’ motion for partial summary judgment, it was “accompanied by” a statement of material facts. ECF
No. 60 at 13–19. Paddock, however, did not include a “separate concise statement of genuine issues.” LCvR 7(h).
Although the Rule would allow the Court to deem admitted the facts included in Plaintiffs’ statement of undisputed
material facts, see, e.g., LCvR 7(h)(1) (“[T]he Court may assume that facts identified by the moving party in its
statement of material facts are admitted, unless such a fact is controverted in the statement of genuine issues filed in
opposition to the motion.”); Richardson v. D.C. Dep’t of Youth Rehab. Servs., 271 F. Supp. 3d 113, 117 (D.D.C. 2017)

2
Investment Trust, which purchased the Hotel in 2001. ECF No. 62-3 at 11–12, 14 (testimony of

subrogors’ 30(b)(6) deponent). After the purchase, for tax purposes, La Salle created two entities

involved with the operation of the property: I&G Capitol, LLC (“I&G”) owned the building and

leased it to DC I&G to operate the Hotel. Id. at 14–15; ECF No. 63 at 2 (Paddock’s opposition to

Plaintiffs’ motion for partial summary judgment); ECF No. 66 at 2 (Plaintiffs’ opposition to

Paddock’s motion for summary judgment). As a subsidiary of La Salle, DC I&G is insured under

the relevant insurance policy in this case (the “Insurance Policy”).

On December 5, 2017, DC I&G (identified as “Owner” in the Renovation Contract) and

Paddock (identified as “Contractor” in the Renovation Contract), using an American Institute of

Architects (“AIA”) form agreement frequently used for construction/renovation jobs, executed the

Renovation Contract for Paddock to renovate the Hotel’s rooftop pool. ECF No. 62-5 at 1 (the

Renovation Contract); see also ECF No. 62-1 at 1; ECF No. 66 at 8; cf. Gables Constr., Inc. v. Red

Coats, Inc., 228 A.3d 736, 748 (Md. 2020) (noting that “[t]he standard form contracts published

by the AIA are the most widely used and generally accepted standard contract forms in use within

the construction industry.”). The “Scope of Work” comprised tasks related to the pool’s filter

room; the pool’s structural box; and the pool itself, including its decking, coping, drainage, and

waterproofing. ECF No. 62-5 at 9–11. Pursuant to Article 9 of the Renovation Contract, entitled

“Contractor,” Paddock warranted, among other things, that it would utilize new, good quality

materials and that its work would be free from defects (id. at 4 (Section 9.4)) and that it was

(taking as admitted facts in the moving party’s statements of undisputed material facts where the non-movant failed
to respond with a separate statement of facts as to which it contended there were genuine and material issues); see
also Twist v. Meese, 854 F.2d 1421, 1425 (D.C. Cir. 1988) (“[A] district court judge should not be obliged to sift
through hundreds of pages of depositions, affidavits, and interrogatories in order to make [its] own analysis and
determination of what may, or may not, be a genuine issue of material disputed fact.”), the D.C. Circuit has cautioned
that taking facts as admitted—particularly dispositive facts—is not the “preferred first step.” Grimes v. District of
Columbia, 794 F.3d 83, 92 (D.C. Cir. 2015) (quoting Advisory Committee notes). The facts in this section are
therefore those that the Court has determined from the record and the briefing to be undisputed. Ultimately, the Court
is able to resolve both motions in their entirety by applying the law to those undisputed facts.

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responsible for the acts and omissions of its own employees as well as the agents and employees

of any subcontractors (id. (Section 9.7). Under Article 16—“Protection of Persons and Property”—

Paddock promised to “take reasonable precautions for [the] safety of, and [ ] provide reasonable

protection to prevent damage, injury, or loss to: [ ] employees on the Work and other persons who

may be affected thereby; [ ] the Work and materials and equipment to be incorporated therein; and

[ ] other property at the site or adjacent thereto.” Id. at 7 (Section 16.1). That provision further

required Paddock to “promptly remedy damage and loss to property at the site caused in whole or

in part” by Paddock or a subcontractor, but “only to the extent” that Paddock was at fault. Id.

Article 17 of the Renovation Contract governed, as its title indicates, “Insurance.” It

includes, among others, the following provisions:

17.1 The Contractor shall purchase from and maintain . . . insurance for
protection from claims under workers’ or workmen’s compensation acts and other
[applicable] employee benefits acts . . . , claims for damages because of bodily
injury, including death, and from claims for damages, other than to the Work itself,
to property which may arise out of or result from the Contractor’s operations under
the [Renovation] Contract . . . .

....

17.3 Unless otherwise provided, the Owner shall purchase and
maintain . . . property insurance upon the entire Work at the site to the full insurable
value thereof. This insurance shall be on an all-risk policy form and shall include
interests of the Owner, the Contractor, Subcontractors and Sub-subcontractors in
the Work and shall insure against the perils of fire and extended coverage and
physical loss or damage including, without duplication of coverage, theft,
vandalism and malicious mischief.

17.4 A loss insured under Owner’s property insurance shall be adjusted with the
Owner and made payable to the Owner as fiduciary for the insureds, as their
interests may appear, subject to the requirements of any applicable mortgage clause.

Id. at 7. In addition, the final section of Article 17 is the so-called subrogation waiver:

17.6 The Owner and Contractor waive all rights against each other . . . and any
of their subcontractors, sub-subcontractors, agents or employees, for damages
caused by fire or other perils to the extent covered by property insurance obtained

4
 pursuant to this Article 17 or any other property insurance applicable to the Work,
except such rights as they may have to the proceeds of such insurance held by the
Owner as fiduciary. . . .

Id.

La Salle held a policy underwritten by Plaintiffs (the Insurance Policy identified above)

covering the “Named Insured”—defined as La Salle “and any subsidiary, associated, allied or

affiliated company, corporation, firm, organization, partnership, Joint Venture, Limited Liability

Company or individual, whether wholly or partially owned or controlled by [La Salle], where [La

Salle] maintains an interest, or where [La Salle] is required to provide insurance, . . . and any other

party in interest that is required by contract or other agreement to be named”—in “all real and

personal property owned, used, leased or intended for use by the Insured or in which the Insured

may have an insurable interest, or for which the Insured may be responsible for the insurance.”

ECF No. 62-15 at 6, 9 (the Insurance Policy). The policy also covered “[c]ontractors’ and/or

subcontractors’ . . . interests in property covered to the extent of the Insured’s liability imposed by

law or assumed by contract.” Id. at 10. The policy insured against “all risks of direct physical loss

of or damage to property described” in the policy. Id. at 21. The Insurance Policy also includes a

subrogation clause stating that, “[i]n the event of a payment under [the] policy, [Lexington

Insurance Company] shall be subrogated to the extent of such payment to all the Insured’s rights

of recovery therefor.” Id. at 27. Importantly, the insured parties retained the right to recover under

the Insurance Policy notwithstanding “[a]ny release from liability entered into . . . prior to loss.”

Id.

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 Paddock began work on the project and, by April 2018, the pool liner had been removed

from the pool’s structural box, leaving the structural box exposed.3 ECF No. 60 at 16 (Plaintiffs’

statement of undisputed material facts); ECF No. 60-6 at 6 (testimony of Paddock’s 30(b)(6)

deponent). It is undisputed that a drain line in the structural box was left uncapped at the time that

heavy rains impacted the area of the hotel on April 16, 2018; it is also undisputed that during those

rains, water entered the Hotel, causing damage. 4 ECF No. 60-6 at 4, 11–12; ECF No. 60 at 16–18

(Plaintiffs’ statement of undisputed material facts); ECF No. 62-1 at 3 (Paddock’s memorandum

in support of its motion for summary judgment); ECF No. 63 at 3 (Paddock’s opposition to

Plaintiffs’ motion for partial summary judgment); ECF No. 66 at 5 (Plaintiffs’ opposition to

Paddock’s motion for summary judgment).

The Hotel filed a claim pursuant to the Insurance Policy for property damage and loss of

business caused by the April 16, 2018 incident. ECF No. 62-1 at 3 (Paddock’s memorandum in

support of its motion for summary judgment); ECF No. 62-11 at 16–17 (deposition of Plaintiffs’

Rule 30(b)(6) designee); ECF No. 62-13 at 6 (Plaintiffs’ responses to Paddock’s requests for

admissions); ECF No. 66 at 6 (Plaintiffs’ opposition to Paddock’s motion for summary judgment).

Plaintiffs paid the insurance proceeds—a total of $766,616.34—to La Salle for the claim. 5 ECF

3
Paddock’s corporate designee testified that the pool at issue consisted of the pool liner—what one might call the
pool, itself—and a structural box in which the pool liner sat. ECF No. 60-6 at 4–5. Because pools naturally leak, the
structural box included two drains, known as “weep drains,” to catch the leaks. Id. at 5–6, 10.
4
The party responsible for leaving the drain uncapped is in dispute, with Plaintiffs asserting that either Paddock or
subcontractor P&F was at fault. ECF No. 60 at 18. Paddock insists that P&F was responsible. ECF No. 62-1 at 3.
There is also a dispute about whether the uncapped drain was the cause of the water damage. Plaintiffs argue that the
uncapped drain was the source and cause of the water damage. ECF No. 60 at 18. Paddock contends that the Hotel’s
improper maintenance of drains in the 10th floor mechanical room and a breached containment system in that room,
together with P&F’s negligence in failing to cap the drain, caused the damage. ECF No. 62-1 at 3. In their Answers,
P&F and Mr. Beall generally deny the allegations as to their liability. See ECF Nos. 45–46.
5
LaSalle made a claim for over $2 million. ECF No. 62-11 at 17. Plaintiffs paid the amount that reflected the
emergency work and temporary repairs done, as well as an amount for loss of business. Id. LaSalle did not complete
permanent repairs because the Hotel was sold. Id.

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No. 62-1 at 3 (Paddock’s memorandum in support of its motion for summary judgment); ECF No.

62-11 at 17 (deposition of Plaintiffs’ Rule 30(b)(6) designee); ECF No. 62-12 (summary of

payments under the Insurance Policy due to the April 16, 2018 loss); ECF No. 66 at 6 (Plaintiffs’

opposition to Paddock’s motion for summary judgment).

In September 2019, stepping into the shoes of the insureds, Plaintiffs filed a complaint

alleging breach of contract and negligence against Paddock in D.C. Superior Court, which Paddock

removed to this Court shortly thereafter. See generally ECF No. 1. The Amended Complaint,

which alleges the same two claims against Paddock, 6 indicates that Plaintiffs filed the action as

subrogees of the following entities: LaSalle Hotel Properties; LaSalle Hotel Operating

Partnership, L.P.; I&G; LaSalle Hotel Lessee, Inc.; and DC I&G (collectively, the “LaSalle

Entities”). 7 ECF No. 34 at 1. Paddock and Plaintiffs have now filed motions for summary

judgment. Paddock, which seeks summary judgment in its favor on both claims against it, argues

that Plaintiffs are barred from bringing this action against it pursuant to both the subrogation

waiver included in the Renovation Contract at Section 17.6 and the “anti-subrogation rule,” by

which an insurer may not exercise its right of subrogation against its own insured, on the theory

that Paddock is itself an insured under the Insurance Policy due to its coverage of “[c]ontractors’

and/or subcontractors’ . . . interests in property covered to the extent of the Insured’s liability

imposed by law or assumed by contract.” ECF No. 62-1 at 1–2; ECF No. 62-15 at 10. It further

argues that the “economic loss rule,” which prohibits “a plaintiff who suffers only pecuniary injury

as a result of the conduct of another [from] recover[ing] those losses in tort,” Aguilar v. RP MRP

6
As noted above, claims by Plaintiffs and by Paddock against P&F Services and Freddie Beall are not at issue here.
7
Plaintiffs also sue as subrogees of Pebblebrook Hotel Trust; Pebblebrook Hotel, L.P., Ping Merger OP, LP; and Ping
Merger Sub, LLC, who are identified as LaSalle’s successors-in-interest via a series of mergers that occurred on
November 30, 2018. ECF No. 34 at 1, 5–6.

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Wash. Harbour, LLC, 98 A.3d 979, 982 (D.C. 2014) (quoting Apollo Grp., Inc. v. Avnet, Inc., 58

F.3d 477, 479 (9th Cir. 1995)), bars Plaintiffs’ negligence claim. ECF No. 62-1 at 15–18.

Plaintiffs have moved for partial summary judgment, seeking judgment as a matter of law

on their contract claim based on the following provisions in the Renovation Contract: Section 9.4,

warranting that Paddock’s work would be free from defects; Section 9.7, agreeing that Paddock

would be responsible for the acts and omissions of its employees and its subcontractors; Section

16.1, requiring Paddock to take reasonable precautions to prevent damages to the property and to

promptly remedy damage caused by it or its subcontractors; and Section 17.1, mandating that

Paddock maintain insurance, including for damage to property other than the Work property, that

was caused by Paddock’s operations. ECF No. 60 at 6. That is, Plaintiffs argue that Paddock

breached its obligations under the Renovation Contract because Paddock’s subcontractor “failed

to cap or otherwise secure the drain line that was the root cause of the loss.” Id. at 7. In addition,

Plaintiffs ask the Court to hold that the subrogation waiver does not apply to this situation because

the claimed damage was not to property within the Scope of Work defined by the Renovation

Contract. Id. at 8–12.

II. LEGAL STANDARD

A. Summary Judgment

Summary judgment is appropriate when the moving party demonstrates that there is no

genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter

of law. Fed. R. Civ. P. 56(a). “A fact is material if it ‘might affect the outcome of the suit under

the governing law,’ and a dispute about a material fact is genuine ‘if the evidence is such that a

reasonable jury could return a verdict for the nonmoving party.’” Steele v. Schafer, 535 F.3d 689,

692 (D.C. Cir. 2008) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). In

8
adjudicating such a motion, all reasonable inferences from the facts in the record must be made in

favor of the nonmoving party. Anderson, 477 U.S. at 255. To prevail on such a motion, the moving

party must show that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S.

317, 323 (1986). To do this, it may cite the record, including “affidavits or declarations.” Fed. R.

Civ. P. 56(c)(1)(A). Factual assertions made in the moving party’s affidavits or declarations may

be accepted as true in the absence of contrary assertions made in affidavits, declarations, or

documentary evidence submitted by the nonmoving party. Neal v. Kelly, 963 F.2d 453, 456 (D.C.

Cir. 1992).

For issues on which the nonmoving party would bear the ultimate burden of proof, a party

moving for summary judgment can carry its burden on the summary judgment motion by pointing

out “that there is an absence of evidence to support the nonmoving party’s case.” Celotex, 477

U.S. at 325. If the moving party carries its burden, the nonmoving party “must do more than

simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec.

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, it must show that a rational

trier of fact could find in its favor. Id. at 587. Thus, “‘conclusory allegations’ and ‘unsubstantiated

speculation,’ whether in the form of a plaintiff's own testimony or other evidence submitted by a

plaintiff to oppose a summary judgment motion, ‘do not create genuine issues of material fact.’”

Mokhtar v. Kerry, 83 F. Supp. 3d 49, 61 (D.D.C. 2015) (quoting Bonieskie v. Mukasey, 540 F.

Supp. 2d 190, 200 n.12 (D.D.C. 2008)), aff’d, No. 15-5137, 2015 WL 9309960 (D.C. Cir. Dec. 4,

2015). Nor can a sufficiently supported motion for summary judgment be defeated by statements

and evidence that is “rendered unreasonable given other undisputed evidence in the record.” Id.

at 74; see also Wadley v. Aspillaga, 209 F. Supp. 2d 119, 125 (D.D.C. 2002) (granting motion for

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summary judgment where “facts and arguments proffered by plaintiffs are immaterial, illogical, or

conclusory”).

B. Subrogation

“Where one party has paid the debt of another, justice requires that the payor be able to

recover his loss from the one who should have paid it . . . .” Nat’l Union Fire Ins. Co. v. Riggs

Nat’l Bank, 646 A.2d 966, 968 (D.C. 1994). Such recoupment is frequently accomplished through

subrogation, which “simply means substitution of one person for another; that is, one person [the

payor or insurer] is allowed to stand in the shoes of another [the debtor or insured] and assert that

person’s rights against a third party.” U.S. Airways, Inc. v. McCutchen, 569 U.S. 88, 97 n.5 (2013)

(quoting 1 D. Dobbs Law of Remedies § 4.3(4), at 604 (2d ed. 1993)). Although subrogation can

be based on equitable principles and, as such, would not “depend upon showing a contract

provision or formal assignment” of rights, but rather could be shown by “the mere fact of payment

by a third party,” so-called “‘conventional subrogation’ arises from an express or implied

agreement between the payor and the debtor or creditor.” Nat’l Union Fire at 968–69. This case

is in the realm of the conventional, as the Insurance Policy contains an express agreement that,

“[i]n the event of any payment under this policy, [Lexington Insurance] Company shall be

subrogated to the extent of such payment to all the Insured’s rights of recovery therefor.” ECF

No. 62-15 at 27.

No matter which type of subrogation is at issue, “an insurer can take nothing by subrogation

but the rights of the insured, and is subrogated to only such rights as the insured possesses.” Water

Quality Ins. Syndicate v. United States, 522 F. Supp. 2d 220, 231 n.8 (D.D.C. 2007); see also

Malacca Corp. v. Travelers Indem. Co., 421 F. Supp. 2d 137, 139 (D.D.C. 2006) (“A subrogated

insurer takes nothing by subrogation but the rights of the insured.”). Put another way, “an essential

10
element of subrogation is that the insured have a viable claim against a third party.” 16 Steven

Plitt, et al., Couch on Insurance § 224:76 (3d ed.) [hereinafter, Couch on Insurance]. Thus, a

subrogated insurer’s claims are subject to the same defenses that the defendant would have against

the insured. See, e.g., Vigilant Ins. Co. v. Am. Mech. Servs. of Md., LLC, 816 F. Supp. 2d 114,

118–19 (D.D.C. 2011) (applying a defense arising from a provision in a contract between the

defendant and the insured in an action brought by the subrogated insurer).

III. DISCUSSION

There are many theories at play here. Plaintiffs claim that the evidence establishes that

Paddock breached the Renovation Contract as a matter of law. Paddock interposes a number of

defenses: (1) that Plaintiffs’ right to prosecute these subrogated claims has been waived pursuant

to Section 17.6 of the Renovation Contract; (2) that the “anti-subrogation rule” bars their claims;

and (3) that the negligence claim cannot proceed because of the “economic loss rule.” Each

presents primarily a legal question. However, there is a subsidiary factual dispute about whether

the Renovation Contract (and its subrogation waiver) binds any entities beyond its signatories—

Paddock and DC I&G. Ultimately, both Plaintiffs’ motion for partial summary judgment on the

breach of contract claim and Paddock’s motion for summary judgment on both the breach of

contract and the negligence claims can be resolved by interpreting the meaning and effect of

Section 17.6 of the Renovation Contract and the application of the anti-subrogation rule. More

specifically, the Court finds that, no matter whether all of the LaSalle Entities are bound by the

Renovation Contract or only DC I&G is, (1) Plaintiffs’ breach of contract claim is barred in its

entirety by Section 17.6 and (2) both the breach of contract and the negligence claims are barred

by the anti-subrogation rule. There is therefore no need to analyze Paddock’s arguments regarding

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the entities that should be deemed bound by the Renovation Contract or the application of the

economic loss rule.

A. Contractual Waiver of Subrogation

The provision at the heart of this dispute is Section 17.6, which the parties designate the

subrogation waiver. 8 As noted, it provides, in relevant part:

[DC I&G] and [Paddock] waive all rights against each other . . . for damages
caused by fire or other perils to the extent covered by property insurance obtained
pursuant to this Article 17 or any other property insurance applicable to the Work,
except such rights as they may have to the proceeds of such insurance held by the
Owner [i.e. D.C. I&G] as fiduciary. . . .

ECF No. 62-5 at 7.

Paddock argues that this provision means that Plaintiffs (as subrogees of their insured, DC

I&G) have waived the claims here, which are “for damages caused by” a peril that was “covered

by property insurance” that satisfied the requirements of Article 17 of the Renovation Contract—

specifically, Section 17.3, which dictated that DC I&G should maintain property insurance “upon

the entire Work at the site to the full insurable value thereof” in the form of an “all-risk policy”

that “include[s] [the] interests” of DC I&G, Paddock, and any subcontractors “against the perils of

fire and extended coverage and physical loss or damage.” See ECF No. 62-1 at 7–13; ECF No.

62-5 at 7. Plaintiffs, on the other hand, contend that the waiver “does not apply to damage to

property that does not fall within the term ‘Work’ as defined in the [Renovation Contract].” ECF

No. 60 at 9.

Interpreting this provision does not require the Court to consider any disputed facts or to

break new ground. The principles governing contract interpretation under District of Columbia

8
“Subrogation waiver” or “waiver-of-subrogation clause” are, perhaps, misnomers. Although the effect is that rights
of subrogation are unavailable for certain claims, the provision actually waives certain claims, whether brought by the
parties to the Renovation Contract or by a subrogee.

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law are familiar. 9 The jurisdiction “adheres to an ‘objective law’ of contracts, meaning ‘the written

language embodying the terms of an agreement will govern the rights and liabilities of the parties

[regardless] of the intent of the parties at the time they entered into the Renovation Contract, unless

the written language is not susceptible of a clear and definite undertaking, or unless there is fraud,

duress, or mutual mistake.’” Dyer v. Bilaal, 983 A.2d 349, 354–55 (D.C. 2009) (alteration in

original) (quoting DSP Venture Grp, Inc. v. Allen, 830 A.2d 850, 852 (D.C. 2003)). In interpreting

a contract, courts “examine the document on its face, giving the language its plain meaning.” Dyer,

983 A.2d at 355 (internal quotation marks omitted) (quoting Tillery v. District of Columbia

Contract Appeals Bd., 912 A.2d 1169, 1176 (D.C. 2006)).

Here, DC I&G and Paddock “waive[d] all rights against each other . . . for damages caused

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

17 or any other property insurance applicable to the Work.” ECF No. 62-5 at 7. The plain meaning

of that provision is that DC I&G cannot pursue a claim against Paddock (either directly or by

subrogation) for damage that is covered by property insurance obtained under the Renovation

Contract or any other property insurance that might cover the Work. The damage here was

undisputedly covered by property insurance—the Insurance Policy—and Plaintiffs undisputedly

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The Renovation Contract states that it will be governed by “the law of the place where the Project is located”—that
is, the District of Columbia. ECF No. 62-5 at 8. “[I]t is well established that in diversity cases (such as this one), ‘the
law of the forum state supplies the applicable choice-of-law standard’ in the first instance.” Sickle v. Torres Advanced
Enter. Sols., No. 11-cv-2224, 2020 WL 5530357, at *7 (D.D.C. Sept. 14, 2020) (quoting Williams v. First Gov’t
Mortg. & Inv’rs Corp., 176 F.3d 497, 499 (D.C. Cir. 1999). “[U]nder the District of Columbia’s choice-of-law rules,
courts enforce express contractual choice-of-law provisions ‘so long as there is some reasonable relationship with the
state specified.’” Sickle, 2020 WL 5530357, at *7 (quoting Ekstrom v. Value Health, Inc., 68 F.3d 1391, 1394 (D.C.
Cir. 1995)). That requirement is met here, as the place of performance, location of the subject matter, and location of
the insured risk are all the District of Columbia. See, e.g., Adolph Coors Co. v. Truck Ins. Exchange, 960 A.2d 617,
620 (D.C. 2008) (looking to those factors, among others, to determine which state’s law to apply to a contract dispute).
As this is essentially a contract dispute and, indeed, can be resolved by applying principles of contract law, the Court
will apply the law of the District of Columbia.

13
paid on that insurance claim. ECF No. 62-11 at 16–17; ECF No. 62-12; ECF No. 62-13 at 6. Thus,

the claims here are waived.

Although the D.C. Court of Appeals has not interpreted a clause similar to this one, many

other courts around the country have, 10 and Paddock’s interpretation has clearly emerged as the

consensus view over the approach championed by Plaintiffs. See, e.g., Lexington Ins. Co. v. Entrex

Commc’n Servs., Inc., 749 N.W.2d 124, 133 & n.30 (Neb. 2008) (noting that the courts adopting

the approach that “the waiver applies to all damages insured by the owner’s property insurance

policy, regardless of whether they represent damages to the Work or non-Work

property[,] . . . represent the majority” and collecting cases); see also, e.g., Liberty Mut. Fire Ins.

Co. v. Fowlkes Plumbing, L.L.C., 290 So.3d 1257, 1259 (Miss. 2020) (describing the majority and

minority approach similarly); ACE Am. Ins. Co. v. Am. Med. Plumbing, Inc., 206 A.3d 437, 444

(N.J. Super. Ct. App. Div. 2019) (noting that “the majority . . . of other courts . . . have rejected

the argument” that the “subrogation waiver is limited to damage to the Work”).

Under this majority view, provisions with nearly identical wording to that at issue here

have been held to waive the subrogation of any claim of property damage “to the extent the

property is covered by insurance” required by the parties’ agreement. Fowlkes Plumbing, 290

So.3d at 1259. The cases point out that the plain language of the provision waives claims “for

damages caused by fire or other perils to the extent covered by property insurance obtained

pursuant to this [section of the Renovation Contract] 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.” Bd. of Comm’rs of Jefferson Cnty. v. Teton Corp., 30 N.E.3d 711, 715 (Ind. 2015). As

the Indiana Supreme Court explained:

10
Again, the Renovation Contract used an American Institute of Architects (AIA) form that is frequently used in
construction and renovation projects. ECF No. 62-1 at 1; ECF No. 66 at 8.

14
 [T]o determine which [ ] damages are covered by the subrogation waiver, we must
look at everything that follows the phrase “to the extent.” The positioning and plain
meaning of the word “covered” restricts the scope of the subrogation waiver based
on the source and extent of the property insurance coverage, not the nature of the
damages or of the damaged property.

Id. at 716. “In sum, if property damages (of any sort) are ‘covered’ by an insurance policy that

fits within one of these two descriptions, the waiver applies.” Id. As the U.S. District Court for

the District of Maine explained:

[T]he waiver clause is coextensive with the property insurance actually procured.
If the property insurance actually procured covers more than just the location of a
particular contractor’s own work, the waiver of subrogation must still be effective
as to all fire damages covered by insurance, not just fire damage to the “Work”
itself.

ASIC II Ltd. v. Stonhard, Inc., 63 F. Supp. 2d 85, 92 (D. Me. 1999) (footnote omitted). Moreover,

the party providing the property insurance need not “obtain separate insurance (i.e., ‘property

insurance obtained pursuant to [the contract]’),” but may rely on an “existing policy (i.e., ‘other

property insurance applicable to the Work’).” Id. The fact that the preexisting insurance that is

relied on to comply with the contract “may [be] . . . more extensive than what was required” is

immaterial, because “[t]he waiver clause does not restrict the waiver of damages to “Work” but to

the proceeds of any [property] insurance provided under [the contract].” Id.; see also id. at 93

(“There is no compelling distinction between an insurance policy actually procured at the time of

the contract, and an existing all-risk policy that meets the insurance procurement requirements of

the contract in the first instance.”). Numerous other courts have agreed with this interpretation.

See, e.g., Fowlkes Plumbing, 290 So.3d at 1259 (“The phrase ‘to the extent the property is covered

by insurance’ means that any damage that is paid for by insurance proceeds is covered.

Additionally, the phrase ‘applicable to the work’ means any insurance that insures the work, which

is not a limit on recovery for only damages to work property . . . .”); Entrex Commc’ns, 749

15
N.W.2d at 135 (“The court [in Lloyd’s Underwriters v. Craig & Rush, Inc.] explained, ‘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”).’ We agree.” (quoting

Lloyd’s Underwriters, 32 Cal. Rptr. 2d 144, 148 (Cal. Ct. App. 1994))); Behr v. Hook, 787 A.2d

499, 506 (Vt. 2001) (“The waiver-of-subrogation provision explicitly applies to the extent that

there is ‘property insurance obtained pursuant to’ the contract. . . . It is undisputed that plaintiffs

obtained insurance coverage that compensated them for their entire loss. Therefore, the waiver-

of-subrogation provision applies to the extent of that coverage.”); Am. Med. Plumbing, 206 A.3d

at 443 (“[The subrogation-waiver provision] applies the waiver to any insured damage, . . .

whether to the Work, to the Project, or to other insured property—so long as the policy covering

the damage falls within one of the two categories identified: ‘property insurance obtained pursuant

to [the relevant section in the agreement]’ or ‘other property insurance applicable to the Work.’”);

Westfield Ins. Grp. v. Affinia Dev. LLC, 982 N.E.2d 132, 141, 144 (Ohio Ct. App. 2012) (stating

that “the majority of jurisdictions considering the issue criticize the work/non-work distinction as

ignoring the language defining the scope of claims falling within the waiver clause. These courts

interpret the scope of the waiver as limited to the proceeds of the insurance provided under the

contract, and ask whether the owner’s policy was broad enough to cover both Work and non-Work

property and whether the policy paid for damages” and determining that “the reasoning adopted

by the majority of jurisdictions addressing this issue to be persuasive” because it “is consistent

with the plain and unambiguous language of the [c]ontract and furthers the purpose of the waiver

clause as a risk-shifting provision”).

16
 Plaintiffs urge a different approach, arguing that applying the majority view renders certain

other contractual provisions mere surplusage and that, reading the contractual provisions

applicable to insurance together make it “clear that Paddock remained responsible for damage to

non-Work property, whether caused by Paddock or its subcontractors.” ECF No. 60 at 8–12; ECF

No. 66 at 7–11; ECF No. 67 at 7–10. Specifically, Plaintiffs point to Sections 17.3 and 17.4:

17.3 Unless otherwise provided, the Owner shall purchase and
maintain . . . property insurance on the entire Work at the site to the full insurable
value thereof . . . and shall include the interests of the Owner, the Contractor, [and]
Subcontractors in the Work and shall insure against the perils of fire . . . and
physical loss or damage . . . .

17.4 A loss insured under Owner’s property insurance shall be adjusted with the
Owner and made payable to the Owner as fiduciary for the insureds, as their
interests may appear . . . .

ECF No. 60 at 9 (alterations in original) (quoting ECF No. 62-5 at 7). They argue that, because

(1) Section 17.3 “requires insurance [only] up to the value of the Work, including the interests of

Paddock and its subcontractors in the Work”; (2) Section 17.4 “states that losses will be adjusted

with Owner, and made payable to Owner ‘as fiduciary for the insureds as their interests may

appear”; and (3) the only insurable interest Paddock had “was the value of their interest in the

labor, equipment[,] and materials they used in the Work”; then (4) “the waiver of subrogation

clause—tied to insurance proceeds that the Owner held as fiduciary for Paddock and its

subcontractor ‘as their interests may appear’—only applies to insurance proceeds applicable to the

Work.” ECF No. 60 at 10. Plaintiffs also contend that Paddock’s interpretation renders

meaningless the portion of the subrogation waiver provision stating that DC I&G “waive[d] its

rights to the extent covered by property insurance applicable to the Work, ‘except such rights as

they may have to the proceeds of such insurance held by Owner as fiduciary.’” ECF No. 66 at 9

(quoting ECF No. 62-5 at 7).

17
 The Court rejects Plaintiffs’ reliance on the language of Section 17.3 (which required DC

I&G to maintain property insurance on the Work to its full insurable value, including the interests

of DC I&G as well as Paddock and its subcontractors) to support its argument that subrogation is

waived only as to damage to property that is the subject of the Work. It ignores the plain language

of the subrogation waiver, which, as discussed above, contains no language that could be

interpreted to limit its scope to claims based only on damage to the Work. Again, numerous cases

have made that precise point. For example, in Teton Corp., the Indiana Supreme Court explained

that the fact that the renovation contract at issue there—like the one here—required the property

owner “to procure insurance only for the work, not the entire [building in which the work was

being performed]” was no reason to interpret the scope of the waiver “just as narrow[ly].” Teton

Corp., 30 N.E.3d at 716. Rather, “even though the scope of the insurance requirement is indeed

narrow, the plain meaning of the waiver is not. Nothing in the [ ] contract links the scope of the

waiver to the minimum coverage property owners must procure under [the agreement].” Id.; see

also ASIC II Ltd., 63 F. Supp. 2d at 92 (rejecting the argument that the requirement in a contract

that the property insurance procured cover “the interest of the Owner, Contractor, subcontractors,

and sub-subcontractors in the Work” limited the scope of the waiver of subrogation to damage to

the Work itself); Fed. Ins. Co. v. Woodruff Constr., 826 N.W.2d 516 (Iowa Ct. App. 2012) (Table)

(“To adopt [the insurer’s] proposed reading would require rearranging the contract language so the

waiver would be ‘for damages caused by fire or other causes of loss covered by property insurance

obtained pursuant to this Section [ ] or other property insurance to the extent applicable to the

Work.’ As written, the waiver looks to whether the loss was covered by insurance, not whether

the loss was to ‘the work.’.”); cf. Am. Med. Plumbing, 206 A.3d at 443 (finding that subrogation

was waived for claims of damage to non-Work property where the owner’s property insurance

18
policy exceeded the coverage required by the agreement). That reasoning is sound, based as it is

in the plain meaning of the language of the relevant provisions, which is materially identical to the

language in the Renovation Contract, here.

Section 17.4 of the Renovation Contract is even further afield. That provision states that

“[a] loss insured under Owner’s property insurance shall be adjusted with the Owner and made

payable to the Owner as fiduciary for the insureds, as their interests may appear.” ECF No. 62-5

at 7. That is, when there is a loss insured under the Owner’s property insurance, the Owner and

the Owner’s insurer will determine the amount to be paid. See Adjust, Black’s Law Dictionary

(11th ed. 2019) (“To determine the amount that an insurer will pay an insured to cover a loss.”).

Once that amount is determined, it will be paid to the Owner. If other insureds have an interest in

those proceeds—if they are due part or all of the proceeds because they have suffered a covered

loss—the Owner holds the amount due them as a fiduciary, that is, as an entity that is “required to

act for the[ir] benefit” as to the insurance proceeds. Fiduciary, Black’s Law Dictionary (11th ed.

2019). Thus, for example, if Paddock caused damage to DC I&G’s property and also to Paddock’s

own property, under this provision the insurance company would pay DC I&G the entire adjusted

amount, including the amount due Paddock for its loss, which DC I&G would hold in a fiduciary

capacity for the benefit of Paddock. If there were a dispute about the amount owed Paddock, that

claim would not be waived; rather, Paddock could sue DC I&G for the amount to which it was

allegedly entitled. Plaintiff asserts, baldly, that “Paddock’s reading of the waiver clause

improperly renders [Section 17.4] mere surplusage.” ECF No. 66 at 9. But how? In the example

above, DC I&G would hold funds for Paddock as a fiduciary even though subrogated claims were

waived for damage to both Work and non-Work property. 11

11
Perhaps Plaintiffs mean to argue that, because Paddock would be entitled to proceeds from the Insurance Policy
only for loss to its own property and any such loss would necessarily be related to the Work, then the subrogation

19
 Indeed, Plaintiffs appear to misinterpret the very clause upon which they rely. In their

reply memorandum, Plaintiffs identify the “relevant part” of the subrogation waiver provision,

Section 17.6, as the following (the emphases are Plaintiffs’):

The Owner and Contractor waive all rights against each other and . . . any of their
subcontractors, sub-subcontractors, agents or employees, for damages caused by
fire or other perils to the extent covered by property insurance obtained pursuant to
this Article 17 or any other property insurance applicable to the Work, except such
rights as they may have to the proceeds of such insurance held by the Owner as
fiduciary. . . .

ECF No. 67 at 8 (quoting ECF No. 62-5 at 7). They then argue that

the waiver clause itself includes the requirement that the insurance proceeds be
“applicable to the Work” and “held by Owner as fiduciary.” Based on the language
of the waiver clause itself, the waiver does not apply to any insurance proceeds but
rather, only those proceeds that both apply to the Work and are held by Owner as
fiduciary.

Id. (emphasis omitted); see also ECF No. 60 at 9. But, as the careful reader will have noticed,

Plaintiffs have it wrong. Even if one were to accept that the waiver, by its terms, applies only to

claims of damage to the Work—that is, that only claims of damage to Work property are barred (a

conclusion that, as discussed above, finds no traction in the language of the Renovation

Contract)—the provision at issue mentions proceeds held by the Owner as fiduciary only in order

to identify claims that are excepted from the waiver—that is, claims related to insurance proceeds

held by DC I&G as fiduciary for other insureds. Thus, it is not, as Plaintiffs would have it, that

the waiver applies “only [to] those proceeds that both apply to the Work and are held by Owner as

fiduciary.” ECF No. 67 at 8. Rather, claims to proceeds held by the Owner as fiduciary are

explicitly not barred by the waiver. As such, there is no textual basis for Plaintiffs’ attempts to

graft onto the Renovation Contract’s delineation of the claims to which the waiver applies—as

waiver must apply only to claims regarding damage to the Work. ECF No. 60 at 9; ECF No. 67 at 8. But that argument
suffers from the same defect as the argument derived from Section 17.4: it ignores the plain language of the
subrogation waiver, which does not include any such limitation.

20
explained above, claims “for damages caused by fire or other perils to the extent covered by

property insurance” (ECF No. 62-5 at 7)—a requirement that the proceeds that are the subject of

those claims be “held by the Owner as fiduciary.” In short, Plaintiffs appear to fundamentally

misunderstand the provision that they attempt to construe.

Plaintiffs’ remaining arguments are similarly unconvincing. For example, their motion for

summary judgment points to Section 16.1 of the Renovation Contract, which requires Paddock to

“take reasonable precautions for [the] safety of, and [ ] provide reasonable protection to prevent

damage, injury, or loss to: [ ] employees on the Work and other persons who may be affected

thereby; [ ] the Work and materials and equipment to be incorporated therein; and [ ] other property

at the site or adjacent thereto” and also to “promptly remedy damage and loss to property at the

site caused in whole or in part.” ECF No. 62-5 at 7; see ECF No. 60 at 11. But that provision says

nothing about insurance or subrogation.

Plaintiffs also emphasize that Section 17.1 of the Renovation Contract requires Paddock to

purchase insurance for “claims from damages, other than to the Work itself, to property which may

arise out of or result from Contractor’s operations under the [Renovation] Contract.” ECF No. 60

at 12 (emphasis omitted); ECF No. 62-5 at 7. This, they argue, supports their position that

“Paddock remained responsible for damage to non-Work property, whether caused by Paddock or

its subcontractors.” ECF No. 60 at 12. Again, that interpretation ignores the scope of the

subrogation waiver, which waives claims covered by property insurance. As the Indiana Supreme

Court held in interpreting a similar contract, the provision requiring the contractor to maintain its

own liability insurance “ha[d] no impact on the subrogation waiver.” 30 N.E.3d at 714. The court

reasoned that

no such allocation between property and liability insurance [was] expressed
anywhere in the contract. Rather, the waiver of subrogation plainly applies to

21
 “damages caused by fire or other perils”—without exception or distinction—“to
the extent covered by property insurance.” This necessarily implies that [the
Contractor’s] duty to procure liability insurance had no bearing on damages that
are already covered by the Owner’s property insurance.

Id. at 716–17; see also Lloyd’s Underwriters, 32 Cal. Rptr. at 147–48 (“[The insurers] claim the

parties intended to allocate responsibilities for losses among themselves by making Owner

responsible for insuring against loss to the project itself and Contractors responsible for insuring

against any other loss under its liability insurance. . . . 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 . . . ; 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’).”). Similarly, Plaintiffs’ argument fails to take into account that the

liability insurance required by Section 17.1 covers risks that would not be covered by the property

insurance required by Section 17.6. By its terms, Section 17.1 requires, for example, coverage for

“claims under workers’ or workmen’s compensation acts and other [applicable] employee benefits

acts.” ECF No. 62-5 at 7. More, as another court has pointed out, the requirement that the

contractor maintain liability insurance is not rendered nugatory by the subrogation waiver, because

[t]he contractor’s liability insurance . . . provide[s] an additional layer of coverage
for damage that the owner’s property insurance may not reach. For example, if the
owner’s losses exceed its policy limit, the contractor’s liability insurance could
cover at least part of the balance. The liability insurance would also provide a
source of compensation to injured third parties, who might otherwise seek remedies
from the owner.

Am. Med. Plumbing, 206 A.3d at 446–47.

The Court therefore finds that the plain meaning of the Renovation Contract —a standard

AIA form—evinces an intention to “shift the risk/loss to the insurer,” barring any claim by DC

I&G for damages allegedly caused by Paddock to the extent that the loss was covered by the

22
Insurance Policy. Gables Constr., 228 A.2d at 749. As the Third Circuit has noted, courts

considering similar AIA form contracts “have concluded essentially that the contract operates to

shift to the owner the ultimate risk of loss which is then transferred to the insurer for valuable

consideration, leaving the insurer no right to proceed by subrogation against a subcontractor with

respect to property loss.” Com. Union Ins. Co. v. Bituminous Cas. Corp., 851 F.2d 98, 101 (3rd

Cir. 1988). That interpretation also has the salutary effect of reducing litigation by causing

construction losses to be resolved by insurance claims rather than through litigation. Id. (noting

that the purpose of the subrogation waiver is “the avoidance of disputes among construction project

participants,” a policy “best effectuated by interpreting the clause as effectively abrogating any

subrogation right of the owner’s insurer against the subcontractor”); see also Fowlkes Plumbing,

290 So. 3d at 1260; Gables Constr., 228 A.2d at 750.

Indeed, the facts indicate that outcome was within the contemplation of the parties to that

Insurance Policy. LaSalle paid a hefty premium—according to the Insurance Policy, over

$830,000 for a year of coverage—for a policy that covered “[c]ontractors’ and/or

subcontractors’ . . . interests in property . . . to the extent of the Insured’s liability . . . assumed by

contract” and insured against “all risks of direct physical loss of or damage to property.” ECF No.

62-15 at 3, 10, 21. It also explicitly allowed the insureds to recover under the policy even on

claims, like this one, for which they had entered into a release from liability prior to the loss. Id.

at 27 (“Any release from liability entered into by the Insured prior to loss hereunder shall not affect

this policy or the right of the Insured to recover hereunder.”). Had the Plaintiffs wanted to protect

themselves from such claims or had LaSalle not wanted to pay for such coverage, they could have

made a different agreement.

23
 The determination that DC I&G waived claims for damage covered by the Insurance Policy

leads inexorably to the conclusion that Plaintiffs’ motion for partial summary judgment—which

seeks judgment as a matter of law in their favor only on the breach of contract claim—must be

denied and, conversely, Paddock’s motion for summary judgment as to the breach of contract

claim must be granted. As noted above, a subrogated insurer steps into the shoes of the insured,

taking the rights the insured has, but nothing more. See, e.g., Malacca Corp., 421 F. Supp. 2d at

139. Thus, for an insurer to prosecute a subrogated claim against a third party, “the insured [must]

have a viable claim against [that] third party.” 16 Couch on Insurance § 224:76. Here, because

under Section 17.6 of the Renovation Contract, DC I&G has no claim against Paddock for losses

covered by the Insurance Policy—whether pleaded as a breach of contract claim or a negligence

claim—Plaintiffs standing in the shoes of DC I&G have no cause of action against Paddock either.

Undeterred, Plaintiffs also take the position that only DC I&G is subject to the subrogation

waiver because only DC I&G signed the Renovation Contract. ECF No. 66 at 12 (“Paddock, itself,

admits that DC I&G is the contracting party. The [Renovation] Contract, moreover,

unambiguously identifies DC I&G as ‘the Owner.’” (internal citation omitted)). It is a fundamental

principle of contract law that, “[i]n order to sue for damages on a contract claim, a plaintiff must

have either direct privity or third party beneficiary status.” Fort Lincoln Civic Ass’n v. Fort

Lincoln New Town Corp., 944 A.2d 1055, 1064 (D.C. 2008) (quoting Alpine Cnty. v. United States,

417 F.3d 1366, 1368 (Fed. Cir. 2005)); see also German All. Ins. Co. v. Home Water Supply Co.,

226 U.S. 220, 230 (1912) (noting the “exceptional privilege” of allowing “a stranger . . . [to] su[e]

for a breach of an agreement to which he is not a party”). According to Plaintiffs, only DC I&G

was in privity of contract with Paddock. But if that position is correct, only DC I&G (of all the

LaSalle Entities) had the right to maintain a breach of contract claim against Paddock. However,

24
as discussed above, DC I&G waived its rights to bring such a claim in that agreement. As

subrogees of DC I&G, Plaintiffs hold only the rights that DC I&G held—no more and no less.

Plaintiffs are a quandary, then. Either they have no right to sue for breach of contract because that

right belongs only to DC I&G and the Renovation Contract’s subrogation waiver bars such a claim

(as well as a negligence claim based on this loss to the extent it is brought as a subrogated claim

of DC I&G) or they are third-party beneficiaries of the Renovation Contract and are therefore

bound by its terms, which waive all claims for losses that were covered by the Insurance Policy,

see, e.g., Bituminous Coal Operators’ Ass’n v. Connors, 867 F.2d 625, 632 (D.C. Cir. 1989) (“In

the usual case, a third party beneficiary that brings a contract claim steps into the shoes of the

promisee and is therefore subject to any claim or defense that the promisor would have against

the promisee.”). At the very least, then, Plaintiffs’ breach of contract claim cannot stand, because

any Plaintiff that could bring such a claim (that is, any subrogee of a LaSalle Entity that is bound

by the Renovation Contract) has waived it.

As to the negligence claim, it is a claim for damage that was covered by the Insurance

Policy; thus, DC I&G has waived that claim through Section 17.6. Whether the remaining

Plaintiffs can bring the claim depends on (1) whether they are, as Paddock urges, bound by the

subrogation waiver through equitable estoppel or because they constitute a single enterprise and

(2) if they are not, whether another doctrine, such as the anti-subrogation rule or the economic loss

rule bars the claims. Because, as discussed below, the anti-subrogation rule bars all of the claims

brought by Plaintiffs, it is unnecessary to address Paddock’s other arguments.

C. Anti-Subrogation Rule

“[I]t has long been held that no right of subrogation can arise in favor of an insurer against

its own insured.” 16 Couch on Insurance § 224:1. “[K]nown by the somewhat overbroad name of

25
‘the antisubrogation rule,’” the prohibition “extends to forbid subrogation against those persons

. . . holding the status of an additional insured or coinsured,” including “pursuant to a separate

agreement requiring the insured to carry insurance for the benefit of another,” as long as the claim

“aris[es] from the very risk for which the insured was covered by that insurer.” Id. (footnotes

omitted). Although subrogation may be waived through a contractual provision, the anti-

subrogation rule is, itself, not a creature of contract, but one of public policy. See, e.g., Lloyd’s

Syndicate 457 v. FloaTEC, LLC, 921 F.3d 508, 522 (5th Cir. 2019). It is motivated, in part, by the

“public policy consideration[ ]” that an insurer that has accepted premiums to cover a risk should

not be allowed to avoid consequent losses by recovering them from an insured party. See 16 Couch

on Insurance § 224:3.

Paddock’s position is that the rule functions to bar both of the claims asserted here—that

is, the breach of contract claim and the negligence claim brought by Plaintiffs as subrogees of each

of the LaSalle Entities. ECF No. 62-1 at 18–23. Plaintiffs counter first that “Paddock offers no

proof that it [was] an insured under Plaintiffs’ policies.” ECF No. 66 at 19. Further, they argue

that, to the extent Paddock was an insured pursuant to the Renovation Contract, the anti-

subrogation rule would bar (1) only claims brought by Plaintiffs as subrogees of DC I&G (and not

the claims brought as, for example, subrogees of I&G) and (2) only claims to Work property. Id.

at 19–22.

Plaintiffs make their first point—that Paddock has not shown that it is an “insured”—in a

single sentence without citation to authority. The argument will be deemed forfeited. See, e.g.,

United States v. TDC Mgmt. Corp., 827 F.3d 1127, 1130 (D.C. Cir. 2016) (finding an argument

forfeited where the party “does not further develop it (or even mention it again) after [a] ‘single

26
conclusory statement’” (quoting Bryant v. Gates, 532 F.3d 888, 898 (D.C. Cir. 2008))); Johnson

v. Panetta, 953 F. Supp. 2d 244, 250 (D.D.C. 2013).

Even if it were not forfeited, authority establishes that, to determine whether an entity not

named in an insurance policy is, indeed, an additional insured, courts should look to the contracts

at issue—that is, both the agreement between the insured and the putative third-party and the

insurance policy—to determine “the reasonable expectations of the parties.” Rausch v. Allstate

Ins. Co., 882 A.2d 801, 814–15 (Md. 2005) (looking to the lease between a landlord and tenant to

determine that the tenant was an insured under the landlord’s fire insurance policy); see also, e.g.,

AGIP Petroleum Co. v. Gulf Island Fabrication, Inc., 920 F. Supp. 1318, 1325–26 (S.D. Tex.

1996) (looking to provisions of the contract between insured and contractor and of the insurance

policy to determine that the contractor should be deemed an insured under the insurance policy);

Sherwood Med. Co. v. B.P.S. Guard Servs., 882 S.W.2d 160, 162 (Mo. Ct. App. 1994) (same, to

determine whether a subcontractor was insured under the policy); Olinkraft, Inc. v. Anco

Insulation, Inc., 376 So.2d 1301, 1302–03 (La. Ct. App. 1979) (same, with a contractor); S.

Tippecanoe Sch. Bldg. Corp. v. Shambaugh & Son, Inc., 395 N.E.2d 320, 354–55, 362 (Ind. Ct.

App. 1979) [hereinafter, South Tippecanoe] (looking to the contract between a building owner and

its general contractor that required the owner to maintain all-risk insurance including the interests

of the contractor and subcontractors and to that all-risk insurance policy to determine that a

subcontractor was an additional insured under the policy). Here, as discussed above, DC I&G and

Paddock signed an agreement in which DC I&G committed to provide property insurance that

would (at least) cover the Work, including the interests of Paddock. ECF No. 62-5 at 7. The

Renovation Contract also waived DC I&G’s right to subrogate claims that were covered by that

property insurance. Id. DC I&G relied on its existing all-risk property insurance—the Insurance

27
Policy—to satisfy the dictates of the Renovation Contract. The Insurance Policy itself was written

to contemplate such a situation, as it extends coverage to “[c]ontractors’ and/or

subcontractors’ . . . interests in property covered to the extent of the Insured’s liability imposed by

law or assumed by contract.” ECF No. 62-15 at 10. More, the policy affirms that the insured

parties retain the right to recover under the Insurance Policy notwithstanding “[a]ny release from

liability entered into . . . prior to loss.” Id. at 27. Thus, the parties intended for Paddock to be

covered by the Insurance Policy, and Paddock, although not named, was coinsured under the

policy. See, e.g., 16 Couch on Insurance § 224:1 & n.6 (collecting cases affirming the proposition

that “[w]here insured is required by contract or lease to carry insurance for benefit of another, other

party may attain status of coinsured . . . in absence of design or fraud on part of coinsured”); South

Tippecanoe, 395 N.E.2d at 354–60 (finding as a matter of law that contractors and subcontractors

on a school construction building governed by a contract similar to the one here were intended

insureds under a builder’s all-risk policy with coverage provisions similar to the policy at issue

here). Indeed, Plaintiffs appear to recognize this, asserting that, “because they step into the shoes

of DC I&G, the terms of the [Renovation] Contract,” which includes the requirement that DC I&G

provide property insurance, “apply to Plaintiffs’ claims—as subrogee of DC I&G—against

Paddock.” ECF No. 66 at 20 (internal citation omitted).

Plaintiffs make two slightly more developed arguments seeking to avoid the application of

the anti-subrogation rule to the LaSalle Entities other than DC I&G. First, they contend that

“Paddock cannot be considered an insured under [ ] Plaintiffs’ [Insurance Policy]” with regard to

any entity other than DC I&G because DC I&G was “the only Insured that could have assumed

Paddock’s liability by contract.” Id. at 19. As support, they cite a provision from the Insurance

Policy stating that, “[e]xcept with respect to limits of liability and deductible amounts, the terms

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of the policy shall apply separately to each person or organization covered as Insured in the same

manner and to the same extent as though a separate policy had been issued to each such person or

organization.” Id.; see also ECF No. 62-15 at 31. However, in determining whether two entities

are insured under the same policy for purposes of the anti-subrogation rule, courts have looked to

the realities of the relationship among the insurer and the insured entities, rather than mere

formalities. So, for example, in North Star Reinsurance Corp. v. Continental Insurance Corp.,

New York’s highest court found that two policies, each naming a different insured, were

“integrally related and indistinguishable from a single policy in any relevant way” because they

were issued by the same insurer at the same time and covered the same risk. 624 N.E.2d 647, 653–

54 (N.Y. 1993). Similarly, in AGIP Petroleum, the court indicated that the anti-subrogation rule

would bar a suit by the subrogated insurer of a petroleum company against a contractor who

qualified as an “other assured” under the policy, even though that policy contained a provision that

the insurance would “be deemed to be a separate insurance in respect of each Assured [ ] (as if a

separate policy had been issued to each).” 920 F. Supp. at 1325–26. Plaintiffs have provided no

reason to consider the single policy here as separate policies. Indeed, the undisputed evidence

indicates that Plaintiffs themselves did not consider each insured to be covered by a separate

policy. Plaintiffs repeatedly assert that I&G (which owned the hotel and leased it to DC I&G) was

the entity damaged by the incident. ECF No. 66 at 19. However, the insurance proceeds were

paid out to LaSalle, not I&G or even DC I&G. ECF No. 62-1 at 3; ECF No. 62-12; ECF No. 66

at 6. Paddock and the insured subrogors—each of the LaSalle Entities upon whose behalf Plaintiffs

sue—are therefore insured under the same policy.

Plaintiffs’ second argument—that DC I&G did not agree by contract to insure damage to

non-Work property and therefore the anti-subrogation doctrine, which “applies only ‘for a claim

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arising from the very risk for which the insured was covered” does not affect the claims here (ECF

No. 66 at 20 (quoting N. Star Reins. Corp. v. Cont’l Ins., 82 N.Y.2d 281, 296) (N.Y. 1993))—fares

no better. First, as noted above, by relying on its existing all-risk property insurance policy to

satisfy the dictates of the Renovation Contract, DC I&G did agree to insure damage to non-Work

property. And the Insurance Policy itself evinces an intention to assume the risk of a contractor’s

negligence by covering “[c]ontractors’ and/or subcontractors’ . . . interests in property . . . to the

extent of the Insured’s liability . . . assumed by contract” and insured against “all risks of direct

physical loss of or damage to property” even where the parties to that contract had waived claims

against each other (and thus waived subrogation). ECF No. 62-15 at 10, 21.

A leading case, Baugh-Belarde Construction Co. v. College Utilities Corp., aptly explains

the concept. There, Baugh-Belarde Construction Co. (“Baugh-Belarde”), the contractor charged

with constructing faculty housing for the University of Alaska maintained an insurance policy that

covered one of its subcontractors, College Utilities Corp., “to the extent of [its] interest in the

project.” Baugh-Belarde, 561 P.2d 1211, 1212 (Alaska 1977). When a fire damaged the

construction, the contractor—on behalf of the insurer—sought recompense for the loss amount,

“alleging that College Utilities had breached its contract and that College Utilities’ negligence had

caused the fire.” Id. at 1212–13. The court recognized that the language of the insurance policy

“provided that subcontractors were insured ‘only as regards [their] property,’ and were included

‘as their interests may appear.’” Id. at 1213 (alteration in original) (quoting the insurance policy).

Nevertheless, the court rejected the plaintiff’s argument that the subcontractor’s “immunity from

liability [due to the anti-subrogation rule was] limited to the amount of loss to its own property in

the construction project.” Id. It reasoned that, “by accepting the premiums for [the

subcontractors’] inclusion as co-insureds under said policy,” the insurance company “assumed the

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risk of any loss occasioned by [the subcontractors’] negligence. . . . The builder’s risk policy

obtained by Baugh-Belarde protected each insured party against his own negligence, whether the

property lost belonged to him or to some other insured party.” Id. at 1214 (first alteration in

original) (quoting New Amsterdam Cas. Co. v. Homans-Kohler, Inc., 305 F. Supp. 1017, 1020

(D.R.I. 1969)). The court pointed to several policy considerations as support for its decision,

including reduction of litigation—because “[i]f an insurer on a major construction job were able

to recover from one or more of its insureds, most losses on construction jobs would result in costly

litigation,” which would “ultimately be passed on to the general public in the form of increased

insurance premiums and higher construction costs”—and “the tremendous burden which would be

placed on subcontractors,” which would be “forced to protect against liability for loss to the entire

project by paying huge premiums for [their] own liability insurance,” consequently “increas[ing]

the entire cost of the construction project[s].” Baugh-Belarde, 561 P.2d at 1215. The court

concluded that “the insurer could not recover through subrogation from a subcontractor which was

insured under its builder’s risk policy.” Id. at 1216.

Other courts have followed the lead of Baugh-Belarde. Of particular note is the decision

in South Tippecanoe, where the court was faced with a situation very similar to the one presented

here. In that case, the contract to build a school required the owner (South Tippecanoe) to

“purchase and maintain property insurance upon the entire Work at the site to the full insurable

value thereof” and to “include the interests of the Owner, the Contractor, Subcontractors and Sub-

subcontractors.” South Tippecanoe, 395 N.E.2d at 323 (quoting the construction contract). It also

included a subrogation waiver worded similarly to Section 17.6 in the Renovation Contract. Id.

at 324. The insurance policy, which named only South Tippecanoe as an insured, covered the

building while under construction, as well as “builders’ machinery, tools and equipment owned by

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the insured or similar property of others for which the insured is legally liable.” Id. (quoting

insurance policy). It further contained a provision that the policy was not invalidated “should the

Insured waive in writing prior to a loss to the described property any or all right of recovery against

any entity for whom work is being performed, or against any subcontractor working on the job

insured hereunder.” Id. (quoting insurance policy). After a gas explosion damaged the

construction, the insurer paid for the losses and sued, as subrogee of the owner, the allegedly

negligent subcontractors to recover the loss amount. Id. at 322. Relying on Baugh-Belarde and

“the weight of authority from other jurisdictions,” the court held that, because “[t]he construction

contract . . . explicitly required that the property insurance procured by South Tippecanoe include

the interests of the various contracting parties,” claims against those contractors (as “intended

‘insured[s]’ under the builder’s risk insurance”) were “not [ ] subject to subrogation.” Id. at 327–

33; see also, e.g., Harvey’s Wagon Wheel, Inc. v. MacSween, 606 P.2d 1095, 1096 (Nev. 1980)

(holding that the anti-subrogation rule barred suit by an owner’s insurer against subcontractors

notwithstanding the fact the insurance policy stated that it insured the subcontractors “[a]s their

interests may appear” (quoting the policy)); Sherwood Med. Co., 882 S.W.2d at 163 (same, where

“[t]he policy and Agreement afforded subcontractors coverage ‘as their interests may appear’” and

“did not limit coverage to a property interest alone”); Olinkraft, 376 So.2d at 1302–03 (same,

where the construction contract required the owner to maintain insurance covering the “interest[s]”

of the subcontractors and insurance policy stated that it covered “[c]ontractor’s interest in

property . . . to the extent of the Insured’s liability therefor” (quoting the construction contract and

the policy)). Here, as in South Tippecanoe and those other cases, the fact that the Renovation

Contract “explicitly required that the property insurance procured by [DC I&G] include the

interests of the various contracting parties” indicates that “the protection thereby afforded was

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intended to constitute the exclusive source for redress of damages,” a conclusion “buttressed by

the waiver provisions discussed above.” South Tippecanoe, 395 N.E.2d at 327. This result is fully

in line with the precept that “[a]n insurer which accepts a premium based partially on the inclusion

of a coinsured under a policy of insurance has assumed the risk of its negligence.” Bd. of Ed. of

Jordan Sch. Dist. v. Hales, 566 P.2d 1246, 1247 (Utah 1977); see also, e.g., Baugh-Belarde, 561

P.2d at 1215 (“The entire loss should be borne by the insurer which has accepted one premium

covering the entire property.”); cf. Pa. Gen. Ins. Co. v. Austin Powder Co., 68 N.Y.2d 465, 470–

71 (rejecting the argument that the anti-subrogation rule was inapplicable because the additional

insured did not itself pay premiums for the coverage because the costs for such premiums were

likely priced in to the additional insured’s contract with the primary insured).

The result, then, is that the anti-subrogation rule bars Plaintiffs (as subrogees of the insured

LaSalle Entities) from maintaining this action against Paddock, who is also an insured under the

Insurance Policy. In sum, the Renovation Contract itself, as a matter of law, bars Plaintiffs’ breach

of contract claim against Paddock (and any other claim brought as subrogee of DC I&G) and the

anti-subrogation rule bars both the breach of contract and the negligence claims as to all LaSalle

Entities. As noted, the Court need not and does not reach Paddock’s legal argument as to the

application of the economic loss rule or its factual argument that all LaSalle Entities should be

deemed bound by the provisions of the Renovation Contract.

IV. ORDER

For the foregoing reasons, it is hereby

ORDERED that Plaintiffs’ motion for partial summary judgment (ECF No. 60) is

DENIED. It is further

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 ORDERED that Paddock’s motion for summary judgment (ECF No. 62) is GRANTED.

It is further

ORDERED that the claims against Paddock are DISMISSED. It is further

ORDERED that on or before April 15, 2021, Paddock shall SHOW CAUSE why its

claims against P&F should not be dismissed as moot. 12

SO ORDERED.
Digitally signed by
G. Michael Harvey
Date: 2021.04.01
Date: April 1, 2021 08:37:59 -04'00'
______________________________
G. MICHAEL HARVEY
United States Magistrate Judge

12
Paddock has not alleged any claims against Defendant Beall.

34