Allied World National Assurance Company v. Nisus Corporation et al

Filing 405

RULING AND ORDER granting 290 Motion for Summary Judgment, and the claims against Nisus be and are hereby DISMISSED WITH PREJUDICE. Judgment shall issue separately. Signed by Judge Brian A. Jackson on 6/4/2024. (EDC)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
ALLIED WORLD NATIONAL CIVIL ACTION
ASSURANCE COMPANY
VERSUS
NISUS CORPORATION, ET AL. NO. 21-00431-BAJ-EWD

RULING AND ORDER
This is a products liability case. Louisiana State University (LSU) entered into
an agreement with a private company, Provident Group - Flagship Properties, to
build new housing units on LSU's Baton Rouge campus. The constructed buildings
were leased back to LSU to rent to students. After the project was completed, it
turned out that a chemical product sprayed on wood in the buildings to prevent

moisture buildup caused damage to the chlorinated polyvinyl chloride (CPVC) piping
used for the fire safety sprinkler systems. Provident expended millions of dollars
replacing the sprinkler systems, for which it was reimbursed by its insurance

company, Plaintiff Allied World National Assurance Company. Allied then sued the
manufacturer of the CPVC pipe, Defendant Spears Manufacturing Company, and the
manufacturer of the chemical product, Defendant Nisus Corporation, asserting

Louisiana Products Liability Act (LPLA), La.R.S. 9:2800.51 et seq., redhibition, and
warranty claims to recover amounts paid to its insured, Provident. (Docs. 1, 113).
Allieds claims against Spears were dismissed after those parties reached a
settlement. (Doc. 339). Now before the Court is Nisus and Counterclaim Defendant

Evanston Insurance Company's1 IVIotion for Summary Judgment (Doc. 290),
which argues that Allied's claims are prescribed. The JVlotion is opposed. (Doc. 307).
For the reasons that follow, the Motion will be granted.

I. BACKGROUND
a. Facts

The following facts relevant to the Court's analysis are drawn from Nisus's
statement of material facts (Doc. 290-2), Allied's response to Nisus's statement of
material facts (Doc. 307-2), Nisus's reply to Allied's response (Doc. 318-1), and the
record evidence submitted in support of these pleadings.

In 2016, LSU set in motion a plan to build multiple new buildings on its Baton
Rouge campus. Land owned by LSU was leased to Provident, which would construct
and own the buildings on the land and lease them back to LSU. (See Docs. 294-2; 2943). Provident contracted with RISE Tigers, LLC, for project development. (>See Doc.
294-4). RISE Tigers contracted with the Lemoine Company, LLC, to serve as the
general contractor. (See Doc. 294-7). Lemoine then contracted with two
subcontractors for the construction of the buildings. (See Docs. 294-10; 294-11). These
subcontractors contracted with River City Fire Protection, Inc. for the installation of
fire protection sprinkler systems using Defendant Spears's CPVC pipe. (See Docs.

294-13; 294-14; 294-15).
Provident also contracted with RISE Residential, LLC, to serve as the

1 Evanston, as Nisus's insurer, was named as a direct-action Counterclaim defendant by
Niles Bolton Associates, Inc, an architecture firm involved in the construction project. (Doc.
149). Niles Bolton s counterclaims against Nisus and Evanston were dismissed pursuant to

a joint stipulation of dismissal on May 2, 2024. (Doc. 388).

Facilities Manager once construction was completed, as set forth in a Facilities

Operation and Maintenance Agreement (FOMA). (Doc. 290-2 If 3). Under the FOMA,
Rise Residential was to supervise, direct, and control certain custodial, maintenance,
operations, replacement and repair obligations with respect to the Property ... as the
agent of Provident." (Doc. 294-8 ^ 1.1). To the extent requested by Provident, RISE
Residential was to "cause, supervise and/or coordinate the construction and
installation of any renovations, improvements, substantive repairs, or replacements
of a capital nature," defined in the FOMA as "Capital Improvements." (Id. at ^ 3.4).

The scope of RISE Residentials work was limited somewhat, as Capital
Improvements excluded "(i) the construction of a new Facility and/or (ii) the reconstruction of a Facility due to a casualty or other similar event." (Id.). RISE
Residential would also have the right "to outsource and/or subcontract any aspect" of
its duties to "third-party service providers," who would be "Agents" of RISE

Residential. (M at ^ 2.3).
Construction of the buildings began in October 2016. (See Doc. 290-2 ^ 5). In
2017, Lemoine and its subcontractors developed a IVIoisture Control Plan to mitigate
moisture issues that were arising in portions of the wood-framed buildings during

construction. (Id. at ^ 7; Doc. 307-2 ^ 7). The Plan called for treating wood in all the
buildings with a chemical spray called Bora-Care with Mold-Care, a product
manufactured by Nisus. (Doc. 290-2 ^ 7). Lemoine hired Arrow Pest Control of Baton

Rouge, Inc., to apply the treatment in the partially completed buildings during the
latter half of 2017. (Id. at ^ 8-13).

The building project was completed in June 2018. (Doc. 294-28). Seven
apartment buildings had been constructed, totaling more than one million square feet
of real estate. (Doc. 307-2 at 19). In the buildings, more than 87,000 linear feet of

sprinkler pipe and 10,500 sprinkler heads had been installed. (Id.). Completion of
the project triggered a one-year warranty period for the CVPC sprinkler system under
Lemoine's contract with RISE Tigers, the developer. (See Doc. 294-28; Doc. 290-1 at

6). It also triggered the beginning of RISE Residential's responsibilities under the
FOMA as Provident's Agent and Facilities Manager. (Doc. 290-7 at 23). During the
warranty period, five leaks in the sprinkler system in two different buildings were
detected and referred to River City, the contractor that had installed the sprinkler
systems, for repair. (Doc. 290-1 at 9).
When the warranty period ended on June 25, 2019, all repairs became the

responsibility of Provident and RISE Residential. (See Doc. 294-52 at 8:7-9:17).
Sprinkler leaks continued. Between August 9 and December 18, Marc Nichols, RISE
Residential's building General Manager, recorded eleven leaks in five different

buildings. (Doc. 294-34 at 8). RISE Residential referred these leaks to a company
called FireQuest for repairs. (Doc. 307-2 ^ 16). Although RISE Residential processed
the invoices for these repairs internally, Provident would regularly receive a "check

register," which reflected the amounts paid out by RISE Residential as facilities
manager. (Id. ^ 19; see Doc. 294-52 at 11:1-6).

By November 20, RISE Residential employees began to worry about the
persistent leaks. Nichols "was concerned that there were more sprinkler leaks than

he was comfortable with," and so Alana Savoie, RISE Residential's Regional Director,

"told him to start a list [of the leaks] so [RISE Residential] could track and see how
many he's actually coming up with." (Doc. 294-32 at 25:18-23). RISE Residential also
asked Vyron Bernard, a Construction Project JVIanager for RISE Tigers, to help

investigate the cause and resolve the issue. (Id. at 27:3-7). Although RISE Tigers had
completed its role as developer of the building project, RISE Residential saw the leaks
as a potential "major issue," and so RISE Tigers was enlisted because it was involved
in the original construction of the buildings. (Id. at 27:4-7).

Nichols forwarded a list of the documented leaks recorded up to November 20
with photos to Bernard and employees at Lemoine, the sub-contractor in charge of
construction. (Doc. 294-40 at 3). Based on the information from the RISE Residential

employees, Bernard thought "it looked like [the sprinkler leaks were] something more
than just routine defects" and that "something else must [have been] going on." (Doc.

294-26 at 28:7-11).
The employees also began to speculate about the cause of the leaks. In an email
to Bernard and Savoie on November 20, Nichols wrote that the latest leak was in "the
same area as one that's been repaired prior," and noted that there was "an
environmental stress fracture that [was] following the glue." (Doc. 294-39 at 4). On

November 22, Savoie reported this finding to her supervisor, writing that it could be
a "glue issue" and that RISE Residential "DO [sic] not want this to be a glue issue"
because it could "turn into a nightmare." (Doc. 294-40 at 3). That same day, Nichols

prepared Incident Report #280, which described the most recent sprinkler leaks and

reported an "environmental stress fracture" that "seemingly confirmed our beliefs
there may be an issue with the glue used." (Doc. 291-41 at 2). Although Savoie
testified that incident reports were generally sent to Provident, (Doc. 290-1 at 14),

RISE Residential's Chief Operating Officer Courtney Gordon swore in a declaration
that Incident Report #280 "was not provided to Provident ... as part of any other
report or communication," (Doc. 307-14 at 2).
To investigate the cause of the leaks, a section of pipe was given to Lemoine

for testing. (Doc. 294-42 at 3). On December 11, Nichols followed up with Bernard
regarding the communications between RISE Tigers and Lemoine, and Bernard
responded saying that the section of pipe was "being tested by a lab to determine
what contaminates may be damaging the pipe. (Id.). Bernard reported that he would
set up a meeting with Lemoine once they got the lab results. (Id.).
That same day, Plastics Failure Labs, the laboratory retained to analyze the
pipe sample, issued a preliminary report to Lemoine. (Doc. 294-43). In that report,

Dr. Duane Priddy concluded that he thought the failure in the sample pipe was
possibly due to over-spray of products used to treat wood surfaces wherein the spray

contained antimicrobial chemicals added to inhibit mold, adding that "[m]any
antimicrobial chemicals are highly incompatible with CPVC pipe." (Id. at 2). In an
email on December 16 to employees of Lemoine, Dr. Priddy wrote that he had "just

received preliminary data from the lab confirming that it was the ]VIoldCare [sic]
ingredient in the Borecare + MoldCare [sic] solution that adsorbed into the cement
and degraded the CPVC pipe causing it to fail." (Doc. 294-44 at 2). He also warned

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Lemoine to make sure that the BoreCare + IVIoldCare [sic] solution is sprayed onto
wood surfaces BEFORE the CPVC piping is installed." {Id.).
IVIore definitive results were sent to Lemoine on February 5, 2020. (Doc. 294-

45). Dr. Priddy had concluded that the "cause of failure of the CPVC pipe was due to
exposure of the CPVC piping to MoldCare [sic] overspray during treatment of the
wood surfaces. {Id. at 5). In other words, by this point, Lemoine unquestionably knew
why the leaks were occurring and that all sprinkler pipe exposed to Bora-Care with
Mold-Care would need to be removed and replaced.

The employees at RISE Residential apparently never learned this information.
Savoie and Nichols, who had begun the investigation in November 2019, had referred
the issue to Lemoine, and were aware that lab results were incoming, never followed

up or notified Provident of the issue and investigation. Notably, 34 additional
sprinkler leaks were reported and repaired between December 11, when the last
email in the record regarding the investigation was sent, and July 23, 2020, one year

before Allied filed suit. {See Doc. 294-34 at 8). Despite this, the trail of
communications ceases, to be picked up again when Provident received a notice from
LSU on November 17, 2020, regarding the leaks and reporting the cause as "exposure
to antimicrobial or anticorrosion chemicals used during the construction process."
(Doc. 307-17 at 3).
Provident began removing and replacing the sprinkler systems in two of the

buildings over the summer of 2021, (Doc. 294-46), and Allied instituted this lawsuit
on July 23 of that year, (Doc. 1). Allied alleges that it paid Provident $9,047,532.89

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for the removal and replacement of the sprinkler systems in four of the apartment

buildings, and Provident recently made a $7,084,830.49 claim for the replacement of
a fifth building's sprinkler system. (Doc. 307 at 6).
b. Procedural History

Allied sued Nisus and Spears on July 23, 2021, alleging redhibition, warranty,
and LPLA claims under this Courts diversity jurisdiction. (Doc. 1). With leave of the
Court, Allied filed a First Supplemental and Amended Complaint against Nisus and
Spears. (Doc. 113). Allied contends that by virtue of its payments to Provident, it is
subrogated to the rights of Provident to recover amounts paid for damages caused by
Nisus s products. (Doc. 113 ^ 59). Allied s claims against Spears were dismissed after
those parties reached a settlement. (Doc. 339). Now before the Court is Nisus's Motion

for Summary Judgment (Doc. 290). The Motion is opposed. (Doc. 307). With leave of
the Court, Allied filed a sun'eply to address a recently published case cited in Nisus's
reply. (Doc. 385).2

II. LEGAL STANDARD
A court may grant summary judgment only "if the movant shows that there is
no genuine dispute as to any material fact and the movant is entitled to judgment as
a matter of law. Fed. R. Civ. P. 56(a). A dispute regarding a material fact is "genuine"
if the evidence is such that a reasonable jury could return a verdict in favor of the
nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When

2 That case, Mosing v. DougAshy Bldg. Materials, Inc., 2023-3 (La. App. 3 Cir. 11/22/23), 375
So. 3d 613, features an LPLA prescription analysis in a lawsuit over defective stucco applied
to the plaintiffs home.

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ruling on motions for summary judgment, courts are required to view all inferences
drawn from the factual record in the light most favorable to the nonmoving party.
Matsnshita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Coleman
v. Hous. Indep. School Dist., 113 F.3d 528, 533 (5th Cir. 1997).

III. DISCUSSION
Nisus argues that Allied's claims are prescribed by Louisiana's one-year

liberative prescriptive period for product liability cases. (Doc. 290-1 at 18 (citing La.
Civ. Code art. 3492)).3 4 Typically, "prescription commences to run from the day injury
or damage is sustained." In re Taxotere (Docetaxel) Prod. Liab. Litig., 995 F. 3d 384,

388 (5th Cir. 2021). But "[ujnder the doctrine of contra non valentem, the prescriptive
period begins to run 'on the date the injured party discovers or should have discovered
the facts upon which his cause of action is based.'" Chevron USA, Inc. v. Aker Mar.,

Inc., 604 F.3d 888, 893 (5th Cir. 2010) (quoting Griffin v. Kinberger, 507 So. 2d 821,
823 (La. 1987)). The doctrine tolls prescription under any of four "exceptional
circumstances, one of which is "where the cause of action is not known or reasonably
knowable by the plaintiff," termed the "discovery rule." Taxotere, 995 F.3d at 390-91

3 Wlien a federal court is sitting in diversity, as the Court is here, it is "obligated to apply the
substantive law of the forum state." Chevron Oronite Co., L.L.C. v. Jacobs Field Servs. N.

Am., Inc., 951 F.3d 219, 225 (5th Cir. 2020) (quotations omitted).
4 Allied s claims for redhibition and under the LPLA are subject to a one-year prescriptive
period. Peterson v. C.R. Bard, Inc., No. 13-CV-00528-JJB-RLB, 2015 WL 2239681,at *2 (M.D.

La. May 12, 2015), a./fd, 654 F. App'x 667 (5th Cir. 2016); PPG Indus., Inc. v. Indus.
Laminates Corp., 664 F.2d 1332, 1335 (5th Cir. 1982). Allied's breach of warranty claim is as
well. PPG Indus., 664 F.2d at 1335 ("Louisiana courts have held unequivocally that actions
based on a breach of warranty against defects are to be brought in redhibition instead of as
a breach of contract.") (citing Molbert Bros. Poultry & Egg Co. v. Montgomery, 261 So.2d 311,
314 (La. App. 1972)).

(quoting Morgan v. Entergy New Orleans, Inc., 2016-1250, p. 5, 13 (La. App. 4 Cir.

12/6/17), 234 So. 3d 113, 116, 120).5
Under the discovery rule, prescription runs from the time that the plaintiff has
actual or constructive knowledge of the act, which has been defined as "the time at

which the plaintiff has information sufficient to excite attention and prompt further
inquiry." Hebert v. Louisiana Farm Bureau M.ut. Ins. Co., 2023-263 (La. App. 3 Cir.

11/29/23), 374 So. 3d 1170, 1175 (quotation omitted). "Constructive knowledge . . .
requires more than a mere apprehension something might be wrong." Aker Mar., 604

F.3d at 894 (quoting Strata v. Patin, 545 So. 2d 1180, 1189 (La. App. 4 Cir. 1989)).
However, "when a plaintiff suspects something is wrong, he must 'seek out those
whom he believes may be responsible for the specific injury.'" Id. (quoting Jordan v.
Emp. Transfer Corp., 509 So. 2d 420, 423 (La. 1987)). "The duty to act requires an

investigation of the injury." Taxotere, 995 F.3d at 392 (citing Jordan, 509 So. 2d at
423-24 aMRozas v. Dep't of Health & Hum. Res., State of La., 522 So. 2d 1195, 1197
(La. Ct. App. 1988)). The discovery rule "applies only when such ignorance is not
willful and does not result from negligence." Id. at 391 (quoting Cartwright v.

Chrysler Corp., 255 La. 597, 232 So. 2d 285, 287 (1970)). In other words, "when a
plaintiff acts reasonably to discover the cause of a problem, the prescriptive period

5 In cases involving property damages, the Louisiana Supreme Court has explained that the
discovery rule is encompassed in the prescriptive period proscribed by La. C.C. art. 3493, as

both essentially suspend prescription until the plaintiff knew, or reasonably should have
known of the damage." Marin v. Exxon Mobil Corp., 2009-2368 (La. 10/19/10); 48 So.3d 234,
245 (2010). In other words, the discovery rule as understood in the doctrine of contra non
valentum has been codified, and "the substantive analysis is the same under both La. C.C.
art. 3493 and the discovery rule of contra non valentum." Id.

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does not begin to run until he has a reasonable basis to pursue a claim against a

specific defendant." Aker Mar., 604 F.3d at 894 (quoting Jordan, 509 So. 2d at 424)
(quotations and alterations omitted). In this inquiry, "reasonableness is assessed 'in

light of [the plaintiffs] education [and] intelligence.'" Taxotere, 995 F.3d at 393
(quoting Campo v. Correa, 2001-2707, p. 12 (La. 6/21/02), 828 So. 2d 502, 511)
(alterations in original). Summary judgment is inappropriate where reasonable

minds could differ as to the applicability of contra non valentem." Id. at 389 (citing
M.R. Pittman Grp., L.L.C. v. Plaquemines Par. Gov't, 2015-860, p. 19 (La. App. 4 Cir.

12/2/15), 182 So. 3d 312, 324).
Allied filed its complaint on July 23, 2021, and therefore its claims are timely
if the prescription period began on or was tolled until July 23, 2020. See La. Civ. Code
art. 3492; La. Civ. Code Ann. Art. 3494. As the first sprinkler damage was incurred

during a one-year warranty period following completion of the buildings in 2018 and
Allied did not file suit until 2021, Allied's claims are facially prescribed. For this
reason, the issue in dispute here is whether contra non valentem tolled the

prescription period until Allied s suit was filed. Put simply, the question is whether
Provident, as Allied's subrogor, had actual or constructive knowledge of the damage

allegedly caused by Nisus's product before July 23, 2020.
Nisus argues that (1) Provident itself had actual or constructive knowledge of
the damage prior to July 23, 2020; and (2) RISE Residential had actual or
constructive knowledge of the damage prior to July 23, 2020, and its knowledge is
imputed to Provident as Provident s agent. Allied responds that neither Provident

11

nor RISE Residential had actual or constructive knowledge of the damage before July
23, 2020, that the agency relationship between Provident and RISE Residential was
limited to exclude any investigation into the cause of the sprinkler leaks, and that
Nisuss own conduct must be taken into account when assessing constructive
knowledge.

A. Provident Did Not Have Actual or Constructive Knowledge of
the Damage
Nisus argues that "Provident was aware of the sprinkler pipe leaking issues

due to its receipt of monthly operating reports from Rise Residential, notice that it
was paying for sprinkler pipe repairs since September 2019, and receipt copies of
Incident Reports" in November 2019 describing concern about the sprinkler system
leaks." (Doc. 290-1 at 23).
There is a dispute as to whether Providence received Incident Report #280,

which was created by Nichols to describe the sprinkler damage, (See Doc. 307-2 ^ 23),
and Nisus cites no evidence that Provident received monthly operating reports
detailing the damage. Therefore, the undisputed facts merely support that Provident

knew that money was being expended for sprinkler repairs by RISE Residential, (see
Doc. 294-52 at 11:1-6). This does not constitute actual or constructive knowledge as
a matter of law because the line-item expenses for sprinkler repairs, which revealed
nothing about the cause, specific location, or nature of the damage, was too far
removed from the facts that could have led Provident to Nisus's alleged culpability.

See Wells v. Zadeck, 2011-1232 (La. 3/30/12), 89 So.3d 1145, 1149 ("Generally,
prescription statutes are strictly construed against prescription and in favor of the

12

claim sought to be extinguished by it . . . . ). Provident received the sprinkler-repair
expenses as part of its ownership of seven large apartment buildings for which the
annual operating budget was over $2,000,000. (Doc. 307-2 at 20). Testimony also
suggests that sprinkler leaks are relatively common in new construction projects,
particularly in ones such as these with extensive sprinkler pipe systems. (See Docs.

307-5 at 31:5-12; 307-64 at 2:2-5; 307-6 at 9:22-10:5). The Court is loathe to find
actual or constructive knowledge under such needle-in-the-haystack circumstances,

where the relevant information hides in plain hindsight. See Wells, 89 So.3d at 1149.
B. RISE Residential Had Constructive Knowledge of the Damage
Nisus next argues that RISE Residential had actual or constructive knowledge
of the cause of damage to the sprinkler system. The Court agrees.

In November 2019, RISE Residential employees began to worry regarding the
leaks. Nichols "was concerned that there were more sprinkler leaks than he was
comfortable with," and he created a running list of leaks. (Doc. 294-32 at 25:18-23).
The employees informed RISE Tigers, the developer, and Lemoine, the construction
company, about the potential "major issue." (Doc. 294-32 at 27:4-7).

The RISE Residential employees also began to investigate the problem. In an
email to Bernard and Savoie on November 20, Nichols wrote that the latest leak was
in "the same area as one that's been repaired prior," and noted that there was "an
environmental stress fracture that [was] following the glue." (Doc. 294-39 at 4). A
section of pipe was given to Lemoine for testing. (Doc. 294-42 at 3). In a December 11
email to Nichols, Bernard wrote that the section of pipe was "being tested by a lab to

13

determine what contaminates may be damaging the pipe," and told Nichols that a
meeting would be set up with Lemoine "as soon as they [got] the lab results." (Id. at
2, 3). In an email to Lemoine only five days later, Dr. Priddy related preliminary
results confirming the fault of Bora-Care with Mold-Care and warned Lemoine to

spray the product before the installation of CPVC pipe. (Docs. 294-44 at 2). On
February 5, 2020, Dr. Priddy confirmed this assessment. (Doc. 294-45 at 5).

Apparently, the employees at RISE Residential never followed up with RISE
Tigers or Lemoine for the expected lab results or notified Provident of the damage.

Regarding the evidence before the Court, RISE Residential's role in the investigation
screeched to a halt, even though 34 additional sprinkler leaks were reported and
repaired between December 11, 2019, when the last email in the record regarding the

investigation was sent, and July 23, 2020, one year before Allied filed suit. Under the
discovery rule, "when a plaintiff suspects something is wrong, he must 'seek out those
whom he believes may be responsible for the specific injury.'" Id. (quoting Jordan v.
Emp. Transfer Corp., 509 So. 2d 420, 423 (La. 1987)). "The duty to act requires an

investigation of the injury." Taxotere, 995 F.3d at 392 (citing Jordan, 509 So. 2d at
423-24 and Rozas v. Dep't of Health & Hum. Res., State of La., 522 So. 2d 1195, 1197

(La. Ct. App. 1988)).
Absent any explanation for the failure to continue investigating and the failure
to notify Provident of the problem, the Court finds that RISE Residential did not act
reasonably once it became aware of the persistent leaks, and was therefore on
constructive notice before July 23, 2020, that Nisuss product was the probable

14

culprit. See Aker Mar., 604 F.3d at 894 (explaining that "[w]hen a plaintiff acts
reasonably to discover the cause of a problem, the prescriptive period [does] not begin
to run until [he has] a reasonable basis to pursue a claim against a specific defendant"

(quotations omitted)); Taxotere, 995 F.3d at 392 (explaining that the discovery rule
"applies only when [a plaintiffs] ignorance is not willful and does not result from
negligence").
The heart of the inquiry into constructive knowledge is the reasonableness of
a party s inaction." Hebert v. Louisiana Farm Bureau Mnt. Ins. Co., 2023-263 (La.
App. 3 Cir. 11/29/23), 374 So. 3d 1170, 1175. In a similar case, a construction company
whose cranes were malfunctioning received a report recommending "that it further
investigate the noise from the rotating gears or bearing. Expert Riser Sols., LLC v.

Techcrane Int'l, LLC, 2018-0612 (La. App. 1 Cir. 12/28/18), 270 So. 3d 655, 662
(affirming grant of summary judgment on prescription). In the face of the company's
argument that it was unaware of the cause of the crane problems, the Court found
instead that had the company "timely heeded . . . [the] advice to investigate further,
it would have been led to the true condition of things." Id. (quotation and alterations

omitted).
The facts here are different by only one degree, in that RISE Residential and
Provident never received the report confirming that Nisus's product was causing the

sprinkler leaks. But RISE Residential's failure to follow up or notify Provident of the
persistent damage and investigation constitutes a lack of reasonable diligence that
dooms Allied's argument, just as the failure to heed an investigation doomed the

15

construction company in Techcrane. Id. ("A plaintiff is deemed to know what he can
learn through the exercise of reasonable diligence and cannot rely on ignorance
attributable to his own willfulness or neglect.") (citing Moore v. Chevron USA, 16-

0805 (La.App. 1 Cir. 5/25/17), 222 So. 3d 51, 54)); see, e.g., Mosing v. DougAshy Bldg.
Materials, Inc., 2023-3 (La. App. 3 Cir. 11/22/23), 375 So. 3d 613, 618 (finding
plaintiffs had constructive knowledge of defect when they "first noticed" damage to
stuccoing on exterior walls, because although this did not give them actual knowledge
"of the facts that would entitle them to bring" suit, it "excited their attention, put

them on guard and had them call for an inquiry" by calling their contractor). RISE
Residential was on notice of everything but the lab results, and was on notice for eight
months before July 23, 2021, as dozens of sprinklers leaked and were repaired.

During that time, RISE Residential failed to notify Provident or follow up on the
cause of the damage. No reasonable jury could find that such failure, particularly

when RISE Residential walked its investigation to the very edge of discovery, was the
result of the diligent examination required of parties denying constructive

knowledge. See Bruno v. Biomet, Inc., 74 F.4th 620, 624 (5th Cir. 2023) (finding
summary judgment inappropriate "where reasonable minds could differ as to the
applicability of contra non valentem ).

C. RISE Residential's Constructive Knowledge Was Imputed to
Provident
Next, Nisus argues that RISE Residential's constructive knowledge of the
cause of the sprinkler leaks was imputed to Provident, its principle, under the law of
agency. (Doc. 290-1 at 22 n.130). Allied responds that RISE Residential's agency was

16

limited because the agreement between the two entities required written approvals
for certain work; excluded the construction and installation of any renovations,
improvements, substantive repairs, or replacements of a capital nature" from RISE

Residentials duties/authority unless Provident specifically requested such action;
and excluded "re-construction of a Facility due to a casualty or other similar event"

from the scope of RISE Residential's agency without exception. (Doc. 307 at 19). Allied
contends that the investigation into the cause of the leaks was outside the scope of

RISE Residentials limited agency relationship with Provident, and, therefore, RISE
Residentials constructive knowledge cannot be imputed to Provident. {Id. at 19-21).

It is a basic tenet of agency law that knowledge of the agent is imputed to the
principal when it is received by the agent while acting within the course and scope of
the agents duties. Metropolitan Wholesale Supply, Inc. v. M/V Royal Rainbow, 12

F.3d 58, 62 (5th Cir. 1994). It is also a "well settled principle that knowledge
possessed by the agent is imputed to the principal even if the agent neglected to
specifically convey those facts to the principal." Bell v. Demax Management Inc., 824
So.2d 490, 493 (La. App. 4 Cir. 2002) (quoting Bank of Louisiana v. Argonaut Ins. Co.,

248 So.2d 349, 352 (La. App. 4 Cir. 1971)). There is no dispute that an agency
relationship existed here. {E.g., Docs. 307 at 3; 290-1 at 5). Allied merely attempts to

argue that the scope of the relationship did not include RISE Residential's
constructive knowledge of the source of the sprinkler damage. An analysis of the
agreement between the parties shows that Allied's argument fails.

Under the provisions of the FOMA, RISE Residential agreed to "undertake to

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supervise, direct, and control certain custodial, maintenance, operations,
replacement and repair obligations at the building's. (Doc. 291-9 at 8). Section 3.2,
entitled "Maintenance of Property and Equipment," provided:

The Facilities Manage shall keep and maintain the Property in
good operating condition, order, and repair, and in connection therewith,
shall formulate and implement a written preventative maintenance

program designed to efficiently and effectively maintain the condition of
the Property.

(Id. at 15). And Section 3.4 provided:
To the extent requested by Provident-Flagship, subject to the
prior written approval thereof of LSU, Facilities Manager shall cause,
supervise and/or coordinate the construction and installation of any
renovations, improvements, substantive repairs, or replacements of a
capital nature ....

(Id. at 16). In all, RISE Residential agreed to perform its duties "in good faith and
exercising prudent commercial judgment, and in a manner reasonably calculated to
. . . protect and preserve the buildings it managed. (Id. at 11-12).

Each of these sections strongly supports the conclusion that RISE Residential's
duties included its knowledge of the investigation into the damage. Again, there is no
dispute that RISE Residential was aware of the persistent damage, began the
investigation in response, and was aware that the investigation continued. Nor is

there a dispute that it was RISE Residential's job to repair the sprinkler leaks.
Indeed, Exhibit 3.1 to the FOMA expressly confirmed that RISE Residential's
responsibilities include responding to "[c]ontinuous leaks that may result in damage
to facility or contents." (Doc. 291-9 at 87). Nowhere does the FOMA's language

suggests that the scope of RISE Residential's agency was limited to exclude its

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awareness of the problem it was tasked by the FOMA to repair and its knowledge of
the almost immediately successful investigation into the cause of the damage.
Additionally, under the "Preventive ]VTaintenance Work Orders" section, RISE
Residential agreed that "Sprinklers . . . [would] be tested by an independent vendor
who will perform a comprehensive inspection of the system and recommendation of

repairs/replacements." (Doc. 291-9 at 88-89). It defies belief that RISE Residential
could be required to coordinate a "comprehensive inspection" of the sprinkler system,
but, when it came to Lemoine's investigation into the sprinkler leaks, prompted by

RISE Residential's own concern, RISE Residential was suddenly absolved of any
responsibility or duty to learn of the results and communicate such results to
Provident.
Allied seems to suggest that the constructive knowledge acquired regarding
the cause of the sprinkler leaks cannot be imputed to Provident because RISE
Residential's had no authority to repair the entire system if the entire system was
damaged. (Doc. 307 at 19 (referring to the FOMA's exclusion of "re-construction of a
Facility due to a casualty or other similar event" from the scope of RISE Residential's

agency)). But whether RISE Residential had the authority to fix the entire system is
separate from the inquiry into its duty to inquire and notify its principal of what it
knew. Nichols began creating a list, prepared a report theorizing that the cause of the
damage was a glue issue in the CPVC piping, and communicated with Bernard at

RISE Tigers regarding the testing of the sample pipe. Savoie emailed her supervisor
anxiously, saying RISE Residential "DO [sic] not want this to be a glue issue," because

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that could be a "nightmare." (Doc. 294-40 at 3). Absurdly, Allied argues that this
documented awareness and concern was outside the scope of RISE Residential's

duties. But the FOMA required RISE Residential to use "good faith and exercise [e]
prudent commercial judgment" and act "in a manner reasonably calculated to ...
protect and preserve the buildings under its care. (Doc. 294-8 at 11—12). The
conclusion demanded by this language and the excerpts above affirms that the scope

of RISE Residentials agency included its constructive knowledge of the cause of the
sprinkler damage.

Allied points to the depositions of Nichols and Savoie as evidence that the
investigation was not within the scope of their duties. (Doc. 307 at 19-20). Savoie

testified that she "[didn't] even think this FOMA applie[d] to [the investigation] at
all" because it was "part of a construction investigation of what's going on with the

system as a whole." (Doc. 307-4 at 8:24-9:4). Nichols testified that his duty did not
include addressing the growing concern regarding the sprinkler damage and
identifying- the root cause. (Doc. 307-13 at 10). Regardless of the legal significance of
the employees' interpretation of the scope of RISE Residential's agency, the Court

finds that the FOMA encompassed their understanding of the problem and their role
in the investigation. Their constructive knowledge of the problem and the fact of the
investigation was therefore imputed to Provident.

Essentially, Allied asks the Court to interpose an artificial wall separating
RISE Residential's maintenance duties, sprinkler repair duties, and general duties
to preserve the buildings from the constructive knowledge it acquired regarding the

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cause of the sprinkler leaks. The Court will not do so. No reasonable jury could find

that RISE Residential's constructive knowledge of the sprinkler damage was outside
the scope of its agency relationship with Provident. Anderson, 477 U.S. at 248.
Because knowledge of an agent is imputed to its principal, Provident had constructive

knowledge of the sprinkler damage before July 23, 2020.6 Allied's subrogated claims
are prescribed.
D. Nisus's Conduct Creates No Genuine Issues ofAIaterial Fact
In an attempt to avoid prescription, Allied asserts that because Nisus knew of

the incompatibility of Bora-Care with IVIold-Care with CPVC piping and failed to
warn Provident, Nisus prevented Provident from acquiring constructive knowledge
of the problem. (Doc. 307 at 24-25 (citing LaShip, LLC v. Hayward Baker Inc., No.

CIV.A. 11-546, 2013 WL 5739062, at *7 (E.D. La. Oct. 22, 2013) ("The ultimate issue
in determining whether a plaintiff had constructive knowledge sufficient to
commence a prescriptive period is the reasonableness of the plaintiffs action or

inaction in light of his education, intelligence, and the nature of the defendant's
conduct, (quotations omitted and emphasis added))). But there is no evidence that
Nisus provided incorrect information about Bora-Care with Mold-Care to Provident,

RISE Residential, or any party involved into the leak investigation. Rather, RISE
Residential acquired constructive notice of the cause of the damage independent of
any action or omission of Nisus. In other words, the evidence reveals that Nisus did

6 Because the Court finds that RISE Residential's constructive knowledge is imputed to
Provident, it does not address Nisus's additional argument that RISE Tigers and Lemoine
were themselves acting as agents of RISE Residential in their investigation of the pipe
damage. (See Doc. 290-1 at 22 n. 130).

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not prevent RISE Residential from acquiring the "information sufficient to incite
curiosity, excite attention, or put [it] on guard to call for inquiry." Dominion Expl. &
Prod., Inc. v. Waters, 2007-0386 (La. App. 4 Cir. 11/14/07), 972 So. 2d 350, 357. Again,
RISE Residential's constructive knowledge is imputed to its principal, Provident, and
therefore Allied's claims are prescribed.

IV. CONCLUSION
Accordingly,

IT IS ORDERED that Defendants Nisus Corporation and Evanston
Insurance Company's JVtotion for Summary Judgment (Doc. 290) be and is

hereby GRANTED, and the claims against Nisus be and are hereby DISMISSED

WITH PREJUDICE.
Judgment shall issue separately.

l-'SL

Baton Rouge, Louisiana, this .* ~~S'ay of June, 2024

^

JUDGE BRIAN A. </A<JKSON
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

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