                                 NO. 07-11-0038-CV

                            IN THE COURT OF APPEALS

                     FOR THE SEVENTH DISTRICT OF TEXAS

                                    AT AMARILLO

                                      PANEL A

                               OCTOBER 23, 2012
                        ______________________________


  AMERICAN ZURICH INSURANCE COMPANY, AS SUBROGEE OF THE VARSITY
  GOLF CLUB, LTD D/B/A THE UNIVERSITY OF TEXAS GOLF CLUB, APPELLANT

                                          V.

                        BARKER ROOFING, L.P, APPELLEE


                       _________________________________

             FROM THE 353RD DISTRICT COURT OF TRAVIS COUNTY;

      NO. D-1-GN-10-001903; HONORABLE SUZANNE COVINGTON, JUDGE

                        _______________________________

Before CAMPBELL and HANCOCK and PIRTLE, JJ.


                                      OPINION


      This is an appeal from an order granting summary judgment in favor of Appellee,

Barker Roofing, L.P. (Barker) in a subrogation lawsuit filed by Appellant, American

Zurich Insurance Company (AZIC), as Subrogee of the Varsity Golf Club, Ltd d/b/a The

University of Texas Golf Club (UT), seeking to recover damages suffered by its insured,

UT, due to a fire allegedly caused by Barker. The trial court granted summary judgment

based upon the affirmative defense of waiver. By five issues, AZIC asserts the trial
court erred because (1) two clauses in the subcontract between Barker and the prime

contractor, Harvey-Cleary Builders (HCB) modified or were controlling over the

contractual waiver of subrogation provision in the general contract between UT and

HCB, and (2) the contractual waiver provision did not apply to either the business

interruption losses reimbursed by AZIC, or (3) the uninsured business interruption

losses suffered by UT. AZIC also asserts the trial court erred by (4) denying AZIC’s no-

evidence motion for partial summary judgment on Barker’s affirmative defense of waiver

because neither UT nor AZIC waived their subrogation rights, and (5) granting summary

judgment in favor of Barker on AZIC’s breach of contract claims because those claims

were not addressed by Barker’s summary judgment motion. We affirm.


                                     Background


      The cause underlying this appeal is AZIC’s subrogation claim for losses resulting

from a fire allegedly caused by Barker’s negligence during the construction of a

clubhouse for the benefit of UT.     Barker contends that because those claims are

derivative from UT’s claims, they were waived by a contractual waiver of subrogation

contained in the original construction contract between UT and HCB.


      AZIC’s Coverage


      UT was insured under a commercial insurance policy issued by AZIC. Under the

policy’s Commercial Property Coverage Part Declarations, AZIC insured UT against,

among other things, real and personal property damage including business income loss.

The policy period ran from December 1, 2007 to December 1, 2008 and coverage was

subject to a $5,000 property deductible applicable to all loss, damage, cost or expense.

                                           2
The Commercial Property Coverage contained a Business Income Coverage Form that

insured UT against an actual loss of business income sustained due to a necessary

suspension of its operations. To be covered, however, the suspension “[was required

to] be caused by direct physical loss of or damage to property at a ‘premises.’” 1


       The Business Income Coverage also provided that “[i]f any person or

organization for whom we make payment under this Commercial Property Coverage

Part has rights to recover damages from another, those rights are transferred to us to

the extent of our payment.” It further provided that UT could, “without restricting [its]

coverage waive [its] rights against another party in writing [p]rior to a loss.”


       UT/HCB Contract -- Builder’s Risk Insurance


       In February 2007, UT and HCB executed a general contract for the construction

of the UT Phase 2 Clubhouse Improvements with a stipulated contract sum of

$5,767,055.    Under the contract, the “Work” comprised “the completed construction

required by the Contract Documents, and include[ed] all labor and services necessary

to produce construction of, and all materials and equipment incorporated or to be

incorporated in the construction of, the improvements, set forth in the Contract

Documents.”


       Per the Conditions of the Contract, UT was required to “purchase and maintain

property insurance written on a builder’s risk “all-risk” or equivalent policy form in the

amount of the Initial Contract Sum . . . comprising total value for the entire Project at the


1
Under the Commercial Property Coverage Part, “Premises #1” was defined as 2200 University Club
Drive, Austin, Texas, i.e., the address of the UT clubhouse destroyed by fire.

                                              3
site on a replacement cost basis without optional deductibles.”                     In the event of a

covered loss, Article 11 of the Conditions entitled Insurance and Bonds provided that

UT would be responsible for any deductible that might apply “except for the first

$5,000.00 of the cost of any deductibles, which [would] be paid by [HCB].”                            The

Conditions further provided that the property insurance must “include [the] interests of

Owner, Contractor, Subcontractors and Sub-subcontractors in the Project” and “include

without limitation, insurance against the perils of fire (with extended coverage) and

physical loss or damage . . . .”


        Paragraph 11.2.1.6 of the Conditions contained a waiver of subrogation 2 stating

as follows:


        The Owner and Contractor waive all rights against each other and the
        Architect . . . and any of their Subcontractors . . . for damages caused by
        fire or other perils to the extent covered by property insurance obtained
        pursuant to this Article or any other property insurance applicable to the
        Work, except such rights as they may have to the proceeds of such
        insurance held by the Owner as fiduciary but only to the extent of actual
        recovery of insurance proceeds under or pursuant to property insurance
        applicable to the Work.

(Emphasis added).


        Exhibit B to the contract’s Supplementary Conditions entitled Insurance

Addendum, required HCB and its subcontractors to protect UT’s interests by purchasing

worker’s compensation insurance, commercial general liability insurance, automobile

liability insurance and umbrella excess liability insurance.                     The Supplementary

Conditions further provided that all insurance policies “in any way related to the Work . . .

that are secured and maintained by [HCB] and all tiers of Subcontractor, shall contain
2
 Throughout the remainder of this opinion we will refer to this contractual provision simply as the “waiver
clause.”

                                                    4
the waiver contained in Paragraph 11.2.1.6 of the Conditions of the Contract” and

“name [UT] as an additional insured.”


      UT subsequently obtained property insurance on a “Builder’s Risk Declaration”

from Fireman’s Fund Insurance with a deductible of $5,000 and policy limits of

$5,800,000. The policy insured against “risks of direct physical loss of damage from

External causes” and expressly excluded losses due to “[d]elay, or any loss of market

for the covered property that occurs from the interruption of business; or any

consequential loss that is beyond the direct physical loss of the covered property.”


      Barker’s Subcontract


      In March 2007, HCB entered into a subcontract with Barker to complete the roof,

vinyl siding and flashing at UT’s clubhouse for a contract price of $293,467.          The

subcontract required Barker to obtain a commercial general liability insurance policy

with a limit of not less than $1,000,000 each occurrence with a $2,000,000 aggregate

and include UT as an insured. The subcontract also provided that UT or HCB would

provide builders risk insurance for the entire Project, insuring against risks of direct

physical loss or damage to materials. In accordance with the UT/HCB contract, Barker

waived his right to subrogation against UT, HCB, “and any party as required in the

General Contract, for damages caused by fire or other causes of loss to the extent

covered by the builders risk insurance.”


      The subcontract also contained two indemnification provisions whereby Barker

agreed to “indemnify, defend and save Contractor and Owner harmless from any liability

for all claims, causes of action, losses, costs, expenses, damages, liabilities and

                                            5
judgments” due to any delay in performance or Barker’s failure to properly pursue the

subcontract work or comply with the terms of the subcontract. Barker also agreed to

indemnify UT and HCB against all claims relating to his performance, or lack thereof,

arising from the subcontract work.


      Before Barker completed performance under the subcontract, there was a

catastrophic fire at UT’s clubhouse. A fire marshal’s investigation indicated the fire

originated in the exterior roof covering, ignited by a “spark, ember or flame,” with a

contributing factor of high wind. Two of Barker’s employees working on the roof when

the fire occurred later described to the fire marshal how the fire started in roofing

material while they were using a small propane torch to make repairs. UT’s estimated

loss for the building was $8,000,000 plus $930,000 for its contents. Fireman’s Fund

Insurance Company provided insurance coverage of $5,800,000 plus $930,000 for the

contents. AZIC paid business interruption damages to UT totaling $500,000.


      Proceedings


      In February 2009, AZIC filed a subrogation action against Barker alleging the

roofer was negligent in the performance of its work and services at the UT clubhouse

resulting in a fire that caused UT’s business interruption damages.    AZIC’s petition

disclaimed any representation of UT or authorization to accept service, pleadings or

discovery on UT’s behalf. AZIC alleged a claim against Barker for negligence and

sought UT’s business interruption damages plus any deductible paid by UT. Barker

subsequently filed a traditional motion for summary judgment asserting UT contractually

waived AZIC’s subrogation rights per the waiver clause in the UT/HCB contract and


                                          6
sought severance. AZIC subsequently filed a no-evidence summary judgment motion

on Barker’s affirmative defense of waiver.


      In May 2010, AZIC filed its Third Amended Original Petition asserting a

contractual indemnity claim under Barker’s subcontract with HCB for UT’s uninsured

losses. Following a hearing, the trial court granted Barker’s motion, denied AZIC’s

motion, and severed the parties from the pending action. This appeal followed.


                                      Discussion


      AZIC asserts its subrogation claim is not barred by the UT/HCB contract because

the waiver clause does not mention Barker by name and the indemnification provisions

in Barker’s subcontract negate the waiver clause’s effect. AZIC also contends that UT’s

business interruption damages are not subject to its subrogation waiver because its

damages were not within the scope of the “Work” defined by the UT/HCB contract and

its business interruption coverage with UT was not “property insurance” or insurance

against “property damages.” AZIC next asserts the trial court erred by granting Barker’s

motion for summary judgment because Barker did not appear for the hearing on AZIC’s

motion and failed to amend its motion to seek summary judgment on AZIC’s claim for

contractual indemnity. We disagree.


I. Standard of Review


      We review the trial court’s summary judgment de novo. Valence Operating Co.

v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). Traditional summary judgment is proper

only if the movant establishes there is no genuine issue of material fact and that the


                                             7
movant is entitled to judgment as a matter of law.                  Tex. R. Civ. P. 166a(c).           See

Diversicare General Partner, Inc. v. Rubio, 185 S.W.3d 842, 846 (Tex. 2003). In our

review of a trial court’s grant of summary judgment, we take as true all evidence

favorable to the nonmovant and indulge every reasonable inference and resolve any

doubts in the nonmovant’s favor.             Dorsett, 164 S.W.3d at 661; Provident Life and

Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003).


        A defendant moving for traditional summary judgment must conclusively negate

at least one essential element of each of the plaintiff’s causes of action or conclusively

establish each element of an affirmative defense. Frost Nat’l Bank v. Fernandez, 315

S.W.3d 494, 508 (Tex. 2010); Sci. Spectrum Inc. v. Martinez, 941 S.W.2d 910, 911

(Tex. 1997). 3 The trial court is required to grant the motion unless the nonmovant

produces summary judgment evidence that raises a genuine issue of material fact. Tex.

R. Civ. P. 166a(b). Moreover, if, as here, a trial court’s granting of summary judgment

does not specify the basis for the trial court’s ruling, the summary judgment will be

affirmed if any of the theories advanced by the movant are meritorious. Joe v. Two

Thirty Nine Joint Venture, 145 S.W.3d 150, 157 (Tex. 2004).


        When interpreting a contract, 4 our primary concern is to ascertain and give effect

to the intent of the parties as expressed in the contract. In re Service Corp. Int’l, 355

S.W.3d 655, 661 (Tex. 2011) (citing Seagull Energy E & P, Inc. v. Eland Energy, Inc.,

3
 A matter is conclusively established if reasonable people could not differ as to the conclusion to be
drawn from the evidence. City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005).
4
 The interpretation of an insurance contract is generally subject to the same rules of construction as other
contracts. Chrysler Ins. Co. v. Greenspoint Dodge of Houston, Inc., 297 S.W.3d 248, 252 (Tex. 2009);
Yorkshire Ins. Co., LTD. v. Diatom Drilling Co., 280 S.W.3d 278, 282 (Tex.App.—Amarillo 2007, pet.
denied).



                                                     8
207 S.W.3d 342, 345 (Tex. 2006)). To discern this intent, we examine and consider the

entire writing in an effort to harmonize and give effect to all the contractual provisions so

that none will be rendered meaningless. See Brent v. Field, 275 S.W.3d 611, 617

(Tex.App.—Amarillo 2008, no pet.).       No single provision taken alone will be given

controlling effect; rather, all the provisions must be considered with reference to the

whole instrument. Id.


       Where the language is plain and unambiguous, we construe the contract as a

matter of law; Coker v. Coker, 659 S.W.2d 391, 393 (Tex. 1983), and enforce the

contract as made by the parties. Fiess v. State Farm Lloyds, 202 S.W.3d 744, 753

(Tex. 2006). We “cannot make a new contract for them, nor change what they had

made under the guise of construction.” Id.        However, if the contract’s language is

susceptible to two or more reasonable interpretations, an ambiguity exists. Am. Mfrs.

Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003). Whether a contract is

ambiguous is a question of law; id., however, a contract is not ambiguous simply

because the parties offer conflicting interpretations.      Gilbert Tex. Constr., L.P. v.

Underwriters at Lloyd’s London, 327 S.W.3d 118, 133 (Tex. 2010). If a contract as

written can be given a clear and definite legal meaning, then it is not ambigious as a

matter of law. Id.


II. Subrogation Waiver


       Although an insurer acquires a right to be subrogated to any cause of action an

insured may have against the offending party upon payment of the loss, the insurer’s

right to subrogation derives from the insured’s right against the offending party and is


                                             9
limited to those rights. TX. C.C., Inc. v. Wilson/Barnes Gen. Contractors, Inc., 233

S.W.3d 562, 566 (Tex.App.—Dallas 2007, pet. denied) (citing Nat’l Union Fire Ins. Co.

of Pittsburgh, Pa. v. John Zisk Co., 972 S.W.2d 839, 843 (Tex.App.—Corpus Christi

1998, pet. denied)). An insured, however, can affect a subrogated insurer’s rights by

releasing claims the insured has against third parties. Austin Indep. Sch. Dist. v. H. C.

Beck Partners, Ltd., No. 03-07-00228-CV, 2009 Tex. App. LEXIS 1756, at *7

(Tex.App.—Austin 2009, pet. denied) (mem. op.). While this may or may not be a

breach of the insurance contract, id., Paragraph Q of the Commercial Property

Conditions of AZIC’s policy permitted UT to waive its rights against another party

without restricting its coverage if the waiver was executed, as it was here, prior to a

covered loss.


      The waiver clause here is well known and often used in the construction industry.

See TX. C.C., Inc., 233 S.W.3d 562, 565 (waiver of subrogation commonly used in

construction industry). In its brief, AZIC acknowledges that the waiver clause is the

standard clause recommended by the American Institute of Architects; see TX. C.C.,

Inc., 233 S.W.3d at 565; Trinity Universal Ins. Co. v. Bill Cox Constr., Inc., 75 S.W.3d 6,

9 (Tex.App.—San Antonio 2003, no pet.); Walker Eng’g, Inc. v. Bracebridge Corp., 102

S.W.3d 837, 838 (Tex.App.—Dallas 2003, pet. denied), that has been in use for at least

twenty years. See, e.g., E.C. Long v. Brennan’s of Atlanta, Inc., 148 Ga. App. 796, 252

S.E.2d 642, 645-46 (Ga. Ct. App. 1979).


      The waiver clause provided that UT waived all rights against HCB and Barker for

damages caused by fire or other perils to the extent covered by property insurance

obtained pursuant to the UT/HCB contract “or any other property insurance applicable

                                            10
to the Work.”    The UT/HCB contract provided that UT would purchase property

insurance upon the entire Work at the site to the full insurable value thereof and would

include the interests of UT, HCB, and Barker in the Project and insure against the perils

of fire. “A review of the Contract [the construction contract between the Owner and the

General Contractor containing the waiver of subrogation clause] and applicable case

law interpreting similar AIA contract provisions reveals the parties agreed [the Owner’s]

property coverage would protect all parties from property loss.” Walker Eng’g, Inc., 102

S.W.3d at 840. Courts reviewing this allocation of risks and the waiver of subrogation

provision have concluded the purpose of these provisions is to eliminate the need for

lawsuits by protecting all contracting parties from property loss by way of the owner’s

property insurance. Id. at 841.


      Where a waiver clause identical to the UT/HCB contract was upheld under

similar circumstances, the court stated as follows:


      A waiver of subrogation clause is a risk-shifting provision premised upon
      the recognition that it is economically inefficient for parties to a contract to
      insure against the same risk. [Citation omitted]. A subrogation waiver
      encourages the parties to anticipate the risks and to procure insurance
      covering those risks and also facilitates and preserves economic relations
      and activity. [Citation omitted]. Because a property owner can generally
      acquire insurance to protect property against fire and other perils, in the
      context of a construction contract, the waiver of subrogation clause shifts
      the ultimate risk of loss resulting from such perils to the owner to the
      extent damages are covered by insurance. [Citation omitted]. The intent
      is to avoid disruption during construction and provide certainty and
      eliminate litigation by having the contracting parties look only to the
      owner’s insurance for protection in the event of loss resulting from fire or
      other perils. [Citation omitted]. In other words, a waiver of subrogation
      clause substitutes the protection of insurance for the uncertain and
      expensive protection of liability litigation. [Citation omitted].




                                            11
TX. C.C., Inc., 233 S.W.3d at 567-68. See Walker Eng’g, 102 S.W.3d at 842; Trinity

Universal Ins. Co., 75 S.W.3d at 13; Temple Eastex, Inc. v. Old Orchard Creek

Partners, 848 S.W.2d 724, 731 (Tex.App.—Dallas 1992, writ denied).


       Further, the waiver clause applies whether the owner purchased the property

insurance used to pay the loss before executing the construction contract or afterwards.

See TX. C.C., Inc., 233 S.W.3d at 571. As long as the owner’s property insurance

covers the damages to the structure, whether completed or not, the waiver applies. Id.

This is consistent with the plain meaning of “other property insurance applicable to the

Work,” i.e., property insurance other than that required to be purchased by the owner

under the construction contract. Id.


       Given the plain meaning of the phrase “other property insurance applicable to the

Work,” as well as the lengthy period of time this standard AIA clause has been in use,

and its ultimate purpose; see Frost Nat’l Bank, 165 S.W.3d at 312 (contracts are

construed “from a utilitarian standpoint, bearing in mind the particular business activity,”

while avoiding unreasonable constructions), we conclude the parties intended claims

against HCB and its subcontractors (and resultantly any subrogation claims) be waived

if UT had already purchased, or later obtained property insurance, that otherwise

covered any damage to UT’s clubhouse resulting from fire and/or other perils. See

Trinity Universal Ins. Co., 75 S.W.3d at 13 (scope of a waiver provision in a standard

AIA contract is determined by whether the owner’s policy provided coverage for the

losses arising from the damage to the property).         Because AZIC’s policy covered

damages resulting from the destruction of UT’s property, we conclude that UT waived

all rights against Barker for damages caused by the fire, and, because AZIC’s rights

                                            12
were limited by UT’s rights, the trial court properly held that AZIC’s subrogation claim

was barred as a matter of law. See TX. C.C., Inc., 233 S.W.3d at 571 (“as long as

property insurance cover[s] the damages to the structure, . . . the waiver applies”). See

also Trinity Universal Ins. Co., 75 S.W.3d at 13.


       A. Third Party Beneficiary


       AZIC correctly points out that, generally, only parties to a contract have the right

to complain of its breach; Carson Energy v. Riverway Bank, 100 S.W.3d 591, 600

(Tex.App.—Texarkana 2003, pet. denied), and a presumption exists against conferring

third-party beneficiary status on non-contracting parties. S. Tex. Water Auth. v. Lomas,

223 S.W.3d 304, 306 (Tex. 2007). An exception exists, however, when one who is not

a party to the contract shows that the contract was actually made for his or her benefit

and that the contracting parties intended that he or she benefit by it. Id.


       Here, the inclusion of the word “sub-contractor” in the waiver clause indicates

that “a considerable depth of parties was contemplated and that the waiver was not

meant to be limited only to those who contracted directly with the owner and prime

contractor.” Temple Eastex, Inc., 848 S.W.2d at 730 (citing Crow-Williams, I v. Federal

Pac. Elec. Co., 683 S.W.2d 523, 524 (Tex.App.—Dallas 1984, no writ)). The language,

“[t]he Owner and Contractor waive all rights against each other and the Architect,

Architect’s consultants, separate contractors, 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 this Article or any other

property insurance applicable to the Work,” in the waiver clause reveals UT’s and


                                             13
HCB’s intent that the waiver provision extend to subcontractors. Id. Therefore, Barker,

as HCB’s subcontractor, is entitled to benefit from the waiver provision as a third-party

beneficiary and may rely on, and enforce, the waiver provision.


        B.      Indemnification


        AZIC contends the indemnification clause in Barker’s subcontract required

Barker to indemnify UT for losses it sustained due to the fire despite the waiver clause.

Under the general indemnity clause in Section 7(a) of the subcontract, Barker agreed to

indemnify UT against all claims, causes of action, and damages arising out of

performance of the subcontract. 5


        Because Barker’s subcontract defines the “Contract Documents” to include not

only the subcontract but also the UT/HCB contract, we cannot look at the contested

clauses in a vacuum but must read them in the context of the entire contracts. In re

Service Corp. Int’l, 355 S.W.3d at 661; Brent, 275 S.W.3d at 617.                         See Tribble &

Stephens Co. v. RGM Constructors, L.P., 154 S.W.3d 639, 663 (Tex.App.—Houston

[14th Dist.] 2004, pet. denied) (“When a document is incorporated into another by

reference, both instruments must be read and construed together.”)                             Further, in

construing their provisions, we must avoid an interpretation that renders any of the

contract provisions meaningless. In re Service Corp. Int’l, 355 S.W.3d at 661.




5
 The indemnification clause in Section 6 of the subcontract is not a general liability indemnification clause
but expressly pertains to claims or losses incurred due to delay in Barker’s performance of the
subcontract work as directed by HCB or in accordance with the subcontract’s terms due to inadequate
staffing; delay in preparation, procurement or purchasing; correction of defective work; sub-subcontractor
delay, labor issues, and insolvency. As such, we find Section 6 does not modify the waiver clause
pertaining to property insurance.

                                                     14
        The waiver clause is contained in Article 11 of the UT/HCB contract entitled

“Insurance and Bonds” and it details the insurance UT, as owner, is obligated to supply.

The property insurance provision requires UT to purchase and maintain a builder’s all-

risk policy in the full amount of the contract sum.               UT’s property insurance is also

required to include its interests as well as the interests of HCB and Barker. The waiver

clause expressly applies to damages caused by fire “to the extent covered by [the

builder’s risk policy required by the] Article or any other property insurance applicable to

the Work.” (Emphasis added).


        Section 7(a) of the subcontract entitled “Indemnification,” on the other hand, does

not reference the waiver clause or mention any specific type of damages or insurance to

which it might apply. Section 8 of the subcontract entitled “Insurance,” however, lists all

the types of insurance policies for which Barker is responsible for purchasing, i.e.,

compensation and third-party liability policies such as general liability insurance,

business auto liability insurance, and workers’ compensation insurance.                       The sole

reference to property insurance in Section 8 addresses UT’s responsibility under the

UT/HCB contract to purchase builder’s risk insurance and also contains a waiver of

subrogation that is similar to, and required by, the UT/HCB contract. 6


        A reasonable interpretation of the subcontract’s indemnification clause(s) that is

in harmony with UT’s property insurance procurement requirement and waiver clause is

that the subcontract’s general indemnification clause refers to compensation and liability

losses not covered by property insurance. This interpretation is consistent with the

6
 Barker’s waiver in Section 8(g) of the subcontract states: “Subcontractor waives its right of subrogation
against Owner, Contractor, . . . and any other party as required by the General Contract, for damages
caused by fire or other causes of loss to the extent covered by the builders risk insurance.”

                                                   15
parties’ intent, as manifested by the property insurance requirement and waiver clause,

i.e., to shift the risk of each other’s loss to the insurer to the extent the loss is covered

by the owner’s property insurance. To the extent the loss is for compensation and

liability to third parties, the indemnification clause shifts the loss from UT, as owner of

the property, to Barker. Moreover, in light of Texas’s history of enforcement of the

waiver clause; TX C.C., Inc., 233 S.W.3d at 571; Walker Eng’g, Inc., 102 S.W.3d at

843-44; Trinity Universal Ins. Co., 75 S.W.3d at 841-43; Temple Eastex, Inc., 848

S.W.2d at 730-31, which has been used extensively in the construction industry

nationwide for many years, a reasonable person would assume that if the parties

wished to nullify it, they would have amended the text of the waiver itself, not included it

at all, or included a statement of nullification that referred to it specifically in either or

both contracts.


       Accordingly, we hold that the indemnification clause(s) in Barker’s subcontract do

not modify, or conflict with, the waiver clause. As a result, AZIC’s subrogation claims

against Barker are barred as a matter of law by Barker’s affirmative defense of waiver of

subrogation.      The trial court did not err by granting Barker’s traditional motion for

summary judgment on AZIC’s subrogation claim. AZIC’s first issue is overruled.


III. Business Interruption Losses


       By its second issue, AZIC asserts that UT’s business interruption damages were

not subject to the waiver clause because the damages were not within the scope of the

“Work” and its policy does not constitute “property insurance.” As a corollary, by its




                                             16
fourth issue, AZIC asserts that neither it nor UT waived their subrogation rights as

applied to this case. We disagree.


        The waiver clause waived “all rights . . . for damages caused by fire or other

perils to the extent covered by property insurance . . . applicable to the Work.” Texas

courts recognize that a majority of jurisdictions interpreting this waiver clause have held

that waived claims are not defined by what property is harmed, but by the source of any

insurance proceeds paying for the loss. TX. C.C., Inc., 233 S.W.3d at 571. 7                    “As long

as [the owner’s] property insurance cover[s] the damages to the structure, . . . the

waiver applies.” Id.        See Walker Eng’g, 102 S.W.3d at 844 (rejecting an insurer’s

contention that the property insurance policy was not applicable to “the Work”, the court

held that “to the extent the property damage at issue was covered by [the plaintiff’s]

insurance, [the plaintiff] waived its right to sue [the contractor”); Trinity Universal Ins.

Co., 75 S.W.3d at 13, 15 (court held the scope of the waiver clause in the standard AIA

contract was determined by whether the owner’s policy provided coverage for losses

arising from damage to the property, not whether the injury was to “Work” or “non-

Work.”) Neither party disputes the fact that UT’s business interruption damages were

caused by the fire and AZIC’s policy covered those damages. Thus, we find AZIC’s

7
 Under the majority approach, no distinction is drawn between “Work” and “non-Work,” but instead, the
scope of the waiver is limited to the proceeds of the insurance provided under the contract between the
owner and contractor whether the property owner chooses to rely on existing insurance in place at the
time of construction or purchase insurance after entering into a construction contract. See TX. C.C., Inc.,
233 S.W.3d at 564 (owner acquired policy after entering into construction contract); Trinity Universal Ins.
Co., 75 S.W.3d at 8 (owner acquired policy before entering into construction contract). Moreover, that,
here, there were two property insurance policies—AZIC’s policy, entered into prior to the UT/HCB
contract, and Fireman Fund’s policy entered into after the construction contract was consummated—is of
no moment. See Walker Eng’g, 102 S.W.3d at 838-844. In Walker, although the owner had purchased a
separate builder’s risk policy insuring the “Work” in accordance with the contract in addition to existing
property insurance, the scope of the waiver of subrogation was not limited to the builder’s risk policy
purchased pursuant to the contract. Id. at 844. By agreeing to the waiver of subrogation clause, the
parties agreed that they would all be “protected from property loss under the owner’s insurance,”
regardless whether it was the policy required by the contract or other property insurance. Id.

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policy was “applicable” to the Project at the address it insured, 2200 University Club

Drive, Austin, Texas.


       We also find that UT’s business interruption losses were a component of the loss

suffered by UT due to the fire and AZIC’s business interruption coverage was a part of

UT’s “property insurance” coverage on the clubhouse. The interruption of an owner’s

business is a proper element of property damages. See Goose Creek Consol. Indep.

Sch. Dist. v. Jarrar’s Plumbing, Inc., 74 S.W.3d 486, 496-97 (Tex.App.—Texarkana

2002, pet. denied) (“[E]ven if a plaintiff is not physically deprived of the property, if the

injury causes the property to be unfit for the purpose for which the plaintiff had used or

had intended to use it, loss of use may be an available remedy.”) See also Berry

Contracting, Inc. v. Coastal States Petrochemical Co., 635 S.W.2d 759, 761

(Tex.App.—Corpus Christi 1982, writ ref’d n.r.e.). Further, AZIC’s Business Income

Coverage Form is listed under the “PROPERTY PORTFOLIO PROTECTION FORMS

AND ENDORSEMENTS” of AZIC’s policy and Commercial Property Coverage Part

Declarations for Premises #1, i.e., UT’s clubhouse. The Business Income Coverage

Form also insured UT’s loss from business interruption only if the loss was “caused by

direct physical loss or damages to property at a ‘premises.’” (Emphasis added). Thus,

although AZIC’s policy contained both general liability coverage and property coverage,

we find that AZIC’s business income coverage represented property insurance for

losses caused by fire damage to UT’s clubhouse.


       Our finding is compatible with the notion that property insurance policies are

“intended solely to indemnify the insured for his actual monetary loss by the occurrence

of the disaster”; Highlands Ins. Co. v. The City of Galveston, 721 S.W.2d 469, 471

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(Tex.App.—Houston [14th Dist.] 1986, writ ref’d n.r.e.) (quoting 4 J. Appleman,

Insurance Law & Practice § 2107 (rev. 1969)), while liability policies “insure against loss

arising out of legal liability, usually based upon the assured’s negligence.”           Id.

(Emphasis added). Furthermore, “[p]roperty loss coverage is typically under a first-party

insurance policy [as here] while tort liability coverage is under a third-party policy.”

Warrilow v. Norrell, No. 13-88-437-CV, 1990 Tex. App. LEXIS 863, at *2-5 (Tex.App.—

Corpus Christi 2009, writ denied).


      In discussing the differences between property and liability insurance, the

Warrilow court stated the following:


      Coverage in a property policy is commonly provided by reference to
      causation, such as ‘loss caused by . . .” certain enumerated forces.
      [Citation omitted]. It is precisely these physical forces that bring about the
      loss. [Citation omitted]. Frequently, as in the cases cited to us by
      Warrilow, property losses occur from more than one legally significant
      physical force: poultry house destroyed by wind and snow in McKillip;
      home rendered uninhabitable by contamination and an exterminator’s
      negligence in Auten; and building damaged by rain and wind in
      Matchoolian. In Texas, if one force is covered and one force is excluded,
      the insured must show that the property damage was caused solely by the
      insured force, or he must separate the damage caused by the insured
      peril from that caused by the excluded peril. [Citation omitted]. The
      coverage analysis in the property insurance context examines the
      relationship between perils, those that are covered under the policy and
      those that are excluded, focusing on the exclusions that limit loss
      coverage. [Citation omitted].

Id. at *3. (Emphasis supplied).


      Given the plain meaning of the phrase “other property insurance applicable to the

Work,” we conclude the parties intended subrogation claims to be waived if UT

obtained, or had existing, property insurance that covered any damages to the

clubhouse resulting from fire and/or other perils.      Because AZIC’s policy covered

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damages resulting from the destruction of the clubhouse by fire, we conclude UT

waived all rights against Barker for damages caused by the fire and, because AZIC’s

rights were limited to UT’s rights, AZIC’s subrogation claim is barred as a matter of law.

See TX. C.C., Inc., 233 S.W.3d at 571.          Issue two is overruled and issue four is

pretermitted. See Tex. R. App. P. 47.1.


IV. UT’s Uninsured Losses


      By its third issue, AZIC next contends that, even if the waiver clause applies to

the $500,000 in damages reimbursed by AZIC, the waiver clause does not waive AZIC’s

claim for UT’s uninsured losses or deductible.


      AZIC’s policy requires that, “[i]f any person or organization to or for whom we

make payment under this Commercial Property Coverage Part has rights to recover

damages from another, those rights are transferred to us to the extent of our payment.”

As a general rule, “’subrogation gives indemnity and no more.’” American Centennial

Ins. Co. v. Canal Ins. Co., 843 S.W.2d 480, 485 (Tex. 1992) (Hecht, J., concurring)

(quoting Phipps v. Fuqua, 32 S.W.2d 660, 663 (Tex.Civ.App.—Amarillo 1930, writ

ref’d)). See Interfirst Bank Dallas v. United States Fidelity & Guar. Co., 774 S.W.2d

391, 399 (Tex.App.—Dallas 1989, writ denied) (subrogee limited to recovery of amount

paid); McAllen State Bank v. Linbeck Constr. Corp., 695 S.W.2d 10, 24 n.5 (Tex.App.—

Corpus Christi 1985, writ ref’d n.r.e.) (under both law and the parties’ agreement,

subrogee subrogated only to the extent of its payment).


      Thus, AZIC’s subrogation rights are limited to the amount of UT’s losses paid by

AZIC up to the policy limits. That AZIC’s policy makes provisions for a distribution to UT

                                           20
if there is a recovery as a result of subrogation proceedings arising out of a covered loss

does not confer on AZIC the ability to expand its subrogation rights. See McAllen State

Bank, 695 S.W.2d at 24 n.5. There is no evidence of record that UT was a party to the

action below, assigned any cause of action, or paid any deductible to AZIC. To the

contrary, AZIC’s Third Amended Original Petition expressly states that AZIC “does not

represent [UT] and is not authorized to accept service, pleadings or discovery on its

behalf.” AZIC’s third issue is overruled.


IV. Breach of Contract


       Finally, by its fifth issue, AZIC asserts the trial court erred by disposing of its

claims for breach of contract. Prior to the court’s order granting summary judgment in

Barker’s favor, AZIC amended its complaint to assert claims for breach of contract, i.e.,

Barker breached its subcontract with HCB by failing to indemnify UT, and Barker did not

amend its summary judgment motion to include those “newly” asserted claims. This

failure to amend, however, is not fatal to Barker’s position that the trial court had the

authority to grant summary judgment as to those claims. “In a nod to reality, summary

judgment may be properly granted on later-pleaded causes of action if the grounds

actually asserted show that the plaintiff could not recover on the later-pleaded cause of

action.” See Owens v. McLeroy, Litzler, Rutherford, Bauer & Friday, P.C., 235 S.W.3d

388, 391 (Tex.App.—Texarkana 2007, no pet.) (citing Ortiz v. Collins, 203 S.W.3d 152,

162 (Tex.App.—Houston [14th Dist.] 2006, no pet.)). “Even when a later-filed claim is

involved, if the motion for summary judgment is sufficiently broad to encompass that

claim, then the movant need not amend his motion.” Zarzana v. Ashley, 218 S.W.3d

152, 161 (Tex.App.—Houston [14th Dist.] 2007, no pet.). Based on the arguments set

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forth hereinabove, Barker’s affirmative defense of waiver clearly applies to all AZIC’s

theories of recovery, including its breach of contract claim asserting UT’s rights, if any,

to indemnity under the subcontract. AZIC’s fifth issue is overruled.


                                       Conclusion


       The trial court’s judgment is affirmed.




                                                  Patrick A. Pirtle
                                                      Justice




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