Advanced Property Restoration Services, LLC v. Continental Casualty Company

• Court: Louisiana Court of Appeal
• Decided: October 27, 2025
• Docket: 2025 CW 0205
• Status: Unknown

Opinion

STATE OF LOUISIANA COURT OF APPEAL, FIRST CIRCUIT

ADVANCED PROPERTY NO. 2025 CW 0205 RESTORATION SERVICES, LLC PAGE 1 OF 2 VERSUS

CONTINENTAL CASUALTY COMPANY, SCOTTSDALE INSURANCE COMPANY, GNO PROPERTY MANAGEMENT, LLC AND

ROBERT KIRK PHILLIPS OCTOBER 27, 2025

In Re: The Scottsdale Insurance Company, applying for supervisory writs, 19th Judicial District Court, Parish of East Baton Rouge, No. 725334.

BEFORE : PENZATO, STROMBERG, AND FIELDS, JJ.

WRIT GRANTED. The trial court’s October 28, 2024 judgment, which denied the motion for summary judgment filed by defendant, Scottsdale Insurance Company (“Scottsdale”), is reversed. An insurance policy should not be given an interpretation which would enlarge or restrict its provisions beyond what is reasonably contemplated by its terms or which would lead to an absurd conclusion. Coates v. Northlake Oil Company, Inc., 499 So.2d 252 (La. App. lst Cir. 1986), writ denied, 503 So.2d 476 (La. 1987). The Scottsdale commercial general liability policy issued to its insured, GNO Property Management, LLC (“GNO”), provides coverage for those sums the insured becomes legally obligated to pay as damages because of property damage to which this insurance applies. The policy defines “property damage” as “[p]hysical injury to tangible property, including all resulting loss of use of that property” or “{l]loss of use of tangible property that is not physically injured.” Plaintiff, Advanced Property Restoration Services, LLC (“APRS”), contracted with Metairie Towers Condominium Association (“MTCA”) to provide remediation services to Metairie Towers Condominiums after Hurricane Ida. GNO managed the receipt of funds from the property insurer and operated under the direction of MTCA to fulfill MTCA’s obligation to pay APRS. APRS received two payments via wire transfer from GNO. However, prior to the third payment, an unknown third party hacked into APRS’ email server and sent an email to GNO with wire instructions that resulted in the final payment being sent to the hacker. APRS has asserted claims against Scottsdale’s insured, GNO, in contract and negligence, and alleged the negligence claims are covered by Scottsdale’s policy.

The factual allegations and claimed damages in the underlying litigation clearly and unambiguously relate to economic losses caused by the hacking incident in which the unknown third party hacked into APRS’ email server, provided fraudulent wire transfer instructions, and obtained funds that were intended for APRS. Applying Louisiana law to the same definition of “property damage”, courts have found purely economic losses do not qualify as “property damage” to trigger policy coverage. See CMP Coatings, Inc. v. Tokyo Marine & Nichido Fire Insurance Company, LTD, No. STATE OF LOUISIANA COURT OF APPEAL, FIRST CIRCUIT

NO. 2025 CW 0205 PAGE 2 OF 2

10-4277, 2012 WL 3901625, *2 (E.D. La. 9/6/12). In doing so, the court relied on Lamar Advertising Co. v. Continental Casualty Company, 396 F.3d 654 (5th Cir. 2005), which held that economic loss arising from an alleged breach of contract or lack of payment under a contract is not covered as “property damage.” Contractual rights are intangible in nature and thus any resulting economic loss arising from the interference with such rights would not be covered under the “property damage” coverage of the policy; the money damages would arise from loss of use of intangible property, and are, therefore not covered. CMP Coatings, Ine., 2012 WL 3901625 at *3. While APRS may have possessed, at the time, a right to the funds pursuant to its contract, the funds at issue were never in the possession of APRS, and accordingly, did not constitute its tangible property. APRS failed to establish it sustained “property damage” as defined in the policy. Accordingly, the motion for summary judgment is granted, and the claims of plaintiff, Advanced Property Restoration Services, LLC, against defendant, Scottsdale Insurance Company, are dismissed with prejudice.

COURT OF APPEAL, FIRST CIRCUIT

~ Ry.

DRPUTY CLERK OF COURT (|) FOR THE COURT