Hospitality Management Services, LLC v. Axis Surplus Insurance Company, Firequest Fire Alarm Service Associates, LLC, and Brassco, Inc.

• Court: Louisiana Court of Appeal
• Decided: September 16, 2024
• Docket: 2024-CA-0137
• Status: Published

Opinion

HOSPITALITY * NO. 2024-CA-0137 MANAGEMENT SERVICES, LLC * COURT OF APPEAL VERSUS * FOURTH CIRCUIT AXIS SURPLUS INSURANCE * COMPANY, FIREQUEST FIRE STATE OF LOUISIANA ALARM SERVICE ******* ASSOCIATES, LLC, AND BRASSCO, INC.

APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2020-10401, DIVISION “I-14” Honorable Lori Jupiter, Judge ****** Judge Tiffany Gautier Chase ****** (Court composed of Judge Rosemary Ledet, Judge Tiffany Gautier Chase, Judge Rachael D. Johnson)

Daniel M. Redmann DUPLASS APLC 433 Metairie Road, Suite 600 Metairie, Louisiana 70005

COUNSEL FOR PLAINTIFF/APPELLEE

Kyle Paul Kirsch E. Madison Barton Samantha S. Boudreaux WANEK KIRSCH DAVIES LLC 1340 Poydras Street, Suite 1801 New Orleans, Louisiana 70112

COUNSEL FOR DEFENDANT/APPELLANT

JUDGMENT REVERSED; REMANDED SEPTEMBER 16, 2024 TGC RML RDJ

Appellant/Defendant, Brassco, Inc. (hereinafter “Brassco”), seeks review of

the trial court’s January 10, 2024 judgment granting an exception of prescription

filed by Appellee/Defendant, Axis Surplus Insurance Company (hereinafter “Axis

Insurance”). After consideration of the record before this Court and applicable law,

we reverse the trial court’s judgment and remand this matter for further

proceedings.

Facts and Procedural History

Plaintiff, Hospitality Management Services, LLC (hereinafter “Hospitality

Management”), owns and operates a hotel located at 1801 32nd Street in Kenner,

Louisiana. On August 14, 2020, a pipe within the hotel’s sprinkler system ruptured

resulting in water and property damage to the hotel.

On December 8, 2020, Hospitality Management filed a petition for damages

(hereinafter “the original petition”) naming Axis Insurance, Firequest Fire Alarm

Service Associates, LLC (hereinafter “Firequest”), and Brassco as defendants. The

original petition alleges that Firequest, and its sub-contractor Brassco, were hired

for the purpose of inspecting, servicing, and maintaining the hotel’s fire alarm

system. In the original petition, Hospitality Management contends that Firequest

and Brassco were negligent in adhering to the appropriate standard of care in

1 inspecting and maintaining the sprinkler system which resulted in the ruptured pipe

and the subsequent damage to the hotel. Hospitality Management likewise

maintains that Brassco negligently reported the sprinkler system was in proper

working condition prior to the pipe rupturing. As to its claims against Axis

Insurance, Hospitality Management alleges bad faith claims that Axis Insurance

failed to provide proper payment under its commercial and dwelling policy of

insurance.

On June 1, 2023, Axis Insurance filed cross claims (hereinafter “incidental

demand”) against Firequest and Brassco.1 In the incidental demand, Axis Insurance

contends, as the insurer of Hospitality Management, is subrogated to the rights and

actions asserted in the original petition against Brassco and Firequest. Axis

Insurance also asserts that Brassco was negligent in maintaining and inspecting the

hotel’s sprinkler system which resulted in the ruptured pipe. According to the

incidental demand, Brassco conducted a service call at the hotel on November 11,

2019, where it discovered that couplings between the pipes of the sprinkler system

were leaking in the hotel’s attic. Axis Insurance claims that Brassco’s failure, to

perform hydrostatic testing in accordance with National Fire Protection

Association guidelines, prevented its discovery of corroded pipes.

In response to the incidental demand, Brassco filed an exception of

prescription on June 13, 2023. In its exception, Brassco maintains that Axis

Insurance’s incidental demand was not filed within ninety days of the original

petition as required under La. C.C.P. art. 1041. Brassco also alleges that the timely

filing of the original petition does not interrupt prescription as to the incidental

1 “Incidental demands are reconvention, cross-claims, intervention, and the demand against third

parties.” La. C.C.P. art. 1031.

2 demand because the two pleadings fail to share a single cause of action.

Accordingly, Brassco sought a dismissal of Axis Insurance’s incidental demand.

Axis Insurance opposed the exception arguing the incidental demand is timely

because it shares a single cause of action with its insured’s original petition. It

maintains that the timely filing of the original petition interrupted prescription as to

Axis Insurance’s negligence cross-claims.

After a hearing on the exception, the trial court granted the exception of

prescription and dismissed Axis Insurance’s incidental demand with prejudice.

This devolutive appeal followed.

Standard of Review

This Court’s standard of review of a trial court’s ruling on an exception of

prescription is contingent upon whether evidence is introduced at the hearing on

the exception. Barkerding v. Whittaker, 2018-0415, p. 13 (La.App. 4 Cir.

12/28/18), 263 So.3d 1170, 1180 (citations omitted). “When prescription is raised

by peremptory exception, with evidence being introduced at the hearing on the

exception, the trial court’s findings of fact on the issue of prescription are subject

to the manifest error-clearly wrong standard of review.” Id., 2018-0415, pp. 13-14,

263 So.3d at 1180 (quoting In re Med. Review Panel of Hurst, 2016-0934, p. 4

(La.App. 4 Cir. 5/3/17), 220 So.3d 121, 125-26). If no evidence is introduced, the

de novo standard applies. Id. 2018-0415, p. 14, 263 So.3d at 1180 (citation

omitted). The transcript reveals that neither party introduced evidence at the

hearing. Accordingly, a de novo standard of review applies.

Discussion

Axis Insurance’s sole assignment of error on appeal is that the trial court

erred in granting the exception of prescription. In order to determine whether the

3 incidental demand is prescribed, we must consider whether the subrogation cross-

claims within Axis Insurance’s incidental demand share a single cause of action

with the original petition.

Generally, the party asserting a peremptory exception of prescription bears

the burden of proof. Wells Fargo Fin. Louisiana, Inc. v. Galloway, 2017-0413, p. 9

(La.App. 4 Cir. 11/15/17), 231 So.3d 793, 800 (citations omitted). However,

“[w]hen the plaintiff’s claim is prescribed on it’s the face…the burden shifts to the

plaintiff to establish that his or her claim has not prescribed.” Id. (citations

omitted). “Statutes regulating prescription are strictly construed against

prescription and in favor of the obligation sought to be extinguished.” Id., 2017-

0413, p. 9, 231 So.3d at 801 (quoting Mallett v. McNeal, 2005-2289, 2005-2322 p.

5 (La. 10/17/06), 939 So.2d 1254, 1258). “Prescription runs against all persons

unless [an] exception is established by legislation.” La. C.C. art. 3467. “Louisiana

law recognizes three exceptions to the general rule: ‘(1) La. C.C.P. art. 1153 allows

an amending petition to relate back to the date of the original pleading; (2) La.

C.C.P. art. 1041 allows an additional ninety days for an incidental demand; and (3)

in circumstances where the parties share a single cause of action.’” Lindsay v.

Ports Am. Gulfport, Inc., 2019-0360, p. 5 (La.App. 4 Cir. 12/4/19), 286 So.3d 534,

538 (quoting Corley Enterprises of Louisiana, Inc. v. Bear Creek Saloon, Inc.,

2018-1147, p. 5 (La.App. 1 Cir. 2/28/19); 273 So.3d 1236, 1239) (citation

omitted).2

2 La. C.C.P. art. 1153 provides:

When the action or defense asserted in the amended petition or answer arises out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of filing the original pleading.

4 On appeal, Axis Insurance maintains that the original petition and the

incidental demand share a single cause of action that arises out of the same factual

occurrence, i.e. negligence- property damage caused by the ruptured pipe.

Specifically, Axis Insurance argues that as a subrogee of its insured, Hospitality

Management, it is subrogated to the rights and actions asserted in the original

petition. The principle of subrogation allows an insurer to stand in the shoes of the

insured. Barreca v. Cobb, 1995-1651, pp. 2-3 (La. 2/28/96), 668 So.2d 1129, 1131

(citation omitted). The insurer then “acquires the right to assert the actions and

rights of the plaintiff… .” Id., 1995-1651, p. 2, 668 So.2d at 1131. “[W]hen several

parties share a single cause of action (as through partial subrogation), suit by one

interrupts prescription as to all.” Louviere v. Shell Oil Co., 440 So.2d 93, 96 (La.

1983). Axis Insurance contends the filing of the original petition interrupted

prescription as to the subrogation cross-claims within its incidental demand.

Conversely, Brassco avers prescription was not interrupted because the two

pleadings do not share a single cause of action. Brassco also argues that the

incidental demand is untimely under La. C.C.P. art. 1041. We find Brassco’s

arguments unpersuasive.

In the context of a peremptory exception, a “cause of action” is defined as

the “operative facts which give rise to the plaintiff’s right to judicially assert the

action against the defendant.” Everything on Wheels Subaru, Inc. v. Subaru S.,

Inc., 616 So.2d 1234, 1238 (La. 1993); See also Louviere, 440 So.2d at 95. Stated

differently, to constitute the same cause of action, the claims of both Hospitality

La. C.C.P. art. 1041 provides:

An incidental demand is not barred by prescription or peremption if it was not barred at the time the main demand was filed and is filed within ninety days of date of service of main demand or in the case of a third party defendant within ninety days from service of process of the third party demand.

5 Management and Axis Insurance must be based in the same cause of action that

consist of the same material facts which form the basis of the right to recover

damages. See Louviere, 440 So.2d at 95 (citation omitted). In the matter sub judice,

Hospitality Management timely filed a petition to recover property damages

resulting from a ruptured pipe. In its original petition, Hospitality Management

contends that Brassco failed to act with reasonable care under the circumstances

and neglected to adhere to the appropriate standard of care in its inspection and

maintenance of the sprinkler system. The incidental demand also maintains that

Brassco’s continuous negligent inspection and maintenance of the hotel’s sprinkler

system led to the pipe rupturing.

A review of the original petition and incidental demand indicates the two

pleadings share a single cause of action. The pleadings state that Brassco’s

negligent inspection and maintenance of the hotel’s sprinkler system is a direct

result of the ruptured pipe and subsequent property damage to the hotel. Axis

Insurance and Hospitality Management collectively allege specific occurrences in

which Brassco negligently reported that the sprinkler system was in proper

working condition prior to the pipe rupturing. In both pleadings, they also contend

that if Brassco would have properly inspected the sprinkler system, the corrosion

that lead to the ruptured pipe would have been discovered. Thus, the allegations

within the incidental demand arise from the same factual occurrence plead in the

original petition — the pipe bursting as a result of Brassco’s alleged negligence.

Although Brassco contends the two pleadings requested different forms of

damages – damages covered under Axis Insurance’s policy and those not covered

under the policy – this does not negate the fact that both pleadings maintain the

same negligence claims against Brassco. We therefore find the facts alleged in the

6 original petition give Axis Insurance a right to assert subrogation cross-claims

against Brassco. See Louviere, 440 So.2d at 96 (finding parties share a single cause

of action through partial subrogation). Considering the pleadings share a single

cause of action, the timely filing of the original petition interrupted prescription as

to the cross-claims within Axis Insurance’s incidental demand. See id., 440 So.2d

at 96-98; Lindsay, 2019-0360, p. 5, 286 So.3d at 538 (noting prescription is

interrupted when the parties share a single cause of action). Accordingly, the trial

court erred in granting Brassco’s exception of prescription and dismissing the

cross-claims within Axis Insurance’s incidental demand.

Decree

Based on the foregoing, the trial court’s January 10, 2024 judgment granting

Brassco’s exception of prescription is reversed. This matter is remanded to the trial

court for further proceedings.

JUDGMENT REVERSED; REMANDED