A Louisiana appellate court reversed a decision that granted reimbursement to an insurer for paying a claim related to a leaky fire sprinkler. The case is State Farm Fire and Casualty Company v. Hotel Management of New Orleans, L.L.C., 219 So. 3d 435 (La. Ct. App. 2017).
A fire sprinkler head in a hotel in New Orleans began leaking, partially flooding a gift shop two floors below and causing damage to store merchandise. Per hotel policy, an employee called the fire department when the leak was discovered but did not turn off the sprinkler system. The hotel was not evacuated because there was no fire. The fire department arrived and made sure there was no fire before replacing the sprinkler head. The exact cause of the leaky sprinkler head was not determined.
The gift shop owner had a policy with State Farm and received a claim payment for nearly $42,000. State Farm subsequently sought repayment of the funds from the company that owned the hotel, alleging negligence against hotel employees. The lower court awarded judgment to State Farm, and the hotel company appealed.
In the appellate court, the hotel company claimed the trial court had incorrectly determined the hotel employees had been negligent. In order to succeed on a negligence claim, the party asserting negligence must show that the opposing party had a duty to act in a certain way and did not do so. The lower court had found the hotel was obligated to keep the sprinkler in good working order and had not done so, therefore it had been negligent.
According to the appellate court, the trial court had not applied the correct standard in determining negligence. Instead, State Farm bore the burden of proving the hotel and its employees had breached its duty of care by acting unreasonably. The hotel manager testified that employees were specifically told not to turn off the sprinkler system and to wait for the fire department because the procedure was a safety measure against loss of life. The appellate court found State Farm had not shown how this policy was unreasonable, or that it had been unreasonable to wait until the fire department had cleared the area before turning off the sprinklers.
The appellate court found no evidence of negligence in the record and ruled the lower court's decision was "manifestly erroneous" because it had no reasonable, factual basis. The appellate court reversed the trial court and sent the case back for consistent proceedings.
Editor's Note: There's a difference between negligence, wear and tear, and employee duties. If the employee had been responsible for sprinkler maintenance and repair, State Farm might have had a case. However, the sprinkler leaked and the employee acted as instructed. While we do not know why the sprinkler leaked or malfunctioned, it is apparent by the determination of the court that it was not related to faulty maintenance and that the employee acted as instructed. While State Farm has every right to subrogate when another party is responsible for a loss for which they made payment, in this instance it isn't applicable. There was no negligence, and therefore no party to recoup payment from the hotel company.
Read More: