In a case involving a subrogation action, a trial court recently held that an insurance carrier is barred from maintaining a subrogation claim on behalf of a unit owner against a condominium association if the association’s by-laws compel the waiver of such a claim. Universal North American Insurance v. Bridgepointe Condominium Association, - N.J. Super. – (Law Div. 2018).
Thomas Laspada was a unit owner and member of Bridgepointe Condominium Association, Inc. He obtained homeowner’s insurance through plaintiff, Universal North American Insurance Company.
In December 2014, a fire began at the unit next door to Laspada’s unit. As a result of the fire, his unit sustained damages and Universal paid $220,000.00 to Laspada. Universal then filed a subrogation action against various entities including the association alleging that the association failed to properly maintain the premises.
The association by-laws contained language that barred subrogation claims. Universal countered that the association’s master deed contradicted the by-laws and that the mater deed governed the subrogation action. The trial court disagreed.
Under the Condominium Act, an association’s board of directors is required to maintain a policy of property insurance. A unit owner is presumed to agree to the condominium association’s master deed and by-laws.
The court held that Laspada knew of the waiver of subrogation provision in the by-laws and Universal knew or should have known about that waiver before it sold Laspada insurance. The court noted that Universal could no assert a right that Laspada does not have because the rights of a subrogated insurer can rise no higher than the rights of its insured.
The court barred Universal’s subrogation claim. It found no relevance to the master deed’s absence of a restriction on subrogation. It found that the by-laws were not an unenforceable adhesion contract because there was no evidence that Laspada was forced to purchase a condominium unit.