Pass-Through Claims and Prescription

In Madden v. Fairburn, the plaintiff amended her petition to assert a UM claim against an insurer based upon the alleged negligence of a new defendant not named in the original petition. The amended petition asserted a new theory of liability but sought the same recovery under the same UM policy.

The issue presented to the Louisiana Court of Appeal for the First Circuit was whether the original petition interrupted prescription for the claim brought against the UM insurer. Because the insurer did not receive notice in the original petition that it could be liable for damages based upon the new defendant’s fault, the court found prescription could not be interrupted.

Madden was a passenger in a vehicle driven by John Seibert that collided with Steven Ray Fairburn. Madden timely filed suit against Fairburn and Capitol Specialty Insurance Corporation (Capitol Specialty), claiming uninsured motorist (UM) coverage under its policy. The Trial Court later dismissed Madden’s claims against Fairburn. While the appeal of that ruling was pending, and over five years after the accident, Madden amended her petition to allege Seibert was at fault and sought the same UM coverage any damages he caused. Capitol Specialty argued the claim brought against it in the amended petition had prescribed.

At the time of the accident, claims for torts/delictual actions had a one-year prescriptive period that commenced from the date of the injury or damage sustained* Claims to recover damages under a UM policy are subject to a prescription period of two years.^ Madden argued her original claim against Capitol Specialty interrupted prescription because her amended claim arose from the same accident and sought to recover damages under the same UM policy.

La. C.C. art. 3462 states that prescription is interrupted when an obligee (Madden) commences an action against an obligor (Capitol Specialty) in a court of competent jurisdiction and venue. However, in Kling v. Hebert, the Louisiana Supreme Court has clarified that the “essence of interruption of prescription by suit is notice to the defendant of the legal proceedings based on the claim involved.” The Kling judges emphasized that prescription serves to protect defendants from unexpected liability years after an event, particularly when a new legal theory or a different alleged tortfeasor is introduced.

The court also considered Trahan v. Liberty Mutual Insurance Company, which held that a claim against an insurer based on one party’s negligence does not interrupt prescription for a later claim against the same insurer based on another party’s negligence. Because Madden’s original suit was based on Fairburn’s negligence, Capitol Specialty did not receive timely notice that she would later seek UM coverage based on Seibert’s alleged fault. Thus, the appellate court ruled in favor of the insurer, affirming the prescription of the plaintiff’s claims.

References:

Madden v. Fairburn, 2024-0513 (La. App. 1 Cir. 12/27/24), --- So.3d ---, 2024 WL 5232995.

Kling v. Hebert, 23- 00257, p. 4 (La. 1/ 26/24), 378 So. 3d 54.

Trahan v. Liberty Mutual Insurance Company, 314 So. 2d 350 (La. 1975).

*La. C.C. art. 3492. See As of July 1, 2024, delictual actions are subject to a two-year liberative prescriptive period, applying to delictual actions that arose or after the effective date.

^ La. R.S. 9:5629.

In Couvillion Group, LLC v. Plaquemine Parish Government, the Louisiana Court of Appeals for the Fourth Circuit addressed whether the general contractor could recover “pass-through claims” against the owner where those claims would be time-barred if brought directly by the subcontractors. “Pass-through claims” have been described as damage claims that subcontractors “pass through” to the contractor to prosecute an action against the project owner to recover those damages.

In Couvillion, the contractor sued the Parish for delay damages. The trial court awarded $2,782,724 in delay damages, $300,000 of which was for delays incurred by two of the subcontractors.

On appeal, the Parish argued that the contractor could not recover the pass-through claims because any claims for delay that the subcontractors had against the contractor were prescribed (time-barred). The subcontractors sent demand letters after substantial completion in 2013 but did not file suit against the contractor. Under Louisiana law, contract claims are subject to a 10-year prescriptive period. The Parish asserted that by the time trial occurred in 2024, the subcontractor claims had prescribed.

The Fourth Circuit recognized that subcontractors often pass their claims through the contractor to prosecute against the owner to recover those damages. The contractor included those claims in the lawsuit filed against the owner in 2015. When several parties share a cause of action, suit by one party interrupts prescription as to all parties. As such, the court held that prescription was interrupted, and the contractor could recover the pass-through claims against the owner.

This case highlights the importance of identifying and properly preserving pass-through claims early in litigation.

References:

Couvillion Grp., LLC v. Plaquemines Par. Gov't, 2025-0356 (La. App. 4 Cir. 1/7/26), 430 So. 3d 1175, writ denied, 2026-00217 (La. 5/12/26), 430 So. 3d 1090.

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If you are a property owner, stop and think about the “what ifs” before you enter into a lease with a property manager or lessee. For example, what if an invitee of the property that you own is hurt while on and/or because of a condition on the property? Who is responsible?

A property owner may be able to transfer its potential liability to a property manager or lessee of the property if the lease contains an indemnification provision. However, not all indemnification provisions are enforceable, and these critical provisions are often litigated.

The Eastern District Court of Louisiana recently enforced an indemnification provision, granting summary judgment to a landowner who sought indemnification from its property lessee in Avila v. Village Mart, LLC, Civ. A. No. 20-1850, 2021 WL 4439579 (E.D. La. 9/28/21). In the case, a shopping center leased retail space to a men’s store. Before the store opened, a painter was injured when he fell from a ladder. The owner of the shopping center argued that the lessee owed a defense. It argued indemnity applied because the plaintiffs’ claims arose out of the lessee’s buildout construction, over which the owner did not have any care, custody, or control.

In response, the lessee argued that the owner was not entitled to indemnification because the plaintiffs’ claims did not “arise out of or were connected with Tenant’s use, occupancy, management or control of the Leased Premises.” The lessee claimed that it was not using, occupying, managing, or controlling the leased space because the only permitted use of the space was to sell menswear, and the space was not being used for this purpose at the time of the accident.

Louisiana courts often apply a “but for” causation test to such “arising out of” language in indemnity provisions. Avila, 2021 WL 4439579, at *5, citing Kan. City S. Ry. Co. v. Pilgrim’s Pride Corp., No. 06-03, 2010 WL 1293340, at *6 (W.D. La. Mar. 29, 2010), and Perkins v. Rubicon, Inc., 563 So.2d 258, 259-60 (La. 1990). The court observed the lessee’s arguments contradicted language in the lease that allowed the lessee to use and occupy the store before it opened to the public. The lease also explained that the lessee was responsible for certain construction work and identified specific dates to begin work and to open the store. Thus, the lease contemplated use and occupancy before the store was open to the public. The court found that the lessee’s possession of the space and its construction obligations under the lease established its use and occupancy of the space. The court stated:

Given the broad language in the indemnity agreement – ‘arising out of or connected with’ – [the plaintiffs’] injuries, resulting from his work as a subcontractor painting the premises leased by [the retail space lessee,] are connected to [its] use and occupancy of the premises. … Because [the retail space lessee] was in possession of the space, and had assumed responsibility for the buildout and for contractors and subcontractors working on the buildout, the Court finds that the plaintiffs’ liability theories fall within the scope of the indemnity provision in the lease. Avila, 2021 WL 4439579, at *6.

The enforceability of indemnity provisions such as the one examined in Avila will continue to be litigated. In the meantime, Avila reminds us of the importance of sound indemnity language to anticipate the “what ifs.”