134 So. 3d 616
La. Ct. App.2013Background
- LHC borrowed under an amended promissory note secured by mortgages and guaranties; HAEIDD acquired the hospital and leased it back to LHC, issuing bonds to GECF. LHC defaulted on the note and the bond in Oct 2007.
- HAEIDD notified LHC of acceleration/default and sent letters in early 2008 indicating it would terminate LHC’s lease and seek a new tenant. HAEIDD entered a Memorandum of Agreement with Bruno on March 27, 2008 and a lease with Bruno on April 21, 2008; Bruno paid a $145,000 nonrefundable option payment.
- Bruno later learned (or claimed) the LHC lease had not been formally terminated and sued HAEIDD, alleging HAEIDD misrepresented the lease status and induced Bruno to pay and execute the MOA/lease.
- HAEIDD moved for summary judgment arguing the option payment was nonrefundable, Bruno failed required benchmarks, and Bruno assumed the risk; it submitted an affidavit that Bruno breached benchmarks. Bruno opposed with his affidavit stating HAEIDD’s representatives told him the LHC lease was terminated and that he would not have entered the deal or paid the option if he had known otherwise.
- The trial court granted HAEIDD’s motion and dismissed Bruno’s claims with prejudice. On appeal, the court reviewed de novo whether genuine issues of material fact existed, particularly over inducement, misrepresentation/error, and the validity of the lease.
Issues
| Issue | Bruno's Argument | HAEIDD's Argument | Held |
|---|---|---|---|
| Was the prior LHC lease terminated before HAEIDD leased to Bruno? | HAEIDD told Bruno the LHC lease was terminated; Bruno relied on that and paid $145,000 — so no valid lease to Bruno if LHC lease remained. | The LHC lease was terminated (or HAEIDD lawfully accelerated rent); Bruno assumed risk and paid a nonrefundable option. | Genuine issue of material fact exists as to whether HAEIDD induced Bruno’s consent; summary judgment improper. |
| Did HAEIDD fraudulently or erroneously induce Bruno’s consent to the MOA/lease? | Bruno: HAEIDD representatives misrepresented the lease status, vitiating consent (fraud/error). | HAEIDD: no actionable misrepresentation; Bruno’s risk and nonrefundable payment clause apply. | Conflicting affidavits create triable issues on inducement, fraud/error; cannot be resolved on summary judgment. |
| Was summary judgment appropriate given Bruno’s failure to meet lease benchmarks? | Bruno: Benchmark performance is immaterial if the lease was invalid or induced by misrepresentation. | HAEIDD: Bruno breached benchmarks and thus cannot recover the option payment. | Court cannot resolve credibility and intent on summary judgment; disputed facts preclude judgment. |
Key Cases Cited
- GE Commercial Finance Business Property Corp. v. Louisiana Hosp. Center, L.L.C., 69 So.3d 649 (La. App. 1 Cir. 2011) (prior appellate decision in the case history)
- Hines v. Garrett, 876 So.2d 764 (La. 2004) (summary judgment pierces pleadings to assess need for trial)
- Independent Fire Ins. Co. v. Sunbeam Corp., 755 So.2d 226 (La. 2000) (on summary judgment, courts must assume witnesses credible; no credibility determinations)
- Monterrey Center, LLC v. Education Partners, Inc., 5 So.3d 225 (La. App. 1 Cir. 2008) (elements of lease and that consent may be vitiated by error/fraud)
- Terrebonne Concrete, LLC v. CEC Enterprises, LLC, 76 So.3d 502 (La. App. 1 Cir. 2011) (elements of actionable fraud)
Disposition: The trial court’s grant of summary judgment for HAEIDD and dismissal of Bruno’s claims was reversed in part and remanded for further proceedings; appellate court found genuine factual disputes (inducement, misrepresentation, credibility) precluded summary judgment.