Sit on Your Rights & You Will Lose Them — Statutes of Limitation Serve an Important Function

In an attempt to clean up with damages after Hurricane Katrina after sitting on its rights for many years, Marion’s Cleaners, LLC, sued its insurer seeking indemnity from its insurer for damages that resulted from Katrina. In Marion’s Cleaners, LLC v. National Fire & Indemnity Exchange, Slip Copy, 2016 WL 952247 (March 14, 2016), the United States District Court, E.D. Louisiana, was faced with a claim that, although the suits were filed late, the limitation period (called “prescription” in Louisiana) was tolled.

National Fire & Indemnity Exchange (“National Fire”) filed two motions; first, a motion for summary judgment and second, a motion for judgment on the pleadings. Both motions were opposed by Plaintiff Marion’s Cleaners, LLC (“Marion’s” or “Plaintiff”).

BACKGROUND

This consolidated matter addresses two post-Hurricane Katrina insurance-coverage lawsuits filed by Marion’s Cleaners against National Fire. Prior to Hurricane Katrina, National Fire issued policies of insurance to Marion’s Cleaners for its commercial properties located at 106 Severn Avenue in Jefferson Parish, Louisiana, and at 3142 Calhoun Street in New Orleans. The parties agree the insurance policies were in effect when Hurricane Katrina made landfall in Louisiana and Mississippi on August 29, 2005. According to Marion’s, Hurricane Katrina inflicted “serious and devastating damages” to its business locations in Jefferson Parish and New Orleans, causing Marion’s to incur a “loss of inventory, loss of use and loss of business income” at both locations.

DISCUSSION

National Fire contends, in both motions, that it is entitled to judgment as a matter of law because Marion’s claims are prescribed. Because jurisdiction in this case is premised on diversity of citizenship, the Court must apply the applicable Louisiana prescriptive period. Under Louisiana law, the deadline for filing insurance claims for property damages and losses caused by Hurricane Katrina was September 1, 2007. Both parties agree Marion’s claims against National Fire were subject to the September 1, 2007 deadline. Nevertheless, Marion’s filed the instant lawsuits years later.

It is beyond dispute that Marion’s did not sue National Fire prior to the September 1, 2007 prescriptive deadline. As a general rule, the burden of proving prescription rests with the moving party. However, if the petition is prescribed on its face, prescription is presumed and the burden of proof shifts to the Plaintiff to negate that presumption by proving suspension or interruption. Marion’s claims against National Fire are prescribed on their face. As a result, it is Marion’s burden to prove that the prescriptive period was either suspended or interrupted.

To receive the benefit of the suspension of prescription provided for in the statutes, an individual filing an independent suit must establish three predicate facts: (1) the existence of a timely-filed class action proceeding against the defendant; (2) that he or she is a member of the class described or defined in the identified class petition; and (3) that the claims asserted in the independent action arise “out of the transaction or occurrences described” in that petition.

The Motion to Dismiss

Because Marion’s claims are prescribed on their face, it is Marion’s burden to show the prescriptive period was suspended or interrupted. But nowhere in its state-court petition does Marion’s even mention the class-action tolling doctrine or allege that Marion’s is or was a member or putative member of a class. Marion’s only invokes the class-action tolling doctrine in its opposition to National Fire’s motion, and it does so summarily.

Marion’s state-court petition does not even list the class or putative class actions which Marion’s claims to be a part of, let alone identify itself as a member of those classes or explain how its claims are similar to the claims asserted therein. Summary, conclusory allegations are not sufficient to invoke the class-action tolling doctrine.

Based on these allegations, the Court found that Marion’s state-court petition does not state a plausible claim for relief, and granted National Fire’s Rule 12(c) motion.

The Motion for Summary Judgment

In the motion for summary judgment, National Fire contends, as above, that Marion’s claims are prescribed and that it is entitled to summary judgment as a result. Marion’s two state-court petitions are identical and deficient. Assuming, however, that the petition did satisfactorily state a plausible claim for relief on its face, Marion’s has still failed to establish, by pointing to undisputed facts in the record, that the prescription of its claims was suspended.

However, unlike its opposition to National Fire’s motion for judgment on the pleadings, Marion’s opposition to the motion for summary judgment specifically identifies the class of which Marion’s contends it is a member. That class action is Louisiana State, et al. v. AAA Insurance, et al. (E.D. La. 07-5528), known as the “Road Home litigation.” Marion’s argues the Road Home litigation, which was filed in Louisiana state court on August 23, 2007, interrupted the running of prescription on its claims against National Fire, because Marion’s was a member of that class and National Fire was involved in the action as a defendant.

Because there has been no allegation that Marion’s applied for Road Home benefits prior to July 31, 2007, Marion’s has failed to carry its burden to show that the filing of the Road Home class suspended the prescription of its claims. Moreover, the Road Home litigation involved plaintiffs who sustained damages and losses to residential properties. In fact, the class in the Road Home litigation was defined as “current and former citizens of the State of Louisiana who have applied for and received or will receive funds through The Road Home Program…and to whom insurance proceeds are due and/or owed for damages sustained to any such recipient’s residence.”

Therefore, even if Marion’s alleged it had applied for Road Home benefits prior to July 31, 2007, it is not clear whether Marion’s would qualify as a member of that class, as Marion’s seeks to recover for damages sustained by commercial properties. Therefore the motion for summary judgment was granted.

ZALMA OPINION

Grasping at straws the plaintiff, Marion’s, argued tolling of the statute of limitations without even reading the class action – limited to residences – that they claimed supported the tolling. The reason for prescription – statutes of limitation – is to protect defendants from stale claims where witnesses’ memories have faded and physical evidence has changed. Regardless of the horrors and damages caused by Katrina, attempting such a belated lawsuit is a waste of legal and judicial time and effort.