429 Bourbon Street, LLC v. RMDR Investments, Inc.

230 So. 3d 256
CourtLouisiana Court of Appeal
DecidedNovember 15, 2017
DocketNO. 2016-CA-0800, NO. 2017-C-0845
StatusPublished
Cited by9 cases

This text of 230 So. 3d 256 (429 Bourbon Street, LLC v. RMDR Investments, Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
429 Bourbon Street, LLC v. RMDR Investments, Inc., 230 So. 3d 256 (La. Ct. App. 2017).

Opinion

Judge Edwin A. Lombard

hThe Appellant, RMDR Investments, Inc. (“RMDR”), seeks review of the district court’s May 31, 2016 judgment ordering its eviction from property owned by lessor 429 Bourbon St., LLC (“the Appel-lee”). The appeal has been consolidated with a supervisory writ application filed by RMDR, which seeks review of the denial of its Ex Parte Motion to Release Continuing Suspensive Appeal Bond. Finding that the judgment of the district court is not manifestly erroneous, we affirm. The exceptions of lack of justiciable controversy and no cause of action of RMDR are denied. The answer to appeal of the Appellee is denied. Lastly, the writ application of RMDR is also denied.

Facts:

In January 2006, RMDR began leasing commercial space at 429-433 Bourbon St. (“the Property”), in New Orleans, from the Appellee. RMDR, doing business as Babe’s Cabaret, operated a gentlemen’s club and bar at the leased location-for approximately a ten-year period.

The initial lease (“the Lease”) was executed by the parties in November 2005, and had a 60-month term commencing on January 1,2006. The Lease provided for a percentage-based rental payment obligating RMDR to pay the |gAppellee “a percentage rent of twenty (20%) percent of annual gross sales income, before any payments or adjustments of expenses of any kind, and such percentage of any and every sources of business at the premises, with a cap of $50,000 per month.” However, the Lease did not contain a definition of “annual gross sales income.” RMDR was also required to annually remit to the Ap-pellee 15% of its profits at the Property. Moreover, Chandru Motwani, the Appel-lee’s managing member, personally had a 15% ownership interest in RMDR. The' Lease further provided RMDR with three options to renew for an additional five-year period.

In 2009, RMDR’s ownership changed. That same year, the parties executed an amendment to the Lease (“Amended Lease”) imposing the following additional obligations upon RMDR to maintain and produce reports of its income and other financial records to the Appellee:

5.07 Maintenance of Books and Records. Throughout the term of this Lease, LESSEE shall maintain and preserve, for the longer of three (8) years or as required by federal and state tax authorities, after the dates of their preparation, full, complete and accurate books, records and accounts under and subject to generally-accepted accounting principles, including, but not limited to all income, of whatever source, generated by every source of business at the premises, LESSEE’S obligation to preserve such books, records and accounts shall survive the termination hereof. 5.08 Monthly Reports. LESSEE shall, at LESSEE’S expense, prepare and submit to LESSOR by the fifteenth (15th) day of each month (commencing March 15, 2009), a statement accurately reflecting for the immediately preceding month (or part thereof) all gross sales income, (including, but not limited to cover type charges, tip income), all expenses (including, but not limited to all alcohol and other inventory purchases, and payroll), and such other data or information as LESSOR may reasonably require.
5.09 Financial Statements. Within thirty (30) days following the end of each month during the term of this |3Agreement, LESSEE shall, at LES-' SEE’S expense, submit to LESSOR a balance sheet and an unaudited monthly profit and loss statement for every source of business at the premises. Each statement shall be signed by an authorized officer of LESSEE, attesting that it is true and correct. In addition, LESSEE shall, at LESSEE’S expense, submit to LESSOR, within ninety (90) days following LESSEE’S fiscal year end, a complete annual financial statement, prepared under and subject to generally accepted accounting principles by a certified public accountant reasonably satisfactory to LESSOR, showing the result of the operations of every source of business at the premises (“business”) during such fiscal year.
5.10 Additional Reports. LESSEE shall also submit to LESSOR, for review and audit, such other forms, périodic and other reports, records, information and data as LESSOR may reasonably designate, in the form and at the times and .places reasonably, required (from time to time) by LESSOR, upon request, including, but not limited, to sales tax statements and balance sheets. [Emphasis added.]

It is undisputed that RMDR tendered monthly rental payments to the Appellee throughout its tenancy. Nevertheless, in October, 2014, Mr. Motwani, acting on the Appellee’s behalf, sent correspondence to RMDR requesting monthly accounting reports required by the Lease from June 2009 through the date of the letter. RMDR, however, only submitted records for nine of the requested months. Moreover, after it delayed producing its books and records in New Orleans for the Appel-lee’s review, RMDR eventually produced some of the requested financials.

The Appellee later retained an independent accounting firm to examine RMDR’s books and records following another incomplete record submission by RMDR. Based upon the accounting firm’s report, prepared by Debbie Sawyer, CPA, the Ap-pellee concluded that' RMDR had underpaid its rent by $605,822,91 from January 2012 to December 2014. The $605,822.91 sum totaled $852,369.401 ¿with interest and penalties due under the Lease and/or Amended Lease. The Appellee placed RMDR in default and demanded the delinquent payments due be paid by June 10, 2015. It terminated the Lease the following month due to RMDR’s noncompliance.

The Appellee subsequently filed a petition for summary eviction, alleging that RMDR breached the Lease and Amended Lease. The Appellee alleged that RMDR breached the Lease or Amended Lease in the following three respects: 1) failed to pay the full rent required by the Lease; 2) failed to. provide complete financial' records; and 3) allowed unlawful activities to take place on the leased premises. Additionally, the Appellee asserted that RMDR’s attempt to exercise the second option to extend the Lease term was null and void.1

During a four-day bench trial, the district court heard testimony from eight witnesses, including three experts: Charles Theriot, CPA, who testified for RMDR; Bert Verdigets, CPA, who testified on behalf of the Appellee; and Ms. Sawyer. The district court entered judgment on May 31, 2016, ordering the eviction of RMDR; RMDR was ordered to vacate the Property by June 6, 2016. The district court also issued Reasons for Judgment wherein it explained that RMDR breached the Lease and/or Amended Lease by: 1) failing to maintain and preserve full, complete and, accurate books, records and accounts for a three year period; 2) failing to have an authorized officer of RMDR sign the monthly balance sheet and profit and loss statements, attesting to their truth; 3) failing to produce complete Lannual financial statéments prepared by a CPA; and 4) failing to accurately report income and thus, not' paying the proper amount of monthly rent.

This timely appeal followed.2 RMDR presents the following three questions for review, which we understand to be- its assignments of error and will refer to them as such throughout this opinion:

1.

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Bluebook (online)
230 So. 3d 256, Counsel Stack Legal Research, https://law.counselstack.com/opinion/429-bourbon-street-llc-v-rmdr-investments-inc-lactapp-2017.