Wood Expressions v. Aaa alarm/asi

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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
WOOD EXPRESSIONS FINE CUSTOM CABINETRY INC,
Plaintiff/Appellant,
v.
AAA ALARM & SECURITY INC, Defendant/Appellee.
_________________________________
ASI COMMUNICATIONS INC, Third-Party Defendant/Appellee.
No. 1 CA-CV 19-0382
FILED 11-18-2021
Appeal from the Superior Court in Maricopa County
No. CV2013-004106
The Honorable Connie Contes, Judge Retired
REVERSED AND REMANDED
COUNSEL
Poli, Moon & Zane PLLC, Phoenix
By Michael N. Poli, Lawrence R. Moon, Jeffrey G. Zane
Counsel for Plaintiff/Appellant
Quintairos, Prieto, Wood & Boyer, PA, Scottsdale
By Erick S. Durlach, Rita J. Bustos, Cody N. Crosier
Counsel for Defendant/Appellee AAA Alarm & Security Inc
WOOD EXPRESSIONS v. AAA ALARM/ASI
Decision of the Court
MEMORANDUM DECISION
Chief Judge Kent E. Cattani delivered the decision of the Court, in which
Presiding Judge Paul J. McMurdie and Judge Jennifer B. Campbell joined.
C A T T A N I, Judge:
¶1 Wood Expressions Fine Custom Cabinetry, Inc. (“Wood
Expressions”) appeals the summary judgment entered in favor of AAA
Alarm & Security, Inc. (“AAA”) on Wood Expressions’ claims for damages
caused by a fire. For reasons that follow, we reverse and remand for further
proceedings.
FACTS AND PROCEDURAL BACKGROUND
¶2 Wood Expressions built custom wood products in a
commercial facility until its entire facility was destroyed by fire in January
2012.
¶3 Several years earlier, Wood Expressions entered a contract
with AAA for continuous monitoring of the facility’s burglar and fire alarm
system. AAA subcontracted the monitoring service to a different company.
¶4 The alarm system was connected to a remote monitor over
telephone lines, and the system checked connectivity by sending a test
signal to the monitor around 11 p.m. every night. Around midnight, the
monitoring company’s software would confirm that a communication from
the alarm system had been received that day. The software was
programmed to accept any signal from the system within the preceding 24
hours—not just the nightly test signal—as proof of connectivity for the day.
The nightly test signal was successfully received every night through
January 20, 2012.
¶5 On Saturday, January 21, 2012, the alarm system transmitted
and the monitoring company received a “close” signal when the alarm was
set at 6:44 p.m. Just over two hours later, however, an intruder cut the
telephone lines, so the nightly test signal failed. The monitoring company’s
software did not register a communications issue (and no one contacted
Wood Expressions) because the close signal, received earlier that day,
satisfied the one-transmission daily requirement.
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WOOD EXPRESSIONS v. AAA ALARM/ASI
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¶6 On Sunday, January 22, 2012, the nightly test signal failed
again. Around midnight, the monitoring company’s software logged a “no
test” about which to notify AAA, but by that time, law enforcement had
discovered that Wood Expressions’ facility was on fire. Wood Expressions
later alleged that the fire had been set by an intruder who gained access to
the building through a window broken the night before, when the
telephone lines were cut. The fire department informed the monitoring
company of the fire and the monitoring company then contacted Wood
Expressions, but the entire facility had already been destroyed.
¶7 Wood Expressions and two related entities were named
insureds under a commercial insurance policy that included coverage for
loss of the building, business personal property, and business income. All
three insureds submitted claims under the policy for losses caused by the
fire. Although the insurance company paid Wood Expressions and the two
related entities collectively more than $2 million, the three insureds sued
the insurance company for breach of contract and bad faith, alleging that
the insurer had wrongfully failed to pay all amounts owed under the policy.
The insurance company ultimately settled with the three insureds for a
collective total of $6 million.
¶8 Wood Expressions then sued AAA for negligence and breach
of contract, alleging that if AAA had properly informed Wood Expressions
of the security issue the first night, Wood Expressions could have fixed the
problem and prevented the damage that occurred the second night. AAA
denied liability, then filed a third-party claim against the monitoring
company seeking indemnity. On the third-party claim, the superior court
granted partial summary judgment in favor of the monitoring company
based on a term in the subcontract capping the monitoring company’s
liability to AAA at $250.
¶9 AAA moved for partial summary judgment against Wood
Expressions on the negligence claim, and Wood Expressions cross-moved
for partial summary judgment on liability. The superior court denied both
motions, and in ruling on AAA’s motion specifically noted that AAA had
intended to include—but had mistakenly omitted—a term that would have
contractually capped its liability to Wood Expressions at $150.
¶10 Several months later, AAA filed a second motion for
summary judgment on different grounds. As relevant here, AAA argued
that a waiver provision (the “Waiver”) in its contract with Wood
Expressions “shift[ed] the risk of the subject hazards, burglary and fire, to
[Wood Expressions’] insurance,” meaning Wood Expressions could (and
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WOOD EXPRESSIONS v. AAA ALARM/ASI
Decision of the Court
did) recover from its insurer but could not recover from AAA. AAA also
argued that, as a matter of law, its conduct did not amount to gross
negligence. Wood Expressions responded that the Waiver only applied to
an insurance company’s right to subrogation, not Wood Expressions’ own
claims against AAA; that its insurer had not provided full compensation for
its losses; that the collateral source rule permitted it to recover from AAA
even for losses that insurance had paid; and that questions of fact precluded
summary judgment on gross negligence, which would prevent AAA from
enforcing an exculpatory clause like the Waiver.
¶11 This time the superior court granted summary judgment for
AAA. The court distinguished the incomplete limitation-of-liability clause
at issue in AAA’s first motion from the Waiver, which the court
characterized as a risk-allocation provision by which Wood Expressions
and AAA agreed that the risk of loss in cases covered by Wood Expressions’
insurance would be borne by Wood Expressions’ insurance. Because Wood
Expressions’ insurance did provide compensation for damage from the fire,
the Waiver applied and prevented Wood Expressions’ claims against AAA.
¶12 Wood Expressions requested clarification of two aspects of
the ruling. First, Wood Expressions asked the court to address the scope of
the Waiver—whether it applied only to the extent of the insurer’s payments
or also precluded recovery of Wood Expressions’ losses that exceeded the
insurance proceeds. Second, Wood Expressions asked the court to rule
explicitly on gross negligence and whether the Waiver would apply
notwithstanding a triable issue on AAA’s gross negligence. AAA moved
to strike both arguments, asserting that Wood Expressions had never
argued that the Waiver did not apply to its deductible or uninsured losses,
that Wood Expressions had not properly raised an argument on gross
negligence (which appeared one page outside the page limit in Wood
Expressions’ response on summary judgment), and that (even considering
Wood Expressions’ argument) summary judgment on gross negligence was
proper.
¶13 The superior court addressed gross negligence and denied
that facet of Wood Expressions’ motion, reasoning that Wood Expressions’
evidence showed ordinary negligence at most and thus that AAA was
entitled to summary judgment on that issue. After a second oral argument
regarding the scope of the Waiver, the court denied Wood Expressions’
motion for clarification without further comment.
¶14 After dismissing AAA’s third-party claim against the
monitoring company as moot given the summary judgment ruling against
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WOOD EXPRESSIONS v. AAA ALARM/ASI
Decision of the Court
Wood Expressions, the court entered judgment for AAA on Wood
Expressions’ claims and awarded AAA several hundred thousand dollars
in attorney’s fees and costs. Wood Expressions timely appealed, and we
have jurisdiction under A.R.S. § 12-2101(A)(1).
DISCUSSION
¶15 Wood Expressions challenges the superior court’s summary
judgment ruling, contesting the court’s assessment of (1) the Waiver’s
scope, (2) the applicability of the collateral source rule, and (3) the existence
and effect of gross negligence. Resolution of all three issues turns on the
parameters and character of the Waiver itself.
I. Standards.
¶16 Summary judgment is proper if there are no genuine issues of
material fact and the moving party is entitled to judgment as a matter of
law. Ariz. R. Civ. P. 56(a); Orme Sch. v. Reeves, 166 Ariz. 301, 305 (1990). We
review a summary judgment de novo, construing all facts in favor of the
party against which judgment was entered. Allen v. Town of Prescott Valley,
244 Ariz. 288, 290, ¶ 4 (App. 2018).
¶17 We similarly review de novo issues of contract interpretation.
ELM Ret. Ctr., LP v. Callaway, 226 Ariz. 287, 290, ¶ 15 (App. 2010). The
cornerstone of contract interpretation is determining and enforcing the
parties’ intent, considering the contract as a whole and avoiding, if possible,
a construction that renders part of the contract superfluous. Taylor v. State
Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 153, 158 n.9 (1993); ELM Ret. Ctr., 226
Ariz. at 291, ¶ 18. The language of the contract is the best guide to its
meaning. Grosvenor Holdings, L.C. v. Figueroa, 222 Ariz. 588, 593, ¶ 9 (App.
2009); ELM Ret. Ctr., 226 Ariz. at 290, ¶ 15.
II. The Contractual Waiver.
¶18 The alarm contract between AAA and Wood Expressions
included several clauses germane to the issues on appeal. Most generally,
the contract provided for “continuous monitoring” of the alarm system at
a rate of approximately $35 per month. The contract also included a
provision ostensibly disclaiming any warranty and directly limiting AAA’s
liability. Notably, this provision, the subject of AAA’s first motion for
partial summary judgment, omitted a term that AAA intended to include
that would have imposed a $150 cap on damages. Despite omitting the
critical liability limitation, this provision did, however, include two
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WOOD EXPRESSIONS v. AAA ALARM/ASI
Decision of the Court
statements (emphasized in all caps) that the parties understood AAA was
not an insurer of Wood Expressions’ property.
¶19 Finally, the parties’ contract included the Waiver provision at
issue here. Titled “Waiver of Subrogation,” the clause released AAA from
liability for “all hazards covered by Customer’s insurance”:
[Wood Expressions] does hereby for himself and any parties
claiming under him, release and discharge [AAA] from and
against all hazards covered by [Wood Expressions’]
insurance, it being expressly understood and agreed that no
insurance company or insurer will have any right of
subrogation against [AAA] for any loss or damage resulting
from fire, burglary, or any other cause covered under any
such policy.
Subrogation, of course, generally permits an insurer that paid its insured
for a loss under the policy to step into the insured’s shoes to pursue a claim
against the third party primarily liable for the loss. Monterey Homes Ariz.,
Inc. v. Federated Mut. Ins. Co., 221 Ariz. 351, 355, ¶ 13 (App. 2009); see also
Albany Ins. Co. v. United Alarm Servs., Inc., 194 F. Supp. 2d 87, 93 (D. Conn.
2002). Because the insurer’s subrogation rights derive from the insured’s
right to recover against the third party, however, the insured’s release of its
own claims against the third party likewise waives the insurer’s right to
recover from the third party by way of subrogation. Monterey Homes, 221
Ariz. at 355, ¶ 13.
¶20 Of note here, the Waiver expressly waived an insurer’s
subrogation claim against AAA, but it did so by having Wood Expressions
release its own potential claims against AAA. Additionally, although the
contract noted AAA was not an insurer, nothing in the Waiver or the rest
of the contract required Wood Expressions to secure insurance coverage in
any specified amount—or at all, for that matter—although the contract
could have done so. Compare, e.g., Gap, Inc. v. Red Apple Cos., 725 N.Y.S.2d
312, 314, 316 (App. Div. 2001) (subrogation waiver but no underlying
contractual requirement to acquire insurance), with, e.g., United Alarm
Servs., 194 F. Supp. 2d at 93, Abacus Fed. Sav. Bank v. ADT Sec. Servs., Inc.,
967 N.E.2d 666, 668 (N.Y. 2012), Bd. of Educ. v. Valden Assocs., Inc., 389 N.E.2d
798, 798 (N.Y. 1979), Travelers Prop. Cas. Co. of Am. v. Glob. Prot. Sys., Inc.,
898 N.Y.S.2d 215, 217 (App. Div. 2010) (contract requiring the purchase of
insurance), and Nationwide Mut. Fire Ins. Co. v. Sonitrol, Inc., 672 N.E.2d 687,
688–89, 692 (Ohio Ct. App. 1996) (no express insurance requirement, but
multiple warnings and recommendations that the property owner purchase
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WOOD EXPRESSIONS v. AAA ALARM/ASI
Decision of the Court
insurance, which the owner did). Despite that omission, Wood Expressions
did in fact have insurance coverage, and the Waiver thus released AAA to
the extent (but only to the extent) of such coverage.
A. Scope of the Waiver: Hazards Covered by Insurance.
¶21 The Waiver expressly released AAA from “hazards covered
by [Wood Expressions’] insurance,” but the parties dispute what that clause
means. The superior court’s ruling adopted AAA’s categorical approach:
that the Waiver applies based solely on the type of hazard (e.g., fire or
burglary) and reaches all damage caused by any hazard for which Wood
Expressions’ insurance provided some coverage. In contrast, Wood
Expressions proposes a payment-based approach: that the Waiver only
applies to the extent Wood Expressions’ insurance in fact paid for damage
caused by a given hazard and not to any uninsured (or simply unpaid)
losses. As described below, we conclude, however, that the Waiver applies
to damage caused by all types of hazards for which Wood Expressions’
insurance provided coverage, but only to the extent Wood Expressions’
insurer is contractually obligated to pay—a policy-limits approach.
¶22 AAA’s categorical view—that the Waiver is triggered based
solely on the type of hazard that caused damage—is not wholly
implausible, but it is ultimately not persuasive. To be sure, the Waiver is
phrased as a release from the hazard itself—“release . . . from and against
all hazards covered by [Wood Expressions’] insurance”—but focusing
solely on the type of hazard at play does not give enough weight to what it
means for the “hazard” to be “covered” by insurance. And coverage is
linked not just to the type of hazard involved but also to the scope of the
insurer’s obligation to pay. Cf., e.g., Gap, 725 N.Y.S.2d at 315–16 (limiting
the scope of a similar subrogation waiver for “risk insured against” to the
monetary scope of insurance coverage, meaning the substantial deductible
paid by the subrogor (and not by insurance) fell outside the scope of the
waiver); Lloyd’s Underwriters v. Craig & Rush, Inc., 32 Cal. Rptr. 2d 144, 146
(Ct. App. 1994) (equating “covered” to when insurance “paid for the loss”).
AAA could have drafted a broader clause expressly specifying that Wood
Expressions “look solely to its insurer for recovery of its loss,” Abacus, 967
N.E.2d at 668 (emphasis added), or clarifying that the clause was a release
from “all hazards covered by insurance . . . , including all deductible and
retained limits as well as loss or damage in excess of policy limits,” United Alarm
Servs., 194 F. Supp. 2d at 93 (emphasis added), but the Waiver did not go
beyond what was “covered.” Cf. United Cal. Bank v. Prudential Ins. Co. of
Am., 140 Ariz. 238, 258 (App. 1983) (noting that to the extent the contract
language is ambiguous, we construe the language against the drafter).
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¶23 The authorities on which AAA relies are not to the contrary.
In United Alarm Services, for example, the subrogation waiver clause began
by releasing the alarm company from “hazards covered” (as here) but then
expressly added the insurance deductible and damages in excess of policy
limits to the scope of the waiver. 194 F. Supp. 2d at 93. And Global Protection
Systems involved a claim by the insurance company as subrogee and thus
necessarily addressed only the amounts actually paid by insurance. 898
N.Y.S.2d at 217 (holding that the waiver barred the insurance company’s
claim for “the return of any proceeds paid to the [insured] under the subject
policy”). Finally, Central Alarm of Tucson v. Ganem did not involve a
subrogation wavier at all. 116 Ariz. 74, 78 (App. 1977). The clause at issue
there imposed a cap on liability. Id. at 77. Here, AAA apparently intended
to include a similar fixed-dollar-amount liability-limiting term (separate
from the Waiver) but neglected to include the amount of the intended
damages cap. None of these authorities support AAA’s categorical
approach given the language of the Waiver here.
¶24 Wood Expressions’ proposed payment-based approach—that
the Waiver releases AAA only for the amounts actually paid out by
insurance—is closer to the mark but is similarly imprecise. This approach
more closely tracks the extent to which “hazards” are “covered” by
insurance, and it would be sufficient if the Waiver only waived the
insurance company’s subrogation rights—the insurer as subrogee only has
a claim for the amounts it in fact paid. See, e.g., May Dep’t Store v. Ctr. Devs.,
Inc., 471 S.E.2d 194, 197 (Ga. 1996) (“Subrogation requires the existence of a
contract to pay (insurance) and the actual payment of the claim; in the
absence of insurance and payment thereunder, there can be no subrogation
and hence no waiver.”). But the Waiver here released Wood Expressions’
own claims against AAA as well—“[Wood Expressions] does hereby for
himself and any parties claiming under him, release and discharge
[AAA]”—meaning Wood Expressions released its claims against AAA for
“all hazards covered by [its] insurance” regardless whether the insurer in
fact paid.
¶25 Rather than depending on actual payment, a “hazard” is thus
“covered” by insurance to the extent the insurer is contractually obligated
to pay—up to policy limits and excluding any deductible. See, e.g., Gap, 725
N.Y.S.2d at 315–16; Hancock Fabrics, Inc. v. Alterman Real Estate I, Inc., 692
S.E.2d 20, 22–23 (Ga. 2010); Lexington Ins. Co. v. Entrex Commc’n Servs., Inc.,
749 N.W.2d 124, 126–27 (Neb. 2008) (noting that, despite a subrogation
waiver, the subrogor/owner’s claim for uninsured losses—the deductible
not paid by insurance—remained pending). In the ordinary case, when
there is no dispute that the insurer paid as required under the policy, this
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Decision of the Court
policy-limits approach and Wood Expressions’ proposed payment-based
approach should yield equivalent results. But here, for example, Wood
Expressions sued its insurer for breach of contract and bad faith based on
the insurer’s alleged failure to pay all amounts due under the policy. Wood
Expressions’ claim as to any losses within policy limits was solely against
its insurer; Wood Expressions could recover from AAA only to the extent
of the deductible or damages in excess of policy limits. See Gap, 725
N.Y.S.2d at 315–16.
¶26 With this understanding of the scope of the Waiver, AAA did
not show entitlement to judgment as a matter of law. The summary
judgment record is unclear regarding Wood Expressions’ insurance policy
limits and the damages it suffered—especially given that there were three
named insureds making claims and receiving payments under the policy,
that Wood Expressions itself alleged the insurer had not paid up to policy
limits, and that the settlement between Wood Expressions (and the other
insureds) and the insurer did not clearly delineate between coverage and
bad faith damages. Although Wood Expressions did not specify what
damages it now seeks from AAA were attributable to its insurance
deductible or fell beyond policy limits (rather than just in excess of
payments received), Wood Expressions did assert that it was not fully
reimbursed for its losses, which would encompass damages outside the
scope of the Waiver. And the parties have not yet had an opportunity to
weigh in on the state of the evidence given the policy-limits understanding
of the scope of the Waiver. Accordingly, we reverse the summary judgment
in favor of AAA and remand for further proceedings consistent with this
decision.
B. Character of the Waiver: Allocation of Risk.
¶27 As the superior court correctly described, the Waiver operates
as a risk-allocation provision under which Wood Expressions and AAA
agreed in advance that Wood Expressions’ insurance would bear primary
responsibility for the risk of loss in cases to which it applied. In essence, the
Waiver contemplated that “one of the parties [Wood Expressions] to the
contract [would] provide insurance for all of the parties.” See Great Am. Ins.
Co. of N.Y. v. Simplexgrinnell LP, 874 N.Y.S.2d 465, 466 (App. Div. 2009)
(citation omitted); see also St. Paul Fire & Marine Ins. Co. v. Universal Builders
Supply, 409 F.3d 73, 86 (2d Cir. 2005). As the business owner, Wood
Expressions was best positioned to anticipate potential risks and secure
appropriate insurance coverage. See Entrex Commc’n Servs., 749 N.W.2d at
130. And given AAA’s comparatively nominal fee for monitoring the alarm
system—less than $500 annually as opposed to a nearly $15,000 annual
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Decision of the Court
insurance premium—it makes sense that the parties contemplated looking
to Wood Expressions’ insurance policy rather than requiring AAA to secure
additional coverage (or treating the alarm contract as, in essence, an
umbrella insurance policy).
1. Collateral Source.
¶28 Wood Expressions argued in superior court that the collateral
source rule permitted it to recover from AAA even losses for which it had
received compensation from insurance. The collateral source rule generally
permits an injured plaintiff to recover in full from a liable defendant despite
having received compensation for the same injury from a third party, such
as an insurance provider. John Munic Enters., Inc. v. Laos, 235 Ariz. 12, 17, ¶
14 (App. 2014); Norwest Bank (Minn.), N.A. v. Symington, 197 Ariz. 181, 189,
¶ 36 (App. 2000); see also Restatement (Second) of Torts § 920A (1979). The
doctrine traditionally applies only to tort cases, not contract claims, Norwest
Bank, 197 Ariz. at 189, ¶ 36, although this court has recognized that the rule
may be extended to contract claims under certain circumstances. John
Munic, 235 Ariz. at 18–19, ¶¶ 18–23.
¶29 On appeal, Wood Expressions asserts that the superior court
erred by implicitly ruling that the Waiver waived Wood Expressions’
reliance on this doctrine. But the Waiver is wholly inconsistent with
application of the collateral source rule as Wood Expressions urges. The
Waiver reflected an agreement in advance that Wood Expressions’
insurance (when and to the extent it applied) would be Wood Expressions’
first and primary source of compensation for any damages it suffered.
Although Wood Expressions posits that it is unfair to allow AAA to, in
effect, reap the benefit of Wood Expressions’ payment of insurance
premiums for years, that is precisely what the Waiver contemplates. See id.
at 18, ¶¶ 18–19 (reasoning that the parties’ contractual expectation interests
should drive the application of the collateral source rule to contract claim).
Similarly, given that the Waiver waives Wood Expressions’ insurer’s
subrogation rights, applying the collateral source rule would simply and
necessarily provide Wood Expressions a double recovery—despite the
contract’s allocation of risk and responsibility for losses covered by
insurance. Compare id. at 19, ¶ 22.
¶30 Wood Expressions notes that the contract did not require it to
purchase insurance, much less require any minimum amount of coverage.
But having secured insurance, Wood Expressions is bound by the Waiver
to release its claims against AAA up to policy limits.
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2. Gross Negligence.
¶31 Wood Expressions argues that AAA could not enforce the
Waiver if found to be grossly negligent, and that issues of fact precluded
summary judgment on the issue of gross negligence. Even assuming a
triable issue on gross negligence, however, Wood Expressions’ argument is
unavailing because the Waiver is a risk-allocation provision, not an
unenforceable exculpatory clause.
¶32 Relying on Airfreight Express Ltd. v. Evergreen Air Center, Inc.,
215 Ariz. 103, 110–11, ¶¶ 20–22 (App. 2007), Wood Expressions asserts that
AAA cannot rely on the Waiver to release it from liability from gross
negligence or reckless breach of contract. But Airfreight involved a true
exculpatory clause fully releasing one contracting party from liability for
specific categories of damages and leaving the other without recourse. Id.
at 110, ¶ 18. Here, although the Waiver limited AAA’s liability to a degree
(at least to the extent of whatever applicable insurance coverage Wood
Expressions happened to procure), it did not leave Wood Expressions
without recourse; it does not limit Wood Expressions’ recovery but rather
directs from whom that recovery should come.
¶33 Wood Expressions’ insurance paid a substantial amount for
damages resulting from the fire, and to the extent Wood Expressions’
damages exceeded coverage, AAA remains liable despite the Waiver.
Enforcing the Waiver simply recognizes exactly what the parties bargained
for: low-cost alarm service with an agreed-to allocation of risk requiring
that Wood Expressions look first to its own insurance before pursing
damages from AAA. See, e.g., Entrex Commc’n. Servs., 749 N.W.2d at 130–
31 (noting that, unlike liability-limiting exculpatory clauses, subrogation
waivers “encourag[e] parties to anticipate risks and to procure insurance
covering those risks, thereby avoiding future litigation, and facilitating and
preserving economic relations and activity,” all while still preserving the
injured party’s ability to recover through insurance); Glob. Prot. Sys., 898
N.Y.S.2d at 217 (characterizing subrogation waivers as prearranged risk-
allocation devices that do not “exempt a party from liability” but rather
“require one of the parties to the contract to provide insurance” (citation
omitted)); see also, e.g., Travelers Indem. Co. v. Crown Corr Inc., 589 Fed. Appx.
828, 833 (9th Cir. 2014) (noting that subrogation waivers serve important
policy goals in permitting allocation of risk and, unlike true exculpatory
clauses, do not run the risk of leaving an injured party “with no recourse”).
Accordingly, even if Wood Expressions could prove gross negligence, the
Waiver remains enforceable.
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Decision of the Court
III. Attorney’s Fees and Costs.
¶34 Because we reverse the summary judgment for AAA, we
likewise vacate the award of attorney’s fees and costs in its favor, without
prejudice to a future request if appropriate.
¶35 AAA seeks an award of attorney’s fees on appeal under A.R.S.
§ 12-341.01. Because AAA was not wholly successful, and in an exercise of
our discretion, we deny its request.
¶36 Given our resolution of the matter, Wood Expressions is
entitled to an award of costs on appeal upon compliance with ARCAP 21.
See A.R.S. § 12-342(A).
CONCLUSION
¶37 We reverse the judgment in favor of AAA, vacate the award
of attorney’s fees in favor of AAA without prejudice, and remand for
further proceedings to determine whether Wood Expressions’ damages
exceeded the policy limits of its fire and burglary policy or included a loss
based on its deductible amount under the policy.
AMY M. WOOD • Clerk of the Court
FILED: AA
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