A Louisiana appellate court reversed a decision that granted reimbursement to an insurer for paying a claim related to a leaky fire sprinkler. The case is State Farm Fire and Casualty Company v. Hotel Management of New Orleans, L.L.C., 219 So. 3d 435 (La. Ct. App. 2017). 

A fire sprinkler head in a hotel in New Orleans began leaking, partially flooding a gift shop two floors below and causing damage to store merchandise. Per hotel policy, an employee called the fire department when the leak was discovered but did not turn off the sprinkler system. The hotel was not evacuated because there was no fire. The fire department arrived and made sure there was no fire before replacing the sprinkler head. The exact cause of the leaky sprinkler head was not determined. 

The gift shop owner had a policy with State Farm and received a claim payment for nearly $42,000. State Farm subsequently sought repayment of the funds from the company that owned the hotel, alleging negligence against hotel employees. The lower court awarded judgment to State Farm, and the hotel company appealed.