Kelley Kronenberg Partner/Business Unit Leader Paul Milberg and Associate Benjamin Lazarus secured a complete summary judgment victory for our equipment supplier client in the Sixth Judicial Circuit, Pinellas County, eliminating over $11,000,000.00 in exposure from a complex subrogation action involving a municipal infrastructure fire. 

The case arose when a fire occurred during a design-build refurbishment project for a Florida municipality. The municipality’s property insurer filed a subrogation action seeking nearly $9,000,000.00 in liquidated damages, with total exposure exceeding $11,000,000.00 and growing. The insurer asserted claims of negligence, strict liability, and breach of warranty against multiple defendants, including the client who had supplied vital equipment as part of the overall design-build project. 

The client had entered into a direct purchase agreement with the municipality to supply equipment, a common arrangement allowing municipalities to save on sales tax. This direct contractual relationship, while financially beneficial, exposed the client to significant liability claims when the fire occurred. 

Our team examined vast technical discovery and identified a critical contractual defense. They discovered mutual risk allocation provisions in the design-build contract between the municipality and the primary contractors that included comprehensive waivers of claims and subrogation. These provisions required parties to look only to their own insurance for compensation in the event of property losses during the project. 

The challenge was that our client was not a party to the design-build contract containing these waivers. The provisions had been negotiated before the client’s involvement in the project. However, Paul and Ben crafted a persuasive legal argument that the municipality’s waivers applied to our client as one of the municipality’s “separate contractors.” 

The design-build contract specifically stated that the municipality agreed to “waive against [the design-builder] and the City’s separate contractors . . . [and] Subcontractors . . . all damages covered by property insurance.” Paul and Ben argued that our client, having contracted directly with the municipality to supply equipment for the project, qualified as one of these “separate contractors” entitled to the benefit of the waivers. 

When the Court initially granted summary judgment to the design-build defendants based on these same waivers, Paul and Ben moved quickly to apply that favorable ruling to our client. They filed a comprehensive motion for summary judgment arguing that our client stood in the same position as the design-build defendants with respect to the municipality’s waivers. 

The plaintiff’s insurer vigorously opposed the motion, arguing that the waivers were exculpatory clauses violating public policy, conflicted with other contract provisions, and that the client was barred from asserting third-party beneficiary rights under a separate “no third-party beneficiary” clause in the design-build contract. 

Our team systematically dismantled each argument. They demonstrated that the waivers were not exculpatory clauses but rather pre-loss risk allocation agreements specifically contemplating that parties would obtain insurance coverage. They distinguished controlling case law and showed that Florida courts consistently enforce such waivers in construction contracts as sound public policy supporting parties’ agreed allocation of risk. 

They further argued that even if the general “no third-party beneficiary” language applied, it would only prevent their client from affirmatively suing to enforce the contract—it would not eliminate their client’s ability to assert the waivers as a defense to the plaintiff’s claims. The Court agreed, finding that the specific waiver language in favor of “separate contractors” controlled over general boilerplate language. 

The Court granted summary judgment and dismissed all claims against the client with prejudice. This ruling followed the Court’s earlier finding that the municipality’s contractual waivers were “clear and unambiguous” and that the parties had agreed to “waive claims against each other and to resort to insurance instead” to “prevent the parties from being involved in this litigation.” 

This victory demonstrates the critical importance of thoroughly examining all contractual relationships in complex construction projects and identifying risk allocation provisions that may protect parties even when they are not direct signatories to the contracts containing those provisions. For equipment suppliers and subcontractors, this case reinforces that “separate contractor” language in owner waivers can provide powerful protection against subrogation claims, even in cases involving substantial damages and multiple liability theories. 

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