Gross negligence; Whether the waiver of subrogation clause barred a gross negligence claim; Lamp v. Reynolds; Shelby Mut. Ins. Co. v. City of Grand Rapids; Failure to state a claim of gross negligence; Xu v. Gay; Tarlea v. Crabtree; Affidavit of plaintiff’s expert's opinion that defendants acted with a “substantial lack of concern”; Mack v. Detroit (On Remand); Johnson v. White; Rebuttable presumption of negligence; Klinke v. Mitsubishi Motors Corp.

The court reversed the trial court’s holding that the plaintiff’s claim for gross negligence was barred by the waiver of subrogation clause. However, it affirmed the trial court’s holding that plaintiff failed to state a claim in gross negligence against defendants. It further held, as the trial court did, that the amendment of plaintiff’s complaint would be futile. Plaintiff issued a property insurance policy to the owner and manager of an apartment building (Midtown property), UrbCamCom/WSU 1, LLC (UCC), and Campus Advantage, Inc., respectively (the insureds), providing insurance for loss or damage to the building. UCC retained defendant-The Alan Group as a general contractor to work on the Midtown property, which was to include the installation of a sprinkler system. The Alan Group retained defendant-Condor Piping, Inc. as a subcontractor to install the sprinkler system. The contract between UCC and The Alan Group contained a waiver of subrogation. A dry-fire suppression line for the installed dry-pipe sprinkler system ruptured in two separate locations, flooding the Midtown property. Plaintiff reimbursed the insureds for their losses under its insurance policy. It then brought the subrogation action against defendants, alleging claims of negligence, gross negligence, breach of implied/express warranty, and breach of implied/express contract. Plaintiff argued that the trial court erred by determining that the waiver of subrogation clause barred a gross negligence claim and thus, by holding on reconsideration that summary disposition was proper for that reason under MCR 2.116(C)(10). The court agreed. Plaintiff conceded that the waiver of subrogation clause barred its claims apart from its claim for gross negligence. Plaintiff also argued that the trial court erred by holding that it failed to state a claim of gross negligence. The court held that nothing in plaintiff’s factual allegations showed or implied that defendants acted with willful or reckless disregard for what damage could be caused if they failed to attend properly to the draining of the sprinkler system. Rather, the totality of the factual allegations asserted in essence simply that they acted with carelessness in failing to drain the dry-pipe sprinkler system and in failing to provide proper instruction on how to do so. Thus, at best, plaintiff’s allegations only supported a claim for ordinary negligence.