Superior Court holds condo owners' claim against another owner not barred by insurance provisions in condo documents

A fire caused damage to a condominium complex.  Owners of residential units in the complex alleged that the fire was started by another unit owner named Anthony Siracusa.  They sued him for damages. 

Siracusa moved for summary judgment, asserting that the other unit owners were barred from bringing suit against him.  He relied on two provisions of the condominium trust documents.  The first provided:  

Each unit owner is solely responsible to obtain his or her own insurance coverage in appropriate kinds and amounts to insure his or her unit, personal effects and contents, unit improvements and coverage for the Condominium Trust's deductible as well as insuring for liability and all such other coverages which said Unit Owner desires.

The second provision required that any insurance obtained by unit owners must waive the right of subrogation against other unit owners.

In Koch v. Siracusa, 2016 WL 872932 (Mass. Super.), a Superior Court judge disagreed that the provisions barred unit owners from bringing a claim against another unit owner.  

The court held that the first provision is a message to unit owners that failure to purchase insurance is at their own peril but does not foreclose their claims against other owners.

The court held that the requirement to waive subrogation if insurance is procured does not preclude unit owners from suing each other for losses that are not covered by insurance.  (Indeed, that is not what subrogation means.  Subrogation is means by which an innocent third party, such as an insurer, can recover from a tortfeasor for losses the third party paid.  The insurer stands in the shoes of the insured who has already been compensated.  That is not the situation in this case; the unit owners are merely bringing a claim for losses they have suffered, not standing in the shoes of someone else who suffered a loss who they in turn compensated.) 

U.S. District Court holds no bad faith sanctions in subrogation action where insured spoliated evidence

Fireman's Fund Insurance Company brought a products liability subrogation action against Bradford-White Corporation.  It alleged that a design defect in a water heater manufactured by Bradford White caused a leak that damaged the property of its insured, Bell Partners, Inc. 


After the leak was discovered, Fireman's requested that Bell retain the subject water heater.  However, Bell disposed of the water heater without contacting Fireman's and before Bradford-White had an opportunity to inspect or test it. 


Fireman's expert asserted that other water heaters in the same building were similar to the subject water heater.  Bradford-White contested that, arguing that they were manufactured earlier and kept in outside closets instead of inside closets. 


Bradford-White moved that the case against it be dismissed on the ground of spoliation of evidence, or, at the least, that the court preclude Fireman's from arguing at trial that any evidence or test results obtained from the other supposedly similar water heaters is relevant to the condition of the subject heater.


In Fireman's Fund Ins. Co. v. Bradford-White Corp., 2014 WL 1515266 (D. Mass.), the United States District Court for the District of Massachusetts held that Fireman's Fund did not act in bad faith.  It had asked Bell to retain the heaters and Bell did not contact it before removing the heater.  Fireman's failure to take additional steps to secure the heater was at most negligent.  The court held that the appropriate spoliation sanction is an instruction to the jury that it may draw a spoliation inference against Fireman's Fund. 


The court utilized a straightforward spoliation analysis.  I was surprised that it did not address an argument that an inference can be drawn against Fireman's Fund because as the subrogee of Bell it stands in Bell's shoes.  If Bell had brought its own claim against Bradford-White, would the court have analyzed the sanctions differently?  I don't know offhand if there are any Massachusetts decisions on the issue, but it is certainly where I would have started.