American Zurich Insurance Co. v. Caterpillar, Inc.

99 So. 3d 739, 12 La.App. 3 Cir. 270, 2012 WL 4774896, 2012 La. App. LEXIS 1267
CourtLouisiana Court of Appeal
DecidedOctober 3, 2012
DocketNo. 12-270
StatusPublished
Cited by14 cases

This text of 99 So. 3d 739 (American Zurich Insurance Co. v. Caterpillar, Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Zurich Insurance Co. v. Caterpillar, Inc., 99 So. 3d 739, 12 La.App. 3 Cir. 270, 2012 WL 4774896, 2012 La. App. LEXIS 1267 (La. Ct. App. 2012).

Opinion

GREMILLION, Judge.

|, The plaintiff, American Zurich Insurance Company (Zurich), appeals the trial court’s ruling granting the defendant, Caterpillar, Inc.’s (Caterpillar), peremptory exception of prescription and motion for summary judgment. For the following reasons, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

This litigation arises out of a Kenworth truck fire that occurred on April 7, 2010. Caterpillar manufactured the truck’s engine. Zurich insured the vehicle and learned of the accident on the date it occurred, April 7, 2010, as evidenced by the date of its first entry upon opening its loss file. According to its entry on the following day, April 8, 2010, Zurich knew that the vehicle had burst into flames on the highway. Zurich paid its insured $76,930.74 for the total loss of the truck and sought reimbursement from Caterpillar for an allegedly defective engine.

On April 6, 2011, Zurich fax-filed a petition for damages against Caterpillar in the Eighteenth Judicial District Court for the Parish of West Baton Rouge. Caterpillar was served with the petition on April 26, 2011. However, there is no dispute that West Baton Rouge Parish was an improper venue for the lawsuit. On July 27, 2011, the trial court in West Baton Rouge Parish sustained Caterpillar’s venue exception and granted Zurich’s motion to transfer the case to the Tenth Judicial Court for the Parish of Natchitoches.

[741]*741On September 2, 2011, Caterpillar filed a Peremptory Exception of Prescription and/or Motion for Summary Judgment. Following a November 10, 2011 hearing, the trial court granted Caterpillar’s exception and motion for summary judgment and dismissed Zurich’s claims against it. Zurich now appeals.

TISSUES

Zurich assigns as error:

1. The Appellant’s claim for damages for the defective engine did not prescribe on April 7, 2011.
2. There are genuine issues of material fact that supports [sic] the Appellant’s breach of contract claim against Appellee, which is mutually exclusive from Appellant’s products liability claim against Appellee.

DISCUSSION

Prescription

The central issue in this case is whether Zurich’s claim against Caterpillar has prescribed. We review the trial court’s findings on an exception of prescription using the manifest error standard of review. London Towne Condo. Homeowner’s Ass’n v. London Towne Co., 06-401 (La.10/17/06), 939 So.2d 1227.

Zurich claims that prescription began to toll on April 26, 2010, when it was made aware of a possible defect in the Caterpillar engine by Centro Inspection Agency, whom it hired to investigate the claim. Thus, Zurich argues that the April 26, 2011 service upon Caterpillar was timely. Zurich further argues that its claims are brought pursuant to the Louisiana Products Liability Act, La.R.S. 9:2800.51, et. seq., and the one year prescriptive period on such claims does not begin to toll until the date the victim became aware of the defect. The trial court agreed with Caterpillar that prescription began to toll on the date of the truck fire, April 7, 2010.

A claimant has one year “from the day injury or damage is sustained” in which to file its action. La.Civ.Code art. 3492. This prescriptive period applies to claims under the LPLA. See LaPlace Concrete, Inc., v. Stallings Const. Co. Inc., 01-131 (La.App. 4 Cir. 12/5/01), 803 So.2d 1015. Louisiana Civil Code Article 3462 states (emphasis added):

| (¡Prescription is interrupted when the owner commences action against the possessor, or when the obligee commences action against the obligor, in a court of competent jurisdiction and venue. If action is commenced in an incompetent court, or in an improper venue, prescription is interrupted only as to a defendant served by process within the prescriptive period.

The prevailing wisdom is that prescription begins to run when the defect manifests itself, not on the date the underlying cause of the defect is found. See Lee v. Equitable Life Assur. Soc’y of U.S., 391 So.2d 37 (La.App. 3 Cir.1980), writ denied, 395 So.2d 1363 (La.1981); David v. Meek, 97-523 (La.App. 1 Cir. 4/8/98), 710 So.2d 1160.

Zurich argues that contra non valentem applies to prevent the running of prescription. In Cartwright v. Chrysler Corp., 255 La. 597, 603-04, 232 So.2d 285, 287 (La.1970), the supreme court set forth the often-cited standard for determining constructive knowledge in a contra non valen-tem case:

Whatever is notice enough to excite attention and put the owner on his guard and call for inquiry is tantamount to knowledge or notice of every thing to which inquiry may lead and such information or knowledge as ought to reasonably put the owner on inquiry is [742]*742sufficient to start the running of prescription.

However, there is no need to ponder when Zurich had constructive knowledge since it is clear from the record that it had actual knowledge on the date of the accident or at least the day after. The evidence in the record supports a finding that Zurich knew of the complete loss of the truck that caught fire while in motion which the driver himself attributed to engine malfunction. Knowledge that a vehicle that spontaneously catches on fire, in general, would be sufficient to put the most unobservant person on notice of a major defect. That, coupled with the driver’s own belief that it was caused by an engine malfunction, leads to the conclusion that Zurich had actual knowledge. For these reasons, Zurich’s feeble [4 argument that contra non valentem should apply to this case fails. The trial court, in its extensive written reasons for judgment found:

It is clear from the evidence presented, especially information included in Zurich’s responses to request for production of documents (exhibit G-AZIC 00087-00089), that on the date of the incident, the driver of the truck and his employer, the insured, were aware of incident when it happened. The insured, or its employee, reported to Zurich that her staff went immediately to the accident site. She said the driver reported that he was driving down the road and heard a pop, and then saw flames. An April 8, [2010], notation states that the driver reported that he heard a pop from the front of the vehicle and thought he had a blow out as the vehicle started shaking; the driver reported that he believed a rod came out of the engine block, struck the fuel lines, and this started the fire. As a matter of law, prescription began to run on the date of the engine failure and fire.

Having reviewed the record, we find no manifest error in the trial court’s ruling. Reasonable people could easily conclude that the prescriptive period began to toll on the date of fire, April 7, 2010; thus, service upon Caterpillar on April 26, 2011, was insufficient to interrupt prescription, and Zurich’s claims against Caterpillar are prescribed. This assignment of error is without merit.

Breach of Contract

Zurich contends that it has a separate cause of action for failure to perform under a service contract which is subject to a ten year prescriptive period pursuant to La.Civ.Code art.

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Bluebook (online)
99 So. 3d 739, 12 La.App. 3 Cir. 270, 2012 WL 4774896, 2012 La. App. LEXIS 1267, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-zurich-insurance-co-v-caterpillar-inc-lactapp-2012.