N.J. Appellate Court Confirms that AIA Construction Contract Bars Insurer's Subrogation Claim

Person holding contract

Saxe Doernberger & Vita, P.C. analyzes Ace American Ins. Co. v. American Medical Plumbing, Inc.

September 10, 2019
Saxe Doernberger & Vita, P.C.

On April 4, 2019, the Appellate Division of the New Jersey Superior Court confirmed that the waiver of subrogation provision in a commonly used form construction contract, American Institute of Architects (AIA) form A201 — 2007 General Conditions of the Contract for Construction, precluded an insurer’s claims against a subcontractor.

In Ace American Ins. Co. v. American Medical Plumbing, Inc., the court considered Ace American Insurance Company’s (Ace) subrogation claim against a plumbing subcontractor who was allegedly responsible for a water main leak that caused approximately $1.2 million in damages to Ace’s insured, Equinox Development Corporation (Equinox).

In March 2012, Equinox entered into a contract with Grace Construction Management Company, LLC (Grace) to build the “core and shell” of a new health club. Equinox and Grace used AIA form A201 for their contract. Grace then hired American Medical Plumbing, Inc. (American) as a plumbing subcontractor for the project. In April 2013, the water main failed, flooding the health club.

Saxe Doernberger & Vita, P.C. may be contacted at coverage@sdvlaw.com



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