Soon after a mixed-use development on the LSU campus was completed in 2018, pipes in the buildings’ fire-protection sprinkler systems began to crack and leak. In 2021, Allied World National Assurance Company — which has paid more than $10 million to have the systems replaced — sued Nisus Corporation, the manufacturer of a product that allegedly degraded the pipes. The District Court granted summary judgment, finding that the claims were time-barred, and the U.S. Fifth Circuit Court of Appeals affirmed.

“The first question is whether Allied’s subrogor Provident had actual or constructive knowledge that triggered the running of prescription before July 23, 2020.” The manufacturer argues that the issuance of payments for post-warranty leak repairs out of a Provident operating account gave Provident sufficient notice to investigate by November 2019. Nisus waves away the fact that RISE Residential was invoiced approximately $5,000 for those repairs, compared to a Total Controllable Expense budget north of $2 million per year, by arguing that ‘the commencement of prescription is not premised on the value of the repair costs.’ But it is far from clear that being charged the relatively small sum of $5,000 for repair work indisputably gave or should have given rise to even an apprehension on Provident’s part that something was wrong….

“Our inquiry does not end there, though, because of the possibility that Provident’s undisputed agent RISE Residential had knowledge that is properly imputed to Provident…. Neither Allied’s attempt to downplay Nichols’s and Savoie’s emails nor RISE Residential’s purported inexperience with glue issues and environmental stress cracking suffices to defeat summary judgment. Nichols and Savoie evinced clear concern in November 2019 that something could be seriously wrong with the sprinkler systems. Their suspicion triggered a duty to undertake a reasonable investigation of the issue and, at least, to keep abreast of any ongoing investigations of which they were aware….  Evidentiary confirmation of a cause is a level of certitude that is not a prerequisite to the commencement of prescription. Here, it was enough that RISE Residential through the exercise of reasonable diligence should have considered Mold-Care as a potential root cause of the pipe-cracking well before July 23, 2020….

“Whatever the outer bounds of the agency relationship, RISE Residential had a duty under the Facilities Operation and Maintenance Agreement to address leaks and keep Provident apprised of serious leak issues.”

 

Allied World National v. Nisus Corp., No.24-30386, 2025 WL 1145728 (5th Cir. April 18, 2025).