As a result of a fall at China Palace, Debra Hershberger filed a lawsuit against the restaurant in July of 2011. China Palace leased its commercial space from LKM Convenience, L.L.C. It is important to note that LKM Convenience leased the space to China Palace, but it did not operate the restaurant. LKM Convenience did have insurance through Montpelier US Insurance Company, but China Palace was not named or insured under its policy. China Palace filed a third-party demand against Montpelier demanding defense and indemnification for LKM Convenience. At the same time, LKM Convenience named Montpelier as a defendant and demanded that the insurance company provide a defense and indemnification for China Palace, its tenant. Consequently, Montpelier filed exceptions of no cause of action and no right of action. The exceptions are legal objections to LKM Convenience’s lawsuit against Montpelier and China Palace’s demand. Ultimately, the trial court maintained the exceptions and China Palace’s and LKM Convenience action were dismissed with prejudice in May of 2014. They appealed that judgement to the Fourth Circuit Court of Appeal for the State of Louisiana.
On the appeal, the Fourth Circuit looked at whether the trial court erred in sustaining both exceptions and whether the trial court erred in not giving China Palace and LKM Convenience a period of time to amend their petitions. Ultimately, the Court of Appeals agreed with the lower court regarding all of the questions.
When reviewing the exceptions filed by Montpelier, the Court of Appeals looks at the trial court’s decision de novo. This means that the Court of Appeals looks at the case as if it were a completely new case. It does not give deference to the trial court’s decision. Both of the exceptions function to have the plaintiff’s action dismissed or defeated. An exception of no right of action is sustained when the plaintiff does not have a right to bring the lawsuit, and an exception of no cause of action is sustained when the law does not provide a remedy against the defendant involved in the lawsuit. See La. C.C.P. art. 923.
China Palace’s third-party demand attempted to assert a claim against Montpelier for defense and indemnification of LKM Convenience, but China Palace did not allege any facts in the initial petition that it had the authority or right to sue on behalf of LKM Convenience. If there was a legal right for defense and/or indemnification, LKM would have the right to pursue the claim, but not China Palace. See La. C.C.P. art. 681. For this reason, the Court of Appeals upheld the granting of Montpelier’s exception of no right of action as to China Palace’s demand. LKM Convenience’s petition sought to assert a claim against Montpelier for defense and indemnification of China Palace. Similar to the case above, LKM Convenience did not allege any facts in the petition that it had the authority or right to sue or act on behalf of China Palace. For that reason, neither China Palace, nor LKM Convenience have a cause of action available to them and the exception was properly granted.
The only reason LKM Convenience is a party in the lawsuit is that it filed a petition to intervene. The purpose of the intervention petition was to assert a claim for China Palace against Montpelier. With no claim pending against LKM Convenience, it has no cause of action against its insurance company. China Palace never asserted a claim against the insurer on its own behalf. If there is no claim against LKM Convenience (who China Palace filed for defense and/or indemnification for), there can be no cause of action stated in China Palace’s petition. Even if China Palace had asserted the claim on its own behalf, the petition would still fail because China Palace is not insured by Montpelier. Therefore, China Palace has no right to bring an action against an insurance company that does not insure it.
The last argument China Palace and LKM Convenience assert on appeal involves the trial court not granting them additional time to amend their petitions. Neither party had asked the trial court for time or an opportunity to amend their pleadings. Furthermore, there are no amendments that either party could make to their petitions that would remove the grounds for granting the exceptions. Any amendments made to the petitions and any time given for these amendments would have been useless. For those reasons, the Court of Appeals upheld the trial court’s decision.
No one could have seen how complicated this lawsuit was going to be when Debra Hershberger first filed a complaint against China Palace in 2011. This case demonstrates just how quickly things can turn messy in what seems like a simple slip-and-fall situation. It’s clear that skilled lawyers are needed all around in cases of this nature to make sure everyone’s rights are protected.
Additional Sources: DEBRA HERSHBERGER VERSUS LKM CHINESE, D/B/A L.L.C. CHINA PALACE
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