A federal appeals court has ruled that subcontractors enjoy the same protection from lawsuits that contractors have under Maryland law.
The 4th U.S. Circuit Court of Appeals on Tuesday upheld a lower court’s ruling that a sprinkler company could not be held liable for sprinklers it installed in a Timonium hotel in 1982, after the sprinklers burst four years ago and caused $1.6 million in damages.
A three-judge panel of the court ruled that “the plain meaning of the statutory term ‘contractor’ encompasses subcontractors,” thus giving subcontractors immunity from any lawsuits filed 10 years after work is completed.
“This ruling settles one aspect of Maryland law that has never been settled before,” said Jeffrey Wothers, an attorney for Hartford Insurance Co., which covered the hotel’s losses. “Before this, there was confusion.”
Hartford had sued American Automatic Sprinkler Co. for the sprinkler system that it installed in a Timonium Holiday Inn in 1982. When the hotel upgraded to a Holiday Inn Select in 1996, it went back to American Automatic Sprinkler to make required modifications to the system.
Two weeks after those modifications were made, a sprinkler coupling in a hotel stairwell broke, flooding several areas and damaging the hotel’s guestrooms, stairwells, atrium and facade.
Workers from the sprinkler company who came to repair the system traced the problem to a broken standpipe, which was installed in 1982 but not touched in the 1996 modifications. The workers also took the broken coupling, which was later thrown out.
Wothers argued that most businesses, including subcontractors like the sprinkler company, can be sued for 20 years after a job is completed under Maryland’s statute of repose. The legislature shortened the time limit to 10 years for architects, engineers and contractors on a project.
Wothers said that Maryland is the only state to set a 10-year limit on lawsuits against architects, engineers and contractors, and the case turned on whether subcontractors should be put in a special class.
A U.S. District Court judge in Baltimore said they should be included with contractors, and rejected Hartford’s claim against the sprinkler company. The appeals court agreed Tuesday.
“This ruling said that the legislature had always meant to include subcontractors,” Wothers said. “We argued that they really meant contractors and only contractors.”
Lawyers for American Automatic Sprinkler could not be reached for comment.
Both courts also rejected Hartford’s claim that the sprinkler company had destroyed evidence by throwing out the broken parts. The appeals court said the parts were irrelevant to the insurance company’s claim that the work done in 1996 had somehow affected parts that were installed in 1982.