Club Delux Apartments, LLC v. Westchester Surplus Lines Ins. Co.

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CLUB DELUX APARTMENTS, LLC v. WESTCHESTER SURPLUS LINES INSURANCE COMPANY

Civil Action No. 24-369

United States District Court, E.D. Louisiana

May 6, 2024

SECTION I

ORDER & REASONS

LANCE M. AFRICK UNITED STATES DISTRICT JUDGE

Before the Court is defendant Westchester Surplus Lines Insurance Company's (“defendant”) motion^[1] for summary judgment. Plaintiff Club Delux Apartments, LLC (“plaintiff”) opposes^[2] this motion. Defendant filed a reply.^[3] For the reasons that follow, the Court grants the motion in part and denies it without prejudice in part.

I. BACKGROUND

This case involves an insurance dispute arising from damage to plaintiff's properties allegedly sustained during Hurricane Ida.^[4] Plaintiff asserts that, at all relevant times, plaintiff owned and operated an apartment complex comprised of eleven residential rental properties, each with two rental units.^[5] Defendant issued an insurance policy covering the properties which was in effect during Hurricane Ida.^[6] The insurance policy provides that defendant “will pay for covered loss or damage within 30 days after [defendant] receive[s] the sworn proof of loss, if [the insured] ha[s] complied with all of the terms of this Coverage Part, and: (1) [Defendant] ha[s] reached an agreement with [the insured] on the amount of loss; or (2) An appraisal award has been made.”^[7] The policy also contains a “Legal Action Against Us” provision, which states: “No one may bring a legal action against [defendant] under this Coverage Part unless: 1. There has been full compliance with all of the terms of this Coverage Part; and 2. The action is brought within 2 years after the date on which the direct physical loss or damage occurred.”^[8]

Immediately after Hurricane Ida, Crystal Foster (“Foster”) defendant's property manager, inspected the properties and “observed what appeared to be minor damage that, in [her] opinion, would not exceed the [policy's] windstorm deductible of $2,500 for each building.”^[9] According to Foster, in “mid-2023,” plaintiff “was informed by a building consultant that the properties likely sustained more damage from Hurricane Ida than what [Foster] realized when [she] first inspected them.”^[10]

On August 19, 2023, plaintiff's attorneys emailed a letter of representation to defendant indicating that the letter should be considered “notice of [a Hurricane Ida] claim[.]”^[11] On August 23, 2023, defendant “initiated a loss adjustment by assigning an independent adjuster who contacted [plaintiff's] counsel to schedule an inspection of the claimed damage and request additional information regarding the claim.”^[12]Beginning on August 24, 2023, defendant's independent adjuster made several unsuccessful attempts to contact plaintiff's counsel.^[13] Plaintiff filed the instant lawsuit on August 28, 2023.^[14] Plaintiff's counsel first responded to defendant's independent adjuster on September 6, 2023.^[15]

In its motion for summary judgment, defendant argues that this matter should be dismissed as premature because plaintiff filed its petition for damages only nine days after providing notice of the claim.^[16] Defendant emphasizes that neither the insurance policy nor Louisiana law requires it to pay a claim within nine days of the first notice of the claim.^[17] Because defendant was not obligated to tender anything to plaintiff at the time the lawsuit was filed, defendant argues that the lawsuit was premature.^[18] Moreover, defendant contends that prescription continued to run even after plaintiff filed the lawsuit and that, pursuant to the “Legal Action Against Us” policy provision, plaintiff's claim prescribed on August 29, 2023, two years after Hurricane Ida.^[19] Accordingly, defendant requests that the Court dismiss this action with prejudice and at plaintiff's cost based on prescription.^[20] Alternatively, defendant requests that the Court dismiss the action without prejudice as premature.^[21]

In response, plaintiff characterizes defendant's motion as a “‘Heads, we win, Tails you lose' argument” and therefore urges the Court to deny it.^[22] Specifically, plaintiff argues that its lawsuit was not premature because it was timely filed within two years of Hurricane Ida pursuant to the insurance policy.^[23] Plaintiff also contends that an insurance company should not be able to “enforce a ‘limitation of suit' provision on a property damage claim while simultaneously urging that the policyholder's timely filed claim is then premature.”^[24] Further, plaintiff asserts that, even if its claims are premature, they are not prescribed because “any prescriptive period was interrupted by the timely filing of this suit.”^[25] Plaintiff also argues that defendant's motion is an effort to shorten the prescriptive period to less than two years in violation of La. R.S. 22:868(B).^[26] In the alternative, plaintiff requests the opportunity to amend its complaint if the Court finds that additional factual allegations are necessary to establish its right to proceed with its claim.^[27] In reply, defendant reiterates that no breach had occurred at the time plaintiff filed the lawsuit.^[28] Defendant also contends that the policy's two-year prescriptive period complies with La. R.S. 22:868(B).^[29] Further, defendant stresses that plaintiff's filing of this lawsuit did not interrupt prescription pursuant to Louisiana law because this lawsuit was premature.^[30] Finally, defendant urges the Court to deny plaintiff's request for leave to amend as futile because plaintiff has not indicated what additional allegations it would make in any amended complaint and because plaintiff has already had an opportunity to submit summary judgment evidence in opposition to defendant's motion.^[31]

II. STANDARD OF LAW

Summary judgment is proper when, after reviewing the materials in the record, a court determines that there is “no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The party seeking summary judgment need not produce evidence negating the existence of a material fact; it need only point out the absence of evidence supporting the other party's case. Id.; see also Fontenot v. Upjohn Co., 780 F.2d 1190, 1195-96 (5th Cir. 1986) (“There is no sound reason why conclusory allegations should suffice to require a trial when there is no evidence to support them even if the movant lacks contrary evidence.”).

Once the party seeking summary judgment carries that burden, the nonmoving party must come forward with specific facts showing that there is a genuine dispute of material fact for trial. See Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The showing of a genuine dispute is not satisfied by creating “‘some metaphysical doubt as to the material facts,' by ‘conclusory allegations,' by ‘unsubstantiated assertions,' or by only a ‘scintilla' of evidence.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations omitted). Rather, a genuine dispute of material fact exists when the “evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The party responding to the motion for summary judgment may not rest upon the pleadings but must identify specific facts that establish a genuine issue. Anderson, 477 U.S. at 248. The nonmoving party's evidence, however, “is to be believed, and all justifiable inferences are to be drawn in [the nonmoving party's] favor.” Id. at 255. If the nonmovant fails to meet its burden of showing a genuine dispute for trial that could support a judgment in favor of the nonmovant, summary judgment must be granted. See Little, 37 F.3d at 1075-76.

III. ANALYSIS

As noted, defendant first argues that the Court should dismiss this lawsuit because it was premature at the time it was filed.^[32] Pursuant to Louisiana law, “[a]n obligation implies a right to enforce it which may or may not accrue immediately upon the creation of the obligation. When the obligation allows a term for performance, the right to enforce it does not accrue until the term has elapsed.” La. Code Civ. Proc. art. 423. Additionally, “[w]hen an action is brought on an obligation before the right to enforce it has accrued, the action shall be dismissed as premature, but it may be brought again after this right has accrued.” Id. “Prematurity is determined by the facts existing at the time suit is filed.” Sevier v. U.S. Fidelity & Guaranty Co., 497 So.2d 1380 (La. 1986) (citation omitted).

Plaintiff's complaint asserts a breach of insurance contract claim. The U.S. Court of Appeals for the Fifth Circuit has explained that, “[i]n Louisiana, a breach-of-contract claim has three ‘essential' elements: ‘(1) the obligor's undertaking an obligation to perform, (2) the obligor failed to perform the obligation (the breach), and (3) the failure to perform resulted in damages to the obligee.'” IberiaBank v. Broussard, 907 F.3d 826, 835 (5th Cir. 2018) (quoting Favrot v Favrot, 68 So.3d 1099, 1108-09 (La.App. 4th Cir. 2011)). Additionally, “[t]o state a claim for breach of an insurance contract under Louisiana law, a plaintiff must allege a breach of a specific policy provision.” Louque v. Allstate Ins. Co., 314 F.3d 776, 782 (5th Cir. 2002) (citing Bergeron v. Pan Am. Assurance Co., 731 So.2d 1037, 1045 (La.App. 4th Cir. 1999)). “Generally, a breach-of-contract claim [pursuant to Louisiana...