The State of Delaware Insurance Coverage Office v. DiSabatino Construction Co.

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
THE STATE OF DELAWARE )
INSURANCE COVERAGE OFFICE, )
and FACTORY MUTUAL )
INSURANCE CO., both as subrogee )
of the University of Delaware, )
)
Plaintiffs, )
v. ) C.A. No. N19C-08-080 EMD CCLD
)
DISABATINO CONSTRUCTION CO., )
SCHLOSSER & ASSOCIATES )
MECHANICAL CONTRACTORS, )
INC., AND V.E. GUERRAZZI, INC., )
)
Defendants. )
Submitted: December 21, 2021
Decided: March 17, 2022
Upon Defendant DiSabatino Construction Co.’s Motion for Summary Judgment
GRANTED
Upon Defendant Schlosser & Associates Mechanical Contactors’ Motion for Summary Judgment
GRANTED
Upon Defendant V.E. Guerrazzi, Inc.’s Motion for Summary Judgment
GRANTED
Allison McCowan, Esq., Sarah Fruehauf, Esq., Zi-Xiang Shen, Esq., State of Delaware
Department of Justice, Wilmington, DE, Counsel for State of Delaware Insurance Coverage Office
Timothy Jay Houseal, Esq., Jennifer M. Kinkus, Esq., Young, Conaway, Stargatt & Taylor LLP,
Wilmington, DE, Counsel for Factory Mutual Insurance Company
Seth A. Niederman, Esq., Fox Rothschild LLP, Wilmington, DE, Counsel for DiSabatino
Construction Company
Michael J. Follet, Esq., Naulty, Scaricamazza & McDevitt, L.L.C., Wilmington, DE, Counsel for
Schlosser & Associates Mechanical Contractors
Kenneth M. Doss, Casarino Christmas Shalk Ransom & Doss, P.A., Wilmington, DE, Counsel for
V.E. Guerrazzi, Inc.
DAVIS, J.
I. INTRODUCTION
This is a breach of contract and negligence action assigned to the Complex Commercial
Litigation Division of this Court. Plaintiffs State of Delaware Insurance Coverage Office and
Factory Mutual Insurance Company (collectively, “Plaintiffs”) filed this action as subrogees of
the University of Delaware (the “University”). Plaintiffs seek to recover insurance payments
relating to a fire allegedly caused by Defendants DiSabatino Construction Company
(“DiSabatino”), Schlosser & Associates Mechanical Contractors (“Schlosser”), and V.E.
Guerrazi, Inc. (“Guerrazi,” and collectively, “Defendants”), who were working for the University
as contractors.
Defendants have each moved for summary judgment. Defendants contend they entered
into a contract with the University that included a waiver of subrogation, which bars all
Plaintiffs’ claims. For the set forth below, the Court GRANTS the motions for summary
judgment.
II. BACKGROUND
A. THE PARTIES
The State of Delaware Insurance Coverage Office is a state agency serving as a property
liability carrier for all state-owned property.1 Factory Mutual Insurance Company is a Rhode
Island corporation with its principal place of business in Johnston, Rhode Island.2 Plaintiffs
reimbursed the University of Delaware in the amounts of $2.5 million and $2.75 million,
respectively, for damages related to the fire at McKinly Hall.3 Plaintiffs are subrogated to the
University’s rights to the extent of these payments.4
1
Cmpl. at ¶ 1 (D.I. No. 1).
2
Id. at ¶ 2.
3
Id. at ¶¶ 19–20.
4
Id.
1
DiSabatino, Schlosser, and Guerrazzi are Delaware corporations that provided
contracting services for the University in 2017.5 DiSabatino was the general contractor on the
project to renovate Lab 46 in McKinly Hall (the “Project”), Schlosser was the subcontractor, and
Guerrazzi was the sub-subcontractor.6
B. THE PROJECT
In May 2017, the University invited DiSabatino to bid on the Project.7 At the time, the
University and DiSabatino had a good relationship due to DiSabatino’s previous work on the
University’s projects.8
The University created a 424-page specifications manual (the “Specifications”) as a “road
map” of the Project for potential bidders.9 The Specifications detailed the technical requirements
for the Project and provided instructions for submitting bids.10 Although the Specifications were
not a contract itself, the University expected contractors to follow the Specifications to properly
complete the Project.11 According to the record, documents like the Specifications are “standard
practice” in the construction industry.12
The Specifications state that the successful bidder “will be required to enter into” the
“Contract” and that the “[o]ther forms which shall be used under this contract are noted in the
General, Supplementary, and Special Conditions and/or included as part of the Specifications.”13
Later, in a section titled “Contract,” the Specifications charge bidders to “[u]se A101 2007 and
5
Id. at ¶¶ 5–7.
6
Id.
7
DiSabatino’s Mot. for S.J., Ex. 3 at 13:11–13 (Dep. Transcript of Joseph T. Laws, III).
8
Id., Ex. 2 at 44:9–16 (Dep. Transcript of Lawrence J. DiSabatino).
9
See id., Ex. 6 at 72:21–73:3 (Dep. Transcript of Joseph Farah)
10
See id., Ex. 6 at 69:1–72:20.
11
See id., Ex. 6 at 73:4–73:19.
12
See id., Ex. 6 at 71:6–71:9.
13
Id., Ex. 5 at PLF000468 (Specifications Manual).
2
A201 2007 with the following supplemental information.”14 A101 2007 and A2 2007 refer to
form construction contracts published by the American Institute of Architects. A101–2007 is the
Standard Form of Agreement Between Owner and Contractor (“A101”) and A201-2007 is the
General Conditions of the Contract for Construction (“A201”). The Specifications then provide
for a “Supplement to the Standard Form of Agreement, AIA A101-2007,” which details the
University’s line-by-line revisions to the A101. The Court will collectively refer to the contract
documents listed in the Specifications (i.e., the A101, A201, and Supplement) as the “AIA
Contract.” The Court notes that A201 of the AIA Contract, as detailed below, includes a waiver
of subrogation.
Marcia Hutton, the University’s Director of Planning and Project Delivery, testified that
the University had historically used a “short form” contract for its construction projects.15 The
short form contract was three pages long and included the A201 and a pre-drafted supplement.16
At some point, the University transitioned to using the combination of the A101, A201, and
Supplement described in the Specifications.17 DiSabatino regarded the A101, A201, and
Supplement as the University’s “standard procedure.”18
DiSabatino reviewed the Specifications19 and submitted its bid on May 19, 2017.20
DiSabatino’s bid used a form included in the Specifications.21 DiSabatino’s bid was $125,300.22
The University awarded DiSabatino the contract via email on May 31, 2017.23 The University
14
Id., Ex. 5 at PLF000479.
15
Id., Ex. 4 at 60:2–60:21 (Dep. Transcript of Marcia Hutton).
16
Id., Ex. 4, at 60:16–60:21.
17
Id., Ex. 4, at 60:22–61:2.
18
Id., Ex. 7, at 27:20–28:2 (Dep. Transcript of Jeffrey P. DiSabatino).
19
Id., Ex. 3 at 14:19–24.
20
Id., Ex. 8 (Bid Form Dated May 19, 2017); id., Ex. 3 at 15:11–15:19; id., Ex. 6 at 74:22–75:4.
21
Id.
22
Id., Ex. 8.
23
Id., Ex. 9 (Email Dated May 31, 2017); id., Ex. 6 at 84:19–85:1.
3
confirmed its acceptance of DiSabatino’s bid on June 27, 2017, with a revised contract value of
$126,400.24
C. DEFENDANTS WORK ON THE PROJECT AND THE FIRE OCCURS
The University needed the Project to be completed before students returned in Fall
2017.25 The University authorized DiSabatino to begin work immediately after it received the
construction permit.26 The parties did not jointly sign any contract documents before DiSabatino
began working.27 The record indicates this was not entirely unusual as DiSabatino had
previously started work on projects for the University without a signed contract, so long as
DiSabatino obtained confirmation from the University.28
On June 5, 2017, DiSabatino submitted an executed short-form contract to the
University.29 As noted above, the University had used the short-form contract in the past but had
transitioned to using the three documents described in the Specifications. The short-form
contract that DiSabatino submitted stated that DiSabatino would complete the Project “in
accordance with the conditions and prices . . . stated in the Proposal, the General Conditions,
Supplemental General Conditions, and Special Conditions of the Contract.”30 The short-form
contract, therefore, referenced the AIA documents described in the Specifications, including the
A201. Additionally, DiSabatino executed a copy of the University’s pre-drafted supplement to
the A101 on June 2, 2017.31 When the University’s project manager, Joseph Farah, received the
24
Id., Ex. 10 (Email Dated June 27, 2017).
25
Id., Ex. 3 at 26:22–27:4.
26
Id., Ex. 3 at 28:17–29:5; id., Ex. 2 at 28:10–28:12.
27
Id., Ex. 2 at 28:5–20, 89:20–90:4.
28
Id., Ex. 7 at 13:11–23.
29
Id., Ex. 3 at 34:10–34:16.
30
Id., Ex. 11 (Short-Form Contract).
31
Id., Ex. 12 (Supplement)
4
short-form contract, he responded that DiSabatino should modify the “substantial completion
date” to a date in July 2017.32
DiSabatino had almost completed the Project when a fire occurred in McKinly Hall on
August 9, 2017.33 After the fire, DiSabatino realized it had not received an executed contract
from the University.34 DiSabatino initiated correspondence to obtain executed contract
documents, and then re-submitted the short-form contract and the supplement to the A101.35 On
August 15, the University requested that DiSabatino produce an A101 and A201 as soon as
possible.36 The University’s intention was to execute the full AIA Contract retroactively.37
The University suggested that the retroactive AIA Contract should have a contract
commencement date of May 31, 2017.38 DiSabatino did not object. But then the University
suggested modifications to terms of the AIA Contract relating to delay damages and other mark-
ups.39 DiSabatino refused, explaining it would not agree to modifications of substantive terms
after the fact.40 The University then agreed that the original AIA Contract terms, as included by
the University in the Specifications, would remain in place.41 The University never provided
DiSabatino with an executed copy of the AIA Contract. DiSabatino did not ask the University to
execute the AIA Contract because it “believed [they] were under contract,” such that the “actual
signature” seemed “superfluous.”42
32
Id., Ex. 13 (Email Dated June 6, 2017).
33
Id., Ex. 6 at 93:1–93:9.
34
Id., Ex. 7 at 18:15–19:7.
35
Id.; id., Ex 19 (Email Dated Aug. 11, 2017).
36
Id., Ex. 4 at 112:9–112:14.
37
Id., Ex. 4 at 112:15–112:19.
38
Id., Ex. 4 at 125: 3–9.
39
Id., Ex. 20 (Email Dated August 29, 2017); id., Ex 21 (Email Dated Sept. 5, 2017); see also id., Ex. 2 at 49:1–
49:12, 111:20–113:11.
40
Id., Ex. 21; id., Ex. 4 at 117:22–118:12.
41
Id., Ex. 22 (Email Dated Sept. 18, 2017); id., Ex. 2 at 114:24–115:10.
42
Id., Ex. 2 at 87:7–87:16.
5
D. THE UNIVERSITY AND DISABATINO ENTER INTO A TERMINATION AGREEMENT
In November 2017, the University decided to terminate DiSabatino’s engagement on the
Project.43 The University then drafted a Conclusion of Services Agreement (“COSA”).44 On
November 8, 2017, the University emailed the COSA to DiSabatino, describing it as “an
agreement that will facilitate a conclusion of our agreement.”45 The University requested an
accounting of DiSabatino’s work on the Project, which DiSabatino provided.46 DiSabatino’s
accounting showed a contracting amount of $119,241.04.47
DiSabatino executed the COSA and submitted it to the University on January 17, 2018.
DiSabatino understood the COSA as reserving the rights the parties had according to the AIA
Contract.48 DiSabatino did not view the COSA as modifying the AIA Contract.49 DiSabatino
maintains it would not have executed the COSA if the COSA modified the terms of the AIA
Contract.50 After DiSabatino signed the COSA, the University paid it $119,241.04.51
E. RELEVANT TERMS OF THE AIA CONTRACT AND COSA
The A101 incorporated the A201 as part of the “Contract Documents.”52 And Section
11.3.7 of the A201, titled “Waivers of Subrogation,” reads as follows:
The Owner and Contractor waive all rights against (1) each other and any of their
subcontractors, sub-subcontractors, agents and employees, each of the other, and
(2) the Architect, Architect’s consultants, separate contractors described in Article
6, if any, and any of their subcontractors, sub-subcontractors, agents and
employees, for damages caused by fire or other causes of loss to the extent covered
by property insurance obtained pursuant to this Section 11.3 or other property
insurance applicable to the Work, except such rights as they have to proceeds of
43
Id., Ex. 4 at 148:6–148:11.
44
Id., Ex. 24 (Email Dated Nov. 8, 2017).
45
Id.
46
Id.
47
Id., Ex. 25 (Letter Dated Dec. 4, 2017).
48
Id., Ex. 2 at 93:10–94:18.
49
Id.
50
Id., Ex. 2 at 119:6–119:12, 121:3–121:9.
51
Id., Ex. 28 (Email Dated March 5, 2018).
52
Id., Ex. 29 at § 9.1.2 (AIA Documents Signed by DiSabatino).
6
such insurance held by the Owner as fiduciary.53 The Owner or Contractor, as
appropriate, shall require the Architect, Architect’s consultants, separate
contractors described in Article 6, if any, and the subcontractors, sub-
subcontractors, agents and employees of any of them, by appropriate agreements,
written where legally required for validity, similar waivers each in favor of other
parties enumerated herein. The policies shall provide such waivers of subrogation
by endorsement or otherwise. A waiver of subrogation shall be effective as to a
person or entity even though that person or entity would otherwise have a duty of
indemnification, contractual or otherwise, did not pay the insurance premium
directly or indirectly, and whether or not the person or entity had an insurable
interest in the property damaged.54
Additionally, the COSA included a section titled “Non-Waiver and Reservation of Right by
Owner,” which reads follows:
Owner does not waive, and hereby reserves, all of its rights, claims, remedies and
defenses against Contractor; any of its subcontractors and suppliers; and any other
person(s) or entities for whom Contractor is liable or responsible arising from or
relating in any way to the Fire, including, without limitation, all such rights, claims
and remedies as may now or hereafter be vested in any property or casualty insurer
of Owner, whether public or private, by reason of applicable law, including the
principles of subrogation and/or indemnity.55
F. THIS CIVIL ACTION
Plaintiffs filed their Complaint on August 8, 2019, seeking—through subrogation—to
recover damages to the University resulting from the fire.56 The Complaint asserts causes of
action for negligence (Count I), negligence per se (Count II), breach of contract (Count III), and
breach of the implied warranty of good quality and workmanship (Count IV).57 Counts I, II, and
IV are brought against all Defendants, while Count III is brought against DiSabatino alone.
Defendants moved to dismiss, arguing that the AIA Contract expressly waived
subrogation claims.58 After Plaintiffs filed their opposition, Defendants requested that briefing
53
The University’s Supplement strikes “as fiduciary.” See id., Ex. 5 at PLF000509.
54
Id., Ex. 18 (A201).
55
Id., Ex. 26 (COSA).
56
Complaint at ¶¶ 19–20.
57
Id. at ¶¶ 21–53.
58
See D.I. Nos. 16, 19, 20.
7
on the motions to dismiss be stayed and that the Court allow discovery as to the operative
contract.59 The Court denied Defendants’ request on December 10, 2019.60 In response,
Defendants withdrew their motions to dismiss and answered the Complaint.61
Following discovery, Defendants moved for summary judgment in July 2021.62 The
Court heard argument on December 21, 2021.63 At the conclusion of the hearing, the Court took
the motions under advisement.64
III. PARTIES’ CONTENTIONS
Defendants argue that the AIA Contract is the operative agreement between the
University and DiSabatino, and that because the AIA Contract included a waiver of subrogation,
all Plaintiffs’ claims are barred.65 Defendants acknowledge that the parties never jointly signed
the AIA Contract forms. Nevertheless, Defendants maintain the parties objectively manifested
an intent to be bound by the terms of the AIA Contract.66 Furthermore, Defendants argue that
the COSA did nothing to modify the waiver of subrogation67 and that the waiver is fatal to all
claims against all Defendants.68
Plaintiffs advance several arguments in opposition. First, Plaintiffs argue that contract
formation is a jury question.69 Second, Plaintiffs claim there are factual issues on whether the
parties objectively manifested an intent to be bound by the AIA Contract.70 Plaintiffs maintain
59
See D.I. Nos. 27–28.
60
D.I. No. 35.
61
D.I. Nos. 40, 47, 52–53.
62
See D.I. Nos. 83–85.
63
D.I. No. 91.
64
D.I. No. 91.
65
DiSabatino’s Mot. for S.J. at 20–25.
66
Id. at 22–25.
67
Id. at 25–27.
68
Id. at 28–33.
69
Plaintiffs’ Answering Br. at 20–21.
70
Specifically, Plaintiffs cite a case from 1935 for the proposition that “[t]he question of whether an alleged
contract was made is for the jury where, as here, a party introduces not only written evidence but also ‘facts and
circumstances tending to show that the parties, by their acts, had recognized existence of that contract.’” Id. at 21
8
that DiSabatino and the University had a “meeting of the minds” only on the essential terms of
price and scope of work, but not on the form of their contract.71
Alternatively, Plaintiffs argue that even if the University and DiSabatino agreed to be
bound by the AIA Contract, the COSA modified the AIA Contract to remove the waiver of
subrogation. Plaintiffs also suggest that the waiver would be limited to certain parts of McKinly
Hall and that it would not extend to DiSabatino’s subcontractors and sub-subcontractors.
IV. STANDARD OF REVIEW
The standard of review on a motion for summary judgment is well-settled. The Court’s
principal function when considering a motion for summary judgment is to examine the record to
determine whether genuine issues of material fact exist, “but not to decide such issues.”72
Summary judgment will be granted if, after viewing the record in a light most favorable to a
nonmoving party, no genuine issues of material fact exist and the moving party is entitled to
judgment as a matter of law.73 If, however, the record reveals that material facts are in dispute,
or if the factual record has not been developed thoroughly enough to allow the Court to apply the
law to the factual record, then summary judgment will not be granted.74
The moving party bears the initial burden of demonstrating that the undisputed facts
support his claims or defenses.75 If the motion is properly supported, then the burden shifts to
(quoting Universal Prods. Co., Inc. v. Emerson, 179 A. 387, 395 (Del. 1935). The Court will not dwell on this
argument because Delaware courts routinely analyze contract formation under such circumstances on summary
judgment. See, e.g., Price v. State Farm Mut. Auto. Ins. Co., 2013 WL 1213292, at *6–7 (Del. Super. Ct. Mar. 15,
2013), aff’d, 77 A.3d 272 (Del. 2013) (finding, on summary judgment, that the plaintiff manifested assent to a
settlement offer through his conduct).
71
Plaintiffs’ Answering Br. at 28.
72
Merrill v. Crothall-American Inc., 606 A.2d 96, 99-100 (Del. 1992) (internal citations omitted); Oliver B. Cannon
& Sons, Inc. v. Dorr-Oliver, Inc., 312 A.2d 322, 325 (Del. Super. 1973).
73
Id.74
Ebersole v. Lowengrub, 180 A.2d 467, 470 (Del. 1962); see also Cook v. City of Harrington, 1990 WL 35244 at
*3 (Del. Super. Feb. 22, 1990) (citing Ebersole, 180 A.2d at 467) (“Summary judgment will not be granted under
any circumstances when the record indicates . . . that it is desirable to inquire more thoroughly into the facts in order
to clarify the application of law to the circumstances.”).
75
Moore v. Sizemore, 405 A.2d 679, 680 (Del. 1970) (citing Ebersole, 180 A.2d at 470).
9
the non-moving party to demonstrate that there are material issues of fact for the resolution by
the ultimate factfinder.76
V. DISCUSSION
Defendants’ motions raise three main questions: (1) is the AIA Contract the operative
contract between DiSabatino and the University; (2) if so, did the COSA modify the waiver of
subrogation in the A201; and (3) if the waiver remains effective, what is the effect of the waiver
on Plaintiffs’ claims? For the reasons set out below, the Court holds that the AIA Contract is the
operative contract between DiSabatino and the University; that the COSA did not modify the
waiver of subrogation in the A201; and that the waiver bars all of Plaintiffs’ claims against all
Defendants. Accordingly, the Court grants Defendants’ motions.
A. THE AIA CONTRACT IS THE OPERATIVE CONTRACT
A valid contract exists when (1) the parties intended that the contract would bind them,
(2) the terms of the contract are sufficiently definite, and (3) the parties exchanged legal
consideration.77 At issue here is the first element: Did the parties intend for the AIA Contract to
bind them? The Court finds that the University and DiSabatino did.
The question of intent “looks to the parties’ intent to the contract as a whole, rather than
analyzing whether the parties possess the requisite intent to be bound to each particular term.”78
Under Delaware law, “overt manifestation of assent—not subjective intent—controls the
formation of a contract.”79 In applying this objective test, “the court reviews the evidence that
the parties communicated to each other up until the time that the contract was signed—i.e., their
76
See Brzoska v. Olsen, 668 A.2d 1355, 1364 (Del. 1995).
77
Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1158 (Del. 2010) (internal citations omitted).
78
See Eagle Force Holdings, LLC v. Campbell, 187 A.3d 1209, 1229 (Del. 2018).
79
Id. (internal quotations omitted).
10
words and actions—including the putative contract itself.”80 Where the putative contract is in
the form of a signed writing, that document generally offers the most powerful and persuasive
evidence of the parties’ intent to be bound.81 “However, Delaware courts have also said that, in
resolve this issue of fact, the court may consider evidence of the parties’ prior or
contemporaneous agreements and negotiations in evaluating whether the parties intended to be
bound by the agreement.”82 Furthermore, “[n]othing in the law of contracts requires that a
contract be signed to be enforceable.”83
The Court finds that the University and DiSabatino objectively manifested assent to using
the AIA Contract as their contract. The University initially invited DiSabatino to bid on the
Project and provided the Specifications as a directive for the bid. The Specifications said that a
successful bidder would be “required to enter into” the “Contract.”84 In the Specifications, a
section titled “Contract” directed bidders to “use A101 2007 and A201 2007 with the following
supplemental information.”85 In other words, the University expressly informed DiSabatino
during bidding that the contract would be the AIA Contract. DiSabatino agreed. By signing the
Bid Form included in the Specifications, DiSabatino certified that it understood the requirements
detailed in the Specifications and that it would carry out the Project “in accordance with the
Specifications . . . .”86 Therefore, the University and DiSabatino objectively manifested assent to
using the AIA Contract during the bidding stage of their relationship.
80
Id. at 1229–30 (internal citations omitted).
81
Id. at 1230 (internal citations omitted).
82
Id. (internal citations omitted).
83
See Whittington v. Dragon Grp. L.L.C., 2013 WL 1821615, at *3 (Del. Ch. May 1, 2013) (collecting cases); see
also 17A Am. Jur. 2d Contracts § 174 (“Signature spaces in a form contract do not in and of themselves require that
signatures of the parties are a condition precedent to the agreement’s enforceability.”).
84
DiSabatino’s Mot. for S.J., Ex. 5 at PLF000468.
85
Id., Ex. 5 at PLF000479.
86
See id., Ex. 8.
11
The Court notes that the University and DiSabatino did not execute the AIA Contract as
the Specifications required.87 Nevertheless, the Court finds that their conduct after the
University selected DiSabatino’s bid manifests an intent to be bound by the AIA Contract. On
June 2, 2017, DiSabatino executed a copy of the University’s pre-drafted supplement to the
A101.88 The top of the first page again instructed the bidder to “[u]se A101 2007 and A201
2007 with the following supplemental information.”89
On June 5, 2017, DiSabatino executed a copy of the University’s short-form contract.90
The record, however, demonstrates that DiSabatino made a mistake by signing the short-form
contract as the Specifications did not call for the short-form contract and the University had
ceased using it by this time. The Court finds that DiSabatino’s mistake was harmless because
the short-form contract said DiSabatino would complete the Project “in accordance with the
conditions and prices . . . stated in the Proposal, the General Conditions, Supplemental General
Conditions, and Special Conditions of the Contract . . . .”91 In other words, DiSabatino expressly
informed the University that it intended to follow the terms of the AIA Contract, including the
A201.
In response, the University did not to inform DiSabatino that it had submitted the wrong
form, nor did it take issue with DiSabatino’s stated intent to follow the Specifications and the
AIA Contract. Instead, the University simply asked DiSabatino to slightly alter the date of
substantial completion.92 The Court finds that a reasonable, objective third party in DiSabatino’s
87
See id., Ex. 5 at PLF000468 (“Within five (5) days of receipt of the Contract, the successful Bidder shall execute
the Contract and return it to the Owner for execution by the University. The Contract to be signed will be in the
form included in the Bidding Documents.”).
88
Id., Ex. 12.
89
Id.
90
Id., Ex. 11.
91
Id.; see also id., Ex. 4 at 60:16–60:21 (Marcia Hutton acknowledging that the short form contract included the
A201).
92
See id., Ex. 13.
12
position would interpret the University’s response as implicitly approving DiSabatino’s other
statements in the short-form contract.93
The conduct of the parties after the fire provides the final proof of their intent.
DiSabatino sent the University additional copies of the short-form contract and Supplement.94
This time, the University (through Ms. Hutton) informed DiSabatino that it had submitted the
wrong form:
Thanks for delivering the contract Friday. Unfortunately it is not the format
outlined in the bid documents for this particular project. This was a project that
referenced the A101 2007 and A201 2007 and our supplemental information.
Please produce that contract and submit as soon as possible.95
In other words, Ms. Hutton asked DiSabatino to sign and submit the AIA Contract as it was
described in the Specifications. The only reasonable interpretation of Ms. Hutton’s request is
that the University regarded the AIA Contract as the operative contract between itself and
DiSabatino. Otherwise, the University would have had no reason to ask DiSabatino to sign and
submit it. DiSabatino did, as Ms. Hutton asked, submit the signed AIA Contract, thereby
confirming its assent to being bound by its terms.
DiSabatino and the University objectively manifested an intent to be bound by the AIA
Contract at each stage of their relationship. Pre-bidding, the University made clear through its
Specifications that the contract would be the AIA Contract. DiSabatino agreed. After receiving
the Project, DiSabatino told the University it would follow the Specifications. The University
93
See Corp. Service Co. v. Kroll Assoc., Inc., 2001 WL 755934, at *4 (Del. Super. June 15, 2001) (“When the
offeree through his conduct leads the offeror to conclude that he has accepted the proposal, . . . the court will view
silence as being tantamount to acceptance.”). The Kroll court applied this principle in circumstances somewhat like
the case now before the Court. In Kroll, an individual “clearly expressed to [the plaintiff] her expectations with
respect” to the fees that plaintiff charged for certain services. Id. The individual’s understanding of the plaintiff’s
fee structure was incorrect. But the plaintiff failed to correct her misunderstanding during a subsequent discussion,
“the purpose of which was to clarify [the plaintiff’s] pricing.” Id. In this context, the Kroll court found that the
plaintiff “objectively manifested [its] assent” to the individual’s proposal with respect to the plaintiff’s pricing. Id.94
DiSabatino’s Mot. for S.J., Ex. 19.
95
See id., Ex. 20 at 3.
13
told DiSabatino to begin work. After the fire, the University asked that DiSabatino sign and
submit the full AIA Contract. DiSabatino did so. Even if the University never ultimately signed
the AIA Contract, both it and DiSabatino objectively manifested assent to using it as their
contract. The undisputed facts allow no other conclusion, even when they are interpreted in
Plaintiffs’ favor. As a result, the parties agreed to be bound by the waiver of subrogation in the
A201.
B. THE COSA DID NOT MODIFY THE WAIVER OF SUBROGATION
Plaintiffs argue that even if the AIA Contract is operative, the COSA modified the waiver
of subrogation in the A201.96 The Court finds that Plaintiffs’ interpretation is inconsistent with
the COSA’ plain and unambiguous language.
The COSA is a contract, and “[t]he proper construction of any contract . . . is purely a
question of law.”97 The goal of contract interpretation “is to fulfill the parties’ expectations at
the time they contracted.”98 “But because Delaware adheres to an objective theory of contracts,”
the Court's interpretation must be intelligible to an “objective, reasonable third party.”99 To that
end, the Court construes “clear and unambiguous terms according to their ordinary meaning.”100
Ambiguity exists only if the disputed language is “fairly or reasonably susceptible to more than
one meaning.”101 Summary judgment cannot be granted if a disputed contract term is
ambiguous.102
96
Plaintiffs’ Answering Br. 29.
97
Exelon Generation Acquisitions, LLC v. Deere & Co., 176 A.3d 1262, 1266–67 (Del. 2017) (internal citations
omitted).
98
Leaf Invenergy Co. v. Invenergy Renewables LLC, 210 A.3d 688, 696 (Del. 2019) (internal quotation marks
omitted).
99
Id.100
Id.; see also Salamone v. Gorman, 106 A.3d 354, 368 (Del. 2014) (“Contract terms themselves will be
controlling when they establish the parties’ common meaning so that a reasonable person in the position of either
party would have no expectations inconsistent with the contract language.”) (internal quotation marks omitted).
101
Alta Berkeley VI C.V. v. Omneon, Inc., 41 A.3d 381, 385 (Del. 2012).
102
See, e.g., GMG Cap. Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776, 783 (Del. 2012).
14
The relevant clause of the COSA was titled “Non-Waiver and Reservation of Right by
Owner” and stated:
Owner does not waive, and hereby reserves, all of its rights, claims, remedies and
defenses against Contractor; any of its subcontractors and suppliers; and any other
person(s) or entities for whom Contractor is liable or responsible arising from or
relating in any way to the Fire, including, without limitation, all such rights, claims
and remedies as may now or hereafter be vested in any property or casualty insurer
of Owner, whether public or private, by reason of applicable law, including the
principles of subrogation and/or indemnity.103
This clause does not purport to expand the University’s rights or restore any rights that the
University previously waived. Instead, the clause provides that the University “does not waive”
and “reserves” its rights “as may now or hereafter be vested . . . .” As discussed above, the Court
held that the University had previously waived the right of subrogation by agreeing to be bound
by the AIA Contract. Nothing in the COSA can reasonably be interpreted as changing that.
The Court’s conclusion is consistent not only with the plain language of the COSA, but
also settled law regarding non-waiver clauses. The purpose of non-waiver clauses “is generally
to ensure that a party to a contract is given an opportunity to make a thoughtful and informed
decision about whether or not to enforce a particular contract right.”104
“Moreover, with regard to commercial contracts entered into between legal entities
that can only act through authorized agents, they ensure that a contracting party will
not lose its rights due to spontaneous words and acts of corporate agents. In this
sense, non-waiver clauses serve to inform the other contracting party that no
individual agent has the authority to waive or alter contract terms. Rather, they
make clear that some official act is required in order to actually change the original
agreement.”105
As the law instructs, non-waiver clauses generally are not understood as expanding the rights of
a party, but rather ensuring those rights are not reduced.
103
Id., Ex. 26.
104
Viking Pump, Inc. v. Liberty Mut. Ins. Co., 2007 WL 1207107, at *27 (Del. Ch. Apr. 2, 2007).
105
Id.15
The Court’s conclusion does not change because the non-waiver clause in the COSA
referred to the “principles of subrogation.” The Court notes that “laundry list” of rights is
general and not specific. The language illustrates the rights preserved, if any, and does not
purport to expand or create new rights between the parties. In short, the COSA did not change
the fact that the University had previously waived the right of subrogation.
C. THE WAIVER OF SUBROGATION EXTENDS TO ALL DAMAGES
The fire in McKinly Hall damaged both the areas that Defendants were renovating for the
Project and other areas, which were not part of the Project. Plaintiffs argue the waiver of
subrogation should apply only to damages associated with the Project, and not to the non-Project
areas.106 This argument rests on Plaintiffs’ interpretation of the A201 and various cases,
including St. Catherine of Sienna Catholic Church v. J.R. Pini Electrical Contractors Inc.107
The Court, however, rejected this very argument in St. Paul Fire & Marine Ins. Co. v.
Elkay Mfg. Co.108 In Elkay Mfg. Co., the Court noted that St. Catherine had recognized a
distinction between “work” and “non-work” areas for purposes of the waiver of subrogation in
the A201.109 However, the Court distinguished St. Catherine on the grounds that it addressed an
earlier version of the A201.110 The A201 had since been updated in a way that “effectively
extended the waiver of subrogation to non-work areas which have been covered by separate
property insurance.”111 The Court therefore rejected an argument similar to the one Plaintiffs
make now.
106
See Plaintiffs’ Answering Br. at 30.
107
2000 WL 1211146 (Del. Super. Ct. June 27, 2000), aff’d, 781 A.2d 695 (Del. 2001).
108
2003 WL 139775, at *6 (Del. Super. Ct. Jan. 17, 2003).
109
Id.110
Id.111
See id. (distinguishing the 1987 version of the A201 from earlier versions).
16
Plaintiffs appear to recognize that Elkay Mfg. Co. is unfavorable and suggest in a footnote
that it was wrongly decided.112 Plaintiffs are not alone in arguing that the A201 should be
interpreted as waiving subrogation only for damage to work property.113 However, a recent
review of the case law by the Fifth Circuit concluded this is the “minority approach.”114
Conversely, the decision in Elkay Mfg. Co. is consistent with the “majority approach.”115 The
Court is therefore satisfied with and adopts the reasoning in Elkay Mfg. Co.
The University and DiSabatino used a version of the A201 that contains the same
relevant terms as the version addressed in Elkay Mfg. Co.116 Moreover, it appears undisputed
that the non-work areas of McKinly Hall were separately insured. The waiver therefore extends
to those areas as well.
D. THE WAIVER OF SUBROGATION EXTENDS TO ALL DEFENDANTS
Schlosser and Guerrazzi were not parties to the AIA Contract. As such, Plaintiffs argue
the waiver would extend to them only if they were third-party beneficiaries of the agreement
between the University and DiSabatino.117 The University’s supplementary conditions in the
Specifications disclaims any intent “confer upon any third party, including any of the
Contractor’s Subcontractors . . . the rights of a third party beneficiary.”118 Plaintiffs therefore
contend that the subrogation waiver does not reach Schlosser and Guerrazzi.
112
Plaintiffs’ Answering Br. at 33 n.16 (arguing that Elkay “did not consider Section 11.3.7 in the broader context
of the A201-2007, including Sections 3.18.1 and 11.1.1”).
113
See Liberty Mut. Fire Ins. Co. v. Fowlkes Plumbing, L.L.C., 934 F.3d 424, 427–428 (5th Cir. 2019).
114
See id.115
See id. at 427 (collecting cases); see also see also Liberty Mut. Fire Ins. Co. v. Fowlkes Plumbing, L.L.C., 290
So. 3d 1257 (Miss. 2020) (answering the Fifth Circuit’s certified question by adopting the majority approach).
116
Elkay Mfg. Co. involved the 1987 version of the A201, while this case deals with the 2007 version of the A201;
however, the sections containing the subrogation waiver and the same in both versions.
117
Plaintiffs’ Answering Br. at 33.
118
Id. at 34 (internal citation omitted).
17
The waiver in the A201 expressly states that the “Owner and Contractor waive all rights
against (1) each other and any of their subcontractors, sub-subcontractors, agents and
employees, each of the other . . . for damages caused by fire or other causes of loss . . . .”119 This
language unambiguously means that the waiver extends to Schlosser and Guerrazzi. The Court
finds that an argument to the contrary is an unreasonable interpretation of the unambiguous
language of the operative document.
VI. CONCLUSION
For the foregoing reasons, the Court holds that the AIA Contract is the operative contract
between the University and DiSabatino, and that the parties are bound by the waiver of
subrogation therein; that the COSA did not affect the waiver; and that the waiver extends to all
damages associated with the fire and all Defendants. Accordingly, Defendants’ motions for
summary judgment are GRANTED.
Dated: March 17, 2022
Wilmington, Delaware
/s/ Eric M. Davis
Eric M. Davis, Judge
cc: File&ServeXpress
119
DiSabatino’s Mot. for S.J., Ex. 18.
18