Michiana Contracting, Inc. (Michiana) entered into a contract with the Plymouth Wesleyan Church (Church) to build a two-story addition to the church's main building on January 11, 2007. The addition consisted of 48,195 square feet and included space for a gymnasium, student center, and classrooms. The contract included a mutual waiver of subrogation that waived all rights of one party against the other. It defined "Work" as "the construction and services required by the Contract Documents, whether completed or partially completed, and including all labor, materials, equipment, and services provided (or to be provided) by the Contractor to fulfill the Contractor's obligations."

The contract also contained language regarding installation of the gym floor in various parts of the main contract document with optional costs to install various types of floor coverings. The contract did not indicate that Church agreed to any of the alternative costs. The fact was that Michiana poured the concrete floor and sealed it. Church itself covered the concrete floor with wood flooring and without Michiana's assistance.

Construction was completed on April 30, 2008 and Church made the final payment for the work on September 28, 2008. A frozen sprinkler pipe above the gymnasium's ceiling broke on January 3, 2009 and the escaping water destroyed the gym floor. Church filed a claim with its carrier, Brotherhood Mutual Insurance Company (Brotherhood). Brotherhood paid $37,355.80 for the damage.

As Church's subrogee, Brotherhood sued Michiana on October 8, 2010. It claimed that Michiana breached its contract with Church for three reasons:

• It did not "properly construct and/or oversee the construction of the addition."
• It breached the warranty of workmanlike performance because it did not "use reasonable
skill in the work it performed at Church."
• It was negligent because it did not construct the addition "so as to prevent the sprinkler lines from freezing."

Brotherhood later amended the claim to include similar allegations against the other Appellees.

Michiana filed a motion for summary judgment on August 26, 2011. It argued that the waiver of subrogation provision completely barred Brotherhood's complaint and that summary judgment was appropriate because the gym floor was "work" as the contract defined and subject to the waiver of subrogation. Brotherhood responded on September 28, 2010. It stated essentially the same arguments as Michiana and stated that they were not appropriate because there was a genuine issue of material fact as to whether the gym floor was personal property and not subject to the contract's provisions or if it was within the scope of the work the contract described and subject to the waiver of subrogation. The trial court granted summary judgment in favor of Michiana on October 20, 2011. Brotherhood appealed.

On appeal, Brotherhood argued that the gym floor was not "Work" because Church never selected any of the options Michiana offered and Michiana did not install it. Michiana did not dispute this fact. The appellate court determined that installation of the wooden gym floor was not accepted as part of the work, the cost to do so was not added to the amount Church owed to Michiana, and Church actually installed it. As a result, the wooden gym floor was not within the "Scope of Work" for the project and was not subject to the waiver of subrogation. The court reversed the trial court's summary judgment and remanded the case back to it for proceedings consistent with this decision.

Court of Appeals of Indiana. Brotherhood Mutual Insurance Company as Subrogee of Plymouth Wesleyan Church, Appellant-Plaintiff, v. Michiana Contracting, Inc., McGrath Refrigeration, Inc., John D. McGrath, Jospeh A. Dzierla and Associates, Inc., and Shambaugh & Son, L.P., Appellees-Defendants. No. 50A03-1111-CT-518. July 13, 2012. 971 N.E.2d 127