Lexington Ins. Co. v. Entrex Comm. Servs.

702 	275 NebRASkA RePORTS
due to its jurisdictional conclusion, the Court of Appeals did
not reach any of James’ assignments of error, and we conclude
that under these circumstances, it is appropriate for the Court of
Appeals to consider James’ arguments in the first instance.40
CONCLUSION
based on the foregoing reasoning, we reverse the decision
of the Court of Appeals, and remand the cause to the Court of
Appeals for consideration of the merits of James’ appeal.
R eveRsed and ReManded foR
fuRtheR pRoceedings .
40 See In re Interest of Devin W. et al., 270 Neb. 640, 707 N.W.2d 758
(2005).
lexington insuRance coMpany et al .,
appellants , v . entRex coMMunication
seRvices , inc . et al ., appellees .
749 N.W.2d 124
Filed May 16, 2008. 	No. S-06-1452.
1. Summary Judgment. Summary judgment is proper when the pleadings and
evidence admitted at the hearing disclose no genuine issue regarding any material
fact or the ultimate inferences that may be drawn from those facts and that the
moving party is entitled to judgment as a matter of law.
2. Summary Judgment: Appeal and Error. In reviewing a summary judgment, an
appellate court views the evidence in the light most favorable to the party against
whom the judgment is granted and gives such party the benefit of all reasonable
inferences deducible from the evidence.
3. Contracts. The meaning of a contract is a question of law.
4. Contracts: Public Policy. The determination of whether a contract violates public
policy is a question of law.
5. Judgments: Appeal and Error. When reviewing questions of law, an appellate
court has an obligation to resolve the questions independently of the conclusions
reached by the trial court.
6. Contracts: Subrogation: Waiver: Negligence. A contractual waiver of subroga-
tion is enforceable against gross negligence claims.
7. Contracts. A contract written in clear and unambiguous language is not subject
to interpretation or construction and must be enforced according to its terms.
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:54 AM CST

8. Contracts: Words and Phrases. A contract is ambiguous when a word, phrase,
or provision in the contract has, or is susceptible of, at least two reasonable but
conflicting interpretations or meanings.
9. Contracts. A contract must receive a reasonable construction, and a court must
construe it as a whole and, if possible, give effect to every part of the contract.
10. ____. When there is a question about the meaning of the contract’s language, the
contract will be construed against the party preparing it.
Appeal from the District Court for Douglas County: thoMas
a. otepka, Judge. Affirmed.
J. Joseph McQuillan, of Walentine, O’Toole, McQuillan &
gordon, and Jeffrey R. Learned, Charles R. Tuffley, and Alyssa
J. endelman, of grotefeld & Denenberg, L.L.C., for appellants.
William R. Johnson and Craig F. Martin, of Lamson, Dugan
& Murray, L.L.P., and Raymond e. Walden for appellee entrex
Communication Services, Inc.
Thomas A. grennan and Francie C. Riedmann, of gross &
Welch, P.C., L.L.O., for appellee Communication Structures &
Services, Inc.
Dean Suing, of katskee, Henatch & Suing, for appellee
Dudutis erection & Maintenance, Inc.
heavican , 	c.J., 	WRight , 	connolly , 	geRRaRd , 	stephan ,
M ccoRMack , and M illeR-leRMan , JJ.
connolly , J.
Hearst-Argyle Properties, Inc., and the Hearst Corporation
(collectively Hearst) owned a television broadcast tower in
Omaha, Nebraska. In February 2003, Hearst contracted with
entrex Communication Services, Inc. (entrex), to upgrade the
antenna on the tower. After the tower collapsed in July 2003,
Hearst sued entrex. Hearst alleged that entrex’s gross negli-
gence caused the collapse. entrex moved for summary judg-
ment. entrex claimed that a waiver of subrogation in the par-
ties’ agreement barred Hearst’s claims to the extent insurance
proceeds covered the damages. The district court granted the
motion and dismissed Hearst’s claims for damages that had
been compensated by insurance. Hearst’s insurer appeals.
LexINgTON INS. CO. v. eNTRex COMM. SeRVS. 	703
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704 	275 NebRASkA RePORTS
This appeal presents two issues. The first is whether enforc-
ing a waiver of subrogation provision to bar a gross negligence
claim violates public policy. The second is whether the waiver
of subrogation is limited to damages to “the Work” (as defined
in the agreement), or whether it also applies to damages to
“non-Work” property. We conclude that the waiver of subroga-
tion is effective against claims for gross negligence. We further
conclude that the waiver applies to damages to both the Work
and the non-Work property. We affirm.
I. bACkgROUND
1. factual backgRound
The facts are not in dispute. Hearst owns and operates a tele-
vision station in Omaha. In February 2003, Hearst contracted
with entrex to modify a 1,234-foot television broadcast tower
by removing the analog antenna and replacing it with a digital
antenna. entrex subcontracted with Communication Structures
& Services, Inc., which hired Dudutis erection & Maintenance,
Inc., to assist (hereinafter collectively entrex).
The parties’ contract required Hearst to obtain property
insurance to cover “the Project” (as defined in the agreement).
Instead of obtaining a specific property insurance policy to
cover the Project, Hearst relied upon existing “all-risk” property
insurance policies. These policies were issued by Lexington
Insurance Company; Allied World Assurance Company, Ltd.;
CNA 	Insurance 	Company; 	everest 	Reinsurance 	(bermuda)
Limited; and Firemen’s Fund Insurance Company (collectively
Lexington). These all-risk policies collectively provided Hearst
with $25 million in coverage.
The tower collapsed in July 2003, allegedly causing over
$6 million in damages to the antenna, tower, transmission
building, and personal property in the transmission building.
Lexington compensated Hearst for its losses, less a $250,000
deductible. Hearst sued entrex, alleging that the tower collapse
occurred because of entrex’s gross negligence.
entrex moved for partial summary judgment. It argued that
a waiver of subrogation clause in the parties’ agreement barred
Hearst’s claims against entrex to the extent insurance proceeds
were available to cover the damages. Hearst responded with

two arguments: (1) The waiver of subrogation was unenforce-
able because Hearst had alleged gross negligence and enforcing
a waiver of subrogation against a claim for gross negligence
would violate public policy and (2) the waiver barred only
claims for damage to the Work (as defined in the agreement),
and thus, entrex’s motion should be denied as to damage claims
involving non-Work property.
Regarding Hearst’s first argument, the court concluded that
enforcing a waiver of subrogation to bar a claim for gross neg-
ligence did not violate public policy. In deciding the second
argument, the court concluded that Hearst had waived all claims
covered by its all-risk insurance policies, including damages
to the Work and non-Work property. The district court granted
entrex’s motion and dismissed Hearst’s claims for damages
covered by insurance.
Hearst appealed, but the Nebraska Court of Appeals dis-
missed the appeal for lack of jurisdiction. It determined that
although the court’s order disposed of all subrogation claims by
Lexington, Hearst’s claims for uninsured losses remained pend-
ing. Thereafter, Lexington was substituted as the named plain-
tiff in this lawsuit and Hearst’s claims were dismissed without
prejudice and refiled under a different case number. The court
then entered a final order (consistent with its earlier order),
granting entrex’s motion for summary judgment on Lexington’s
claims. Lexington appeals.
2. R elevant contRact pRovisions
The contract between Hearst and entrex was an American
Institute of Architects (AIA) standard form of agreement, docu-
ment A101-1997. The agreement incorporated another AIA
standard form of general conditions of the contract for con-
struction, document A201-1997.
Pivotal to our analysis are two words used in the parties’
agreement—“Work” and “Project.” Subparagraph 1.1.3 of the
agreement defined “Work” as “the construction and services
required by the Contract Documents, whether completed or par-
tially completed, and includes all other labor, materials, equip-
ment and services provided or to be provided by the Contractor
to fulfill the Contractor’s obligations.” Simply put, the Work
LexINgTON INS. CO. v. eNTRex COMM. SeRVS. 	705
Cite as 275 Neb. 702

706 	275 NebRASkA RePORTS
is the construction and services to be provided by the contrac-
tor to fulfill the contractor’s obligations under the contract.
Subparagraph 1.1.3 also explains that the Work may constitute
the whole or a part of the “Project.”
Subparagraph 1.1.4 of the agreement defines the “Project” as
“the total construction of which the Work performed under the
Contract Documents may be the whole or a part and which may
include construction by the Owner or by separate contractors.”
Stated more simply, the Project incorporates all the construction
to be done, whether it be by the contractor, the owner, or other
contractors. Here, the only construction being done was that by
entrex, so the terms “Work” and “Project” are interchangeable.
(a) entrex’s Obligations Under the Agreement
Article 11 of the agreement allocated insurance responsi-
bilities among the parties. Subparagraph 11.1.1 of that article
required entrex, as the contractor, to obtain liability insurance
covering claims for damages to non-Work property:
The Contractor shall purchase . . . and maintain . . . such
insurance as will protect the Contractor from claims set
forth below which may arise out of or result from the
Contractor’s operations under the Contract and for which
the Contractor may be legally liable . . . .
. . . .
.5 claims for damages, other than to the Work itself,
because of injury to or destruction of tangible property,
including loss of use resulting therefrom[.]
(emphasis supplied.)
(b) Hearst’s Obligations Under the Agreement
Subparagraph 11.4.1 of the agreement required Hearst to
obtain property insurance covering the Project:
Unless otherwise provided, the Owner shall purchase and
maintain . . . property insurance written on a builder’s
risk “all-risk” or equivalent policy form in the amount
of the initial Contract Sum, plus value of subsequent
Contract modifications and cost of materials supplied or
installed by others, comprising total value for the entire
Project at the site on a replacement cost basis without
optional deductibles. . . . This insurance shall include

interests of the Owner, the Contractor, Subcontractors and
Sub-subcontractors in the Project.
(emphasis supplied.)
(c) Waiver of Subrogation
The agreement’s critical provision is set out in subparagraph
11.4.7. It contains a waiver of subrogation, which forms the
basis of this appeal, and states in relevant part:
The Owner and Contractor waive all rights against . . .
each other and any of their subcontractors . . . for damages
caused by fire or other causes of loss to the extent covered
by property insurance obtained pursuant to this Paragraph
11.4 or other property insurance applicable to the Work,
except such rights as they have to proceeds of such insur-
ance held by the Owner as fiduciary.
II. ASSIgNMeNTS OF eRROR
Lexington assigns, restated, that the district court erred in
holding that (1) the contractual waiver of subrogation barred
gross negligence claims and (2) the waiver barred claims for
damage to non-Work property.
III. STANDARD OF ReVIeW
[1,2] Summary judgment is proper when the pleadings and
evidence admitted at the hearing disclose no genuine issue
regarding any material fact or the ultimate inferences that may
be drawn from those facts and that the moving party is entitled
to judgment as a matter of law.1 In reviewing a summary judg-
ment, an appellate court views the evidence in the light most
favorable to the party against whom the judgment is granted
and gives such party the benefit of all reasonable inferences
deducible from the evidence.2
[3-5] The meaning of a contract is a question of law.3 The
determination of whether a contract violates public policy is a
1 Erickson v. U-Haul Internat., 274 Neb. 236, 738 N.W.2d 453 (2007).
2 Id.
3 Hogelin v. City of Columbus, 274 Neb. 453, 741 N.W.2d 617 (2007).
LexINgTON INS. CO. v. eNTRex COMM. SeRVS. 	707
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708 	275 NebRASkA RePORTS
question of law.4 When reviewing questions of law, an appellate
court has an obligation to resolve the questions independently
of the conclusions reached by the trial court.5
IV. ANALYSIS
1. enfoRcing the W aiveR of subRogation to baR lexington ’ s
gRoss negligence claiMs does not violate public policy
Lexington contends that the district court erred in decid-
ing that the waiver of subrogation in subparagraph 11.4.7 bars
Lexington’s gross negligence claims. According to Lexington,
public policy precludes parties from contractually disclaiming
or limiting their liability for gross negligence.
Other jurisdictions are split on whether to enforce contrac-
tual waivers of subrogation against claims for gross negligence.
Some courts have held that even though traditional exculpa-
tory provisions may not be effective against claims for gross
negligence, waivers of subrogation are effective to bar gross
negligence claims.6 but other courts have decided that because
a traditional exculpatory clause is generally ineffective against
a gross negligence claim, a waiver of subrogation will similarly
be ineffective.7
Two leading cases in which courts have enforced waivers
of subrogation to bar gross negligence claims are St Paul Fire
and Marine v. Universal Builders8 and Reliance Nat. Indem. v.
Knowles Ind. Ser.9 The St Paul Fire and Marine and Reliance
Nat. Indem. courts reasoned, in part, that policy considerations
4 Spanish Oaks v. Hy-Vee, 265 Neb. 133, 655 N.W.2d 390 (2003).
5 Eastlick v. Lueder Constr. Co., 274 Neb. 467, 741 N.W.2d 628 (2007).
6 See, e.g., St Paul Fire and Marine v. Universal Builders, 317 F. Supp. 2d
336 (S.D.N.Y. 2004), affirmed as modified 409 F.3d 73 (2d Cir. 2005);
Reliance Nat. Indem. v. Knowles Ind. Ser., 868 A.2d 220 (Me. 2005); Behr
v. Hook, 173 Vt. 122, 787 A.2d 499 (2001).
7 See, e.g., Butler Mfg. Co., Inc. v. Americold Corp., 841 F. Supp. 1107 (D.
kan. 1993); Colonial Properties Realty v. Lowder Const., 256 ga. App. 106,
567 S.e.2d 389 (2002).
8 St Paul Fire and Marine, supra note 6.
9 Reliance Nat. Indem., supra note 6.

associated with traditional exculpatory provisions are not impli-
cated with waivers of subrogation:
The rule [that gross negligence generally renders exculpa-
tory provisions void] exists . . . to ensure that “a party
injured by another’s gross negligence will be able to
recover its losses.” . . . In cases involving waivers of sub-
rogation, however, there is no risk that an injured party will
be left uncompensated, and it is irrelevant to the injured
party whether it is compensated by the grossly negligent
party or an insurer.10
In sum, because a waiver of subrogation clause does not leave a
party uncompensated, these courts hold that the clause is effec-
tive even when the plaintiff alleges gross negligence.
Lexington argues we should give these cases little deference.
It claims the decisions “erroneously focused on whether the
injured party was compensated for damages . . . rather than on
holding the grossly negligent defendant financially responsible
for its misconduct.”11 Lexington relies on our decision in New
Light Co. v. Wells Fargo Alarm Servs.12 In New Light Co., a
fire in the plaintiff’s restaurant caused extensive damage to the
building and its contents. The plaintiff alleged that the defend-
ant was grossly negligent in designing, installing, and maintain-
ing a fire alarm system in the building. The plaintiff further
argued that public policy prevented the defendant from relying
on a contractual exculpatory clause or limitation-of-damages
provision to insulate itself from liability for its gross negligence.
In New Light Co., we held that allowing the defendant to use a
contractual agreement to insulate itself from damages caused by
its own gross negligence would violate public policy.
Relying on New Light Co., Lexington argues that the reason
exculpatory clauses may be unenforceable against gross neg-
ligence claims is not to ensure compensation for the injured
party, but, rather, to hold grossly negligent parties financially
10 Id. at 226 (citation omitted). See, also, St Paul Fire and Marine, supra note
6.
11 brief for appellants at 21-22.
12 New Light Co. v. Wells Fargo Alarm Servs., 247 Neb. 57, 525 N.W.2d 25
(1994).
LexINgTON INS. CO. v. eNTRex COMM. SeRVS. 	709
Cite as 275 Neb. 702

710 	275 NebRASkA RePORTS
responsible for their conduct. Lexington contends that Nebraska
public policy requires that grossly negligent parties be held
financially responsible for their conduct because otherwise they
“would have no incentive to act more appropriately in the
future.”13 Lexington acknowledges that New Light Co. addressed
a contractual exculpatory clause and a limitation-of-damages
provision, rather than a waiver of subrogation clause. but
Lexington claims that allowing a party to use a waiver of subro-
gation to avoid gross negligence liability would similarly elimi-
nate the financial incentive for that party to “‘clean up its act.’”14
Therefore, Lexington argues that the New Light Co. rationale
and the underlying Nebraska public policy apply to contractual
waivers of subrogation just as they did to the exculpatory clause
and limitation-of-damages provision in that case.
Admittedly, language in New Light Co. can be read as sug-
gesting that our policy concern was protecting the public by
providing incentive for parties to refrain from grossly negli-
gent conduct. We decline, however, to extend our discussion
in New Light Co. to this case involving a contractual waiver of
subrogation. We recognize that a waiver of subrogation shares
similarities with traditional exculpatory clauses or limitation-
of-damages provisions. but, we also find that significant differ-
ences exist between waivers of subrogation and the exculpatory
clause and limitation-of-damages provision we dealt with in
New Light Co.
First, as the Reliance Nat. Indem. and St Paul Fire and
Marine courts observed, the danger with exculpatory clauses
is that a party injured by another’s gross negligence will be
unable to recover its losses. but such danger is not present in
cases involving waivers of subrogation because the waiver only
applies to losses covered by insurance, so “there is no risk that
an injured party will be left uncompensated.”15
Also, waivers of subrogation serve other important policy
goals not met by exculpatory clauses. As the Reliance Nat.
13 brief for appellants at 16.
14 Id. at 18.
15 Reliance Nat. Indem., supra note 6, 868 A.2d at 226.

Indem. court explained, “‘waivers of subrogation are encour-
aged by the law and serve important social goals: encouraging
parties to anticipate risks and to procure insurance covering
those risks, thereby avoiding future litigation, and facilitat-
ing and preserving economic relations and activity.’”16 Other
courts have observed that a waiver of subrogation is particularly
useful in a construction contract: “‘[I]t avoids disruption and
disputes among the parties to the project. It thus eliminates
the need for lawsuits, and yet protects the contracting parties
from loss by bringing all property damage under the all risks
builder’s property insurance.’”17 Traditional exculpatory clauses
and limitation-of-damages provisions do not serve this same
important policy goal. because of these differences, we decline
to extend New Light Co. to the present case.
[6] We, like other jurisdictions, recognize the important policy
goal that waivers of subrogation serve in avoiding disruption of
construction projects and reducing litigation among parties to
complicated construction contracts. Concluding that waivers of
subrogation cannot be enforced against gross negligence claims
would undermine this underlying policy by encouraging costly
litigation to contest whether a party’s conduct was grossly negli-
gent. Therefore, we conclude that “public policy favors enforce-
ment of waivers of subrogation even in the face of claims of
gross negligence.”18
because the waiver of subrogation clause in subparagraph
11.4.7 is effective to bar Lexington’s gross negligence claims,
we next determine the scope of the waiver.
16 Id. at 225-26.
17 Haemonetics Corp. v. Brophy & Phillips Co., 23 Mass. App. 254, 258, 501
N.e.2d 524, 526 (1986), quoting Tokio Marine & Fire v. Employers Ins. of
Wausau, 786 F.2d 101 (2d Cir. 1986). See, also, St Paul Fire and Marine,
supra note 6; Reliance Nat. Indem., supra note 6; Behr, supra note 6.
18 Reliance Nat. Indem., supra note 6, 868 A.2d at 227.
LexINgTON INS. CO. v. eNTRex COMM. SeRVS. 	711
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712 	275 NebRASkA RePORTS
2. the WaiveR of subRogation applies to insuRed
daMages , W hich heRe include both the
WoRk and the non -WoRk pRopeRty
Lexington next contends that the district court erred in hold-
ing that the waiver of subrogation in subparagraph 11.4.7 barred
Lexington’s claims for damage to non-Work property. Again,
the parties’ agreement essentially defines “Work” as the con-
struction and services provided by the contractor to fulfill the
contractor’s obligations under the contract. The record reflects
that of the over $6.2 million in claimed damages, about only
$470,000 represented damages to the Work, while the remain-
der represented damages to non-Work property. We understand
from Lexington’s counsel at oral argument that the antenna was
the Work property, while the tower and transmission building
represented the non-Work property.
The waiver of subrogation in subparagraph 11.4.7 states in
relevant part, “The Owner [Hearst] and Contractor [entrex]
waive all rights against . . . each other . . . for damages caused
by fire or other causes of loss to the extent covered by property
insurance obtained pursuant to this Paragraph 11.4 or other
property insurance applicable to the Work . . . .” Subparagraph
11.4.1 required Hearst to purchase a builder’s risk “all-risk”
property insurance policy “comprising total value for the entire
Project at the site.” Here, “Project” and “Work” are inter-
changeable. Hearst did not purchase a separate builder’s risk
policy covering the Work, but instead relied upon existing
“all-risk” property insurance policies issued by Lexington and
other companies. These all-risk policies collectively provided
Hearst with $25 million in coverage for both the Work and
the non-Work property. Lexington argues that the waiver of
subrogation in subparagraph 11.4.7 applied only to damages to
the Work. In other words, Lexington claims that even though
Hearst’s existing property insurance policies covered both the
Work and the non-Work property, the parties waived sub-
rogation only for damages to the Work property. Therefore,
Lexington believes it can recover for claims it paid for damages
to non-Work property.
entrex, of course, contends that the waiver applies to all
insured 	damages, 	including 	those 	to 	non-Work 	property.

Lexington argues that even if entrex’s interpretation is reason-
able, the waiver is at most ambiguous. Lexington also claims
that entrex “drafted” the contract by requiring use of the
standard AIA form and that therefore, we should construe any
ambiguity against entrex.
[7-10] We have stated that a contract written in clear and
unambiguous language is not subject to interpretation or con-
struction and must be enforced according to its terms.19 A
contract is ambiguous when a word, phrase, or provision in the
contract has, or is susceptible of, at least two reasonable but
conflicting interpretations or meanings.20 Also, a contract must
receive a reasonable construction, and we must construe it as a
whole and, if possible, give effect to every part of the contract.21
In construing a contract, we apply the general rule that when
there is a question about the meaning of the contract’s language,
the contract will be construed against the party preparing it.22
We determine that the waiver of subrogation is subject
to only one reasonable interpretation—that urged by entrex.
Therefore, as explained later, we conclude that the contract is
not ambiguous and that here, the waiver applies to damages to
both the Work and the non-Work property.
(a) Courts Addressing the Issue generally
Apply One of Two Approaches
A review of cases from other jurisdictions reveals two
approaches to when an insurer’s subrogation rights are barred.
In Trinity Universal Ins. Co. v. Bill Cox Const.,23 the Texas
Court of Appeals has summarized the two approaches:
[O]ne approach makes a distinction between Work (as that
word is defined in the contract) and non-Work property
and limits the scope of the waiver to damages to the Work;
19 Kluver v. Deaver, 271 Neb. 595, 714 N.W.2d 1 (2006).
20 Id.
21 See id.
22 See Artex, Inc. v. Omaha Edible Oils, Inc., 231 Neb. 281, 436 N.W.2d 146
(1989).
23 Trinity Universal Ins. Co. v. Bill Cox Const., 75 S.W.3d 6, 11 (Tex. App.
2001).
LexINgTON INS. CO. v. eNTRex COMM. SeRVS. 	713
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714 	275 NebRASkA RePORTS
and the second approach draws no distinction between
Work and non-Work, but instead, limits the scope of the
waiver to the proceeds of the insurance provided under the
contract between the owner and contractor.
(b) Lexington Urges the First Approach
Lexington urges us to adopt the first approach described
above. Lexington contends that “a reasonable construction of
the waiver is that it has no relevance to claims for damage to
non-Work property.”24 The New York Court of Appeals applied
this approach in S.S.D.W. Co. v. Brisk Co.25 The waiver clause
in that case was nearly identical to the waiver clause here. The
court explained that the waiver barred subrogation claims to the
extent the damages sought were covered by either “(1) ‘insur-
ance obtained pursuant to [art 17] [here paragraph 11.4]’ or (2)
‘any other property insurance applicable to the Work.’”26 Article
17.3 of the parties’ agreement required the owner to provide
insurance “‘upon the entire Work at the site.’”27 In deciding
the waiver barred only claims for damages to the Work, the
S.S.D.W. Co. court reasoned:
It makes no difference whether the policy under which
subrogation is sought is one which the owner purchased
specifically to insure the Work pursuant to article 17.3
[here subparagraph 11.4.1] or some other policy covering
the owner’s property in which the owner has also pro-
vided coverage for the Work. In either event, the waiver
clause, if given its plain meaning, bars subrogation only
for those damages covered by insurance which the owner
has provided to meet the requirement of protecting the
24 brief for appellants at 24.
25 S.S.D.W. Co. v. Brisk Co., 76 N.Y.2d 228, 556 N.e.2d 1097, 557 N.Y.S.2d
290 (1990).
26 Id. at 233, 556 N.e.2d at 1099, 557 N.Y.S.2d at 292 (emphasis in origi-
nal).
27 Id. at 233, 556 N.e.2d at 1099-1100, 557 N.Y.S.2d at 292-93 (emphasis in
original).

contractor’s limited interest in the building—i.e., damages
to the Work itself.28
Therefore, the S.S.D.W. Co. court concluded that to the extent
the plaintiff sought recovery for damages to non-Work property,
that claim was not barred by the waiver of subrogation. Other
courts have similarly decided the waiver applies only to dam-
ages to the Work.29
(c) entrex Urges the Second Approach
entrex urges us to adopt the second approach described by
the Trinity Universal Ins. Co. court. entrex contends that we
should follow those courts that have decided the waiver applies
to all damages insured by the owner’s property insurance
policy, regardless of whether they represent damages to the
Work or non-Work property. The courts adopting this approach
represent the majority.30
The California Court of Appeal adopted this approach in
Lloyd’s Underwriters v. Craig and Rush.31 Like Hearst, the
owner in Lloyd’s Underwriters elected not to purchase a sepa-
rate “builder’s risk” policy with coverage limited to the con-
struction work. Instead, the owner chose to rely on its existing
“all-risk” property insurance to satisfy its obligations under
the contract to provide property insurance for the Work. Non-
Work property was damaged while the contractor was repairing
the roof of the owner’s facility. The owner’s insurers argued
that these damages, although insured, fell outside the waiver
of subrogation.
28 Id. at 233-34, 556 N.e.2d at 1100, 557 N.Y.S.2d at 293.
29 See, e.g., Midwestern Indem. Co. v. Systems Builders, 801 N.e.2d 661 (Ind.
App. 2004); Butler v. Mitchell-Hugeback, Inc., 895 S.W.2d 15 (Mo. 1995);
PEMCO v. Sellen Constr. Co., 48 Wash. App. 792, 740 P.2d 913 (1987).
30 See, e.g., ASIC II Ltd. v. Stonhard, Inc., 63 F. Supp. 2d 85 (D. Me. 1999);
Stop and Shop v. ABCO Refrigeration Supply, 48 Conn. Supp. 301, 842
A.2d 1194 (Conn. Super. 2003); Trinity Universal Ins. Co., supra note 23;
Employers Mut. Cas. Co. v. A.C.C.T., Inc., 580 N.W.2d 490 (Minn. 1998);
Lloyd’s Underwriters v. Craig and Rush, 26 Cal. App. 4th 1194, 32 Cal.
Rptr. 2d 144 (1994); Chadwick v. CSI, Ltd., 137 N.H. 515, 629 A.2d 820
(1993); Haemonetics Corp., supra note 17.
31 Lloyd’s Underwriters, supra note 30.
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The Lloyd’s Underwriters court read the waiver’s language
to mean that “so long as a policy of insurance ‘applicable to
the Work’ pays for the damage, the waiver applies.”32 The court
observed that the owner’s insurers “[did] not dispute that their
policies (1) were ‘applicable to the Work’ and (2) ‘covered’
or paid for the loss.”33 The court reasoned that satisfaction of
these two criteria allowed the court to conclude the waiver
applied. Stated another way, the Lloyd’s Underwriters court
essentially concluded that if a policy covering the Work paid
for the losses, the parties waived subrogation for those losses,
regardless of whether they were damages to the Work or
non-Work property.
Another 	case 	often 	cited 	for 	the 	majority 	approach 	is
Haemonetics Corp. v. Brophy & Phillips Co.34 There, the
owner also relied on an existing property insurance policy to
meet its obligation to provide property insurance covering the
Work. During construction, a fire damaged non-Work property,
and the owner received insurance proceeds to cover the dam-
age. The owner later argued that the parties’ contract required
only that it maintain property insurance on the Work, so the
waiver applied only to damages to the Work property. The court
disagreed, reasoning:
The preexisting insurance policy . . . was the insurance
the owner chose to provide to comply with § 11.3 [here
subparagraph 11.4.1] even though that policy may have
been more extensive than what was required. by the terms
of [the waiver of subrogation provision], the waiver of
rights extends to the proceeds of any insurance provided
under § 11.3.35
The Haemonetics Corp. and Lloyd’s Underwriters courts
reached the same conclusion, but with different rationales.
Again, for clarification, the waiver applies to the extent losses
32 Lloyd’s Underwriters, supra note 30, 26 Cal. App. 4th at 1198, 32 Cal. Rptr.
2d at 146.
33 Id.
34 Haemonetics Corp., supra note 17.
35 Haemonetics Corp., supra note 17, 23 Mass. App. at 257, 501 N.e.2d at
526.

are covered by (1) insurance obtained to meet the owner’s
obligation to acquire property insurance covering the Project
or (2) “other property insurance applicable to the Work.” The
Haemonetics Corp. court reasoned that the owner’s preexisting
policy fell within the first alternative as the policy the owner
chose to provide to comply with the contract. In contrast, the
Lloyd’s Underwriters court reasoned that the owner’s preexist-
ing policy came within the second alternative as “other prop-
erty insurance applicable to the Work.” Despite their different
classifications of the policies, both courts decided the owner’s
preexisting policy fell within the waiver of subrogation clause.
The courts concluded that the scope of the waiver clause
was not defined by the property damaged, but, rather, by the
extent the damages were covered by those policies described
in the clause: All losses covered by those policies were sub-
ject to the waiver, whether those losses related to the Work or
non-Work property.
(d) We Adopt the Majority Approach and Conclude
That the Waiver Applies to Damages to both
the Work and the Non-Work Property
We find the majority courts’ rationale persuasive. We also
believe this approach is more consistent with other provisions
in the parties’ agreement and furthers the purpose of the waiver
clause. Furthermore, construing the contract as a whole, we are
unable to conclude that the minority approach is reasonable.
The majority interpretation is consistent with a related pro-
vision, subparagraph 11.4.5 in the parties’ agreement, which
states in relevant part:
If during the Project construction period the Owner insures
properties, real or personal or both, at or adjacent to the
site by property insurance under policies separate from
those insuring the Project, . . . the Owner shall waive all
rights in accordance with the terms of Subparagraph 11.4.7
for damages caused by fire or other causes of loss covered
by this separate property insurance.
We understand this provision to mean that if the owner acquires
a separate property insurance policy to cover non-Project
property—a policy that did not cover the Project or Work
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718 	275 NebRASkA RePORTS
property—and the non-Project property is damaged, the owner
waives subrogation rights for the insurer as to those damages.
So even though the damage occurred to non-Work property,
the owner waived subrogation rights because the damages were
insured. This provision shows that the contracting parties were
not opposed to waiving damages to non-Work property.36
Subparagraph 11.4.5 reinforces our conclusion that the
waiver in subparagraph 11.4.7 applies to all damages—including
Work and non-Work damages—covered by the owner’s prop-
erty insurance policy. An example is helpful. Suppose the
owner purchased two separate property insurance policies:
“Policy A” that covered only the Project (Work) and “Policy b”
that covered only the non-Work property. Under subparagraph
11.4.7, the owner waives subrogation rights as to any damages
covered by Policy A (damages to the Work property). Under
subparagraph 11.4.5, the owner waives subrogation rights as
to any damages covered by the separate Policy b (damages
to the non-Work property). So, applying subparagraphs 11.4.5
and 11.4.7, the owner waives damages to both the Work and
the non-Work property when the owner obtains two separate
policies. We see no reason why the parties would intend a dif-
ferent result when, instead of purchasing two separate policies,
the owner relied on one policy covering both the Work and the
non-Work property, as Hearst did here.
Also, as the Haemonetics Corp. court noted, the major-
ity approach furthers the policy underlying the use of waiver
of subrogation clauses in construction contracts. That court
explained that a waiver of subrogation is useful in construction
contracts because it avoids disrupting the project and eliminates
the need for lawsuits.37 The majority approach furthers this pur-
pose. Applying the waiver to all losses covered by the owner’s
property insurance policy eliminates litigation over liability
36 See, Lloyd’s Underwriters, supra note 30; Walker Engineering v. Bracebridge
Corp., 102 S.W.3d 837 (Tex. App. 2003).
37 Haemonetics Corp., supra note 17, citing Tokio Marine & Fire, supra note
17.

issues and whether the claimed loss was damage to the Work or
non-Work property.38
Lexington, of course, argues we should not adopt the major-
ity approach. Lexington contends this approach is inconsistent
with the agreement’s allocation of insurance responsibilities.
Again, under subparagraph 11.1.1, entrex was obligated to
obtain liability insurance covering claims for damages to non-
Work property, while subparagraph 11.4.1 required Hearst to
obtain property insurance covering the Project (Work). The
insurers in Lloyd’s Underwriters made a similar argument.
They argued that the court must interpret the waiver of subro-
gation as waiving claims only to the extent the loss fell within
the owner’s area of insurance responsibility (i.e., a loss to the
Work). The court decided this contention ignored the language
defining the scope of claims falling within the waiver clause.
The court explained, “The waived claims are not defined
by what property is harmed (i.e., ‘any injury to the Work’);
instead, the scope of waived claims is delimited by the source
of any insurance proceeds paying for the loss (i.e., whether
the loss was paid by a policy ‘applicable to the Work’).”39
We agree. Further, as another court noted, the waiver clause
expressly provides that the “‘waiver of subrogation shall be
effective as to a person or entity even though that person or
entity would otherwise have a duty of indemnification, contrac-
tual or otherwise.’” This reconciles any inconsistency between
the waiver of subrogation and the agreement’s allocation of
insurance responsibilities.40
Having reviewed the reasons that support the majority
approach, we conclude that the minority approach is not a
reasonable interpretation of subparagraph 11.4.7. First, the
minority approach is inconsistent with the waiver’s purpose
of avoiding disruption and disputes among the parties to the
project by eliminating the need for litigation. Adopting the
38 See, Stop and Shop, supra note 30; S.S.D.W. Co., supra note 25 (Alexander,
J., dissenting); Haemonetics Corp., supra note 17.
39 Lloyd’s Underwriters, supra note 30, 26 Cal. App. 4th at 1200, 32 Cal. Rptr.
2d at 148 (emphasis in original).
40 See Chadwick, supra note 30, 137 N.H. at 524, 629 A.2d at 826.
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720 	275 NebRASkA RePORTS
minority approach would actually encourage litigation about
whether the claimed loss was damage to the Work or non-Work
property. More important, we are unable to reconcile subpara-
graph 11.4.5 with the minority approach. If we applied the
minority approach, we would be left with two disparate results
depending on whether the owner (1) purchased a single policy
covering both the Work and the non-Work or (2) purchased two
separate policies. An owner relying on a single policy, as Hearst
did here, would waive only damages to the Work (11.4.7). but
an owner purchasing two separate policies, as in the example
above, would waive damages to both the Work (11.4.7) and the
non-Work (11.4.5). We do not believe the parties intended this
disparity. because we must construe the contract as a whole,41
subparagraph 11.4.5 is a hurdle that prevents us from decid-
ing that the minority approach is a reasonable interpretation
of subparagraph 11.4.7. because we decide that the minority
approach is not a reasonable interpretation of subparagraph
11.4.7, we conclude that subparagraph 11.4.7 is not ambiguous.
Instead, it is subject to only one reasonable interpretation—that
of the majority courts. Therefore, we need not construe the
contract against the drafter.
We 	find 	the 	majority 	courts’ rationale 	persuasive. 	The
Minnesota Supreme Court has summarized the result under
this approach:
The owner has the option of purchasing an all-risk
policy specifically to cover the “work” or can rely on
any existing property insurance which would cover the
“work.” However, the waiver clause creates the “work”
and “nonwork” distinction based upon the owner’s deci-
sion to purchase a new policy or to rely upon an existing
one. The owner agrees to waive the right to sue for dam-
ages done only to the “work” if it purchases a separate
all-risk policy specifically to cover the “work.” but if the
owner relies on an existing policy which is so broad that it
covers both “work” and “nonwork” property, it waives the
41 See Kluver, supra note 19.

right to sue for all damages done as long as that damage
is covered by the policy.42
We hold that the waiver of subrogation applies to all damages
covered by a property insurance policy “obtained pursuant to
. . . Paragraph 11.4” or other property insurance policy that
covers the Work. When that policy is broad enough to cover
both the Work and the non-Work property, the waiver extends
to non-Work damages.
Here, Hearst relied on existing policies covering both the
Work and the non-Work property. because these policies are
“applicable to the Work,” they fall within the purview of sub-
paragraph 11.4.7. Applying the approach adopted today, Hearst
waived subrogation rights on behalf of Lexington for any dam-
ages covered by those policies, including damages to non-Work
property. Therefore, the district court did not err in grant-
ing summary judgment for entrex and dismissing Lexington’s
claims for the insurance proceeds it paid.
V. CONCLUSION
We conclude that the district court correctly determined that
contractual waivers of subrogation are effective to bar gross neg-
ligence claims. Therefore, the waiver of subrogation in the par-
ties’ agreement was enforceable even though Lexington alleged
entrex was grossly negligent. Also, we interpret the waiver
of subrogation provision, subparagraph 11.4.7, as applying to
all damages covered by a property insurance policy “obtained
pursuant to . . . Paragraph 11.4” or other property insurance
policy that covers the Work. When that policy is broad enough
to cover both the Work and the non-Work property, as Hearst’s
policies were here, the waiver applies to both the Work and the
non-Work damages. Thus, Lexington is unable to recover the
proceeds it paid for damages to the Work and non-Work prop-
erty. The district court did not err in granting entrex’s motion
for summary judgment or in dismissing Lexington’s claims for
the insurance proceeds it paid.
affiRMed .
42 Employers Mut. Cas. Co., supra note 30, 580 N.W.2d at 493.
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