Published on: July 26, 2016

Unit owners in a condominium complex could sue a fellow unit owner for starting a fire despite provisions in the trust agreement stating that the owners were responsible for insuring their property and that any insurance they obtained had to waive subrogation against other unit owners, a Massachusetts Superior Court judge has ruled.

The defendant who started the fire argued that the Condominium Trust’s insurance resolution meant that the plaintiffs had each agreed individually to insure their unit and that the agreement, read in tandem with the subrogation waiver requirement, meant that the other unit owners had waived their right to sue him even if they did not purchase insurance.

Judge Dennis J. Curran disagreed.

“There is no basis to conclude that the requirement to waive subrogation if insurance is procured necessarily precludes unit owners from suing each other if individual losses are incurred, but not covered by insurance,” Judge Curran wrote, granting summary judgment for the plaintiffs. “No language in the Insurance Resolution, the condominium trust agreement, or in G.L.c. 183A (the Massachusetts law governing condominium arrangements) indicates otherwise.”

The judge did, however, grant summary judgment for the defendant on emotional distress claims brought by some of the plaintiffs.

On February 1, 2014, a seven-alarm fire caused catastrophic damage to a seven-story condo complex in Boston.

The blaze allegedly started when one unit owner left a smoldering marijuana-filled glass pipe next to an open window, newspaper clippings and cloth couch.

The plaintiffs in the case were the owners of all the other units in the complex.

The Condominium had adopted an “insurance resolution” (which is a standard resolution offered by MEEB as part of the MEEB Resolution Program)  stating that each unit owner was “solely responsible” for obtaining insurance coverage to insure their units, personal effects and contents, unit improvements, and coverage for the condo trust’s deductible.

The provision also said unit owners were responsible for insuring for liability and any other coverage they might desire.

An additional provision in the trust agreement stated that any insurance obtained by unit owners must waive the right of subrogation against other unit owners.

The record is unclear whether the plaintiffs obtained coverage as the insurance resolution suggested, if not outright required, they do.

In any event, the plaintiffs brought negligence claims against the unit owner, seeking compensation for their losses, including damages for emotional distress.

The unit owner responded by moving for summary judgment.

Addressing the defendant’s motion, Judge Curran noted that the “essence of [his] argument” was that the plaintiffs — as unit owners — either had to or were strongly encouraged to buy insurance to cover personal property damage, and that such insurance, had the plaintiffs obtained it, would have waived subrogation rights against other unit owners like himself.

“The defendant is correct to the extent that a plain reading of the Insurance Resolution is a message to all unit owners that if they do not insure their personal property and other individual losses related to their own unit, they do so at their own peril,” Judge Curran said. “However, this interpretation does not foreclose the plaintiffs’ claims as a matter of law.”

Though the plaintiffs took a risk by not obtaining insurance, they still have the right to pursue compensation directly from the defendant for financial losses that his alleged negligence caused, the judge said.  The subrogation clause did not relate to direct claims for negligence.

At the same time, Judge Curran granted summary judgment for defendant on the plaintiffs’ emotional distress claims, finding a lack of any evidentiary basis to support such claims.

The Decision highlights the importance of condominium insurance provisions and insurance resolutions.  It is definitely worth having the insurance provisions reviewed or exploring MEEB’s Resolution Program.

For a copy of the Koch, et al. v. Siracusa, et al. Decision [click here].