United States District Court, N.D. California
FINDINGS OF FACT AND CONCLUSIONS OF LAW
William H. Orrick United States District Judge
a bench trial on June 5 and 6, 2017 on plaintiff Philadelphia
Indemnity Insurance Company
(“Philadelphia”)'s equitable subrogation
claim against Dan Johnson Construction, Inc. dba Danco
Builders (“DANCO”) arising out of a fire that
occurred on the balcony of Apartment F at the Willow Creek
Apartments, in Willow Creek, California, in December of 2013.
Philadelphia asserted that DANCO, the general contractor that
built the Willow Creek Apartments, negligently installed a
highly flammable Green Deck material on the balconies of the
apartments and that the Green Deck on the balcony of
Apartment F caused the fire to spread, substantially
increasing the property damage resulting from the fire. DANCO
denies liability. Philadelphia, the insurer, paid
approximately $664, 000 for fire damage repair costs and lost
rent following the fire. In this order I issue my findings of
fact and conclusions of law, determining that Philadelphia is
not entitled to equitable subrogation against DANCO.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1, 2006, DANCO and Willow Creek Family Partnership executed a
construction contract for DANCO to act as general contractor
for the construction of an apartment project near Willow
Creek, California (the “Willow Creek
Apartments”). UF 1, 7. The contract price of
construction was around $3.6 million. UF 7, 45. The
International Fire Code's Wildland Urban Interface Code
(“WUI”) was not adopted by Humboldt County at the
time the Willow Creek Apartments were planned and
constructed. UF 33.
Roberts dba Pacific West Architecture was hired as the
architect for the Willow Creek project and drafted the
architectural plans. UF 4-5. Per the plans, the apartment
complex was to consist of four buildings, each with six
units. UF 46. Each building was to have two second-story
units, each with a deck around 100 square feet. UF 47. It was
DANCO's general standard practice to follow a
project's plans and specifications in completing a
project. UF 8.
plans for the Willow Creek Apartments had a conflict in that
they called for both UltraGuard PVC and a two-inch
lightweight concrete to be used for the second-story decks.
UF 12-13, 50. DANCO did not issue a written request for
information to the architect or structural engineer to clear
up this conflict, UF 27, and there is no evidence that DANCO
and the structural engineer discussed what decking material
to use for the second floor balconies. UF 10.
September 25, 2006, the Humboldt County Building Inspection
Department approved using Procell PVC deck boards for the
decking material on the second floor balconies at Willow
Creek. UF 14. DANCO never sent UltraGuard PVC specifications
or installation instructions to the building department for
approval. UF 28. There is no evidence that DANCO submitted a
written change order, signed by the owner, architect, or
Department of Agriculture, regarding the material to use for
second floor decking. UF 9, 31. The only change order signed
by the architect in the DANCO job file related to additional
fire sprinklers in the bathroom and no documents were removed
from the DANCO job file prior to production in this
litigation. UF 11.
building the Willow Creek Apartments, DANCO performed some
work itself and subcontracted other work out. UF 3. In 2007,
DANCO installed, or gave one of its subcontractors approval
to install, polyethylene deck boards (“Green
Deck”) on the second-floor balconies instead of the
Procell PVC (approved by Humboldt County) or the UltraGuard
PVC or lightweight concrete (specified in the plans). UF 15,
52. The manufacturer and origin of the Green Deck is unknown.
UF 30. Green Deck was installed on all the second floor
balconies at the Willow Creek Apartments. UF 29.
26, 2008, there was a fire on the second-floor balcony of
Apartment F at the Willow Creek Apartments. UF 16, 55. The
fire was caused by a lit cigarette, which caught fire to
materials on the Green Deck and burned the vinyl siding of
the balcony wall. UF 18-19, 53. It was first suppressed by a
passerby with a water hose. UF 20. An alarm for the fire went
off at approximately 11:10 p.m. and the fire department
arrived about eight minutes after the alarm. UF 17. The fire
department quickly contained the fire and there were no
injuries. UF 54. The fire caused $13, 009.92 in damage,
primarily to the vinyl siding, which DANCO repaired. UF 21.
There was no significant damage to the Green Deck. UF 54.
second fire occurred on the second-floor balcony of Apartment
F on December 16, 2013. UF 22. This fire was also caused by a
lit cigarette. UF 25. The tenant in Apartment F negligently
discarded a lit cigarette in an ashtray and dumped the
ashtray into a paper bag that contained combustible debris on
the deck. UF 25. The fire was first reported by a driver on
Highway 96, approximately 400 yards away from the Willow
Creek Apartments around 11:59 a.m. UF 26, 56. The fire
department arrived at 12:07 p.m., eight minutes later. UF 56.
Only 3-4% of the Green Deck burned through during the 2013
fire, concentrated in the northwest corner of the deck. UF
bid on and was awarded the contract to repair the damage from
the 2013 fire. UF 35. It made repairs of like kind and
quality to the damaged portions of the building. UF 34.
Plaintiff Philadelphia is a corporation authorized to conduct
insurance business in California. UF 38. It insured the
Willow Creek Apartments at the time of the 2013 fire. UF 39.
Philadelphia paid $581, 500.00 for fire repair costs. UF 40.
In addition to being the general contractor of the Willow
Creek Apartments, DANCO was the property manager of the
buildings at the time of the fire. UF 42. It calculated the
lost rent and provided its lost rent figures to
Philadelphia's adjuster for consideration. UF 43-44.
Philadelphia paid $82, 552.49 for lost rent due to fire
damage. UF 41.
Additional Findings of Fact
The 2013 fire burned for approximately 12-17 minutes before
the fire department ...