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Insurance covenant in storage contract barred subrogated claim against warehouse operator and its third-party contractors.
The appellant entered into a contract with the respondent for the storage of vaccines in a temperature-controlled warehouse.
The contract required the appellant to maintain all-risk property insurance.
After the cooling system malfunctioned and destroyed the vaccines, the appellant's insurer brought a subrogated action against the respondent and other contractors involved in the warehouse's operations.
The Court of Appeal upheld the summary judgment dismissing the action, finding that the insurance covenant barred the claim against the respondent (except for a $100,000 negligence carve-out) and that the other contractors were third-party beneficiaries of this protection.
Covenant to insure barred negligence claims and justified summary judgment dismissal.
The plaintiff pharmaceutical company stored vaccines with a logistics provider under a master services agreement requiring the plaintiff to obtain all‑risk property insurance covering the stored goods and naming the warehouse operator as an additional insured.
After a refrigeration malfunction allegedly rendered the vaccines unsellable, the plaintiff commenced a subrogated action against the warehouse operator and various contractors responsible for the cooling and monitoring system.
The defendants moved for summary judgment dismissing the claim.
The court held that the covenant to insure constituted an allocation of risk whereby the plaintiff assumed the risk of loss to the goods and thereby barred tort claims against the warehouse operator for that loss.
The court further held that the covenant extended to contractors and related parties with an identity of interest in the performance of the contract.
Summary judgment was granted dismissing the action and all cross‑claims.
