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Commercial Property |
Subrogation |
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Faulty Wiring |
Two-Year Limitation |
A fire damaged property
owned by Metamorphosis Salon (Salon) insured by United Fire Group (United) on
March 6, 2006. Neither Salon nor United knew what caused the fire. On March 27,
2006, a fire investigator informed United that faulty wiring in an electrical
exit sign caused the fire. Powers Electric, Inc. (Powers) had installed the
exit sign. United made a series of payments to Salon to compensate it for its
losses. Salon cashed the payments between April 24 and August 7, 2006.
United filed a subrogation
claim against Powers on March 11, 2008, claiming that Powers negligently
installed the exit sign and that this negligence caused the fire. Powers moved
for summary judgment, stating that United was barred because it was not filed
within the applicable statute of limitations. Powers argued that the statute
began to run on the date of the fire. United countered, arguing that it began
to run either on the date it received the fire investigator's report that
determined the cause or the dates that Salon cashed the insurance payments. The
trial court granted Powers' motion for summary judgment, agreeing that the
statute of limitations began to run on the date of the fire and that United was
barred because it did not file its subrogation claim until more than two years
after the date. United appealed.
The Colorado Court of
Appeals determined that the fire that damaged Salon's premises was the
"physical manifestation of the defect" in Powers' installation of the
exit sign that had faulty wiring. For the purposes of pinpointing the two-year
statute of limitations that applied to United's subrogation claim against
Powers based on its alleged negligent installation, the limitations period
began to run on the date of the fire, not on the date of the fire
investigator's report or when Salon cashed the checks. It held that the fire
was a natural and material thing that was the perceptible, outward, and visible
expression of defective wiring in the exit sign. In other words, the damage
served as the initial discovery of the defect and United stepped into Salon's
shoes to recover its losses and was required to use Salon's accrual date, being
the date of the fire.
The appellate court upheld
the trial court's decision.
Colorado Court of Appeals,
Div. VII. United Fire Group, as subrogee of Metamorphosis Salon,
Plaintiff-Appellant, v. Powers Electric, Inc. and Gary J. Powers d/b/a Powers
Electric, Inc., Defendants-Appellees. No. 09CA1869. June 24, 2010. 240 P.3d 569