Corley Enters. of La., Inc. v. Bear Creek Saloon, Inc.

Citation: 273 So. 3d 1236Docket: NUMBER 2018 CA 1147

Court: Louisiana Court of Appeal; February 27, 2019; Louisiana; State Appellate Court

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Certain Underwriters at Lloyd's of London (the Underwriters) appeal a trial court judgment that upheld a peremptory exception of prescription favoring Brassco, Inc. and dismissed the Underwriters' intervention petition with prejudice. The trial court's judgment is reversed and remanded for further proceedings. The case originates from a lease agreement between Bear Creek Saloon, Inc. and Corley Enterprises of Louisiana, Inc. for a property in Montpelier, Louisiana, from January 1, 2014, to December 31, 2018. Following a concert hosted by Bear Creek on April 26, 2014, a fire occurred, causing total loss of the building and contents. On April 27, 2015, Corley sued Bear Creek and its insurer, First Financial Insurance Company, along with Brassco and its insurer, alleging Bear Creek's negligence in maintaining the property and issues with the sprinkler system inspected by Brassco. Corley sought damages for property loss, business income loss, and attorney's fees.

On July 17, 2017, the Underwriters, as subrogees to Corley’s rights, filed a petition for intervention, claiming they paid $550,000 to Corley under their insurance policy and sought reimbursement from the defendants for this amount. They argued that any damages awarded to Corley should prioritize their claims for reimbursement. Brassco filed an exception of prescription on September 21, 2017, arguing that the Underwriters’ intervention was untimely, having been filed nearly two years after being served with Corley’s petition, and not within the required ninety days set by Louisiana Civil Code Procedure Article 1041.

Brassco sought to dismiss the Underwriters' petition for intervention with prejudice, and the trial court granted Brassco's exception of prescription, determining the petition was untimely under LSA-C.C.P. art. 1041 and Stenson v. City of Oberlin. The court concluded that the Underwriters' claims should be dismissed with prejudice and issued a written judgment on April 23, 2018. The Underwriters appealed, arguing that the trial court erred in maintaining the exception and in its timeliness ruling, asserting that LSA-C.C.P. art. 1041 does not apply to their subrogation claims.

The appeal centers on whether an insurer's incidental demand for subrogation, arising from the same event as its insured's claim, is governed by LSA-C.C.P. art. 1041 or if the insured's timely suit interrupts prescription for the insurer's claims. Under Louisiana law, a subrogated insurer has rights equivalent to its insured, allowing for direct action against third-party liability insurers. Prescription generally runs against all unless exceptions apply, such as the relation back of amended petitions and provisions for incidental demands. The Underwriters argue that their subrogation rights are linked to the original claim filed by their insured, Corley, which should interrupt prescription according to the precedent set in Louviere v. Shell Oil Company, where the Supreme Court ruled that claims stemming from the same cause of action can interrupt prescription for both parties involved.

The Supreme Court established that the filing of a compensation carrier's suit interrupts prescription due to the shared cause of action between the insurer and the employee, as the insurer can recover damages it paid on the employee's behalf. This principle, outlined in Louviere v. Shell Oil Company, asserts that a suit by one party halts the prescription for all parties involved in the single cause of action. The Court further clarified that once prescription is interrupted by a suit, it remains interrupted throughout the duration of that suit, restarting from the last day of interruption. However, if a subsequent suit by another party involves a different cause of action, even if based on similar facts, the initial suit does not interrupt prescription for the latter.

The Underwriters cited Fair Grounds Corporation v. ADT Security Systems, which aligned with Louviere's principles, where a subrogation claim by an insurer was deemed timely because it arose from the same event as the original suit filed by the Fair Grounds. In contrast, Brassco contends that the Underwriters' intervention in Corley's suit is prescribed, asserting that it was filed after both the one-year prescriptive period for delictual actions and the ninety-day extension for incidental demands had expired. To support this claim, Brassco referenced Stenson v. City of Oberlin, which addressed the applicability of the relation back doctrine versus the time limitation for incidental demands.

Residents of Oberlin filed claims for property damage and personal injury due to sewerage overflow, with the Stensons initially petitioning on October 20, 2003. Their petitions were consolidated on September 22, 2004, and the Stensons later filed supplemental petitions, including a request for class status on March 11, 2005. The last defendant received service of the second supplemental petition on March 17, 2005. On July 20, 2006, the Fuselier plaintiffs sought to intervene, asserting similar claims but were met with a defendant's exception of prescription, arguing their intervention was untimely.

The Fuseliers contended their claims related back to the Stensons' original petition under LSA-C.C.P. art. 1153. The trial court upheld the prescription exception, but the appellate court reversed, stating that the Stensons' original petition interrupted prescription for the Fuseliers' intervention. The Louisiana Supreme Court intervened to address the conflict regarding whether LSA-C.C.P. art. 1153 or LSA-C.C.P. art. 1041 applied to interventions. The Supreme Court ruled that Article 1041 governs interventions as incidental demands, and thus the Fuseliers' petition for intervention was prescribed for not being filed within the required ninety days after service of the last defendant. The Underwriters argued that Stenson's ruling does not apply to subrogation claims or scenarios involving shared causes of action, as Stenson necessitated an analysis of prescription interruption not present in cases of subrogation.

Underwriters assert that LSA-C.C.P. art. 1041 functions as an exemption statute, applicable only when a claim is already prescribed, and argue that if prescription is interrupted for other reasons, Article 1041 analysis is unnecessary. They reference the case of Gallagher Bassett Services, Inc. v. Canal Insurance Company to highlight that prescription applies to all parties unless legally exempt, noting that the initiation of a tort suit does not halt prescription for other parties with separate claims from the same incident (citing Louviere v. Shell Oil Co.). Exceptions exist, including that an amended petition can relate back to the original filing date (La. C.C.P. art. 1153), an additional ninety days for incidental demands (La. C.C.P. art. 1067), and shared causes of action among parties (Colbert v. Batiste). The Underwriters argue that the case of Stenson did not address shared causes of action and cannot be interpreted to alter prescription rules for insurance subrogation claims. The court agrees, stating that Corley filed suit within the applicable time frame, interrupting prescription for the Underwriters' intervention claims, as both claims stem from the same incident. The trial court's ruling to maintain Brassco's peremptory exception of prescription and dismiss the Underwriters’ claims with prejudice is deemed erroneous. Consequently, the court reverses the trial court's April 23, 2018 judgment and remands the matter for further proceedings, with costs of the appeal assigned to Brassco, Inc. It clarifies that Elmus Corley may represent Corley Enterprises of Louisiana, Inc. and notes a recent redesignation of LSA-C.C.P. art. 1067 to art. 1041 without text alteration. The dismissal of the Underwriters' claims is recognized as a final judgment for appeal purposes.

In Stamps, the plaintiff initiated a lawsuit for personal injury against a tortfeasor and their insurer. Subsequently, the plaintiff's insurer filed a cross-claim against these defendants for subrogation regarding property damages it had already compensated to the plaintiff. The court differentiated this case from Louviere, highlighting that it involved distinct personal injury claims and a separate subrogation claim for property damage, thus recognizing two separate causes of action. The court applied LSA-C.C.P. art. 1041, which permits incidental demands that are not barred by prescription or peremption if filed within 90 days of the main demand's service. Additionally, LSA-C.C.P. art. 1153 states that amendments related to the original petition's conduct or occurrence relate back to the original filing date. The ruling referenced earlier cases and clarified the application of the law, specifically abrogating previous decisions such as Allstate v. Theriot and others, underscoring the evolution of legal interpretations regarding incidental demands and amendments in Louisiana law.