Gray•Duffy Prevails at Arbitration and Defends $148,117 Subrogation Claim

December 2012

Overview

Kevin M. Cruz of Gray•Duffy’s Encino office successfully defended an arbitration claim brought by State Farm Insurance, who filed a subrogation action against Cal-Coast Repiping alleging that a contractor caused $148,117.91 in water damage in the repiping of a condominium project in Playa Del Rey, CA. On the eve of trial in the civil litigation matter, State Farm dismissed the action and filed for intercompany arbitration against Cal-Coast’s insurer, Scottsdale. On October 5, 2012 a three person panel of arbitrators issued an award denying any and all liability on the part of Scottsdale’s insured.

Discussion

State Farm Insurance Co. v. Scottsdale Insurance Co. In a contract dated October 5, 2006, Scottsdale’s insured, Cal-Coast Repiping, Inc. (“Cal-Coast”) was hired to perform copper repiping in 26 condominiums located in Playa Del Rey in 2006 and 2007. State Farm’s position was that Cal-Coast did repiping and improperly installed plumbing in Unit 202 which caused severe water damage. State Farm supported its claims with documentation of repairs, water damage and environmental remediation from June 2007 through February 2008. The building’s water main comes from the street, goes into the underground garage and is then piped under the three rows of units and up the risers to the three units. In order for Cal-Coast to perform their work, another contractor, RAR Solutions, had to first open up the walls along each riser. RAR, who was hired directly by the HOA, would work on each stack a day or two ahead of Cal-Coast. Cal-Coast was several stacks away from unit where the leak occurred although RAR had opened up the walls on that stack. It appeared to the Cal-Coast foreman that the 102, 202, 302 riser had previously been changed out from galvanized to copper piping. Thus, another plumber had likely worked on that riser within two years before the incident. The arbitration panel found that State Farm failed to meet its burden of proof against Cal-Coast based on the sworn testimony of the foreman and an engineering expert, thus issuing its ruling in favor of Cal-Coast.

Please Note: This article is necessarily general in nature and is not a substitute for legal advice with respect to any particular case. Readers should consult with an attorney before taking any action affecting their interests.