Abbott Paul Oak, L.L.C. VS Joaquin Sampedro, L.L.C., d/b/a Mama Mia Maternity Boutique, Joaquin Sampedro, Alexandra Tate and Kristen Chetta Collura
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NOT DESIGNATED FOR PUBLICATION STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT NUMBER 2010 CA 1701 ABBOTT PAUL OAK LLC VERSUS JOAQUIN SAMPEDRO LLC DB MAM M1A MATERNITY BOUTIQUE A JOAQUIN SAMPEDRO ALEXANDRA TATE AND KRISTEN CHETTA COLLURA Judgment Rendered MAY 1 2 2011 I Appealed from the Second Twenty Judicial District Court In and for the Parish of St Tammany State of Louisiana Suit Number 2009 13629 Honorable Richard Swartz Judge Willard O Lape III Madisonville LA Counsel for Douglas M Chapoton Baton Rouge LA Counsel for Appellee Plaintiff Abbot t Paul Oak LLC Appellants Defendants Joaquin Sampedro LLC a b d Mama Mia Materniry Boutique Joaquin Sampedro and Alexandra Tate Rusty Savoie Covington LA Counsel for DefendantlAppellant Kristen Chetta Collura BEFORE PARRO GUIDRY AND HUGHES JJ O 1l I cC G Y GUIDRY J The original tenant and the assignee of a commercial property lease appeal a partial summary judgment rendered in favor of the owner finding that they lessor breached the terms of the lease agreements FACTS AND PROCEDURAL HISTORY At issue in this appeal is the lease of unit 4 in a commercial retail building in Mandeville Louisiana known as the Elmwood Place Retail Center On October 8 2002 Don McMath leased unit 4 to Mama Mia Maternity Boutique LLC Mama Mia and Kristen Chetta for a five term commencing on December 1 year 2002 master lease Ms Chetta also signed the lease as a guarantor The lease agreement was subject to an option allowing for the renewal of the lease for two additional I year five terms I In 2005 prior to the expiration of the first term of the master lease Grand olia Mag LP acquired ownership of the Elmwood Place Retail Center and in 2006 Grand Magnolia transferred ownership of the shopping center to Abbott Paul Oak LLC Abbott Paul Mama Mia and Ms Chetta maintained the lease on unit 4 for the initial term and later exercised the option to extend the master lease for a second five year term However shortly after commencing the second term which began on December 1 2007 Mama Mia and Ms Chetta executed an Assignment and Assumption of Lease and Consent to Assignment agreement assignment on April 1 2008 wherein it was disclosed that on March 31 2008 Mama Mia sold all of its assets to Joaquin Sampedro LLC JSLLC Pursuant to that sale the assignment provided that JSLLC acquire the lease of unit 4 from Mama Mia The record reveals thaT Ms Chetta later became Mrs Collura however far the pwposes of this opinion we will refer to her simply as Ms Chetta The recard shows that JSLLC continued to operate the business as Mama Mia Matemity Boutique 2 Additionally Abbott Paul gave its written consent to the transfer of the lease based on certain provisions in the assignment and based on personal guarantees executed by Ms Chett and the managers of JSLLC Joaquin Sampedro and Alexandra Tate securing the obligations owed under the lease agreements The following year JSLLC desired to sublease unit 4 and by a letter dated April 13 2009 Ms Tate informed Abbott Paul that a potential tenant had been found to sublease the premises however due to the nature of the potential new s tenant business Abbott Paul refused to consent to the sublease as it was believed that the potential tenant would be a direct competitor of another tenant in the Elmwood Place Retail Center Thereafter in accordance with prior notice given to Abbott Paul JSLLC vacated unit 4 and discontinued lease payments As a consequence of JSLLG action and after amicable demand Abbott Paul filed a s Petition far Breach of Contract and to Enforce Personal Guarantees against JSLLC Mr Sampedro Ms Tate and Ms Chetta on June 22 2009 JSLLC Mr Sampedro and Ms Tate answered the petition to assert that the lease agreements automatically terminated due to Abbott Paul alleged breach in s failing to consent to the sublease proposed by JSLLC Ms Chetta also answered the petition to deny liability however she further filed a cross claim against JSLLC in the event she should be found liable Abbott Paul later filed a motion far summary judgment seeking a declaration that JSLLC was in default of the lease agreements and that the three guarantors Mr Sampedro Ms Tate and Ms Chetta were liable in solido far the balance owed under the lease agreements for the unexpired term Following a hearing on Abbott Paul motion for summary judgment the s trial court took the matter under advisement and later rendered a partial summary 3 The master lease and the assignment constitute the lease agreements The potential new tenant proposed to operate a women ready clothing store s to wear 3 judgment in favor of Abbott Paul finding that JSLLC violated the terms of the lease agreements Accordingly the trial court found JSLLC Mr Sampedro Ms Tate and Ms Chetta hereinafter referred to jointly as lessees liable in solido for the damages incurred by Abbott Paul as a result of said default however the trial court denied the motion for summary judgment as it pertained to granting an actual award of damages The trial court found genuine issues of material fact remained regarding the amount of damages owed based on the assertion that Abbott Paul had leased the property to a new tenant after JSLLC vacated the premises The instant appeal followed ASSIGNMENTS OF ERROR On appeal the lessees jointly assert the following assignments of error 1 The Trial Court erred as a matter Motion for of law when it Summary Judgment finding lease with Abbott Paul granted the I that JSLLC breached the I 2 The Trial Court erred as a matter of law by not considering La C art 2713 mandating that the lease provisions prohibiting subleasing should be strictly construed against the lessor Abbott Paul 3 The Trial Court erred as a matter of law in not relying on the more specific statute La C art 2713 in determining the common intent of the parties in interpreting the lease contract which is the subject matter of this litigation 4 The Trial Court erred as a matter of law in not construing the contract against the party who drafted and provided it Abbott or Paul in determining the common intent of the parties 5 The Trial Court erred as a matter of law in relying on La C art 2353 equity usage and the conduct of the parties before and after the farmation of the contract and not on La C art 2713 and La C art 2056 6 The Trial Court erred as a matter of law by finding that Article VI of the Lease Agreement master lease which was executed in the standard form of Abbott Paul was in doubt and ambiguous or and not interpreting it in favor of JSLLC and against Abbott Paul 4 7 The trial court erred as a matter of law in granting the Motion for Summary Judgment when there is a genuine issue of material fact whether JSLLC consent was vitiated because Abbott Paul did s not inform it of Re power to prohibit JSLLC from s Elle subleasing its retail space and Abbott Paul actions were s arbitrary in denying the sublease request APPELLATE JURISDICTION This matter comes before us pursuant to a partial summary judgment granted in favar of Abbot Paul that was designated as a final judgment by the trial court for purposes of appeal See La C art 1915 The trial court gave no express P B reasons for its determinarion that no just reason for delay existed other than stating that such designation serves judicial economy and is in the interest of justice for the parties in this litigation Since we cannot determine the merits of this appeal unless our jurisdiction is properly invoked by a valid final judgment see La P C art 2083 we must make a de novo detertnination of whether the designation is proper See R Messinger Inc v Rosenblum 04 pp 13 J 1664 14 La 3894 So 1113 1122 OS 2 2d Some of the factors we are advised to consider in our de novo determination of whether the judgment is properly designated as a final judgment include 1 the relationship between the adjudicated and the unadjudicated claims 2 the possibility that the need for review might or might not be mooted by future developments in the district court 3 the possibiliry that the reviewing court might be obliged to consider the same issue a second time and 4 miscellaneous factors such as delay economic and solvency considerations shortening the time of trial frivolity of competing claims expense and the like R Messin eg r Inc 04 7 1664 at 14 894 So 2d at 1122 Based on our consideration of all the relevant factors we find the trial s court designation of the judgment as final is proper as this matter strictly 5 I involves the interpretation of contractual language Thus we find jurisdiction I lies to consider the appeal I STANDARD OF REVIEW As discussed by this court in Boh Bros Construction Co L v State ex C rel Department of Transportation and Development 08 pp 3 La App 1793 5 1 st Cir 3 9 So 3d 982 984 writ denied 09 La 69 So 3d 09 27 85 0856 09 5 870the following rules govern our review of this contractual dispute In determining whether summary judgment is appropriate appellate courts conduct a de novo review of the evidence employing the same criteria that govem the trial court determination of whether s is summary judgment appropriate Henderson v Kingpin Development Co 2001 p 4 App 1 Cir 8 859 So 2115 La 03 6 2d 122 126 Summary judgment is properly granted if the pleadings depositions answers to interrogatories and admissions on file together with affidavits if any show that there is no genuine issue of material fact and that mover is entitled to judgment as a matter of law La C art 966 P B When parties are bound by a valid contract and material facts are not in conflict the contract application to the case is a matter of s law and summary judgment would be appropriate Ginger Mae Financial 5ervices L v Ameribank FSB 2002 p 4 C 2492 La App 1 Cir 9857 So 546 548 writ denied 2003 La 03 26 2d 2983 04 16 1 864 So 634 A determination of the existence or absence 2d of an ambiguity in a contract entails a question of law An appellate review that is not founded upon any factual findings made at the trial court level but rather is based upon an independent review and analysis of the contract within the four comers of the document is not subject to the manifest error rule of law In such cases appellate review is simply whether the trial court was legally correct Claitor v Delahoussave 2002 p ll App 1 Cir 5 858 So 1632 La 03 28 2d 469 478 writ denied 2003 La 10 855 So 764 1820 03 17 2d Generally legal agreements have the effect of law upon the parties and as they bind themselves they shall be held Yo a full perfarmance of the obligations flowing therefrom Belle Pass Terminal Inc v Jolin Inc 92 92 p 16 La App 1 Cir 1544 1545 94 11 3634 So 466 479 writ denied 94 La 6 638 2d 0906 94 17 2d So 1094 In other words a contcact between the parties is the law between them and the courts are obligated to give legal effect to such contracts according to the true intent of the parties La C art 2045 Sanders v Ashland Oil Inc 96 p 7 App 1 Cir 1751 La 97 20 6 696 So 1031 1036 writ denied 97 La 2d 191 10 97 31 703 So 29 This intent is to be determined by the words of the 2d contract when they are clear explicit and lead to no absurd consequences La C art 2046 Woodrow Wilson Const Co Inc v MMR Constructors Inc 93 p 3 App 1 Cir Radon 2346 La 6 94 8 4 635 So 758 759 writ denied 94 La 7 639 2d 1206 94 1 2d So 1167 When the words of a contract are clear and explicit and lead to no absurd consequences no further interpretation may be made in search of the parties intent La C art 2046 Belle Pass Terminal Inc 92 at 17 634 So at 479 The rules of interpretation 1544 2d establish that when a clause in a contract is clear and unambiguous the letter of that clause should not be disregarded under the pretext of pursuing its spirit La C art 2046 comment b Cashio v Shoriak 481 So 1013 1015 La 1986 Belle Pass Terminal Inc 2d 1544 92 at 2d 17 634 So at I 9 4 To determine the meaning of words used in a contract a court should give them their generally prevailing meaning La C art 2047 If a word is susceptible of different meanings it must be interpreted as having the meaning that best conforms to the object of the contract La C art 2048 A provision susceprible of different meanings must be interpreted with a meaning that renders it effective and not with one that renders it ineffective La C art 2049 Furthermore every provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole La C art 2050 Moreover in the interpretation of contracts the specific contro the general s Smith v Burton 2004 p 6 App 1 Cir 12 928 2675 La OS 22 2d So 74 79 DISCUSSION In their first six assignments of error the lessees basically contend that the trial court erred in applying general provisions of contractual interpretation instead of the more specific provisions regarding subleases to interpret the subject lease agreements We find no merit in this contention Article 2713 found in the Title IX Lease of Book III of the Civil Code provides 5 Articles 2669 to 2744 of Title IX Of Lease of Book III of the Civil Gode were revised by Acts 2004 No 821 1 effective January 1 2005 to consist of Articles 2668 through 2729 Thus when the master lease was executed in 2002 the applicable Civil Code article regarding sublease was found in Article 2725 which provided The lessee has the right to underlease or even to cede his lease to another person unless this power has been expressly interdicted The interdiction may be for the whole or for a part and this clause is always construed strictly However as a party obligations under a contracY are fixed at the time the contract is entered s into the existing Article 2713 applies to the obligations assumed by JSLLC under the ease agreements pursuant to the assignment executed in 2008 See Green Clinic L v Finelv C 140 45 pp 8 La App 2d Cir 1 30 So 3d 1094 1099 see also Dombrowski v 11 10 27 1100 New Orleans Saints OS pp 8 La App 1 st Cir 8 943 So 2d 403 409 0762 10 06 2 411 7 The lessee has the encumber his right in the sublease the leased thing assign I lease unless expressly prohibited by the I to or to rights contract of lease A provision that prohibits one of these rights is deemed to prohibit Yhe others unless a contrary intent is expressed In all other respects a provision that prohibits subleasing assigning or encumbering is to be strictly construed against the lessor or The lease agreements at issue the master lease and the assignment both contain several express provisions regarding assignments and subleases The pertinent provision in the master lease however is the following Article VI AssiQnments and Subleases 1 Assignments and Sublease by the Tenant The Tenant may not assign ar in any manner transfer this lease or any interest herein permit any such assignment or transfer to occur by operation of law ar otherwise or sublet the Leased Premises or any part or parts thereof without the prior written consent of the Landlord which may not be withheld for any reason or without reason No assignee sublessee or any person or entity at any time owning the Tenant interest in this s lease or subleasing any of the Leased Premises may assign any of his interest in this lease or sublease any of the Lease Premises except as permitted in this article Emphasis added The ambiguity of the foregoing provision only becomes clarified in light of the other provisions contained in the same article of the master lease Those other provisions state i 2 Request of Tenant If the Tenant permission to assign this lease or to sublet any portion of the Leased Premises the Tenant shall submit to the Landlord the proposed assignment or sublease together with any additional information the Tenant may have with respect to the proposed assignee or sublessee The Landlord shall have 30 days from submission of the foregoing information by the Tenant within which to grant or not grant its approval to the proposed assignment or sublease If the Landlord does not grant its consent within this 30 period then the day Landlord shall be deemed to have denied its consent to the proposed assignment or sublease If the Landlord grants the approval then the Tenant may conclude the assignment or sublease agreement provided that the Tenant shall remain fully responsible for all of the obligations of the Tenant hereunder including but not limited to the obligation to pay Rent to the end of the term hereunder including any extensions or options for renewal 3 Direct Lease If the Landlord does not approve the assignment or sublease then the Landlord shall have the option either a to make a direct lease with the proposed assignee or sublessee and in that case the term of this lease shall end on the date 8 I requests I immediately preceding the proposed date of occupation and commencement of rental payments under the direct lease with the assignee or sublessee ar to require that this lease remain in full b force and effect and to deny the Tenant the right to conclude the proposed assignment or sublease In the event of an assignment or sublease by the Tenant whether or not approved by the Landlord hereunder any increases in rentals to be paid by the proposed assignee or sublessee over and above the Rent due hereunder shall be due and payable by the Tenant to the Landlord Emphasis added Despite the glaring ambiguity created by the language of section 1 of Article VI as compared with sections 2 and 3 the lessees contend that the rule of strict construction pronounced in La C art 2713 requires the court to intetpret the language in section 1 in accardance with the explicit meaning of the words used We disagree As our brethren in the Second Circuit observed when considering the proper manner in which to interpret a document that established a building restriction which by law also must be strictly construed the court held Apart from the rule of strict interpretation documents establishing building restrictions are subject to the general rules of the Louisiana Civil Code governing the interpretation of juridical acts According to these general rules interpretation of a contract is the determination of the common intent of the parties When the words of a contract are clear and explicit and lead to no absurd consequences no further interpretation may be made in search of the parties intent Even if the words are fairly explicit it is our duty to refrain from considering them in such a manner as to lead to absurd consequences Whitaker Construction Co Inc v Larkin Development Corporation 34 p 297 La 3 App 2d Cir 12 775 So 2d 571 574 writ denied 01 La 00 6 0068 O1 16 3787 So 2d 312 citations omitted And further as noted by the supreme court in Cashio v Shoriak 481 So 2d 1013 1015 La 1986 when a literal interpretation will produce absurd consequences the court may consider all pertinent facts and circumstances including the parties own conclusion of the s instrument meaning rather than adhere to a forced meaning of the terms used Thus we find no error in the trial court use of the general rules of s contractual interpretation found in the Civil Code to determine whether the lease 9 I agreements should be interpreted to allow Abbott Paul to withhold its consent to the proposed sublease of the The premises rule of strict construcYion pronounced in La C art 2713 does not exclude the application of the general rules of contract interpretation found in the Civil Code Rather considering that if such a literal interpretation were to apply in the current case it would result in the absurd consequence of holding that the potential sublessee had greater rights than those held by JSLLC under the lease agreements By interpreting the ambiguous language of the master lease to literally mean that Abbott Paul had to consent to the sublease JSLLC proposed would result in a declaration that the potential sublessee could engage in a business activity which according to the assignment JSLLC was strictly prohibited from engaging in by virtue of the terms of the assignment to JSLLC It is a basic precept of law that a sublessee cannot have greater rights than the sublessor obtained in its acquisition of rights See Soma Enterprises Inc v State Department of Transportation and Development 584 So 2d 1243 1246 La App 2d Cir writ denied 589 So 2d 1055 La 1991 Furthermore we find the lessees arguments regarding the application of La C art 2056 to be equally unsustainable Article 2056 provides in pertinent part that icase of doubt that cannot be otherwise resolved a provision in a n contract must be interpreted against the party who furnished its text Emphasis added While the record shows that Abbott Paul did not furnish the objectionable text at issue in this action even if it had the statute plainly provides that interpreting the contract against the party who furnished the text should only occur when the doubt created by the ambiguous provision cannot be otherwise resolved The articles preceding Article 2056 particularly Articles 2048 through 2055 6 Paragraph number 2 of the assignment and assumption of lease titled Use expressly provides that JSLLC acknowledges and agrees that the only permitted use of the leased premises pursuant to the Lease is the operation of a retail clothing store specializing in maternity and baby clothing 10 provide several principles by which to resolve a doubtful provision in a contract and we observe that the trial court properly considered these same principles in resolving the doubtful provision in the master lease First the trial court interpreted the doubtful provision in light of other provisions in the master lease as suggested in La C art 2050 and then the court went on to interpret the doubtful provision in light of the nature usage and conduct of the parties pursuant to La C art 2053 In so doing the trial court found Thus when the disputed provision is interpreted in light of these specific provisions and the lease contract in its entirery along with the assignment the Court finds that Article VI section 1 was intended to mean that the landlard could withhold consent for a valid reason In addition La C art 2053 provides that A doubtful provision must be interpreted in light of the nature of the contract equity usages the conduct of the parties before and after the formation of the contract and of other contracts of a like nature between the same parties The lessees followed the procedure for obtaining the landlord consent set forth in Article VI section 2 of s the lease when Mama This Mia sought to sublease to JSLLC conduct of the parties indicates their common understanding that the consent of the landlord was required Considering this reasoning expressed by the trial court we find it was legally correct in its interpretation of the doubtful provision found in the master lease As for the lessees final assignment of error asserting that a genuine issue of material fact existed that precluded the ganting of summary judgment in this matter we likewise find no merit in Yheir argument A fact is material when its existence or nonexistence may be essential to plaintiffs cause of action under the applicable theory of recovery Facts are material if they potentially insure or preclude recovery affect a IitiganYs ultimate success or determine the outcome of the legal dispute Smith v Our Ladv of the Lake Hospital Inc 93 p 27 2512 La 7 639 So 2d 730 751 Because it is the applicable substantive law that 94 5 detertnines materiality whether a particular fact in dispute is material can be seen only in light of the substantive law applicable to the case Charlet v Le of islature 11 the State of Louisiana 97 p 7 App lst Cir 6 713 So 2d 1199 0212 La 98 29 1203 rvrits denied 98 98 La l 1730 So 2d 934 In this case 2023 2026 98 13 the applicable substantive law between the parties is found in their agreements that is the master lease and the assignment See Belle Pass Terminal Inc 92 at 1544 16 634 So 2d at 479 legal agreements have the effect of law upon the parties and as they bind themselves they shall be held to a full performance of the obligations flowing therefrom As observed by the trial court the parties expressly agreed in paragraph number 2 of the assignment that the leased premises would only be used for the operation of a retail clothing store specializing in maternity and baby clothing thus this restriction on the use of the premises I made it of no moment that the terms I of another tenant lease precluded Abbott Paul from consenting Yo a sublease far s the operation ofa women sclothing store as such use was already precluded under the express terms of the parties own agreement in the assignment Moreover the other tenant lease was recorded in 2005 and therefare was a matter of public s record CONCLUSION For the foregoing reasons we find the trial court was legally correct in interpreting the lease agreements at issue to find that Abbott Paul had authority to withhold its consent to the sublease proposed by JSLLC and in doing so it did not breach the governing lease agreements We therefore affiim the partial summary judgment finding the lessees liable solido for breaching the lease agreements All costs of this appeal are assessed equally to JSLLC Joaquin Sampedro Alexandra Tate and Kristen Chetta AFFIRMED AND REMANDED 12
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