COMMERCIAL BROKERS, * NO. 2019-CA-0638 INC. D/B/A RE/MAX COMMERCIAL BROKERS, * INC. AND ROBERT E. COURT OF APPEAL TALBOT, INC. D/B/A TALBOT * REALTY GROUP FOURTH CIRCUIT * VERSUS STATE OF LOUISIANA ******* JOHN J. HAZARD DRAYAGE & CONSTRUCTION CO., INC. AND TWIN SHORES LANDSCAPE AND CONSTRUCTION SERVICES, INC.
APPEAL FROM FIRST CITY COURT OF NEW ORLEANS NO. 2016-07986, SECTION “B” Honorable Angelique A. Reed, Judge ****** Judge Paula A. Brown ****** (Court composed of Judge Terri F. Love, Judge Daniel L. Dysart, Judge Paula A. Brown)
Gerald Wasserman GERALD D. WASSERMAN, LLC 3939 North Causeway Boulevard Suite 200 Metairie, LA 70002
COUNSEL FOR PLAINTIFFS/APPELLEES
Christopher K. LeMieux Johanna E. Lambert 1100 Poydras Street, Suite 1100 New Orleans, LA 70163
COUNSEL FOR DEFENDANTS/APPELLANTS
EXCEPTION OF NO CAUSE OF ACTION AFFIRMED IN PART, REVERSED IN PART; JUDGMENT REVERSED APRIL 29, 2020 PAB TFL DLD
This action arises out of a dispute over commercial real estate broker
commission fees. Appellants, John J. Hazard Drayage & Construction Co., Inc.
(“Hazard Construction”) and Twin Shores Landscape and Construction Services,
Inc. (“Twin Shores”), appeal the city court’s judgment that overruled Appellants’
exception of no cause of action. In addition, Appellants seek review of the city
court’s judgment that found Appellants liable to Appellees, Commercial Brokers,
Inc. d/b/a RE/MAX Commercial Brokers, Inc. (“RE/MAX”) and Robert E. Talbot,
Inc. d/b/a/ Talbot Realty Group (“Talbot Realty”) (collectively referred to as
“RE/MAX & Talbot”), for unpaid broker commission fees (“commission fees”),
along with interest, attorney fees and cost. For the reasons discussed, infra, we
affirm in part and reverse in part the city court’s judgment overruling Appellants’
exception of no cause of action, and reverse the city court’s judgment that found
Appellants liable to Appellees for outstanding commission fees.
FACTUAL AND PROCEDURAL HISTORY
Hazard Construction retained RE/MAX, a commercial realty company, to
lease its property located at 701 South Alexander Street in New Orleans (the
1 “Alexander Street property”). Based on a recommendation from Talbot Realty,
RE/MAX referred Joule, LLC (“Joule”) as a tenant.
On March 3, 2011, Hazard Construction entered into a commercial lease
with Joule for the Alexander Street property (“Lease I”).1 Lease I was for a term
of 46 months, commencing on April 1, 2011 and ending at midnight on January 31,
2015. Lease I granted Joule the option to renew the lease for an additional three
years under the same terms and conditions, except that the base rent would
increase from $5,000.00 to $5,250.00 per month. In consideration for negotiating
the terms of Lease I with tenant Joule, Lease I obligated Hazard Construction to
pay to RE/MAX & Talbot an annual 6% commission, 3% each, during the term of
Lease I and any lease renewals with Joule.
Before expiration of Lease I, Hazard Construction negotiated with Twin
Shores to lease the Alexandria Street property. On December 29, 2014, Hazard
Construction and Twin Shores drafted an agreement wherein Hazard Construction
leased several properties to Twin Shores (“Lease II”), including the Alexander
Street property. Lease II permitted Twin Shores to sublease all or any portion of
the leased properties. Robert Hazard, Sr., the president of Hazard Construction,
and Susanne Drygalla, the president of Twin Shores, signed Lease II on January
31, 2015. Lease II was to commence on February 1, 2015.
In a separate property lease agreement, also drafted on December 29, 2014,
Twin Shores subleased to Joule the Alexander Street property (the “Sublease”).
Ms. Drygalla and Julian Thomas, the managing partner of Joule, signed the
Sublease on January 1, 2015. Similar to Lease II, the Sublease specified that
1 RE/MAX drafted Lease I, RE/MAX represented Hazard Construction at the signing of Lease I, and Talbot Realty represented the interests of Joule.
2 Hazard Construction allowed Twin Shores to sublease any of the property included
in Lease II. The Sublease between Twin Shores and Joule was to commence on
February 1, 2015, for a term of three years at a monthly rate of $5,250.00.
Additionally, the Sublease allowed Joule the use of approximately 50% of the
Alexander Street property’s yard parking space.
Hazard Construction paid to RE/MAX & Talbot the commission fees owed
during the term of Lease I. Hazard Construction did not pay any subsequent
commission fees to RE/MAX & Talbot after the Sublease went into effect on
February 1, 2015.
On November 10, 2016, RE/MAX & Talbot filed suit (the “Petition’) in
First City Court for the Parish of Orleans against Hazard Construction and Twin
Shores (collectively referred to as “Hazard & Twin”).2 RE/MAX & Talbot alleged
that Hazard & Twin were liable for outstanding commission fees contractually
owed under the terms negotiated in Lease I due to Joule’s continued occupancy of
the Alexander Street property after Lease I’s expiration date. Hazard & Twin filed
an exception of no cause of action and argued that RE/MAX & Talbot failed to
assert a cause of action to recover outstanding commission fees on the grounds that
Joule did not renew Lease I, and Twin Shores was not a party to Lease I. On
November 14, 2017, the city court heard argument on Hazard & Twin’s exception
of no cause of action. The city court denied the exception on the same day.
The matter proceeded to trial on the merits on October 23, 2018. After
submission of post-trial memoranda, on November 30, 2018, the city court
2 RE/MAX also filed a first supplemental and amended petition on February 3, 2017, re-averring its initial allegations, attaching Lease II and the Sublease as exhibits, and updating the amount of the commission fees allegedly owed. For purposes of this opinion, the Petition and the supplemental petition are referenced as the “Petition.”
3 rendered judgment against Hazard & Twin in favor of RE/MAX & Talbot in the
amount of $15,120.00, along with interest on any unpaid commission fees until
paid, attorney fees in the amount of 25%, interest, and court costs from the date of
judicial demand.
This devolutive appeal followed.3
DISCUSSION
Hazard & Twin contend that the city court erred in the following respects:
(1) overruling the exception of no cause of action; (2) finding fraud in its reasons
for judgment when RE/MAX & Talbot failed to alleged fraud in its Petition; (3)
allocating damages based on the expired lease between Hazard Construction and
Joule; and (4) finding that the President of John J. Hazard Drayage was the sole
owner of Twin Shores. We will review each error in turn.
Exception of No Cause of Action
The function of an exception of no cause of action is to determine whether
the law affords a remedy based on the facts as alleged in the petition. An Erny Girl
L.L.C. v. BCNO 4 L.L.C., 2018-0360, p. 6 (La. App. 4 Cir. 9/26/18), 257 So.3d
212, 218. Appellate courts review a trial court’s ruling on an exception of no cause
of action using the de novo standard of review as the exception raises a question of
law and the trial court’s decision rests on the legal sufficiency of the plaintiff’s
petition. Herman v. Tracage Development, L.L.C., 2016-0082, p. 4 (La. App. 4
Cir. 9/21/16), 201 So.3d 935, 939 (citations omitted). Generally, an exception is
tried on the face of the petition, and evidence may not be introduced to support or
3 The city court initially denied Hazard & Twin’s motion for devolutive appeal. However, upon reconsideration, the city court found Hazard & Twin had not received the notice of signing of judgment, pursuant to La.C.C.P. arts. 1913 and 5002, and, in turn, granted the motion for devolutive appeal on March 19, 2019.
4 controvert whether the petition states a cause of action. See La. C.C.P. art. 931. In
deciding whether to sustain an exception of no cause of action, the well-pleaded
facts in the petition must be accepted as true. Forrester v. Bruno, 2018-0648, pp.
11-12 (La. App. 4 Cir. 5/1/19), --- So.3d ---, 2019 WL 1940341, *6 (citation
omitted). The burden of proof to show the plaintiff has stated no cause of action
rests on the mover. Id., 2018-0648, p. 12, --- So.3d at --- (citation omitted). The
exception shall not be granted, “‘unless it appears beyond doubt that the plaintiff
can prove no set of facts which would entitle the plaintiff to relief.’” Id. (quoting
Mid-South Plumbing, LLC, 2012-1731, p. 5, 126 So.3d at 736.
Hazard & Twin make two arguments in support of its exception of no cause
of action. First, Hazard & Twin contend that because Joule did not renew Lease I,
and the lease expired by its own terms on January 31, 2015, RE/MAX & Talbot
failed to assert a cause of action to recover commission fees. Next, they argue
RE/MAX & Talbot failed to state a cause of action against Twin Shores as Twin
Shores was not a party to Lease I.
RE/MAX & Talbot alleged in the Petition the following pertinent
allegations: (i) Hazard Construction agreed to pay 6% commission fees for any and
all lease renewals by Joule; (ii) Robert W. Hazard, Sr., was the president of Hazard
Construction and Robert W. Hazard, Jr., was the sole officer of Twin Shores on
December 29, 2014; (iii) Lease II between Hazard Construction and Twin Shores
and the Sublease between Joule and Twin Shores were each drafted on December
29, 2014—before Joule’s Lease I expired; (iv) the Sublease contained the same
lease terms as Lease I; (v) paragraph 31 of Lease I provided, in pertinent part, that
“[l]essor agrees that if the property covered by this lease is sold or transferred
during the term hereof or during the term of any renewal or extension hereof or
5 during the term of any new lease entered into, Lessor will pay any and all unpaid
rental commissions to which RE/MAX is entitled. . . ;” and (vi) Hazard
Construction had not paid commission fees owed based on Lease I’s renewal.
RE/MAX & Talbot argue the dates of execution of Lease II and the
Sublease—January 31, 2015 and January 1, 2015, respectively—show that Joule
renewed Lease I, thereby entitling RE/MAX & Talbot to additional commission
fees. Although Hazard & Twin dispute that Lease I was renewed, “‘[e]very
reasonable interpretation must be accorded the language of the petition in favor of
maintaining its sufficiency and affording the plaintiff the opportunity of presenting
evidence at trial.’” Moses v. Moses, 2015-0140, p. 4 (La. App. 4 Cir. 8/5/15), 174
So.3d 227, 230 (quoting Badeaux v. Southeast Computer Bureau, Inc., 2005-0612,
p. 7 (La. 3/17/06) 929 So.2d 1211, 1217)). Accordingly, we find the allegations
pled in RE/MAX & Talbot’s Petition, which this Court must accept as true, are
sufficient to maintain a cause of action against Hazard Construction in its
individual capacity.
We, however, find merit in Hazard & Twin’s argument that the Petition fails
to state a cause of action against Twin Shores. At its core, RE/MAX & Talbot’s
Petition seeks relief arising out of a breach of contract involving Lease I. The
parties to Lease I were Hazard Construction and Joule. RE/MAX & Talbot alleged
in the Petition that Hazard Construction and Joule entered the lease agreement as
lessor and lessee on March 3, 2011 and that Lease I contained a provision requiring
Hazard Construction to pay commission fees to RE/MAX & Talbot. Notably, the
Petition does not name Twin Shores as a party to Lease I in any capacity. Pursuant
to La. C.C. art. 1906, “[a] contract is an agreement by two or more parties whereby
obligations are created, modified, or extinguished.” Thus, as Twin Shores was not
6 a party to Lease I, Twin Shores had no legal obligation to pay RE/MAX & Talbot
commission fees. In addition, we find no facts alleged in RE/MAX & Talbot’s
Petition that would entitle it to relief against Twin Shores based upon a breach of
contract. Hence, the city court erred, as a matter of law, in overruling Hazard &
Twin’s exception of no cause of action against Twin Shores.
Fraud Allegations/ Judgment
Hazard & Twin assert, in the second assigned error, that the city court erred
in reaching its judgment based on a finding of fraud. Hazard & Twin argue
RE/MAX & Talbot failed to plead fraud in its Petition. Hazard & Twin contend
that, as a result, the city court applied an incorrect principle of law in finding that
RE/MAX & Talbot was entitled to commission fees. We agree.
The city court, in its judgment in favor of RE/MAX & Talbot, wrote:
Hazard agreed to pay plaintiffs’ commission of the property transferred during the terms of the lease, or have transferee expressly assume the payment thereof, in writing.
The court finds that the sublease agreement between Twin Shores and Joule, LLC was an attempt to defraud [RE/MAX] and circumvent their contractual commission obligation. Joule continues to occupy the premises, and never intended to leave.
“Fraud is a misrepresentation or a suppression of the truth made with the
intention either to obtain an unjust advantage for one party or to cause a loss or
inconvenience to the other. . . .” La. C.C. art. 1953. As Hazard & Twin properly
noted, La. C.C.P. art. 8564 and established jurisprudential authority require that
fraud be pled with particularity. See Vagelos v. Abramson, 2012-1235, p. 16 (La.
App. 4 Cir. 10/2/13), 126 So.3d 639, 649. REMAX/Talbot counters, however, that
4 La. C.C.P. art. 856 provides, in pertinent part, that ‘[i]n pleading fraud or mistake, the circumstances constituting fraud or mistake shall be alleged with particularity.”
7 the word “fraud” need not be specifically mentioned in order to maintain a fraud
action.
This Court recognizes that La. C.C.P. art. 856 does not require the word
“fraud” be used in the petition in order to comply with the article’s mandate to
plead fraud with particularity. See Helwick v. Montgomery Ventures, 1995-0765, p.
6 (La. App. 4 Cir. 12/14/95), 665 So.2d 1303, 1306. Nonetheless, our
jurisprudence does require the petition to assert with specificity allegations
consistent with fraudulent behavior. See Thrasher Const., Inc., v. Gibbs
Residential, L.L.C., 2015-0607 (La. App. 4 Cir. 6/29/16), 197 So.3d 283. In
Thrasher, a general contractor, Gibbs, filed a third party demand and
reconventional demand for breach of contract against the subcontractor, Thrasher.
The subcontractor, pursuant to La. R.S. 9:2772(A)(1)(a), filed an exception of
peremption, maintaining that the general contractor’s third party demand and
reconventional demand were not timely because they were brought beyond the
five-year period permitted for actions against a residential contractor after the
certificate of substantial completion has been filed. In opposition, the general
contractor maintained the five-year peremptive period did not apply, citing La.
R.S. 9:2772(H), which provides an exception to the five-year peremptive period
for damages caused by fraud. The general contractor alleged the subcontractor had
transferred assets to other defendants in an attempt to avoid liability for defective
work performed; and as such, was liable for damages caused by fraud. The district
court granted the subcontractor’s exception of peremption. On appeal, the general
contractor argued the district court erred by disregarding its fraud allegations. The
Thrasher court iterated that fraud must be pled with particularity and that a
plaintiff’s mere conclusion that he was defrauded by a defendant—
8 “‘unaccompanied by formal allegations setting forth with particularity the
circumstances alleged to constitute fraud’”—does not suffice. Id., 2015-0607, pp.
15-16, 197 So.3d at 293 (quoting Hardy v. Easy T.V. and Appliances of Louisiana,
Inc., 01-0025, p. 4 (La. App. 4 Cir. 12/12/01), 804 So.2d 777, 781). Thrasher
noted the general contractor’s claim that the subcontractor transferred assets to
avoid liability did not specify how the subcontractor’s alleged fraud caused the
breach of contract, the defective work, or the damages sued upon. Accordingly,
the Thrasher Court found the general contractor’s allegations did not constitute
fraud. Id., 2015-0607, p. 16, 197 So.3d at 293.
Similarly, in the case sub judice, upon review of RE/MAX & Talbot’s
Petition, we find the Petition does not plead nor does it contain any factual
allegations that constitute fraud. We therefore conclude that the city court based
its judgment on an erroneous finding of fraud that was not pled with particularity.
This Court, in Mercato Elisio, L.L.C. v. City of New Orleans, 2018-0081, p.
4 (La. App. 4 Cir. 11/21/18), 259 So.3d 1235, 1239, quoting Evans v. Lungrin,
1997-0541, pp. 6-7 (La. 2/6/98), 708 So.2d 731, 735, explained the standard of
review utilized when a trial court commits legal error in the fact-finding process as
follows:
It is well-settled that a court of appeal may not set aside a trial court’s or a jury’s finding of fact in the absence of “manifest error” or unless it is “clearly wrong.” Rosell v. ESCO, 549 So.2d 840, 844 (La. 1989). However, where one or more trial court legal errors interdict the fact-finding process, the manifest error standard is no longer applicable, and, if the record is otherwise complete, the appellate court should make its own independent de novo review of the record and determine a preponderance of the evidence. Ferrell v. Fireman’s Fund Ins. Co., [19]94-1252 (La. 2/20/95), 650 So.2d 742, 747, rev’d in part, on other grounds, 96-3028 (La. 7/1/97), 696 So.2d 569, reh’g denied, [19]96-3028 (La. 9/19/97), 698 So.2d 1388. A legal error occurs when a trial court applies incorrect principles of law and such errors are prejudicial. See Lasha v. Olin Corp., 625 So.2d 1002, 1006
9 (La. 1993). Legal errors are prejudicial when they materially affect the outcome and deprive a party of substantial rights. See Lasha, 625 So.2d at 1006. When such a prejudicial error of law skews the trial court’s finding of a material issue of fact and causes it to pretermit other issues, the appellate court is required, if it can, to render judgment on the record by applying the correct law and determining the essential material facts de novo. Lasha, 625 So.2d at 1006.
Having found the city court committed an error of law in reaching its
judgment based on unpled fraud allegations, a de novo review of the trial record is
required to determine if RE/MAX &Talbot proved Lease I was renewed to warrant
RE/MAX & Talbot an award for the unpaid commission fees.
Lease renewal
Hazard & Twin contend that Lease I expired and was not renewed in accord
with Lease I’s notice provisions—which required Joule to submit written notice to
Hazard Construction via certified or registered mail.5 Hazard & Twin emphasize
that Lease II and the Sublease are separate contracts from Lease I and the
5 Lease I’s notice requirements included the following:
24. Upon expiration or termination of this lease, Lessee shall surrender possession of the leased premises immediately to Lessor. Any holding over by Lessee shall not operate, except by written agreement, to extend or renew this lease . . . .
*** 27. Any notice or other communication required or permitted to be given under this lease by Lessee to Lessor shall be in writing and shall be delivered in person or sent by United States Certified, or Registered Mail, postage prepaid, return receipt requested, and addressed to Lessor at the place where rent is required to be paid hereunder. Any notice or other communication required or permitted to be given under this lease by Lessor to Lessee shall be in writing and shall be delivered in person or sent by United States Certified or Registered Mail, postage prepaid, return receipt requested, addressed to Lessee at the leased premises. Each notice or communication shall be deemed to have been given as of the date so mailed or delivered, as the case may be. Either party may designate as a substitute address by which written notice to the other party and to RE/MAX Commercial Brokers, Inc. in the manner herein provided.
10 execution of those documents underscores that Lease I was not renewed in fact or
through reconduction.6
Contrariwise, RE/MAX & Talbot contend Lease I was renewed when Joule
signed the Sublease with Twin Shores—which contained the same renewal terms
as Lease I—during the pendency of Joule’s Lease I agreement with Hazard
Construction. RE/MAX & Talbot argue Joule’s signing of the Sublease shows it
intended to renew Lease I and would have done so had Hazard & Twin not
orchestrated the dates that Lease II and the Sublease were to go into effect—which
RE/MAX & Talbot claim was done to circumvent payment of commission fees
owed under Lease I. Alternatively, RE/MAX & Talbot assert that notwithstanding
the lack of any written notice, Lease I was renewed through reconduction based on
Hazard Construction’s acquiescence to Joule’s uninterrupted occupancy of the
Alexander Street property after Lease I had expired.
After our de novo review, we conclude that Joule did not renew Lease I.
Lease I, between Hazard Construction and Joule, was for a period of forty-
six months, commencing on April 1, 2011 and ending at midnight, January 31,
2015. Lease I gave Joule a right to renew the lease at the end of the lease term for
an additional three years at an increased rate of $5,200.00, provided that notice of
renewal was to be in writing; and Lease I provided that RE/MAX & Talbot receive
an annual 6% commission fee during the term of the lease and any subsequent
renewals.7
6 La. C.C. art. 2721 states, in relevant part, that “[a] lease with a fixed term is reconducted if, after the expiration of the term, and without notice to vacate or terminate or other opposition by the lessor or the lessee, the lessee remains in possession.” 7 Lease I between Hazard Construction and Joule included the following:
Leased Premises:
11 Lease II, in which Hazard Construction leased the Alexander Street property
to Twin Shores, along with other properties, was drafted on December 29, 2014,
1(B) 701 S. Alexander Street, consisting of approximately 11,000 square foot office/warehouse space (rear dock level warehouse and office space).
Term:
3. This lease is for a term 46 months commencing on April 1, 2011 and ending at midnight January 31, 2015.
***
Rental and Place of Payment:
7. The rental under this Lease shall be Two Thousand Five Hundred Dollars ($2500.00) per month for the nine (9) months commencing May 1, 2011. The rental shall then escalate to Five Thousand Dollars ($5,000.00) per month for the remaining thirty-six months of the initial term of the lease. . . The Tenant shall have the option to renew for an additional three (3) years under the same terms and conditions in this lease except that the base rent will be increased to Five Thousand Two Hundred and Fifty Dollars ($5,250.00) per month, modified gross lease.
30. In consideration for its services put forth, in negotiating, this lease, furnishing representation and/or bringing Lessor and Lessee together, Lessor acknowledges that RE/MAX Commercial Brokers, Inc., who represents Lessor and Talbot Realty Group who represents Lessee have earned a commission for said services, which commission is earned upon the execution of this lease and is to be paid by Lessor in accordance with the subparagraph below. Lessor further agrees to pay the same percentage commission, payable in like manner, under any and all renewals, extensions, expansions or new leases made with the herein stated Lessee or any Sublessee , nominee or assignee thereof, provided that if this lease is canceled or terminated by mutual agreement of Lessor and Lessee without the written consent of RE/MAX Commercial Brokers, Inc. and the commission on rents payable during the unexpired term thereof has not been paid in full, Lessor shall immediately upon such cancellation or termination pay to RE/MAX Commercial Brokers, Inc. commission of 6% of such rents and RE/MAX Commercial Brokers will pay Talbot Realty Group 50% of the said commission.
1. A cash commission of 6% of the scheduled annual gross rentals under this lease, to be paid annually in advance with the first payment of $1,350.00 due upon execution of this lease, $10,800.00 the remaining balance for the initial term, be in three installments of $3,600.00 each payable on January 1st of each year.
Owner agrees to pay Broker a commission as set forth in the paragraph above and further agrees to pay the same percentage commission, payable in like manner, under any and all renewals, extensions, expansions or new lease made with the Lessee hereunder or any nominee, sublessee or assignee thereof. . . .
12 signed on January 31, 2015, and scheduled to go into effect on February 1, 2015.
In Lease II, Hazard Construction permitted the lessee, Twin Shores, to sublease
any portion of the leased property.8
The Sublease between Joule and Twin Shores was signed on January 1,
2015, and it was to commence on February 1, 2015, for a term of three years at a
monthly rate of $5,250.00. Additionally, the Sublease, unlike Lease I, allowed
Joule the use of approximately 50% of the Alexander Street property’s yard
parking space.9
8 Lease II contained, in pertinent part, the following:
12/29/14
Property Lease Agreement Parties:
John J. Hazard (lessor) hereby leases to Twin Shores Landscape & Construction Services, Inc. (lessee) the entire property and warehouse/buildings located at 701 Alexander Street, 601 Murat, 707 S Murat & 4536 D’Hemecourt Streets property.
This lease shall be for 5 years commencing on 2/1/2015 & expiring on 2/1/2020. . ..
Subleasing:
Lessee shall be allowed to sublease all or any portion of the described property. . . . 9 The Sublease between Twin Shores and Joule included the following:
Property Lease Agreement
Twin Shores (lessor) hereby subleases to Joule, LLC (lessee) the north elevated portion of the raised loading dock height warehouse and office space (approximately) 11,000 sf). The building is located at 701 S Alexander Street New Orleans, LA 70119. The lease also allows the use of approximately 50% of the yard parking space located at 701 S Alexander St.
13 First, we conclude that Lease I, Lease II, and the Sublease are three separate
contracts. The parties to Lease I were Hazard Construction and Joule; the parties
to Lease II were Hazard Construction and Twin Shores; and the parties to the
Sublease were Twin Shores and Joule.
Second, Lease I required Joule to submit written notice to Hazard
Construction of its intent to renew Lease I, and Joule did not give the required
written notice. Consequently, Lease I expired.10
Third, we find that the execution of the Sublease between Joule and Twin
Shores was not a renewal of Lease I. The Sublease offered an inducement,
additional parking spaces, that was not included in Lease I; thus, the execution of
the Sublease did not exclude the possibility that Joule may have elected not to
renew Lease I. In addition, the record before us contains no direct evidence of
Joule’s intent to renew Lease I. A representative for Joule was not called as a
witness to testify at trial. At trial, RE/MAX & Talbot called Peter Lombardo, a
realtor with RE/MAX, and Robert Talbot, the owner of Talbot, as fact witnesses.11
Mr. Lombardo testified that RE/MAX prepared Lease I and represented Hazard
Construction’s interests in the lease, whereas Talbot Realty represented Joule’s
interests. Mr. Lombardo reiterated that Lease I required Hazard Construction to
This lease shall be for 3 years commencing on 2/1/2015 & expiring on 2/1/2018. $5,250.00 is the monthly lease rate due before the 5th of each month. . . .
*** Subleasing:
John J. Hazard Dryage & Construction Co., Inc. (property owner) has allowed Twin Shores Landscape & Construction Services, Inc. to sublease any portion of the described property. 10 In its judgment, the district court wrote, “Joule, LLC [,] did not exercise its right to renew the lease. . . .” 11 Lease I, Lease II, and the Sublease were filed, introduced, and admitted into evidence at trial.
14 pay RE/MAX & Talbot commission fees as long as Joule remained a tenant at the
Alexander Street property and throughout any Lease I renewals. Mr. Lombardo
admitted on cross-examination that he was unaware of any written notice or
communication by Joule to Hazard Construction to extend Lease I and that he
never personally received or reviewed any written agreement that Joule renewed
Lease I. Also, Mr. Talbot acknowledged on cross-examination that he never
received a copy of any notice of renewal between Hazard Construction and Joule,
although Joule did send Talbot Realty a copy of the Sublease.
Fourth, we find that Lease I was not renewed through reconduction. This
Court discussed the legal doctrine of reconduction in Succession of Sigur v.
Henritzy, 2013-0398, p. 12 (La. App. 4 Cir. 9/18/13), 126 So.3d 529, 537-38, as
Reconduction occurs “‘when a fixed-term lease expires and the lessee without opposition continues to occupy the premises for more than a week.’” Southern Ventures Corp. V. Texaco Inc., 372 So.2d 1228, 1230 (La. 1979) (quoting Governor Claiborne Apartments, Inc. v. Attaldo, 256 La. 218, 235 So.2d 574 (1970)). When reconduction occurs, “[t]he reconducted lease is actually a continuation of the lease under the same terms and conditions except that the fixed term or period of duration in the old lease is voided and the reconducted lease is considered to be by the month.’” Id.
As pointed out by Hazard & Twin, Lease I specifically prohibited reconduction.
Section 24 of Lease I provided, in part, that upon Lease I’s expiration that “[a]ny
holding over by Lessee shall not operate, except by written agreement to extend or
renew this lease.” As discussed supra, Lease I expired; Joule’s continued
occupancy of the Alexander Street property was authorized only by the Sublease
between Joule and Twin Shores.
“A contract is the law between the parties, and the parties will be held to full
performance in good faith of the obligations of the contract.” Brenner v. Zaleski,
15 2014-1323, p. 3 (La. App. 4 Cir.6/3/15), 174 So.3d 76, 79 (citations omitted). We
acknowledge, as asserted by RE/MAX and Talbot, that the signing of the Sublease
and Joule’s continued occupancy of the Alexander Street property could arguably
suggest Joule intended to renew Lease I. However, our jurisprudence is well
established that “[w]hen 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.” French Quarter Realty v. Gambel, 2005-0933, p. 7 (La. App. 4
Cir. 12/8/05), 921 So.2d 1025, 1029 (citing La. C.C. art. 2046). In this case, Lease
I unambiguously required Joule to give written notice to Hazard Construction of
any Lease renewal, which Joule did not do. Consequently, the Sublease—without
testimony or other documentary evidence from Joule—cannot stand alone as proof
that Joule intended to renew Lease I.
Finding Lease I was not renewed through written notice, the Sublease or
reconduction, we conclude Hazard Construction did not breach its contract with
RE/MAX & Talbot. Hence, the city court erred in awarding RE/MAX & Talbot
commission fees based on Lease I’s renewal.
Allocation of Damages/Status of Robert Hazard, Sr.
We pretermit discussion of Hazard & Twin’s third and fourth assignments of
error—the city court erred in awarding damages and in finding Robert W. Hazard,
Sr., the president of Hazard Construction, was the sole owner of Twin Shores.12
These assigned errors are moot in light of our finding that Hazard Construction did
not breach its contract with RE/MAX & Talbot.
12 Based on the evidence presented at trial, Robert J. Hazard, Jr., and Michelle Hazard were owners of Twin Shores Landscape and Construction Services, Inc.
16 CONCLUSION
Based on the foregoing reasons, we affirm in part the city court’s judgment
denying Hazard Construction’s exception of no cause of action and reverse in part
the city court’s judgment denying Twin Shores’ exception of no cause of action.
We, further, reverse the city court’s judgment that found Hazard & Twin liable to
RE/MAX & Talbot for outstanding commission fees.
EXCEPTION OF NO CAUSE OF ACTION AFFIRMED IN PART; REVERSED IN PART; JUDGMENT REVERSED