PAUL A. BONIN, Judge.
Kenneth H. Lobell, the plaintiff in the present case, acquired in 1997 the balance of several pre-existing leases. One of these was a sixty-year lease of several parcels of land, a three-story office building of approximately 44,000 square feet, and a parking structure all located at 2025 Canal Street in New Orleans. Relations between Mr. Lobell and the lessors deteriorated in the wake of Hurricane Katrina. These lessors are the heirs of Simon and Herman H. Rosenberg, the two original lessors. The Rosenberg heirs transferred their individual rights under the 1957 lease to 2025 Canal St., L.L.C., which was formed in 2008 shortly before Mr. Lobell filed his initial petition.
On December 28, 2007, some of the Rosenberg heirs, acting through counsel, addressed a letter to Mr. Lobell alleging that he had defaulted on the lease in several respects and served notice that they were electing to terminate the lease. Mr. Lobell subsequently sued the Rosenberg heirs and 2025 Canal for damages, claiming anticipatory breach of contract, and wrongful eviction because they failed to afford him the lease's thirty-day cure period. 2025 Canal, on the other hand, intervened, named Mr. Lobell and K.H.L. Canal as defendants-in-intervention, and argued that Mr. Lobell's numerous defaults entitled it to a termination of the lease, and an award of back rent and damages. Mr. Lobell responded that the December 28, 2007 letter could not serve as a lawful condition precedent to the termination of the lease in 2025 Canal's favor because it did not specifically afford him the cure period set out in the lease. After a four-day bench trial, the trial judge ruled in favor of 2025 Canal and the Rosenberg heirs, dismissed Mr. Lobell's claims for damages, terminated the lease, and awarded 2025 Canal building restoration costs, past unpaid rent, attorney's fees, and reimbursement for monies spent by the Rosenberg heirs on the payment of ad valorem taxes.
Mr. Lobell now argues that the trial judge erred when he: 1) found that Rosenberg heirs' default letters did not constitute anticipatory breaches of contract by the heirs and 2025 Canal; 2) concluded
Because the Rosenberg heirs' default letters failed to specifically afford Mr. Lobell a cure period, they failed to comply with the terms of the lease. Because the Rosenberg heirs did not comply with the lease provisions, the trial court erred when it granted 2025 Canal's request to terminate the lease and evict Mr. Lobell. We must, accordingly, vacate that portion of the judgment which terminated the lease in favor of 2025 Canal and awarded it building restoration costs, past unpaid rent, attorney's fees, and reimbursement for monies spent by the Rosenberg heirs on the payment of ad valorem taxes. We remand these claims to the trial court for further proceedings.
On the other hand, we conclude that the trial judge was not clearly wrong in finding that the Rosenberg heirs' correspondence neither terminated the lease nor deprived Mr. Lobell of his right to attempt to cure his defaults. We, accordingly, conclude that the trial judge did not err in concluding that the Rosenberg heirs and 2025 Canal did not commit anticipatory breaches of the lease or wrongfully evict Mr. Lobell. Because we affirm these findings, we likewise conclude that the trial judge properly refused to award Mr. Lobell damages. We now explain our opinion in more detail.
We first summarize this matter's facts and procedural history. At the outset we examine briefly this matter's contractual history and set out the relevant lease provisions. We then briefly examine the deterioration of the parties' business relationship in the wake of Hurricane Katrina. Finally, we discuss this matter's procedural history, and the trial court's judgment.
The record establishes that Simon and Herman H. Rosenberg leased several parcels of property, which are located in the city block bounded by Canal, Iberville, North Johnson, and North Prieur streets in New Orleans, Louisiana, to Eagle Enterprises, Inc., on January 25, 1957, for a term of fifty years. The lease was amended several times in the 1950's, and subsequently assigned and transferred several times. On December 3, 1997, E.E.W. Properties, Ltd., an intermediate lessee, transferred and assigned its lease interest to Mr. Lobell.
In connection with his acquisition of the lease interest, Mr. Lobell borrowed $600,000.00 in 1998 from Hibernia National Bank
Of significance to the present dispute, the 1957 lease, as amended, provides that Mr. Lobell was obligated to pay the Rosenbergs $2,083.33 in rent per month until the end of the lease in 2017. The lease also obligated Mr. Lobell to pay all ad valorem taxes and assessments levied on or against the premises. Mr. Lobell, moreover, was obligated to keep the buildings subject to the lease in good repair and condition. In the event the buildings on the property were damaged, the lease obligated Mr. Lobell to repair or rebuild the buildings at least to the "same general character" as existed before the loss within six months of the loss. Additionally, the 1957 lease required Mr. Lobell to maintain $400,000.00 in insurance on his leasehold interests and provided that "all policies issued ... are to be assigned to, and in case of loss or destruction be made payable to the Lessor ... and any and all moneys which Lessor shall receive by reason of any loss or destruction of the buildings or improvements is hereby constituted a trust fund, to be used for rebuilding of the buildings and improvements."
The lease also afforded the Rosenbergs the option of bringing lease termination proceedings in the event of Mr. Lobell's default with respect to the aforementioned provisions. On this point, the lease obligates the Rosenbergs to first provide Mr. Lobell with a notice of default and afford him a thirty-day cure period, or some other reasonable amount of time "if the default is one which cannot be cured within the said thirty (30) days." In the event that Mr. Lobell fails to cure his defaults, the lease provides: "in any or either of such events, it shall and may be lawful for the Lessor, at his option, at or after the expiration of thirty (30) days previous notice in writing either to declare the rent for the whole unexpired term due and exigible or to declare this lease terminated."
The 1998 Consent and Agreement also contains provisions germane to the resolution of this dispute. Specifically, the Consent and Agreement amends the 1957 lease to provide that Mr. Lobell must maintain $2,600,000.00 in insurance on the leased premises. Further, Hibernia, Mr. Lobell, and the individual consenting Rosenberg heirs agreed that if the building or improvements were damaged, but the damages did not constitute a total loss,
Aside from the dates associated with the execution of the previously discussed leases and agreements, all pertinent facts to this case occurred in the aftermath of Hurricane Katrina. The buildings and their internal improvements suffered extensive water damage as a result of the storm. The ground floor suffered from flood damage and many of the windows were blown out, while water leaking from the roof seeped down through the remaining floors severely damaging the internal improvements and the lessees' contents. Subsequently, the building's copper wiring was stripped by vandals rendering the entire system inoperable. Mr. Lobell arranged for a new roof to be placed on the building after the storm, but it was subsequently discovered that the roof was improperly constructed, leading to further water damage to the improvements and contents. At trial, the parties stipulated that the building itself was not a total loss. The evidence, however, establishes that while the building itself is structurally sound, the interior of the building needs to be restored, the roof and windows replaced, and new improvements, including operable elevators, installed before it can be re-occupied by tenants. Mr. Lobell's property and flood insurers estimated a combined replacement cost value of $3,230,126.72; whereas 2025 Canal's expert, Scott Wolfe, testified that it would cost $7,642,149.11 to return the buildings to their pre-Katrina condition.
Like the leased property, the parties' business relationship also deteriorated after the storm. Despite the Rosenberg heirs' repeated requests, Mr. Lobell paid rent sporadically after the storm. While he made a few payments in 2006, the trial court concluded that Mr. Lobell owed 2025 Canal $193,749.69 in past-due rent. The Rosenberg heirs also discovered that Mr. Lobell did not pay tax assessments on the property between 2004 and 2013. Mr. Lobell attempted, as was his right under the lease, to contest assessments, but he did not do so for every instance of non-paid tax. In fact, the City Of New Orleans sold the property to a third party in 2007 for non-payment of the 2004 and 2005 taxes. Some of the Rosenberg heirs, subsequently, spent $56,766.67 to redeem the property as well as pay the other outstanding tax bills.
The Rosenberg heirs also discovered that Mr. Lobell failed to maintain $2,600,000.00 in property insurance as provided for by the Consent and Agreement. Mr. Lobell, nevertheless, insured the property and accepted after the storm a combined total of $2,247,403.00 of proceeds based on his insurer's actual cash value estimates.
On December 28, 2007, some of the Rosenberg heirs wrote, through counsel, to Mr. Lobell and noted that he was in default of the lease for failing to pay rent and ad valorem taxes, secure insurance on the building, and apply insurance proceeds to the restoral of the improvements within the building to their pre-hurricane condition. Pointedly, the letter did not afford Mr. Lobell a thirty-day cure period, but instead elected bluntly to terminate the lease. Mr. Lobell, nevertheless, sought to pay a portion of the back rent.
Mr. Lobell initiated the present matter by filing a petition for writ of possession and a possessory action against Cindy Rosenberg Denn, in her individual capacity, on March 27, 2008, more than two months before the First City Court eviction proceeding. He subsequently amended his petition several times to add nine of the ten Rosenberg heirs and 2025 Canal as defendants.
2025 Canal intervened on June 20, 2008, naming Mr. Lobell, K.H.L. Canal, and Capital One as defendants. 2025 Canal's intervention alleges, among other things, that the Rosenberg heirs are the successors in interest to Simon and Herman H. Rosenberg and that each heir has transferred all of his interest in the subject property to 2025 Canal. 2025 Canal, as plaintiff-in-intervention, sought, among
Following trial, the trial judge signed a judgment on August 22, 2013, which dismissed Mr. Lobell's claims against the Rosenberg heirs and 2025 Canal. On the other hand, the trial judge granted 2025 Canal's request to terminate the lease, and ordered Mr. Lobell and K.H.L. Canal to pay 2025 Canal: 1) $3,230,126.72 for restoration of the building; 2) $193,749.69 in past due rent; 3) $56,766.67 for past taxes; and 4) $166,484.73 in attorney's fees. The judgment further dismissed 2025 Canal's claims against Capital One.
In this part we set out the general law which governs our disposition of Mr. Lobell's appeal.
In civil cases, we apply the manifest error standard of review to the trier of fact's factual findings. See Hall v. Folger Coffee Co., 03-1734, p. 9 (La. 4/14/04); 874 So.2d 90, 98. In order to reverse the findings of a trier of fact, "an appellate court must undertake a two-part inquiry: 1) the court must find from the record that a reasonable factual basis does not exist for the finding of the trier of fact; and 2) the court must further determine that the record establishes the finding is clearly wrong." Harold A. Asher, CPA, LLC v. Haik, 12-0771, p. 4 (La.App. 4 Cir. 4/10/13); 116 So.3d 720, 723-724, quoting S.J. v. Lafayette Parish School Board, 09-2195, p. 12 (La.7/6/10), 41 So.3d 1119, 1127.
The issue for a reviewing court to resolve when faced with a fact finding "is not whether the trier of fact was right or wrong, but whether the factfinder's conclusion was a reasonable one." Even though an appellate court may feel its own
Because the parties to this appeal were bound together by a lease agreement, we begin by setting out those general principles governing leases and eviction proceedings.
A lease is a synallagmatic contract which burdens both the lessor and the lessee with certain obligations. See La. Civil Code art. 2668. Lessors are obligated to do three things: 1) to deliver that which is the subject of the lease to the lessee; 2) to maintain the object in a suitable condition; and 3) to maintain the lessee in peaceable possession for the duration of the lease. See La. Civil Code art. 2682. The lessee, on the other hand, is obliged: 1) to pay the rent pursuant to the terms of the lease; 2) to prudently administer the lease according to the lease terms; and 3) to deliver the object to the lessor. See La. Civil Code art. 2683.
In the event that a lessee breaches a lease, the lessor may pursue one of two options.
If a lessor chooses to cancel the lease and terminate the lessee's right of occupancy, the lessor must follow the statutory eviction procedures set out in La. C.C.P. art. 4701 et seq.
Accordingly, the first step in a proper eviction proceeding is for the lessor to give the lessee a five-day notice to vacate the leased premises. See La. C.C.P. art. 4701. If the lessee fails to vacate the leased premises within five days, the lessor must resort to summary judicial process before he can legally terminate the lessee's possession. See La. C.C.P. art. 4731. Lastly, the final step in an eviction proceeding is for the lessor to obtain a judgment of eviction, which then enables him to legally terminate the lessee's possession. See La. C.C.P. art. 4733. A trial court's judgment cancelling a lease and ordering a lessee's eviction is subject to the manifest error/clearly wrong standard of review. See Sizeler Real Estate Management Co., Inc. v. Family Dollar Stores of Louisiana, Inc., 01-1974, p. 4 (La.App. 4 Cir. 3/20/02); 814 So.2d 611, 614.
Mr. Lobell argues that the trial court erred in denying his claims when it: 1) found that the December 28, 2007, January 31, 2007, and February 12, 2008 letters did not constitute anticipatory breaches of contract by 2025 Canal and the Rosenberg heirs; 2) concluded that 2025 Canal and the Rosenberg heirs did not terminate the
We first address Mr. Lobell's assertion that the trial court erred when it granted 2025 Canal's request to terminate the lease. Mr. Lobell argues that the trial court erred in terminating the lease in favor of 2025 Canal because the Rosenberg heirs failed to specifically afford him a cure period according to the terms of the lease. The trial judge concluded that the December 28, 2007, January 31, 2007, and February 12, 2008 letters from some of the Rosenberg heirs to Mr. Lobell satisfied the lease's default notice requirement. Mr. Lobell, however, argues that these letters could not have satisfied the lease's default notice requirement because none of the letters specifically granted him the lease's specified cure period. Our reading of the lease and the letters supports Mr. Lobell's contention.
It is well settled that "a lease contract forms the law between the parties, defining their respective legal rights and obligations. The parties are bound by the agreement regardless of any harsh consequences contained in those agreements." CA One/Pampy's v. Brown, 07-1377, p. 9 (La.App. 4 Cir. 4/2/08); 982 So.2d 909, 915, citing New Orleans Hat Attack v. New York Life Insurance Co., 95-0055, 950056, pp. 4-5 (La.App. 4 Cir. 11/30/95); 665 So.2d 1186, 1189. Specifically, the 1957 lease indicates that the lessor can only seek to terminate a defaulting lessee's rights under the lease after the occurrence of two things: 1) the lessor provides the lessee with a written notice of default; and 2) the lessee fails to remedy the default within thirty days, or some other reasonable period if the default cannot be cured within thirty days. We have studied the letters in question and in no case did the Rosenberg heirs specifically grant Mr. Lobell any type of cure period.
We conclude, therefore, that trial judge was clearly wrong when he found that the December 28, 2007, January 31, 2007, and February 12, 2008 letters constituted adequate notices of default under the 1957 lease. The Rosenbergs bound themselves to give their lessee adequate written notice of default and afford him a cure period to attempt to remedy his defaults. Because the default letters failed to specifically afford him a cure period, they failed to comply with the terms of the lease. Because the letters did not comply with the lease, the trial court erred when it granted 2025 Canal's request to terminate the lease and evict Mr. Lobell. We must, accordingly, vacate that portion of the judgment which terminated the lease in favor of 2025 Canal and awarded it building restoration costs, past unpaid rent, attorney's fees, and reimbursement for monies spent by the Rosenberg heirs on the payment of ad valorem taxes. The lease is, therefore, still in effect and we remand 2025 Canal's claims to the trial court for further proceedings.
We next address Mr. Lobell's errors regarding the trial court's denial of his claims for anticipatory breach of contract, wrongful eviction/termination of lease, and for damages. We review Mr. Lobell's claims for anticipatory breach and wrongful eviction together because they are both premised upon the same pieces of evidence — three letters from some of the Rosenberg heirs.
The cause of action for wrongful eviction flows from La. Civil Code art. 2682's directive that a lessor is bound from the very nature of the contract "[t]o protect the lessee's peaceful possession for the duration of the lease." See also Girgis v. Macaluso Realty Co., Inc., 00-753, p. 4 (La.App. 4 Cir. 1/31/01), 778 So.2d 1210, 1212. A lessor who fails to meet his or her obligations under the provisions of La. C.C. art. 2682 by wrongfully dispossessing the lessee of the premises is generally liable for any resulting damages. Duhon v. Briley, 12-1137, p. 5 (La.App. 4 Cir. 5/23/13); 117 So.3d 253, 258. The Louisiana Code of Civil Procedure provides an exception to that liability where the lessor follows the eviction procedures set out in arts. 4701-4735. Id.
Specifically, Mr. Lobell tethers both of these claims to the December 28, 2007, and February 12, 2008, letters from some of the Rosenberg heirs that noticed Mr. Lobell's defaults and informed him of their desire to terminate the lease. He argues that the letters indicated that some of the Rosenberg heirs no longer intended to honor the lease agreement because they failed to explicitly afford him any type of cure period and announced their intent to terminate the lease. Mr. Lobell, likewise, relies upon the January 31, 2007, letter from some of the Rosenberg heirs that refused his partial tender of rents as indicative of their refusal to allow him the opportunity to cure his defaults.
While it is true that the December 28, 2007 and February 12, 2008 letters indicate that some of the Rosenberg heirs intended to terminate the lease, and failed to specifically grant to Mr. Lobell some type of cure period, the trial court was correct in concluding that these statements, when viewed in the light of all the evidence, did not amount to a statement on the Rosenberg heirs' part that they no longer intended to honor the lease or prevent Mr. Lobell from curing his defaults. The trial court observed that these letters were merely a part of the eviction process set out in the Code of Civil Procedure. As this Court observed in Bill Kassel Farms, Inc. v. Paul, 96-462, p. 4 (La.App. 3 Cir. 12/11/96); 690 So.2d 807, 809, a notice directing the lessee to vacate, or announcing a lessor's intention to terminate the lease, "is only the initial stage in effectuating an eviction and it is upon lessee's failure to vacate the leased premises after receiving such notice that the lessor must proceed summarily to have the lessee evicted." These letters, therefore, could not have caused an eviction, forced a termination, or resulted in an anticipatory breach of the lease.
Moreover, the trial court was not clearly wrong in concluding that the parties acted as though the lease was still in effect despite the language contained in the letters. Specifically, 2025 Canal and the Rosenberg heirs introduced evidence at trial which showed that, up until Mr. Lobell filed suit, the Rosenberg heirs made numerous informal
The evidence, likewise, supports the trial court's conclusion that 2025 Canal and the Rosenberg heirs did not dispossess Mr. Lobell from the leased property. Specifically, 2025 Canal and the Rosenberg heirs presented evidence at trial which showed that movable property belonging to Mr. Lobell and his former tenants could still be found inside the building in 2010 — two years after he filed suit. Likewise, 2025 Canal and the Rosenberg heirs presented evidence that as late as 2013 — five years after he initiated this matter with a possessory action — Mr. Lobell still had physical access to the building, had listed it for sale, and was exhibiting it to prospective purchasers. The trial court was not clearly wrong in concluding that Mr. Lobell was never wrongfully evicted from the leased property.
Because we find that the trial court was not clearly wrong in concluding that the letters did not terminate the lease, or dispossess Mr. Lobell, we likewise conclude that it was not clearly wrong in refusing to find that these letters created an anticipatory breach of contract. Further, because we affirm the trial court's judgment on these issues we pretermit discussing Mr. Lobell's claims for damages.
We vacate that portion of the trial court's judgment which terminated the lease in favor of 2025 Canal St., L.L.C., and cast Kenneth H. Lobell and K.H.L. Canal, L.L.C. in judgment for building restoration costs, past unpaid rent, attorney's fees, and reimbursement for monies spent by the Rosenberg heirs on the payment of ad valorem taxes. We remand 2025 Canal St., L.L.C.'s claims to the trial court for further proceedings. We, furthermore, affirm that portion of the trial court's judgment that dismissed Kenneth H. Lobell's causes of action and claims for damages against the Rosenberg Heirs and 2025 Canal St., L.L.C.