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Carlson Restaurants Worldwide, Inc. v. Designline Construction Services

September 4, 2009

CARLSON RESTAURANTS WORLDWIDE, INC. AND TGI FRIDAYS, INC., PLAINTIFFS-APPELLANTS,
v.
DESIGNLINE CONSTRUCTION SERVICES, INC. AND C.J. SCHMIDT & SONS, INC., DEFENDANTS-RESPONDENTS, AND JMS SERVICES, DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT, AND RESTAURANT SERVICES INTERNATIONAL, INC., RSI PARTNERS, LLC, DV8 DESIGN GROUP, SCOTT & GOBLE ARCHITECTS, INC. F/K/A TAYLOR SCOTT ARCHITECTS, INC., THIRD-PARTY DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-10276-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 14, 2009

Before Judges Rodríguez and Lyons.

Carlson Restaurants Worldwide, Inc. (Carlson) appeals from the grant of summary judgment to all defendants on the issue of liability. We reverse.

This lawsuit arose from a kitchen fire on February 1, 2003, at the Cherry Hill TGIF's restaurant Carlson owns. The fire started and caused damage to the restaurant. Carlson alleges that this fire was caused when a broiler table, which was either negligently installed or defectively manufactured, created a fire hazard, a condition which allegedly existed from the time of installation in 1999-2000.

At the time of the fire, Carlson carried a fire and property insurance policy underwritten by Lexington Insurance Company. As a result of the fire, Carlson sustained losses of $2,144,565, of which $500,000 was not covered by insurance. It is undisputed that Carlson entered into a contract with Designline Construction Services, Inc. (Designline) for construction of the restaurant for $1,229,855. Designline agreed that it would serve as the general contractor for the construction project. In Paragraph 11.3.6 of the contract, termed "Waivers of Subrogation," Carlson and Designline agreed to the following language:

The Owner and Contractor waive all rights against (1) each other and any of their Subcontractors, Sub-subcontractors, agents and employees, each of the other, and (2) the Architect, Architect's consultants, separate contractors . . ., if any, and any of their subcontractors, sub-subcontractors, agents and employees, for damages caused by fire or other perils to the extent covered by property insurance obtained pursuant to Paragraph 11.3. . . (emphasis added).

In Paragraph 11.3.1.3, Carlson was required to carry a property insurance policy on the restaurant with a $25,000 deductible until final payment had been made. Notwithstanding this requirement, pursuant to Paragraph 11.3.1:

Unless otherwise provided, the Owner shall purchase and maintain, in a company or companies lawfully authorized to do business in the jurisdiction in which the Project is located, property insurance in the amount of the initial Contract Sum as well as subsequent modifications thereto for the entire Work at the site on a replacement cost. Such property insurance shall be maintained, unless otherwise provided in the Contract Documents or otherwise agreed in writing buy [sic] all persons and entities who are beneficiaries of such insurance, until final payment has been made . . . or until no person or entity other than the Owner has an insurable interest in the property . . ., whichever is earlier. (emphasis added).

Moreover, Paragraph 11.3.5, addressing insurance requirements after final payment. It states:

If during the Project construction period the Owner insures properties, real or personal or both, adjoining or adjacent to the site by property insurance under policies separate from those insuring the Project, or if after final payment property insurance is to be provided on the completed Project through a policy or policies other than those insuring the Project during the construction period, the Owner shall waive all rights . . . for damages caused by fire or other perils covered by this separate property insurance. All separate policies shall provide this waiver of subrogation by endorsement or otherwise. (emphasis added).

This Paragraph does not require any minimum deductible. Paragraph 11.3.6 sets forth the extent of the required waiver of subrogation. The waiver is "for damages caused by fire or other perils to the extent covered by property insurance. . ." (emphasis added).

Designline entered into a subcontract with C.J. Schmidt & Sons, Inc. ("Schmidt") to provide plumbing services in connection with the installation of the kitchen equipment, and a subcontract with JMS Services ("JMS") to install the commercial kitchen equipment, including the broiler and broiler plate. The broiler and broiler plate were designed and manufactured by Restaurant ...


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