Subrogation And Statute Of Limitations

Here is an insurance subrogation case from the U.S. Southern District of Texas, Houston Division.  It is a 2018, opinion styled, AXA Insurance Company a/s/o The Museum Of Printing History v. Yoau Electric Co. Ltd., LG Electronics U.S.A., Inc., and Chocolates El Rey Inc.

The museum leased a portion of the place of business to El Rey.  A fire occurred at the subject premises on or about May 10, 2016, resulting in extensive smoke, fire, and water damage to Chocolates’s historical collection and the premises.  AXA, as subrogee, made payments on the loss.  Investigators determined the fire resulted from faulty wiring of an LG air conditioning unit used by El Rey at the premises.  The air conditioning unit was designed and manufactured by LG and Yoau.  AXA as subrogee, asserts that defendants LG and Yoau and Chocolates are responsible for the fire loss sustained by AXA due to breach of express and implied warranties, negligence, and strict products liability.

This is a Rule 12(b)(6) motion to dismiss opinion.  In considering a Rule 12(b)(6) motion, courts generally must accept the factual allegations contained in the complaint as true.  While a complaint attacked by a Rule 12 (b)(6) motion does not need detailed factual allegations, a plaintiff’s obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.  The factual allegations must be enough to raise a right to relief above the speculative level.  The supporting facts must be plausible enough to raise a reasonable expectation that discovery will reveal further supporting evidence.

LG argues that the court should dismiss AXA’s complaint because the claims are time-barred by Texas’ two year statute of limitations for tort claims.  LG argues that AXA failed to file a timely complaint because service of process occurred on May 22, 2018, nearly two weeks after the statutory limitations period expired.  According to LG, AXA was not diligent in its attempts to serve because it did not attempt to serve LG until a month after it had filed the complaint and emailing the complaint to legal counsel is not proper service.

AXA agrees that LG was served after the limitations period expired.  However, AXA asserts that diligent attempts were made with regard to process when AXA and LG commenced correspondence on or about March 28, 2018 and continued communicating thereafter.  AXA contends that LG did not respond to its request for a Tolling Agreement, prompting AXA to file the complaint before the statute of limitations had run.

Under Texas law, to comply with the statute of limitations, a plaintiff must both timely file suit and use “due diligence” in serving the defendant with process.  When a plaintiff has timely filed the complaint, but does not serve the defendant until after the period has expired, the date of service relates back to the date of filing only if the plaintiff exercised diligence in service.

Since the incident that gave rise to the claims against LG occurred on May 10, 2016, the statute of limitations ran two years later on May 10, 2018.  AXA’s complaint was filed on April 12, 2018 and the court takes judicial notice of the date LG was served, May 22, 2018.  The court finds that AXA was diligent enough in its attempts to serve LG as LG was served a mere 12 days after the statute of limitations expired.  Accordingly, the motion to dismiss was denied.