On March 2, 2021, the Louisiana Supreme Court made final a ruling in favor of a firm client defending against subrogation claims by insurers who were seeking to recover proceeds paid under a builder’s risk policy. The firm client served as a subcontractor on the Jung Hotel renovation project which experienced significant water damage in 2017. After paying more than $400,000 for the losses to the general contractor under the builder’s risk policy, the insurers sought to recover these amounts from the firm client, arguing that the subcontractor was partly responsible for the damages.
In February 2019, the firm filed a summary judgment motion on behalf of the client seeking dismissal of the insurers’ subrogation claims on two grounds. First, the firm client was an additional insured under the builder’s risk policy as a subcontractor working on the project and, accordingly, the insurers could not recover against their own insured under well-established Louisiana law. Second, the waivers of subrogation in the subcontract and the insurance policy barred the insurers from recovering because they had no greater rights than the general contractor, which had unequivocally waived its rights against the subcontractor.
In November 2019, the trial court denied the firm client’s motion. Riess LeMieux promptly applied for supervisory writs to the court of appeal seeking to reverse the ruling. In December 2020, the Louisiana Court of Appeal, Fifth Circuit, reversed the decision of the trial court and granted summary judgment in favor of the firm client on both grounds appealed by Riess LeMieux, finding that the subcontractor was an additional insured under the builder’s risk policy and the insurers were barred by the waiver of subrogation in the policy and the subcontract. As a result, the insurers’ subrogation claim against the firm client was dismissed. The insurers appealed to the Louisiana Supreme Court, which denied the writ application on March 2, 2021. Therefore, the ruling in favor of the firm’s client is now final.
Riess LeMieux is proud to have secured the correct result for its client and to have established legal precedent favoring insurance coverage for contractors and subcontractors in Louisiana.
