Merchant Liability: No Evidence of Creation or Knowledge of Spill on Premises

In South Alexander Development I, LLC v. Markel American Insurance Co., the U.S. District Court for the Middle District of Louisiana granted an insurer’s motion for summary judgment finding that the insured’s failure to cooperate violated the policy’s coverage terms and voided coverage.

The dispute arose from a commercial first-party property loss following Hurricane Ida. The insurer moved quickly to adjust the claim by retaining an independent adjuster and engineers to evaluate the damage to and value of the insured property. It also asked the insured to produce documentation needed to complete the adjustment, including records of installation costs, monthly revenues, and repair estimates. The insured did not respond.

Additionally, the insurer sent numerous emails over the course of the claim requesting information about (1) the costs the insured had incurred; (2) documentation supporting the income loss claim, along with quotes, estimates, and proposals for repairs; and (3) the scope of work for testing and repairs. However, most of these requests went unanswered.

Based on this evidence, the court determined that the insured violated the terms of the policy because it failed to cooperate with the insurer’s investigation. Most notably, the insured obtained repair estimates and proposals from its own contractor and withheld them from the insurer until after suit was filed. The insured also never submitted a completed proof of loss, even though the policy required submission of such a document that included estimates and “other reasonable information” the insurer needed to settle the loss. These acts showed the insured failed to “cooperate with [the insurer] in performing all acts required by this policy.”

The insurer showed that it pursued the information diligently and that the insured’s breach was both material and prejudicial. The court found (1) the insurer had documented repeated, specific requests for nearly a year, (2) the withheld documents went directly to quantifying the loss, and (3) the insured’s noncompliance deprived the insurer of its right to investigate the insured’s claim.

As a result, the court granted summary judgment finding no genuine issue of material fact relating to the insured’s breach of the policy’s cooperation clause. The insured was precluded from bringing a breach of insurance contract claim and therefore, without a valid contractual claim, the insured also could not pursue a bad faith claim against the insurer.

References:

South Alexander Development I, LLC v. Markel American Insurance Co., CV 23-1436-JWD-SDJ, 2026 WL 1819120 (M.D. La. June 24, 2026).

Courts around Louisiana continue to address factual scenarios for when summary judgment on an insured’s first party bad faith claim may be appropriate.

In Creamer Brothers Inc. et al. v. General Casualty Co. of Wisconsin, the federal court for the Western District of Louisiana addressed an insured’s claim for bad faith penalties and attorney’s fees arising out of an insurance claim for damages sustained in a February 2021 ice storm. The pertinent timeline is as follows:

• February 22, 2021: Date of Loss/Ice Storm
• February 26, 2021: Adjuster inspects property
• April 9, 2021: Adjuster completes estimate
• April 15, 2021: Insurer issues payment
• August 6, 2021: Insured submits damages estimate
• August 26, 2021: Insurer reinspects property with engineer
• September 24, 2021: Engineer submits report to Insurer
• October 7, 2021: Insurer prepares new estimate
• October 11, 2021: Insurer tenders supplemental payment
• October 12, 2022: Suit filed

The insurer argued summary judgment was appropriate because its damage assessment created a reasonable, well-founded dispute regarding the extent of damage caused by the ice storm. Plaintiff disagreed, arguing bad faith attached because the insurer relied solely on its own expert reports which they argued amounted to an investigation that was so inadequate it could be deemed unreasonable.

The Court sided with the insurer, granting its summary judgment. In so holding, the Court relied on the portion of La. R.S. 22:1892 which provides an insurer’s conduct must be “arbitrary, capricious, or without probable cause” for bad faith to attach. Specifically, the Court stated, “the fact that the parties’ experts reached different conclusions in their respective assessments gives rise to a dispute in the extent of Plaintiffs’ coverage, but does not illustrate a genuine issue of fact as to General Casualty’s ‘bad faith.’”

The Court noted the insurer sufficiently communicated with the insured, provided the insured with multiple expert reports containing their data and conclusions, and “ultimately made payments to Plaintiffs in accordance with those conclusions.” Plaintiff failed to point to evidence General Casualty’s conduct was arbitrary, capricious, or without probable cause, “despite yielding unsatisfactory results.”

In a case out of the Eastern District, Gentilly, LLC v. State Farm Fire & Cas. Co., the Court similarly relied on plaintiff’s failure to establish a general issue of material fact to show the insurer’s conduct was “arbitrary, capricious, or without probable cause.” The Gentilly case arose out of the plaintiff’s insurance claim for damages sustained to its commercial shopping center during Hurricane Ida. The parties engaged in a series of inspections, estimates, expert reports, payments, and supplemental payments over the course of about thirteen months, followed by several months of inactivity, then another period of investigation and adjustment over the course of about nineteen months.

Plaintiff argued the insurer’s 43-day delay in its first payout, failure to have an engineer inspect the property for a year, and gross under-evaluation of the damages as evidenced by its supplemental tender supported its bad faith claim. The Court disagreed.

In support of its conclusion, the Court noted the insurer advised plaintiff the inspection would take multiple days, and the delay in issuing payment arose out of the inspectors’ availability. The Court noted the insurer’s actions were “consistently in line with its expert appraisals.” In conclusion, the Court stated, “[t]hough the payout process was protracted by the scope and complexity of the insured loss, plaintiff fails to raise a genuine issue of material facts indicating that State Farm’s actions were arbitrary, capricious, or without probable cause.”

Louisiana courts have not established a bright-line rule for determining when summary judgment is appropriate on an insured’s bad faith claim. However, these cases seem to suggest that continued adjustment over a period of time may not give rise to bad faith claims where an insured cannot cite to evidence an insurer’s conduct was “arbitrary, capricious, or without probable cause.”

References:

Creamer Brothers Inc. et al. v. General Casualty Co. of Wisconsin, No. 22-cv-6110, 2025 WL 818579 (W.D. La. Mar. 13, 2025).

Gentilly, LLC v. State Farm Fire & Cas. Co., No. 23-cv-262, 2024 WL 5246606 (E.D. La. Dec. 30, 2024).

A Louisiana court recently granted a motion for summary judgment in a case involving third-party criminal activity on a university campus. The motion initially was denied, but the Louisiana Supreme Court remanded the motion for reconsideration in light of its ruling in Evans v. Abubaker, Inc. After considering Evans in the context of a claim brought against an institution of higher learning, the court found Grambling University had no duty to provide additional security measures and could not have done anything within its scope of duty to prevent the murder of one of its students. See Augman v. Grambling State University.

In Augman, the plaintiff’s son, a student at Grambling University, was fatally shot at a party on the Grambling campus by another Grambling University student. The established facts confirmed the social gathering was on campus, that alcohol was consumed at the party, and that guns were present. In applying Evans to a higher education context and granting Grambling University’s Motion for Summary Judgment, the Third Judicial District Court reasoned:

There are allegations of breached policies by Grambling, i.e., allowing alcohol consumption on campus, allowing a pop-up party, and not searching for weapons in all the dorm rooms. Despite those allegations, there is no evidence presented in this summary judgment that shows that by following any of those policies to the T, Grambling would have prevented this incident. Likewise, the evidence presented on summary judgment does not show that there are additional security measures that Grambling could have taken to prevent this tragedy.

There is no indication Grambling had any duty to provide any additional security measures in this case. Likewise, there is no evidence presented that Grambling could have done anything within its duty or scope of duty, analyzed with regard to Evans, to prevent this tragedy.

The Louisiana Supreme Court’s opinion in Evans explained that preventing third party criminal activity by someone who intentionally engages in criminal conduct is not within the scope of duty of a business owner. The Evans court held, “Some risks that arise because of a defendant’s conduct are not within the scope of the duty owed to a particular plaintiff because they are unforeseeable.” Augman applied Evans’ reasoning in a higher education/alleged negligence on campus context and dismissed the claims brought against Grambling University because preventing the shooting of one student by another student on its campus was not within Grambling’s scope of duty.

Just one month after the Augman ruling, the Louisiana Supreme Court issued the opinion of Campbell v. Orient-Express Hotels Louisiana, Inc. For more detailed analysis of this case, see a July 28, 2025, Keogh Cox blog by John P. Wolff III. In Campbell, the Supreme Court did not modify the duty/risk analysis but clarified the separate analyses of “duty” and “scope of duty”, concluding that the scope of the duty owed by the defendant hotel did not encompass the risk of the harm and injury suffered by the plaintiff. Again, the Campbell Court focused on “foreseeability” of the criminal activity and considered evidence that the plaintiff’s own actions placed him in the path of peril.

The Louisiana Supreme Court’s reasoning in Campbell echoes its decision in Evans, suggesting that the issue of “scope of duty” for third-party criminal activity on university campuses analyzed in Augman would apply in cases involving claims against other institutions of higher learning as well.

References:

Evans v. Abubaker, Inc., 2023-00955 (La. 5/10/24), 384 So.3d 853.

Augman v. Grambling State University, Third Judicial District Court, Parish of Lincoln, Supplemental Summary Judgment Ruling with Reasons for Ruling, Feb. 07, 2025.

Campbell v. Orient-Express Hotels Louisiana, Inc., 2024-00840 (La. 3/21/25), 403 So.3d 573.