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.