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 in favor of Brassco, Inc., resulting in the dismissal of the Underwriters' intervention petition with prejudice. The court reversed this judgment and remanded the case for further proceedings.

Bear Creek Saloon, Inc. ("Bear Creek") had a lease agreement with Corley Enterprises of Louisiana, Inc. ("Corley") for property in Montpelier, Louisiana, from January 1, 2014, to December 31, 2018. Following a country music concert on April 26, 2014, a fire occurred on the premises, causing total loss of the building and contents. On April 27, 2015, Corley filed a damages petition against Bear Creek, its insurer First Financial Insurance Company, Brassco, and Brassco's insurer, alleging Bear Creek's negligence in maintaining the property and the malfunctioning of the sprinkler system during the fire.

The Underwriters, as subrogees to Corley's rights, filed a petition for intervention on July 17, 2017, claiming they had paid $550,000 in insurance benefits to Corley and sought reimbursement from the defendants. They requested that any damages awarded to Corley be prioritized for their reimbursement claims. Brassco filed an exception of prescription on September 21, 2017, arguing the Underwriters' intervention was untimely, as it was filed nearly two years after service of Corley’s petition, contrary to the ninety-day requirement under LSA-C.C.P. art. 1041.

Brassco moved to dismiss the Underwriters' intervention petition with prejudice, and the trial court granted this motion based on an exception of prescription, determining the petition was untimely under LSA-C.C.P. art. 1041 and the precedent set in Stenson v. City of Oberlin. The court concluded that the Underwriters' claims should be dismissed with prejudice, formalized by a written judgment on April 23, 2018. The Underwriters appealed, arguing the trial court incorrectly upheld Brassco's exception and misapplied the law regarding their subrogation claims.

The central issue on appeal is whether the Underwriters' subrogation claim qualifies as an incidental demand under LSA-C.C.P. art. 1041, or if the timely filing of their insured's initial suit interrupts prescription for the Underwriters' claims. Under Louisiana law, an insurer that is subrogated to its insured's rights can pursue claims against third-party defendants. The Underwriters argue that they share a single cause of action with their insured, Corley, stemming from the same factual incident involving property damage from a fire, thus asserting that Corley's filing interrupted prescription for both parties.

The Underwriters reference Louviere v. Shell Oil Company to support their position, which established that claims by an employee and their compensation insurer are intertwined enough that the suit filed by either interrupts prescription for both. They assert this principle applies to their situation, as their claims arise from the same factual basis as Corley's initial demand.

The Supreme Court established that when multiple parties share a single cause of action, such as through partial subrogation, the filing of a suit by one party interrupts the prescription period for all involved. In the case of Louviere v. Shell Oil Company, the Court clarified that once a suit interrupts prescription, this interruption persists throughout the duration of the case and restarts the prescription period from the last day of the 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 the prescription for the new cause.

In Fair Grounds Corporation v. ADT Security Systems, the Fourth Circuit applied the Louviere holding to a similar situation where the Fair Grounds Corporation's insurer intervened in a suit after a fire, asserting subrogation claims. The court ruled that the original suit's timely filing interrupted prescription for the insurer's claims, as both actions arose from the same incident.

Contrastingly, Brassco contends that the Underwriters' intervention in Corley's suit is prescribed, arguing it was filed after both the one-year prescriptive period for delictual actions and the ninety-day extension for incidental demands had expired. Brassco references Stenson v. City of Oberlin, where the Louisiana Supreme Court addressed whether the relation back doctrine or the time limitation for incidental demands applied to intervening actions. In Stenson, original and subsequent petitions were consolidated, leading to questions about the timeliness of claims related to sewerage overflow damage.

The last defendant received the second supplemental and amending petition on March 17, 2005. The Fuselier plaintiffs attempted to join the litigation on July 20, 2006, by filing a petition for intervention, which was over ninety days after service on the last defendant. A defendant raised an exception of prescription, arguing that the Fuseliers' petition was untimely under LSA-C.C.P. art. 1041, as it was not filed within ninety days of the second supplemental petition. The Fuseliers countered that their intervention related back to the original Stenson petition under LSA-C.C.P. art. 1153. The trial court upheld the exception, but the appellate court reversed, stating the Stenson plaintiffs' original petition interrupted prescription for the Fuseliers. 

The Louisiana Supreme Court granted writs to address inconsistencies in the application of LSA-C.C.P. art. 1153 and art. 1041 regarding intervening petitions. Ultimately, the Supreme Court ruled that Article 1041 governs exceptions of prescription for interventions, not Article 1153, which pertains to amendments adding parties or claims. The Court determined that the Fuseliers' petition had indeed prescribed as it was not filed within the requisite timeframe. The Underwriters argued that the Stenson case was not applicable in their situation involving subrogation claims, asserting that Article 1041 should only apply when a claim has already prescribed and that there was no need for its analysis if prescription was interrupted on different grounds.

Prescription applies to all individuals unless legally exempt, as stated in La. C.C. art. 3467. The initiation of a tort lawsuit by one party does not stop the prescription from running against other parties with distinct damages from the same incident, as established in Louviere v. Shell Oil Co. However, exceptions exist: La. C.C.P. art. 1153 allows relation back of amended petitions, La. C.C.P. art. 1067 grants an additional ninety days for incidental demands, and sharing a single cause of action also serves as an exception. The Underwriters argue that the case of Stenson did not address the third exception, since it did not involve shared causes of action and should not change existing law on insurance subrogation claims. The court agrees, noting that Corley filed a timely suit for damages from a fire, allowing the Underwriters' intervention to also be timely due to the shared cause of action. The trial court's dismissal of the Underwriters' subrogation claims based on prescription was found to be in error. Consequently, the trial court's April 23, 2018 judgment is reversed, and the matter is remanded for further proceedings, with costs assessed to Brassco, Inc. Additionally, the court clarifies that the judgment dismissing the Underwriters' claims is a final judgment for appeal purposes.

The court determined that in cases involving personal injury suits filed by the insured and simultaneous subrogation claims by the insurer for property damages, distinct causes of action exist, thus invoking LSA-C.C.P. art. 1041 (formerly 1067). This article states that an incidental demand is permissible if it was not time-barred at the time the main demand was filed and is submitted within ninety days of service of the main demand, or for third-party defendants, within ninety days from service of the third-party demand. LSA-C.C.P. art. 1153 allows for amendments to relate back to the original pleading if they arise from the same conduct or transaction. The court referenced factors from Giroir v. South Louisiana Medical Center regarding the addition or substitution of parties or claims under this article. Additionally, LSA-C.C.P. art. 1031(B) classifies a demand for intervention as an incidental demand. The Stenson ruling effectively overturned previous cases, including Allstate v. Theriot and others, which had potentially conflicting interpretations.