Gray•Duffy, LLP Obtains Dismissal with Prejudice for General Contractor in Exchange for a Waiver of Costs in a Subrogation Matter

July 2014

Overview

Michelle MacDonald of Gray•Duffy’s Encino office obtained a favorable resolution for a general contractor in a subrogation matter involving a large water loss.

Discussion

USAA v Southworth et al. The plaintiff, USAA, insured a single-family home being used as a rental property by its insured. The original structure was built on a raised foundation but a newer addition was on a slab foundation. Approximately three years prior to the loss, the insured was retained to renovate the addition which did not include plumbing other than fixture replacement. At approximately the same time, in a separate transaction, a licensed plumber named Southworth was hired to re-plumb the original portion of the house but to do no work in the addition. Thereafter, the USAA insured was informed by his tenant of a musty odor and dampness in the wall and floor of the original structure. Upon investigation, the owner found significant and continuous leaking of the newly installed plumbing pipes under the house which caused a large pool of water to form. Moisture had then wicked up into the interior of the home resulting in water damage and mold growth. The plumber claimed that the general contractor doing the addition renovation was partially or wholly responsible as 1) the problem originated in the plumbing work allegedly performed by the contractor in the addition and 2) he was merely the subcontractor of the general for the re-piping done in the home. The plumber also claimed that the homeowner had hired other plumbers to work on the property after he left which allegedly altered his work. During the pendency of the action, Ms. MacDonald argued that there was no actual overlap between the scope of work of the plumber and the general contractor either in location or type and that the client did not act as a general contractor for any work performed in the original portion of the home. Moreover, even if there was a finding that the client was a general contractor for the re-piping, a licensed subcontractor could not shift liability for defects in his scope of work to a general contractor absent an agreement. Finally, Ms. MacDonald noted that the owner of the home, who eventually alerted his insurance carrier of the loss and made a claim for damages, supported the version of the events by the client. Approximately one month before trial, the defendant settled the case with the plaintiff’s insurance carrier. The defendant plumber also resolved his cross complaint against Gray•Duffy’s client for a dismissal with prejudice in exchange for a waiver of costs.

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