Subrogation in Louisiana: Differences and Opportunities
Louisiana. Home of the Big Easy, Mardi Gras and drive-thru daiquiri bars. Louisiana is also home to a unique legal system called the civil code system, which the Pelican State inherited from French and Spanish settlers. Basically, a civil code legal system means that most of Louisiana law originates from codes and statutes, rather than from judge-made law (common law). For this reason, handling subrogation matters in Louisiana can present unique challenges, but it can also provide opportunities not found in common law states.
In general, I found that Louisiana law is more supportive of subrogation actions than common law jurisdictions. For example, a subrogated carrier may assert claims against a defendant for causes of loss that are not covered under the policy. See Independent Fire Insurance Co. v. Kline, 454 So.2d 418, 419 (La. App. 3rd Cir. 1984). In Kline, the insured’s carport collapsed during high winds. Damages caused by high winds were covered under the insured’s policy. The subrogated insurer (that paid under the policy) sued the contractor that built the carport for construction defects. Defects in construction were not covered under the homeowner’s policy. The contractor-defendant asserted that the subrogated insurer did not have subrogation rights because the claims asserted in the petition were not covered losses under the homeowner’s policy. On appeal, the 3rd Circuit Court noted that the subrogation agreement assigned “all claims” to the insurer. The Court reasoned that the term “all claims” included all the claims that could have been asserted by insured against any potential defendant, including those claims not covered under the insurance policy. The Court returned the case to the trial court for a trial on the issue of causation (high winds or construction defects).
Another important difference in Louisiana is the general acceptance of subrogation rights arising from settling third-party liability claims. In general, Louisiana permits a liability insurance carrier to subrogate against a third-party tortfeasor after settling the plaintiff’s claims. Many times, this situation presents itself in environmental contamination or personal injury cases. In general, the settling plaintiff assigns his/her subrogation rights to the liability carrier through the settlement agreement and release, thereby granting the settling carrier conventional (contractual) subrogation rights.
While the vast majority of Louisiana law is conceptually the same as common law jurisdictions, a major difference is in the terminology. For example, a statute of limitations is referred to as “prescription,” and a statute of repose is referred to “peremption.” As I joked with my colleagues after obtaining my Louisiana bar license last year, the Louisiana bar should provide a Louisiana-to-common-law dictionary for those of us who started our practice at the common law. Once the differences and opportunities in Louisiana are understood, as they say in Cajun country: Laissez les bon temps rouler—Let the good times roll.
A newly released study addresses the CSST failure scenario and suggests significant testing in an effort to “mitigate” it. The report, which is 267 pages is entitled, .jpg)
Lightning strikes and a water heater fails resulting in a fire. Is the subrogation investigation over? Not if the water heater failure involves a Gas Appliance Connector (GAC). GAC’s have properties similar to Corrugated Stainless Steel Tubing (CSST)..jpg)
The issue is whether a GAC is unreasonably dangerous given alternative, feasible designs. Although black iron pipe is an excellent alternative to CSST for gas distribution systems, it is not a good substitute for GACs given the difficulty in precisely lining up an appliance with the stub of a black pipe. Moreover, the GAC also functions to protect the gas system from leaks that might be caused by structural shifts in or vibrations to a black iron pipe system.
A fire occurs in a garbage can causing damage to a home. Joe and John Smith, construction workers installing hardwood flooring in the home on and prior to the date of the fire, admit that they smoke each day near the job site. They further admit that they typically extinguish and then discard their cigarettes in the same garbage can where the fire began, including doing so on the date it occurred. The garbage can itself is almost completely destroyed in the fire, and no trace of any cigarettes are found. No witnesses saw the fire begin, and nobody saw the Smiths discard a smoldering cigarette in the garbage can. Finally, no evidence can be shown to exclude the possibility that a third-party, as opposed to the Smiths, left a smoldering cigarette in this garbage can. Think these facts are insufficient to prove that Joe and John caused the fire in a civil case? You may be surprised.
Georgia has a statute of repose for claims involving defective products. O.C.G.A. §51-11-11(b)(2) states that “no action shall be commenced pursuant to this subsection with respect to an injury after ten years from the date of the first sale for use or consumption of the personal property causing or otherwise bringing about the injury.” [Emphasis Added] Prior to 2006, based upon this statute, products claims were brought against product manufacturers within ten (10) years after the product was purchased by the first consumer or user. However, in 2006 the ruling in Johnson v. Ford Motor Company changed the game. In Johnson, the Georgia Court of Appeals held that a claim involving damage caused by a product’s component part must be filed within 10 years after the part was incorporated into the final design of the product by the manufacturer..jpg)
Don't look now, but the Texas Legislature may be back up to its old tricks. That's right, "tort reform" has once again become a hot topic in Texas. On March 14, 2011, two separate bills were introduced in the state Senate and the state house of Representatives that could fundamentally alter civil litigation in Texas (yet again). The bills (referred to as S.B. 13 and H.B. 274, respectively) effectively creates a "loser pays" system to address what the legislature believes to a continuing "lawsuit crisis" in Texas. Governor Rick Perry has expressed his support of a loser pays tort reform initiative, and has publicly commented that he is fully committed to ensuring that the bills make their way through the legislative process.
