Gravolet v. Fair Grounds Corp.

865 So. 2d 126, 2003 WL 22999491
CourtLouisiana Court of Appeal
DecidedDecember 17, 2003
DocketNos. 2003-CA-0392, 2003-CA-0958
StatusPublished
Cited by1 cases

This text of 865 So. 2d 126 (Gravolet v. Fair Grounds Corp.) 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
Gravolet v. Fair Grounds Corp., 865 So. 2d 126, 2003 WL 22999491 (La. Ct. App. 2003).

Opinion

JjJOAN BERNARD ARMSTRONG, Chief Judge.

This is a contract case arising from a lease with options to extend term and to purchase entered into by the Fair Grounds Corporation (FGC) for property located at 111-113 Bourbon Street in New Orleans.

On March 8, 1989, FGC as Lessee and Richard and Patricia Keyworth as Lessor entered into a lease for the ground floor, second floor and limited use of the roof of the subject property, which had been a Mexican restaurant, but which had been vacant for over five years. The two-year lease gave the Lessee a conditional option to extend the term for an additional eight years and .an option to purchase the entire building during the first year of the lease term for $1,250,000. The monthly rental was $10,000. The lease gave the Lessor the option, upon termination or expiration of the lease, to require that the building be replaced in its original condition. FGC could not assign the lease in whole or in part without the prior written consent of the Keyworths, and the Keyworths had the right to refuse to grant consent to any assignment with or without cause and without stating its ^reasons for refusal. The lease gave the Keyworths the right to withhold consent arbitrarily.

By resolutions of September 29, 1988 and May 25, 1989, FGC’s board authorized Mr. Gravolet generally to purchase and dispose of real or movable property on behalf of FGC. A similar resolution in favor of Mr. Louis Roussel, III, a shareholder of and attorney for FGC, was passed on February 23,1989.

On March 13, 1989, Mr. and Mrs. Key-worth executed a note secured by a mortgage on the subject property together with an assignment of leases and rentals in favor of Mr. Roussel. Mr. Gravolet signed the documents as Mr. Roussel’s representative. The record contains a letter pur[128]*128portedly sent by Mr. Gravolet to FGC on the letterhead of “Mammoth Capital, Inc.”, expressing his understanding that FGC “is agreeable to assign its interest to this “Option to Purchase” to Mammaoth [sic] Capital, Inc. for the consideration of: 1. $100 cash consideration. 2. Purchase of property will be subject to existing lease. 3. Mammoth Capital, Inc. waive the “Security Deposit” requirement of said lease.” According to the letter, Mr. Gravolet undertook that Mammoth would cancel FGC’s bank letter of credit securing its security deposit upon transfer of title to the subject property. The FGC corporate secretary’s affidavit, submitted by FGC in opposition to Mr. Gravolet’s motion for summary judgment, shows that FGC did not authorize or approve the assignment of the option to purchase.

On March 7, 1990, Mr. Roussel wrote to Mr. Keyworth advising that FGC intended to exercise its option to purchase the subject property. The sworn | ¡¡evidence of FGC’s corporate secretary’s affidavit establishes that neither FGC’s directors nor shareholders were advised that the option was exercised. On March 14, 1990, Mammoth executed an Act of Collateral Mortgage, acknowledging a principal debt of $600,000, and an $800,000 promissory note in favor of Mr. Roussel. Mr. Gravolet signed the documents as Mammoth’s president. The record contains a copy of a letter purportedly sent by Mr. Gravolet to FGC on March 15, 1990 advising that Mammoth exercised the option to purchase and future rentals should be sent to “Louie [sic] J. Roussel, III, for credit to account of Mammoth Capital, Inc.” Mammoth and Mr. and Mrs. Gravolet subsequently entered into a real estate exchange with Malcolm Faber whereby the Gravolets acquired the subject property on December 2,1992.

On April 3, 1990, Mr. and Mrs. Bryan Krantz purchased control of FGC through a stock purchase agreement, buying Mr. Roussel’s 49.31% interest, Mr. Gravolet’s 2.34% interest, Mr. Roussel’s father’s 1.37% interest and the .64% interest held by Empire Land Corporation, alleged by FGC to be a Roussel corporation.

On July 7, 1999, FGC and Mr. Gravolet executed a five-year extension of the lease in consideration of monthly rental payments of $13,125. As additional consideration, FGC received the right to exercise before December 1, 1999 an exclusive option to lease the third and fourth floors of the property for an additional monthly rental of $2,000. FGC’s exercise of the option would extend the lease term through March 14, 2009. In that event, base rental from March 14, [42004 through March 14, 2009 would be adjusted in accordance with the Consumer Price Index’s change from March 1999 through March 2004. Furthermore, exercise of the option would eliminate Mr. Gravolet’s right to terminate the lease at any time during the extended term by giving FGC twenty-four month written notice. FGC retained its right to early termination without regard to its exercise of the option to lease the additional floors.

On July 27, 1999, FGC put Mr. Gravolet on notice of its intention to terminate the lease effective April 30, 2000. On January 13, 2000, Mr. Gravolet wrote to FGC through its new co-owner and President, Bryan Krantz, that he was exercising his option to require the building to be replaced in its original condition as per the 1981 building plans prepared by architect A.G. Lyons upon the termination of the lease. Mr. Gravolet claimed in the letter that prior to the commencement of the FGC lease the property “was a newly ren[129]*129ovated Cisco’s restaurant.”1

Following mediation, on April 28, 2000, Mr. Gravolet and FGC entered into an agreement extending the lease termination date to July 31, 2000, and reserving the parties’ rights, as they existed on April 30, 2000.

On July 11, 2000, Mr. Gravolet wrote to FGC claiming he was severely handicapped in his efforts to lease the property because of uncertainty as to when FGC anticipated completing the construction necessary to return the property to its original condition and demanding that rent continue until the property would be so [ sreturned. FGC through Mr. Krantz responded on July 28, 2000, denying that FGC had an obligation to restore the premises to original condition. Mr. Krantz also advised Mr. Gravolet that FGC had no interest in a purchase or exchange of the building at Mr. Gravolet’s approximate valuation of $3,000,000.

On November 7, 2000, Mr. Gravolet filed suit seeking to enforce his understanding of the lease, attaching copies of the original lease; extension agreement of July 7, 1999; Gravolet letters of January 13, 2000 and July 11, 2000; agreement of April 28, 2000; and FGC letter of July 28, 2000. A week later, on November 14, 2000, Mr. and Mrs. Gravolet entered into a sixty-two month lease with Bourbon Street Holdings, LLC, leasing the subject property in consideration of a $28,000 lease execution payment to the Gravolets and monthly rent of $14,000 for the first four months and $28,000 thereafter, with CPI adjustments on renewal terms and additional rent as agreed by the parties.

FGC answered the petition, admitting it made renovations to the building and averring that all improvements were made with the Lessor’s express consent, and admitting the documents attached to the petition insofar as they are the best evidence of their terms. FGC further answered claiming that the restoration clause in the lease was intended as a basis on which the Lessor could condition his consent to FGC’s improvements. FGC contended that the Lessor accepted the substantial improvements FGC made to the leased premises. FGC claimed in the alternative that the July 7, 1999 agreement between it and Mr.

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Related

Gravolet v. Fair Grounds Corp.
878 So. 2d 900 (Louisiana Court of Appeal, 2004)

Cite This Page — Counsel Stack

Bluebook (online)
865 So. 2d 126, 2003 WL 22999491, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gravolet-v-fair-grounds-corp-lactapp-2003.