Opinion
2023 CA 0021
06-20-2023
BEDDING PLUS, LLC v. COMMERCE PARTNERSHIP #1155
Charles A. Schutte, Jr. Baton Rouge, Louisiana Counsel for Defendant/Appellant, Commerce Partnership # 1155 Kay H. Michiels Alexandria, Louisiana Counsel for Defendant/Appellee, Mickey Leblanc
On Appeal from the 19th Judicial District Court In and for the Parish of East Baton Rouge State of Louisiana Trial Court Docket Number C633068, Sec. 26 Hon. Richard "Chip" Moore, Judge Presiding
Charles A. Schutte, Jr. Baton Rouge, Louisiana Counsel for Defendant/Appellant, Commerce Partnership # 1155
Kay H. Michiels Alexandria, Louisiana Counsel for Defendant/Appellee, Mickey Leblanc
BEFORE: WELCH, PENZATO, AND LANIER, JJ.
PENZATO, J.
Commerce Partnership #1155 appeals a trial court judgment granting summary judgment in favor of Mickey Leblanc, dismissing Commerce's claims against Leblanc with prejudice. For the following reasons, we reverse and remand for further proceedings.
PERTINENT FACTS AND PROCEDURAL HISTORY
Commerce Partnership #1155, as landlord, and American Wholesale Mattress, Inc., as tenant, entered into an agreement for the lease of property located at 9450-C Airline Highway, Baton Rouge, Louisiana. Between October 23, 2000, when the original lease was signed, and May 7, 2008, the lease was amended five times to adjust various terms not pertinent here. The lease required American Wholesale to pay Monthly Rental, defined as "the minimum monthly rent payable by Tenant to Landlord during the Term" at the rates provided in the lease. Monthly Rental was "due and payable" on the first day of each month. The lease also required American Wholesale to pay a pro rata share of common area maintenance expenses (CAM), taxes, and insurance.
On June 23, 2011, Commerce, American Wholesale, and Bedding Plus, LLC executed an "Assignment, Assumption of Lease, Estoppel and Sixth Amendment to Lease," wherein American Wholesale assigned, transferred, and set over unto Bedding Plus, and Bedding Plus accepted, all right, title, and interest in the lease. With Commerce's consent, Bedding Plus assumed American Wholesale's obligations under the lease from and after the date of the assignment. Notably, the assignment stated that, unless specifically and expressly set forth, nothing shall be construed to modify, waive, or affect (i) any of the provisions, covenants, or conditions in the lease; (ii) any of American Wholesale's obligations under the lease; (iii) any rights or remedies of Commerce under the lease, or (iv) any default by American Wholesale under the lease. The lease similarly stated that, notwithstanding any assignment of the lease, American Wholesale "shall, nevertheless, remain liable" to Commerce for the performance of all obligations under the lease, and any assignment by American Wholesale "shall be subject to the terms, conditions and provisions" of the lease.
On July 1, 2011, American Wholesale sold all of its movable assets to Bedding Plus and also transferred "[w]hatever interest, if any, [it] may have to rent or lease or otherwise occupy the premises or store located at 9450 Airline Highway, Baton Rouge" to Bedding Plus. American Wholesale was dissolved on January 25, 2012, and its assets and liabilities were divided among its shareholders, Michael Monk, Sean Bryan, and Mickey Leblanc.
On September 9, 2014, Bedding Plus filed a "Petition to Terminate the Lease and for Refund of Sums Improperly Collected by Landlord" against Commerce. Bedding Plus alleged that Commerce "routinely" overbilled and/or incorrectly billed various charges from 2012 through 2014 and failed to comply with the terms of the lease. Particularly, Bedding Plus alleged that Commerce billed it for charges that predated May 31, 2011, despite Commerce's acknowledgement in the assignment that all Monthly Rental and charges were "current as of May 31, 2011." As a result, and also due to Commerce's alleged failure to provide accurate accounting information, Bedding Plus sought judicial recognition that the lease was terminated, reimbursement for overpayments, and available attorney fees, expenses, and costs.
The American Wholesale/Bedding Plus sale of assets stated that $25,000 of the sale price shall be paid directly to Commerce. The assignment stated, in part, that, upon Bedding Plus's payment of $25,000 to Commerce, the Monthly Rental is current "and any other charges under the Lease (the estimates for CAM, taxes and insurance are currently being billed in the total monthly amount of $1440) shall be current as of May 31, 2011." The parties dispute whether American Wholesale or Bedding Plus owe a certain portion of CAM charges for 2011 improvements to the premises. In opposition to Leblanc's motion for summary judgment, Commerce argued that a genuine issue of material fact remained regarding whether American Wholesale and Bedding Plus were solidarily liable for the payment of the disputed 2011 CAM charges. Commerce again raises the argument on appeal; however, we decline to consider this assignment of error in light of the result reached in this opinion.
In response, Commerce filed a reconventional demand against Bedding Pius and asserted third-party demands (incorrectly identified as reconventional demands) against, among others, American Wholesale and Leblanc. See La. C.C.R arts. 1061, 1111. Commerce alleged that Bedding Plus, as assignee, and American Wholesale, as the original tenant obligated under the lease, breached the lease by abandoning the premises and failing to pay rent and other expenses due under the lease. Commerce sought monetary damages in the amount of accelerated rent and unpaid CAM charges, insurance, payment of tax obligations, and any amounts due under the lease for the remainder of the term. Finally, Commerce sought to hold Leblanc personally liable for debts owed by American Wholesale as a result of its dissolution.
Commerce also asserted third-party demands against Sean Bryan and Michael Monk, which are not at issue here.
Leblanc does not dispute that he may be held personally liable for any debts or claims against American Wholesale in proportion to his ownership in the shares of the corporation. See La. R.S. 12:142.1, repealed by Acts 2014, No. 328, § 5, eff. Jan. 1, 2015. See also In re Krebs Lasalle Lemieux Consultants, Inc., 16-586 (La.App. 5th Cir. 3/15/17), 215 So.3d 939, 942 (applying the law in effect at the time the corporation existed, rather than the Business Corporations Act, La. R.S. 12:1-101, et seq, eff. Jan. 1, 2015.)
On March 24, 2022, Leblanc filed the subject motion for summary judgment seeking to dismiss Commerce's claims against him. Leblanc asserted that Commerce and Bedding Plus settled their claims and, as a result, Commerce was not entitled to recover additional damages from Leblanc. Leblanc contended that, through the assignment, Bedding Plus and American Wholesale became solidary obligors as to the lease. Leblanc argued that any violation or default of the lease was, undisputedly, due to the sole fault of Bedding Plus, because it enjoyed exclusive possession and use of the leased premises via the assignment. Therefore, Leblanc asserted that Bedding Plus owed and paid 100% of the solidary obligation in the settlement with Commerce. See La. C.C. art. 1804. Leblanc further reasoned that the compromise between Commerce and Bedding Plus benefitted American Wholesale and/or Leblanc in the amount of Bedding Plus's portion. See La. C.C. art. 1803. Thus, Leblanc maintained that, because Bedding Plus's virile share was 100% and American Wholesale/Leblanc's virile share was 0%, Commerce had no right to recover additional sums from American Wholesale and/or Leblanc.
Leblanc also asserted that he and American Wholesale were not in default of the lease, because Commerce failed to give notice of default and an opportunity to cure, as purportedly required by the lease. Section 13.01 of the lease states, in part,
.. .Default by Tenant. In the event any of the following shall occur:
(a) Tenant fails to pay any installment of Rent within ten (10) days after it is due; or
(b) Tenant is in default of any of its other obligations under this Lease and Tenant fails to commence to cure any such default within fifteen (15) days after notice of the occurrence thereof from Landlord and thereafter fails to complete the cure of such default with due diligence within thirty (30) days after notice of the occurrence thereof from Landlord; or
* * * *
[T]hen and in any such event, Landlord may, in addition to such other rights and remedies which are provided for by law or equity or elsewhere in this Lease: [the lease then sets forth various remedies available to the Landlord].
Leblanc contended that he first became aware that Bedding Plus allegedly breached the lease on February 3, 2015, when he was served with the third-party demand filed by Commerce. Leblanc argued that he was denied the opportunity to cure the alleged violations of the lease within 15 days as provided by the lease. Consequently, Leblanc maintained that Commerce was not entitled to recover damages from American Wholesale and/or Leblanc for default of the lease.
Commerce opposed the motion, asserting that its agreement with Bedding Plus was not a "settlement." Nevertheless, Commerce acknowledged that Bedding Plus signed a consent judgment "admitting that it owed Commerce" a sum of money, plus legal interest and costs. Commerce and Bedding Plus also purportedly executed a forbearance agreement wherein both parties agreed to dismiss their respective claims upon payment by Bedding Plus. Commerce maintained that the forbearance agreement did not extinguish any obligation owed to Commerce by Leblanc or American Wholesale. Finally, as to Leblanc's notice contention, Commerce asserted that notice of default for failure to pay a monetary obligation owed under the lease, as occurred here, and an opportunity to cure were not required.
In some instances, the parties maintain that Bedding Plus agreed to pay $225,000 in two installments to Commerce. In other instances, the parties state that the sum was $100,000.
The trial court granted Leblanc's motion at the conclusion of the contradictory hearing on August 15, 2022. The trial court referenced a purported "stipulation whereby the matter was settled after Bedding Plus paid its portion" as the basis of its ruling. A written judgment was signed on August 30, 2022, granting Leblanc's motion and dismissing all claims by Commerce against Leblanc with prejudice.
Commerce now appeals.
DISCUSSION
Motion for Summary Judgment: Standard, Evidence, and Standard of Review
The summary judgment procedure is expressly favored in the law and is designed to secure the just, speedy, and inexpensive determination of non-domestic civil actions. La. C.C.P. art. 966(A)(2). After an adequate opportunity for discovery, summary judgment shall be granted if the motion, memorandum, and supporting documents show there is no genuine issue as to material fact and the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966(A)(3). In determining whether summary judgment is appropriate, appellate courts review evidence de novo under the same criteria that governs the trial court's determination of whether summary judgment is appropriate. Kelley v. Estate of Kelley, 2021-0178 (La.App. 1st Cir. 10/4/21), 330 So.3d 667, 670.
The burden of proof rests with the mover. If the mover will not bear the burden of proof at trial on the issue that is before the court on the motion for summary judgment, the mover is not required to negate all essential elements of the adverse party's claim, action, or defense. Instead, it must point out to the court the absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. La. C.C.R art. 966(D)(1). If the mover fails to make a prima facie showing that the motion should be granted, the burden of proof does not shift to the non-moving party and the motion must be denied. Kelley, 330 So.3d at 673. If, however, the mover successfully satisfies its burden of proof, the burden shifts to the adverse party to produce factual support sufficient to establish the existence of a genuine issue of material fact or that the mover is not entitled to judgment as a matter of law. La. C.C.P. art. 966 (D)(1).
The only documents that may be filed in support of or in opposition to the motion are pleadings, memoranda, affidavits, depositions, answers to interrogatories, certified medical records, written stipulations, and admissions. La. C.C.P. art. 966(A)(4). Leblanc attached his own affidavit in support of his motion, wherein he authenticated and attached the original October 23, 2000 lease and the July 23, 2011 assignment and sixth amendment, the sale of assets between American Wholesale and Bedding Plus, and American Wholesale's January 25. 2012 corporate dissolution. Thus, Leblanc's evidence is proper pursuant to Article 966(A)(4). Commerce, however, attached unauthenticated, unverified documents not included in the exclusive list of permissible summary judgment evidence, including the forbearance agreement with Bedding Plus and a consent judgment not signed by the trial court. See La. C.C.P. art. 966(A)(4). Because no evidentiary objections were raised, we are required by Article 966 (D)(2) to consider the documents. However, we find they have no evidentiary value. Jackson v. St Mary Parish Government, 2021-1317 (La.App. 1st Cir. 8/10/22), 349 So.3d 69, 76 n.5, writ denied, 2022-01380 (La. 11/16/22), 349 So.3d 1004 ("A document that is not an affidavit or sworn to in any way, or is not certified or attached to an affidavit, has no evidentiary value on a motion for summary judgment.")
There is no indication the consent judgment, wherein the parties "move for entry of this consent judgment as the judgment of the court," was filed into the court record and presented to the court for signing. Thus, it cannot be considered a "pleading" for purposes of Article 966(A)(4). See La. C.C.P. art. 852. This court may not consider other judgments or pleadings in the record which concern the forbearance agreement, since those documents were not filed in support of or in opposition to the motion for summary judgment. La. C.C.P. art. 966(D)(2); Troncoso v. Point Can Homeowners Association, 2022-0530 (La.App. 1st Cir. 1/10/23), ___ So.3d ___, 2023 WL 142557, *9 (materials elsewhere in the record cannot be considered on summary judgment.)
Solidarity Obligations: Obligors' Virile Shares
As set forth above, Bedding Plus assumed all obligations owed by American Wholesale under the lease via the assignment. However, American Wholesale remained obligated under the terms of the lease. An obligation is solidary for the obligors when each obligor is liable for the whole performance. A performance rendered by one of the solidary obligors relieves the others of liability toward the obligee. La. C.C. art. 1794.
On appeal, Commerce argues that the trial court erred by dividing the solidary obligation owed by American Wholesale/Leblanc and Bedding Plus in contravention of La. C.C. art. 1795. Pursuant to Article 1795, an obligee, at his choice, may demand the whole performance from any of his solidary obligors. A solidary obligor may not request division of the debt. La. C.C. art. 1795. Commerce further asserts that the trial court erred by applying La. C.C. art. 1804 to find that Bedding Plus owed 100% of the solidary obligation and, that by settling with Bedding Plus, Commerce received 100% of what it was owed. After our de novo review, we find genuine issues of material fact remain concerning whether Commerce received 100% of the solidary obligation owed by Bedding Plus and American Wholesale/Leblanc.
The parties do not dispute that, after litigation commenced, an agreement was reached between Commerce and Bedding Plus, wherein each agreed to dismiss its claims against the other after Bedding Plus paid an agreed-upon sum of money to Commerce. Leblanc's affidavit is the only competent summary judgment evidence on this issue and establishes only that Leblanc was "personally aware that a compromise and settlement was entered into between Commerce Partnership #1155 and Bedding Plus, LLC, as [he] was present in court on the morning of trial when the settlement was announced to the court."
Leblanc argues that pursuant to La. C.C. art. 1804 Bedding Plus's "virile share or portion of the solidary obligation is 100%" because it was solely at fault for any breach of the lease. He further maintains that, because Bedding Plus owed 100% of the obligation, the settlement with Commerce satisfied the full obligation, and Commerce is not entitled to additional recovery from American Wholesale/Leblanc. We find Leblanc's reliance on Article 1804 to support his assertion that Bedding Plus owed 100% of the debt is premature and misplaced.
Louisiana Civil Code article 1804, "Liability of solidary obligors between themselves," pertinently states,
Among solidary obligors, each is liable for his virile portion. If the obligation arises from a contract or quasi-contract, virile portions are equal in the absence of agreement or judgment to the contrary. ...
A solidary obligor who has rendered the whole performance, though subrogated to the right of the obligee, may claim from the other obligors no more than the virile portion of each.
If the circumstances giving rise to the solidary obligation concern only one of the obligors, that obligor is liable for the whole to the other obligors who are then considered only as his sureties.
This article focuses on a division of the solidary obligation between the obligors pursuant to their agreement or after a judgment finding the obligors owe something other than equal virile shares. See La. C.C. art. 1804. The assignment of the lease between American Wholesale and Bedding Plus does not set forth an agreement as to the division of virile shares for the solidary obligation, and there has been no judicial determination that Bedding Plus owed or paid 100% of the solidary obligation. Additionally, Leblanc's motion for summary judgment did not seek such a determination.
As between the obligee and the solidary obligors, La. C.C. art. 1800 provides that a failure to perform a solidary obligation through the fault of one obligor (Bedding Plus) renders all the obligors (including American Wholesale and Lebianc) solidarity liable for the resulting damages. "In that case, the obligors not at fault have their remedy against the obligor at fault." La. C.C. art. 1800. Revision Comment (b) to Article 1800 explains, "Obligors of a solidary obligation represent each other with regard to the obligee. What is done by one of them is considered to have been done by the others...." La. C.C. art. 1800, Revision Comments--1984.
As solidary obligors, Bedding Plus and American Wholesale/Leblanc are each liable for the whole performance, and performance rendered by one will relieve the other of liability toward Commerce, the obligee. See La. C.C. art 1794. However, La. C.C. art. 1802 provides that an obligee who receives a partial performance from an obligor separately preserves the solidary obligation against all obligors after deduction of that partial performance. When partial payment is received, solidary liability is preserved unless it is expressly renounced. La. C.C. art. 1802; Dukes v. Declouette, 2010-0045 (La.App. 1st Cir. 6/11/10), 40 So.3d 1231, 1235, writ denied, 2010-1623 (La. 10/8/10), 46 So.3d 1270. Louisiana law no longer requires a reservation of rights be included in a release to protect a settling plaintiffs right to pursue its claims against non-settling solidary obligors. Dukes, 40 So.3d at 1235. See also La. C.C. art. 1802, Revision Comments--1984, Comment (a) (recognizing the article eliminates the presumption of waiver of solidarity in the absence of a reservation by the obligee) and Comment (d) ("Under this Article, solidarity is preserved when an obligee accepts a partial performance from one obligor, and the obligee retains his right of action against all the solidary obligors for the balance, regardless of whether the amount he received from the first obligor equaled the latter's portion, or was less or more than that portion.") Louisiana Civil Code article 1803 pertinently provides that a transaction or compromise between the obligee and one obligor benefits the other solidary obligors in the amount of the portion of that obligor. See La. C.C. art. 1803, Revision Comments-1984, Comment (a) (This article establishes that a transaction or compromise between the obligee and one solidary obligor does not extinguish the solidary obligation, but only reduces it for the other obligors in the amount of the remitted share.)
Leblanc asserted a cross-claim against Bedding Plus for indemnity should he be held liable to Commerce. On appeal, Leblanc argues that Commerce's settlement with Bedding Plus deprived him of a right of contribution from Bedding Plus. However, by operation of law, any settlement or compromise between Commerce and Bedding Plus will benefit Leblanc/American Wholesale "in the amount of the portion of that obligor (Bedding Plus)." See La. C.C. art. 1803. See also La. C.C. art. 1802. For this reason, we find no merit to Leblanc's argument.
There is no summary judgment evidence to enable this court to determine whether Bedding Plus satisfied the whole performance owed to Commerce, thereby extinguishing the full debt in favor of American Wholesale/Leblanc, or whether Commerce accepted only partial payment from Bedding Plus, retaining its right of action against American Wholesale/Leblanc for the balance. See La. C.C. arts. 1794, 1802, 1803. See also Newsome v. American Waste & Pollution Control, 95-0142 (La.App. 4th Cir. 6/29/95), 657 So.2d 752, 754, writ denied, 95-1967 (La. 11/27/95), 663 So.2d 731 (Summary judgment granted in favor of non-settling solidary obligor was reversed, where the record did not clearly demonstrate that the settlement extinguished the obligees' entire claim. If the obligees were not fully compensated, they were entitled to claim additional damages from the non-settling solidary obligor, absent a valid settlement agreement covering its liability.) Because these genuine issues of material fact remain, Leblanc was not entitled to summary judgment.
Notice of Default
Commerce asserts that, contrary to Leblanc's contention, the lease does not require notice of default where the tenant fails to make a payment owed under the lease nor does the lease provide for a 15-day opportunity to cure a monetary default, like the one at issue here. Conversely, Leblanc maintains that summary judgment was properly granted, dismissing Commerce's claims against him, because he and American Wholesale "were never put in default and were never provided the opportunity to cure and mitigate their damages." As a result of this failure, Leblanc asserts that Commerce has no right to recover default damages from them as a matter of law. We disagree.
As Commerce points out, Section 13.01 of the lease, set forth above, describes two distinct default provisions. Section 13.01(a) applies where Tenant fails to pay any installment of Rent within ten days after it is due. "Rent" is defined as "all Monthly Rental, additional rent and other sums payable by Tenant under this Lease." The payment of Monthly Rental, CAM charges, and additional expenses charged by Commerce is at the center of the present controversy.
Unlike Section 13.01(b), which applies to Tenant's default of "other obligations," Section 13.01(a) does not include notice and cure requirements. When a term for the performance of an obligation is either fixed, or is clearly determinable by the circumstances, the obligor is put in default by the mere arrival of that term. La. C.C. art. 1990. By operation of law and pursuant to the clear and unambiguous language of Section 13.01(a), default occurred when Commerce did not receive the required payments ten days after each was due. See La. C.C. art. 2046 ("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.") Thus, we find Leblanc was not entitled to summary judgment dismissing Commerce's claims based on a purported failure to provide notice and an opportunity to cure the default.
Because we find Leblanc failed to satisfy his summary judgment burden of proof on any theory asserted, the trial court erred by granting the motion and dismissing the claims asserted by Commerce against Leblanc with prejudice.
DECREE
For the forgoing reasons, the August 30, 2022 judgment granting summary judgment in favor of Mickey Leblanc, dismissing the claims asserted against him by Commerce Partnership #1155, is reversed. The case is remanded to the trial court for further proceedings consistent with this opinion. All costs of this appeal are assessed to Mickey Leblanc.
REVERSED AND REMANDED.