Circuit Court for Prince George's County 00CAL1323508
Deborah S., Berger, Zarnoch, Robert A. (Senior Judge,
Specially Assigned), JJ.
DEBORAH S., JUDGE.
Circuit Court for Prince George's County, National Surety
Corporation ("National Surety"), as subrogee of
Metropolitan Apartments at Camp Springs, LLC
("Metropolitan"), sued WCS Construction, LLC
("WCS"), the general contractor on a large
construction project, and numerous subcontractors for
negligence and "breach of the contract/breach of
the subcontractors moved for summary judgment on the ground
that Metropolitan had waived its subrogation rights in its
contract with WCS ("the Prime Contract"), and
therefore National Surety's claims against them were
barred. WCS and some of the subcontractors also moved for
summary judgment on the ground that Metropolitan had waived
any right to loss of use damages in the Prime Contract and
therefore National Surety's claims for business
interruption damages were barred. The circuit court granted
summary judgment in favor of WCS and the subcontractors on
appeal, National Surety presents four questions,
which we have condensed and rephrased as three:
I. Did the circuit court err by granting summary judgment in
favor of WCS based upon Metropolitan's waiver of
subrogation in the Prime Contract?
II. Did the circuit court err by granting summary judgment in
favor of the subcontractor appellees based on
Metropolitan's waiver of subrogation in the Prime
III. Did the circuit court err by granting summary judgment
in favor of WCS and the subcontractor appellees based upon a
waiver of loss of use damages in the Prime Contract?
following reasons, we shall affirm the judgment of the
2003, Metropolitan contracted with Global Construction, LLC
("Global"), to be the construction manager for
Metropolitan's planned 367-unit apartment complex in Camp
Springs, Prince George's County ("the
Project"). Global acted in that capacity until September
6, 2005, when Metropolitan terminated the contract with
Global. WCS began acting as the construction
manager for the Project soon after Global was terminated.
Around seven months later, on April 10, 2006, WCS executed
the Prime Contract with Metropolitan. That contract, which we
shall discuss in greater detail, infra, consisted of
standard form AIA documents, as modified by the parties.
January 31, 2007, while work on the Project was in progress,
WCS filed a complaint to establish a mechanics' lien
against Metropolitan, in the Circuit Court for Prince
George's County. In the mechanics' lien case, WCS
alleged that Metropolitan was not making payments as required
by the Prime Contract. The parties agreed to hold the
mechanics' lien case in abeyance and engage in settlement
negotiations. Work continued on the Project and, on May 4,
2007, the Project was "substantially completed"
within the meaning of that phrase in the Prime Contract.
12, 2007, Metropolitan and WCS entered into a
"Settlement Agreement and Final Release of Claims and
Waiver of Liens" ("the Settlement Agreement").
We shall discuss the pertinent terms of the Settlement
Agreement, infra. On July 31, 2007, the Project was
fully completed and final payment was made, in compliance
with the Settlement Agreement.
years later, on August 23, 2011, central Maryland experienced
a 5.8 magnitude earthquake, with its epicenter in
north-central Virginia. In the aftermath, the Project
suffered significant water intrusion and a mold outbreak,
necessitating extensive repairs. Metropolitan took the
position that the damage was a result of latent defects in
construction for which WCS was responsible. At that time, the
Project was covered by a property and business loss insurance
policy Metropolitan had purchased from National Surety.
Metropolitan submitted claims for its losses to National
Surety, which denied them in part. Litigation between
National Surety and Metropolitan ensued in the United States
District Court for the Eastern District of Virginia.
August 21, 2013, in the Circuit Court for Prince George's
County, National Surety filed the instant subrogation action
against WCS, the subcontractors, and seven other
defendants. A first amended complaint was filed on
November 22, 2013, stating claims for negligence in
construction and "breach of contract/breach of
warranty" against each defendant.
following binding arbitration between National Surety and
Metropolitan, the extent of Metropolitan's losses covered
by the National Surety policy was found to be $39, 333, 460,
comprising $27, 633, 900 in property damages and $11, 699,
560 in business interruption damages. An order approving the
binding arbitration appraisal in that amount was entered by
the United States District Court for the Eastern District of
Virginia on March 22, 2016. Metropolitan Apartments at
Camp Spring, LLC v. National Surety Corp., No.
1:14-CV-107, 2016 WL 4650007 (E.D. Va. Mar. 22, 2016).
13, 2016, WCS filed a motion for summary judgment in the
instant case, arguing that on the undisputed material facts
it was entitled to judgment on all of National Surety's
claims as a matter of law because Metropolitan had waived its
subrogation rights in the Prime Contract. By separate motion
for summary judgment, it argued that it was entitled to
summary judgment based upon Metropolitan's waiver of loss
of use damages in that contract. Also, between May 13 and 16,
2016, the four subcontractor appellees moved for summary
judgment on various bases not pertinent to the issues on
appeal. They each subsequently supplemented their motions to
adopt WCS's argument that National Surety's claims
were barred by the waiver of subrogation. Ramsey and
Mid-Atlantic also adopted the arguments from WCS's motion
for summary judgment based upon the waiver of loss of use
opposition to the motions, National Surety argued that the
subrogation waiver in the Prime Contract no longer was
operative, for either of two reasons. First, the Settlement
Agreement had extinguished the waiver by modification.
Second, and alternatively, the Settlement Agreement was a
substitute contract that discharged all prior rights and
obligations under the Prime Contract, including the waiver of
subrogation. National Surety maintained that to the extent
the Settlement Agreement did not unambiguously extinguish or
discharge the waiver of subrogation, its effect on that
waiver provision was an issue of fact that was not
susceptible of decision on summary judgment. National Surety
made the same argument regarding the loss of use damages
waiver in the Prime Contract.
August 26, 2016, the court heard argument on the motions for
summary judgment. It ruled that the parties to the Settlement
Agreement intended that it modify the Prime Contract but not
that it be a "complete substitute" for the Prime
Contract, and that the waivers of subrogation and loss of use
damages in the Prime Contract were not extinguished by that
modification. It determined that the waivers were binding on
National Surety, as Metropolitan's subrogee, and barred
its claims against WCS and against Marside, Ramsey, and
September 19, 2016, the court granted summary judgment in
favor of subcontractor K&C and against National Surety
for the "reasons stated in open Court on August 26,
2016, [and at a subsequent hearing on] September 2,
timely appeal followed.
standard of review on appeal from the grant of summary
judgment is well-established:
An appellate court reviewing a summary judgment examines the
same information from the record and determines the same
issues of law as the trial court. PaineWebber Inc. v.
East, 363 Md. 408, 413, 768 A.2d 1029, 1032 (2001)
(citation omitted) . . . . We recently reiterated the
standard of review for a trial court's grant or denial of
a motion for summary judgment in Myers v. Kayhoe,
391 Md. 188, 892 A.2d 520 (2006):
The question of whether a trial court's grant of summary
judgment was proper is a question of law subject to de
novo review on appeal. Livesay v. Baltimore,
384 Md. 1, 9, 862 A.2d 33, 38 (2004). In reviewing a grant of
summary judgment under Md. Rule 2-501, we independently
review the record to determine whether the parties properly
generated a dispute of material fact and, if not, whether the
moving party is entitled to judgment as a matter of law.
Id. at 9-10, 862 A.2d at 38. We review the record in
the light most favorable to the nonmoving party and construe
any reasonable inferences that may be drawn from the facts
against the moving party. Id. at 10, 862 A.2d at 38.
[Myers] at 203, 892 A.2d at 529.
United Servs. Auto. Ass'n v. Riley, 393 Md. 55,
67 (2006). Thus, we review the circuit court's grant of
summary judgment in favor of WCS and the subcontractor
appellees on National Surety's claims de novo.
addressing the questions presented, we shall review the
relevant terms of the Prime Contract and the Settlement
Agreement, as they are central to all the issues.
Prime Contract consisted of two main documents: 1) "AIA
Document A131 CMc-2003 and AGC Document 566, Standard Form
Agreement Between Owner and Construction Manager"
("the A131 Document"); and 2) "AIA Document
A201-1997, General Conditions of the Contract for
Construction" ("the General Conditions").
A131 Document identified Metropolitan as the
"Owner" and WCS as the "Construction
Manager" and spelled out WCS's responsibilities in
taking over from Global; its compensation; its reimbursement
for costs; and other matters. As pertinent, it required that,
during the construction phase of the Project, Metropolitan
"purchase and maintain liability and property insurance,
including waivers of subrogation, as set forth" in the
General Conditions. § 8.2. It stated that, during the
construction phase of the project, "[c]laims, disputes
or other matters in question between the parties" shall
be resolved as provided in sections 4.3 through 4.6 of the
General Conditions, and that "[c]laims arising out of or
relating to the [Prime] Contract shall be decided by
Arbitration . . . ." § 9.1.
General Conditions, Metropolitan was identified as the
"Owner" and WCS was identified as the
"Contractor." Section 1.1.1, "The Contract
Documents, " described all the documents making up the
Prime Contract, including "Modifications issued after
execution of the [Prime] Contract." As pertinent, a
"Modification" is defined as "a written
amendment to the [Prime] Contract signed by both
parties[.]" Section 1.1.2, entitled "The Contract,
" stated that "[t]he [Prime] ...