The town released a statement today saying Roch Bernier and Irène Plante, the owners of Résidence du Havre, decided not to go ahead with the $1.5-million suit filed in July.
The lawsuit had alleged the community failed to implement emergency plans which might have lowered the death toll.
It also claimed L'Isle-Verte's fire department was not adequately equipped to deal with the blaze at the residence, where many of the elderly inhabitants had limited mobility.
The decision to drop the lawsuit comes four days after the completion of a coroner’s inquest into the tragedy.
It's not clear whether a separate $2.3-million lawsuit launched by the co-owners' insurance company against L'Isle-Verte will still proceed.
The statement said there would be no further comment.