A recent court decision has reignited a legal battle over alleged negligence and insurance claims involving a Louisiana hotel. On September 16, 2024, the Court of Appeal for the Fourth Circuit reversed a previous ruling by the Civil District Court of Orleans Parish, which had dismissed an incidental demand filed by Axis Surplus Insurance Company against Brassco, Inc. The case stems from a 2020 incident where a ruptured sprinkler pipe caused significant water damage to a hotel owned by Hospitality Management Services, LLC.
Hospitality Management Services, LLC filed the original complaint on December 8, 2020, in the Civil District Court of Orleans Parish against Axis Surplus Insurance Company, Firequest Fire Alarm Service Associates, LLC, and Brassco, Inc. The plaintiff alleges that Firequest and its subcontractor Brassco were negligent in inspecting and maintaining the hotel's fire alarm system. This negligence purportedly led to the sprinkler system's failure and subsequent property damage. Additionally, Hospitality Management accused Axis Insurance of bad faith for not providing proper payment under its commercial and dwelling policy.
The case took another turn on June 1, 2023, when Axis Insurance filed cross-claims against Firequest and Brassco. In these claims, Axis contended that as the insurer of Hospitality Management Services, it was subrogated to their rights and actions against Brassco and Firequest. According to Axis Insurance's incidental demand, Brassco was negligent during a service call on November 11, 2019. During this visit, Brassco discovered leaking couplings between pipes but failed to perform hydrostatic testing per National Fire Protection Association guidelines. This omission allegedly prevented them from discovering corroded pipes that eventually led to the rupture.
In response to these cross-claims, Brassco filed an exception of prescription on June 13, 2023. They argued that Axis Insurance's incidental demand was not filed within ninety days of the original petition as required under Louisiana law (La. C.C.P. art. 1041). Furthermore, they claimed that the timely filing of the original petition did not interrupt prescription for the incidental demand because both pleadings did not share a single cause of action.
The trial court initially sided with Brassco and granted their exception of prescription on January 10, 2024. However, upon appeal by Axis Insurance, the Court of Appeal applied a de novo standard of review since no evidence was introduced at the hearing on the exception. The appellate court found that both Hospitality Management’s original petition and Axis Insurance’s incidental demand shared a single cause of action based on negligence leading to property damage from the ruptured pipe.
Axis Insurance argued successfully that as a subrogee standing in for its insured party (Hospitality Management), it acquired all rights to assert claims against Brassco for negligence. The appellate court concluded that since both pleadings arose from identical factual circumstances—Brassco’s alleged negligent inspection—the timely filing of Hospitality Management’s original petition interrupted prescription for Axis Insurance’s cross-claims.
Consequently, Judges Tiffany Gautier Chase (authoring judge), Rosemary Ledet (concurring), and Rachael D. Johnson (concurring) reversed the trial court's judgment granting Brassco's exception of prescription and remanded the matter for further proceedings.
Attorneys involved in this case include Daniel M. Redmann from Duplass APLC representing Hospitality Management Services (plaintiff/appellee) and Kyle Paul Kirsch along with E. Madison Barton and Samantha S. Boudreaux from Wanek Kirsch Davies LLC representing Brassco (defendant/appellant). The case is identified under No: 2024-CA-0137.