Carrier Cannot Subrogate Against One Who is Insured by the Same Carrier

The Reeds’ teenage daughter woke up in the middle of the night to find her bedroom was on fire. The Reeds’ carrier, Liberty Mutual (“Liberty”), sent investigators to the scene, who determined the fire began at an electric-powered water filter in an aquarium. Liberty put the manufacturer of the filter on notice and gave them an opportunity to inspect the scene and evidence. Coincidentally, the water filter manufacturer was also insured by Liberty, subject to a $250,000 deductible. A subrogation action was brought in the name of the Reeds against the manufacturer, Aqueon. Following discovery, Aqueon moved to dismiss the action, arguing that the “anti-subrogation rule” barred the action. The court granted the motion, with one proviso.


Appellate Court Affirms Dismissal of Subrogation Suit Where Truck Had Been "Modified" Prior to Fire

Many subrogation matters involve the failure of a product which causes a fire.  In order to hold a manufacturer or distributor liable in products liability, the subrogating carrier must show, among other things, that the product was defective at the time it was in the hands of the defendant and that the product was not altered or modified in any significant way prior to the fire’s occurrence.


Appellate Court Allows Subrogation Suit Against City of Ithaca to Proceed

A water meter ruptured in the basement of State Farm’s insured, a dental office. The ruptured meter caused water damage to property, for which State Farm paid. State Farm brought a subrogation action against the City of Ithaca alleging that this loss was caused by the City’s negligent operation of its water system. Defendant Ithaca moved for summary judgment, asking the Court to dismiss the complaint because there was no duty for the City to inspect the water meter. State Farm responded by arguing that its theory wasn’t that Ithaca was supposed to inspect this water meter; rather, State Farm’s theory of liability is that there was actual negligence on the part of the City which caused the meter to rupture.


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