Vincent Fertitta v. Regions BankVincent Fertitta v. Regions Bank
BELSOME, J., CONCURS IN THE RESULT
John Armand Venezia
Julie O‘Shesky
VENEZIA & ASSOCIATES, APLC
757 St. Charles Avenue
Suite 302
New Orleans, LA 70130
Cesar Roberto Burgos
Robert J. Daigre
BURGOS & ASSOCIATES, LLC
3535 Canal Street
New Orleans, LA 70119
COUNSEL FOR PLAINTIFF/APPELLANT
Thomas Richard Temple, Jr.
Carroll Devillier, Jr.
Michael Roy Hubbell
Kelsey A. Clark
BREAZEALE, SACHSE &
301 Main Street, Suite 2300
Post Office Box 3197
Baton Rouge, LA 70821-3197
COUNSEL FOR DEFENDANT/APPELLEE
AFFIRMED
DECEMBER 9, 2020
This is a commercial lease dispute. Appellant-Lessor, Vincent Fertitta, (“Mr. Fertitta“) appeals the trial court‘s July 31, 2019 judgment, which awarded him the cost of removal of certain approved constructions made on his immovable property by Appellee-Lessee Regions Bank (“Regions“), but which denied Mr. Fertitta‘s claims for lost rent and the cost of returning the property to its pre-lease condition. Regions answered the appeal, seeking reversal of the trial court‘s judgment granting Mr. Fertitta thе cost of removal of the constructions. Regions also seeks reversal of the trial court‘s interlocutory judgments, which denied its peremptory exception of no cause of action and motion for summary judgment. For the following reasons, we affirm the trial court‘s July 31, 2019 judgment and its June 18, 2019 judgments, denying Regions’ peremptory exception of no cause of action and motion for summary judgment.
FACTUAL AND PROCEDURAL HISTORY
Mr. Fertitta owns property at 2158, 2158½, 2454, and 2454½ Foy Street (the “Property“) in New Orleans. Prior to 1995, Regions had a bank branch that was adjacent to the Property. On July 19, 1995, Mr. Fertitta and Regions entered into a written lease (the “Lease“), whеreby Regions would rent the Property for use as a parking lot and drive-thru for the bank. At the time the Lease was executed, the Property had four structures as well as landscaping on it. The terms of the Lease allowed Regions to demolish the pre-existing structures, build a drive-thru, and add new landscaping. Specifically, Paragraph 19 of the Lease provided the following related to the “improvements” on the Property:
Removal of Improvements
Notwithstanding anything to the contrary contained herein, 60 days prior to the expiration or termination of this lease for whatever reason, Lessor at Lessor‘s option may require Lеssee, at no cost to Lessor, to either abandon and deliver to Lessor all improvements on the Leased Premises existing at the termination of the lease at no cost to Lessor, (sic)
During the terms of the Lease and with Mr. Fertitta‘s knowledge and consent, Regions demolished all of the structures on the Property and built a concrete drive-thru so its customers could access a drive-up window. The original term of the Lease was for fifteen years. The parties mutually agreed to extend the Lease beyond its original terms. On February 18, 2016, Regions wrote a letter to Mr. Fertitta notifying him of Regions’ intention to terminate the Lease effective April 30, 2016. When the Lease terminated, Regions closed off the drive-thru and stopped using it, but did not remove it or the landscaping, nor did Regions rebuild the structures that were on the Property prior to the Lease. Regions also constructed a fence between its property and Mr. Fertitta‘s, which Mr. Fertitta alleged encroached on the Property.
On August 8, 2016, Mr. Fertitta‘s attorney wrote to Regions, demanding the removal of all constructions Regions made on the Property and the restoration of the Property to its pre-lease condition, including returning the pre-existing buildings.
After Regions’ refusal to remove the drive-thru, on April 28, 2017, Mr. Fertitta filed a Petition for Damages and Possession (the “Petition“) against Regions, alleging that he suffered damages in the form of lost rental income and loss of use of the Property. He demanded: (1) payment for the cost of removal of the concrete drive-thru; (2) payment for the cost to rebuild the four structures that were demolished in accordance with the Lease; and (3) payment for lost rent from the end of the Lease through the amount of time it would take for the drive-thru to be removed and the structures to be rebuilt, which Mr. Fertitta alleged totaled 48 months. Mr. Fertitta sought a total award of $1,426,692.38. Mr. Fertitta also prayed that he be awarded attorney‘s fees for bringing the instant action in accordance with the Lease and that the trial court award him costs of removing the fence that encroached on the Property.
In response, on June 23, 2017, Regions filed an Answer to the Petition, generally denying that Mr. Fertitta was entitled to the relief he sought. On April 22 and May 2, 2019, respectively, Regions filed a motion for summary judgment and a peremptory exception of no cause of action. After Mr. Fertitta filed oppositions to the motion for summary judgment and the peremptory exception of no cause of action, the trial court heard the matters on May 24, 2019. On June 18, 2019, the trial court denied both the motion for summary judgment and the peremptory exception of no cause of action.
The matter proceeded to bench trial on June 24, 2019. At the close of trial, the trial court took the matter under advisement. On July 31, 2019, after the parties filed post-trial memoranda, the trial court rendered judgment. The trial court found that the provision in the Lease that addressed the parties’ rights and obligations relative to “improvements” to the Property was ambiguous and, as such, the suppletive law or “default” rules regarding the drive-thru and parking lot should apply. The trial court found that the drive-thru and parking lot are component parts because they had been incorporated into the Property, such as to become an integral part of it. Applying
On August 9, 2019, Mr. Fertitta timely moved for a new trial, arguing that the trial court erred in failing to award lost rent, judicial interest, and court costs in its July 31, 2019 judgment. On November 8, 2019, the trial court amended its July 31, 2019 judgment to award Mr. Fertitta judicial interest and costs, but again denied his claim for lost rent.
From this judgment, Mr. Fertitta‘s timely appeal follows. Answering the appeal, Regions requests reversal of the trial court‘s award for the costs of removing the drive-thru and parking lot, as well as reversal of the trial court‘s denial of Regions’ peremptory еxception of no cause of action and motion for summary judgment.
DISCUSSION
On appeal, Mr. Fertitta maintains that the trial court correctly found that the Lease was ambiguous and properly applied the suppletive law in awarding him the costs of removing the drive-thru. Mr. Fertitta argues, however, that the trial court erred in failing to award him lost rental
If we determine that the issues raised in Regions’ answer have merit, the assignments of error raised in Mr. Fertitta‘s appeal are rendered moot. Accordingly, we address Regions’ assignments of error regarding the trial court‘s rulings on Regions’ exception of no cause of action and motion for summary judgment first.
We review these rulings as interlocutory judgments, which are judgments on preliminary matters in the course of an action and which do not determine the merits of the action. See
Exception of No Cause of Action
Regions argues that the trial court should have granted its peremptory exception of no cause of action because Mr. Fertitta did not and could not state a cause of action for having the improvements removed and the Property restored. Regions reasons that Mr. Fertitta based his claims on
An exception of no cause of action is raised by peremptory exception. “The function of the peremptory exception is to have the plaintiff‘s action declared legally nonexistent, or barred by effect of law, and hence this exception tends to dismiss or defeat the action.”
“A peremptory exception of no cause of action questions whether the law extends a remedy against a defendant to anyone under the factual allegations of a petition.” White v. New Orleans Ctr. for Creative Arts, 2019-0213, p. 7 (La. App. 4 Cir. 9/25/19), 281 So.3d 813, 819, writ denied, 2019-01725 (La. 12/20/19), 286 So.3d 428 (citing Mid-S. Plumbing, LLC v. Dev. Consortium-Shelly Arms, LLC, 2012-1731, p. 4 (La. App. 4 Cir. 10/23/13), 126 So.3d 732, 736). The exception tests “the legal sufficiency of the petition by determining whether the law affords a remedy on the facts alleged in the pleading.” Green v. Garcia-Victor, 2017-0695, p. 4 (La. App. 4 Cir. 5/16/18), 248 So.3d 449, 453 (quoting Moreno v. Entergy Corp., 2010-2281, p. 3 (La. 2/18/11), 62 So.3d 704, 706). “In deciding an exception of no cause of action a court can consider only the petition, any amendments to the petition, and any documents attached to the petition.” Green, 2017-0695, p. 5, 248 So.3d at 453 (quoting 2400 Canal, LLC v. Bd. of Sup‘rs оf Louisiana State Univ. Agr. & Mech. Coll., 2012-0220, p. 7 (La. App. 4 Cir. 11/7/12), 105 So.3d 819, 825). “A court cannot consider assertions of fact referred to by the various counsel in their briefs that are not pled in the petition.” Id. “The grant of the exception of no cause of action is proper when, assuming all well pleaded factual allegations of the petition and any annexed documents are true, the plaintiff is not entitled to the relief he seeks as a matter of law.” Id. “[A]ny doubt must be resolved in the plaintiffs’ favor.” Id. Nevertheless, the mere conclusions of the plaintiff which are unsupported by facts do not set forth a cause of action. Green, 2017-0695, p. 5, 248 So.3d at 453-54 (citing 831 Bartholomew Investments-A, L.L.C. v. Margulis, 2008-0559, p. 10 (La. App. 4 Cir. 9/2/09), 20 So.3d 532, 538).
The peremptory exception of no cause of action raises a question of law; thus, the appellate court reviews the trial court‘s ruling de novo. Ocwen Loan Servicing, LLC v. Porter, 2018-0187, p. 3 (La. App. 4 Cir. 5/23/18), 248 So.3d 491, 495.
In the instant matter, Mr. Fertitta asserted the following facts in the Petition: (1) that the parties entered into the Lease on July 10, 1995; (2) that the Lease allowed Regions to demolish the pre-existing structures on the Property and construct a drive-thru; (3) that Regions in fact demolished the pre-existing structures and built a drive-thru on the Property; (4) that the parties mutually agreed to exercise the option to extend the Lease, and it ultimately terminated on April 30, 2016; (5) that Regions did not remove its constructions or restore the Property to its original condition, despite Mr. Fertitta‘s demands; (6) that there was no agreement in the Lease that allowed Regions to abandon the constructions without removing them or restoring the Property; and (7) that Mr. Fertitta has no use for the drive-thru as it prevents him from using or leasing the Property to someone else. Mr. Fertitta cited the law in
Mr. Fertitta stated a valid cause of action in the Petition. This Court is tasked with looking at the factual allegations in the Petition—rather than the references to the law—to determine if the law extends any remedy to Mr. Fertitta based on the facts pled. A review of the Louisiana Civil Code, specifically
Next, we аddress Regions’ assignment of error regarding the trial court‘s denial of its motion for summary judgment. Regions argues that the Lease is unambiguous regarding the parties’ rights and obligations related to the drive-thru. Accordingly, Regions argues the trial court should have granted the motion for summary judgment because the Lease clearly provided that Mr. Fertitta was only entitled to keep the drive-thru at no cost, and under the Lease, Mr. Fertitta is not entitled to any additional relief. Alternatively, Regions argues that, even if the Lease is ambiguous, the suppletive law and jurisprudence do not offer the remedies Mr. Fertitta seeks, and Mr. Fertitta could not meet his burden of proof at trial.
Summary judgment is favored in Louisiana. It is designed to “secure the just, speedy, and inexpensive determination of every action.”
Appellate courts review judgments granting or denying motions for summary judgment de novo using the same criteria district courts consider when determining if summary judgment is proper. Madere v. Collins, 2017-0723, p. 6 (La. App. 4 Cir. 3/28/18), 241 So.3d 1143, 1147, writ denied, 2018-0678 (La. 9/14/18), 252 So.3d 478 (citing Kennedy v. Sheriff of E. Baton Rouge, 2005-1418, p. 25 (La. 7/10/06), 935 So.2d 669, 686).
We begin review of the denial of the motion for summary judgment with a discussion of the Lease as Regions’ arguments on summary judgment turn on whether the Lease is ambiguous.
Interpretation of a contract is the determination of the common intent of the parties.
“Generally, a contract, subject to interpretation on the four corners of the instrument without the necessity of extrinsic evidence, is interpreted as a matter of law.” New Orleans Jazz & Heritage Found., Inc. v. Kirksey, 2009-1433, p. 9 (La. App. 4 Cir. 5/26/10), 40 So.3d 394, 401 (citing Bartlett Constr. Co., Inc. v. St. Bernard Parish Council, 1999-1186, p. 6 (La. App. 4 Cir. 5/31/00), 763 So.2d 94, 98). Appellate courts apply the following standard of review regarding contract interpretations:
Where factual findings are pertinent to the interpretation of a contract, those factual findings are not to be disturbed
unless manifest error is shown. However, when appellate review is not premised upon any factual findings made at the trial level, but is, instead, based upon an independent review and examination of the contract on its face, the manifest error rule does not apply. In such cases, appellate review of questions of law is whether the trial court was legally correct or legally incorrect.
“If, after examining the four corners of a contract, the contract is ambiguous, the agreement shall be construed according to the intent of the parties, which is to be inferred from all of the surrounding circumstances.” Kirksey, 2009-1433, p. 10 (La. App. 4 Cir. 5/26/10), 40 So.3d at 401-02 (citing Derbes v. GBS Properties, 2004-1460, p. 5 (Lа. App. 5 Cir. 4/26/05), 902 So.2d 1109, 1111). Whether a contract is ambiguous is an issue of law subject to de novo review on appeal. French Quarter Realty v. Gambel, 2005-0933, p. 3 (La. App. 4 Cir. 12/28/05), 921 So.2d 1025, 1027 (quoting Orleans Par. Sch. Bd. v. City of New Orleans, 1996-2664, p. 4 (La. App. 4 Cir. 9/3/97), 700 So.2d 870, 873).
The record does not support Regions’ argument that the Lease is unambiguous regarding the parties’ rights and obligations relative to the drive-thru. Review of the text of the provision itself shows that the provision addressing the “Removal of Improvements” is incomplete, as the provision ends with a comma rather than a period. Additionally, by its plain language, Mr. Fertitta has an “option” when it comes to the drive-thru, but the provision only provided one choice without indicating what should happen if Mr. Fertittа declines to make that choice. The record contains no indication of whether the omission was purposeful or inadvertent. Based on a de novo review, the Lease is ambiguous regarding the drive-thru.
We have previously held that “when a contract is determined to be ambiguous, an issue of material fact exists, and the matter is not ripe for summary judgment.” Johnson v. Orleans Par. Sch. Bd., 2010-1388, p. 11 (La. App. 4 Cir. 12/20/11), 80 So.3d 1175, 1183 (additional citations omitted). Therefore, the trial court properly denied the motion for summary judgment on the basis that the Lease is ambiguous regarding the parties’ intent on the constructions Regions made on the Property. Accordingly, the trial court‘s denial of the motion for summary judgment is affirmed.
Trial Court‘s Judgment Awarding Cost of Removing the Drive-thru
Having decided that the trial court properly denied Regions’ peremptory exception of no cause of action and motion for summary judgment, we now turn to the trial court‘s judgment awarding Mr. Fertitta $43,000 for the cost of the removal of the drive-thru. Mr. Fertitta argues the trial court properly awarded him the cost of removing the drive-thru, but erred in failing to award him the costs of restoring the Property to its pre-lease condition, including rebuilding the structures that were demolished when the Lease was executed. Mr. Fertitta further argues the trial court erred in failing to awаrd him lost rental income because the drive-thru has prevented him from re-leasing the Property. Conversely, Regions argues the trial court erred in finding it had any obligation to remove the drive-thru and awarding the cost of the removal to Mr. Fertitta.
“Appellate courts review the trial court‘s factual findings with the manifest error/clearly wrong standard of review.” Gordon v. Gordon, 2016-0008, p. 2 (La. App. 4 Cir. 6/8/16), 195 So.3d 687, 688 (citing Hall v. Folger Coffee Co., 2003-1734, p. 9 (La. 4/14/04), 874 So.2d 90, 98). “This precludes the setting aside of a district court‘s finding of fact unless that finding is clearly wrong in light of the record reviewed in its entirety.” Id., 2016-0008, p. 2, 195 So.3d at 688-689. “[A] reviewing court may not merely decide if it would have found the facts of the case differently.” Hall, 2003-1734, p. 9, 874 So.2d at 98. “Even though an appellate court may feel its own evaluations and inferences are more reasonable than the factfinder‘s, reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed upon review where conflict exists in the testimony.” Stobart v. State through Dep‘t of Transp. & Dev., 617 So.2d 880, 882 (La. 1993) (citations omitted).
“The manifest error standard of review also applies to mixed questions of law and fact.” A.S. v. D.S., 2014-1098, p. 10 (La. App. 4 Cir. 4/8/15), 165 So.3d 247, 254. Legal issues are reviewed under the de novo standard of review. Harper v. State ex rel. Its Dep‘t of Health & Hosps., 2014-0110, p. 7 (La. App. 4 Cir. 9/9/15), 176 So.3d 479, 486.
As discussed above, this Court determined after de novo review that the Lease is ambiguous regarding the parties’ intent on the fate of the drive-thru. Therefore, this Court must consider if the suppletive law applies, and if so, which suppletive law.
“[I]f the statute is merely directory or contains a proviso such as ‘unless otherwise stipulated’ or ‘except as otherwise provided,’ it states a suppletive rule of law that may be superseded by conventional agreement.” Taranto v. Louisiana Citizens Prop. Ins. Corp., 2010-0105, p. 17 (La. 3/15/11), 62 So.3d 721, 733 (quoting E.L. Burns Co., Inc. v. Cashio, 302 So.2d 297, 301 (La. 1974)). Similarly,
When the parties made no provision for a particular situation, it must be assumed that they intended to bind themselves not only to the express provisions of the contract, but also to whatever the law, equity, or usage regards as implied in a contract of that kind or necessary for the contract to achieve its purpose.
The Lease is ambiguous on the parties’ rights and obligations related to the drive-thru and/or the restoration of the Property to its former condition and, thus, provides no superseding conventional agreement. Whether the trial court properly awarded the costs of removing the drive-thru to Mr. Fertitta turns on the classification of the drive-thru and the rights and obligations provided to Mr. Fertitta and Regions as Lessor and Lessee in the suppletive law.
Classification of the drive-thru is a mixed question of law and fact, and the manifest error standard of review is applied. See A.S. v. D.S., supra. The trial court had to make findings of fact regarding the physical characteristics of the drive-thru, i.e. whether its physiсal characteristics render it an improvement in the law under
Conversely,
While the article does not specifically define what is meant by the term “incorporated,” it does provide an example of the type of items building materials-that may be incorporated into an immovable so as to become an “integral part” of it. Enumerated items are a guidepost for determining what non-enumerated items are to be included in the meaning of a phrase. See Cox Cable New Orleans, Inc. v. City of New Orleans, 624 So.2d 890, 894 (La. 1993) citing Rollins Environmental Services of Louisiana, Inc. v. Iberville Parish Police Jury, 371 So.2d 1127 (La. 1979) (“[T]he meaning of words or phrases may be ascertained by the words or phrases with which they are associаted. Words of general meaning should be applied only to such classes of things of the same general kind as those specifically mentioned.“). A general characteristic of building materials (the most common examples that come to mind are bricks, nails, sheet rock, and roofing tiles) is that once placed in a building, they lose their identity as separate things and become merged in the building to the extent that they become a part of it. Consequently, it can be argued that the test for determining whether an item has become a component part of an immovable by incorporatiоn is whether it has lost its identity as a movable and become a part of the immovable. (Emphasis added).
The trial court found that the drive-thru was a component part of the Property. Based on the record before us, we cannot say that this finding is manifestly erroneous. There was ample testimony at trial that Regions constructed the drive-thru on the Property with concrete and used the structure as a drive-thru for its bank customers. Once the concrete was poured and set on the Property, it lost its individual characteristics as a movable and became merged into the land, as it cannot be remоved without extensive effort and without the breaking of the concrete. There was also testimony on the cost of the drive-thru‘s removal being significant at $43,000. The record supports the trial court‘s factual finding that the drive-thru was “incorporated into” the land such as to become its component part.
In finding that the drive-thru was a component part, the trial court applied
One who incorporates in, or attaches to, the immovable of another, with his consent, things that become component parts of the immovable under Articles 465 and 466, may, in the absence of other provisions of law оr juridical acts, remove them subject to his obligation of restoring the property to its former condition.
If he does not remove them after demand, the owner of the immovable may have them removed at the expense of the person who made them or elect to keep them and pay, at his option, the current value of the materials and of the workmanship or the enhanced value of the immovable.
Regions argues that the trial court‘s application of
This provision applies to things that become component parts of an immovable under Articles 465 and 466, supra.
It does not apply to buildings, other constructions permanently attached to the ground, standing timber, and unharvested crops or ungathered fruits of trees, dealt with in Articles 491, supra. Buildings, other constructions permanently attached to the ground, standing timber, and unharvested crops or ungathered fruits of trees are not component parts of a tract of land when they belong to a person other than the owner of the ground. (Emphasis added).
Regions states this comment stands for the proposition that component parts cannot be owned by a party who is not the owner of the ground. Thus, Regions argues, because the drive-thru is owned by Regions and the ground is owned by Mr. Fertitta, the drive-thru cannot be classified as a component part. This reading of the comment is erroneous.
The comment clarifies that “[b]uildings, other constructions permanently attached to the ground, standing timber, and unharvested crops or ungathered fruits of trees” that are discussed in
Regions also argues that the trial court cannot find the drive-thru is a component part because the parties referred to the drive-thru as an “improvement” throughout the case. This argument is without merit. Contrary to Regions’ arguments, though the parties referred to the drive-thru anecdotally as an “improvement” in the trial stipulations, they did not stipulate that the drive-thru is an “improvement” in the legal sense. How the parties rеferred to the drive-thru does not conclusively establish whether it is an improvement, a component part, or some other classification of property. Indeed, Regions’ own expert in the drafting, reviewing, and negotiation of commercial lease agreements, Randy Opotowsky, testified at trial that the layman‘s term “improvement” is not the same as the legal term. Instead, the classification of the drive-thru as a component part or improvement was a question of fact to be resolved by trier of fact‘s determination of the level of incorporation of the drive-thru. See
Having found that the trial court properly found the drive-thru was a component part under
The parties also do not dispute that Regions declined to exercise its option of removing the drive-thru, nor do they dispute that Mr. Fertitta demanded the drive-thru‘s removal, and that Regions still refused. At that point,
The trial court also properly denied Mr. Fertitta‘s claims for lost rent and the cost of restoring the Property to its pre-lease condition.
DECREE
For the foregoing reasons, we affirm the trial court‘s rulings on Regions’ peremptory exception of no cause of action and motion for summary judgment. We further affirm the trial court‘s judgment granting Mr. Fertitta the costs of removing the drive-thru and denying Mr. Fertitta‘s claims for lost rent and the costs of restoring the Property to its pre-lease condition.
AFFIRMED