In Ace American Insurance Co. v. American Medical Plumbing, 458 N.J. Super. 535 (App. Div. 2019), the Appellate Division addressed an issue of first impression in New Jersey: the enforcement of waiver-of-subrogation clauses in AIA (American Institute of Architects) construction contracts.

Equinox Development Corp., which was insured by Ace American Insurance Co., entered into a contract with Grace Construction Management Company in March of 2012 to build the “core and shell” of a health club in Summit. American Medical was a plumbing subcontractor that installed a sprinkler system. Following the completion of construction and the installation of gym equipment, the high-pressure connections to the sprinkler system failed, causing damage in excess of $1 million.