KAS Properties, LLC v. Louisiana Board of Supervisors

167 So. 3d 1007, 2014 La.App. 1 Cir. 0566, 2015 La. App. LEXIS 806, 2015 WL 1813946
CourtLouisiana Court of Appeal
DecidedApril 21, 2015
DocketNo. 2014 CW 0566
StatusPublished
Cited by9 cases

This text of 167 So. 3d 1007 (KAS Properties, LLC v. Louisiana Board of Supervisors) 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.

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KAS Properties, LLC v. Louisiana Board of Supervisors, 167 So. 3d 1007, 2014 La.App. 1 Cir. 0566, 2015 La. App. LEXIS 806, 2015 WL 1813946 (La. Ct. App. 2015).

Opinion

GUIDRY, J.

| ^Plaintiff, KAS Properties, LLC (KAS), appeals from a judgment of the district court, upholding the termination of a lease by the defendants, Louisiana Board of Supervisors for the Louisiana State University, Health Care Services Division (the Board) and Louisiana Division of Administration (DOA), and dismissing its claims against the Board with prejudice. For the reasons that follow, we convert this appeal to an application for supervisory writ and deny the relief requested.

FACTS AND PROCEDURAL HISTORY

KAS and the Board executed a lease agreement approved by the DOA on July 30, 2008, for cold storage warehouse and office space for the operations of the University Medical Center in Lafayette, Louisiana. The lease agreement was subsequently amended to provide a lease term beginning March 31, 2009 through February 28, 2014, in consideration of payment of $532,000.20, to be made payable in sixty equal installments of $8,866.67.

Thereafter, on October 8, 2012, the Board forwarded a letter to KAS, notifying KAS that the Board was exercising its right to cancel the lease due to the fact that public funding for the Louisiana State University, Health Care Services Division (LSU-HCSD) had been drastically re[1009]*1009duced and the finding was no longer adequate to meet the obligations of the lease. The letter further stated that the lease shall be terminated effective sixty days from KAS’s receipt of the notice.

After receiving the Board’s letter, KAS requested payment of the balance due on the lease. The Board responded to KAS’s request by directing KAS to paragraph twenty-two of the lease, the fiscal funding provision, which stipulates that the lease may be terminated with sixty-days written notice to the lessor when funding by the legislature is not sufficient to meet the requirements of the lease. | ..¡Because the required written notice was given for termination of its occupancy, the Board stated that rental payments were going to cease as of December 12, 2012.

On October 31, 2012, KAS filed an administrative complaint pursuant to La. R.S. 39:1673 with Sandra Gillen, the Director for the Office of State Purchasing and Travel, asserting that the Board breached its contract with KAS by prematurely terminating its lease without sufficient cause. Ms. Gillen subsequently delegated her decision-making authority to John Davis, Director of the Office of Facility Planning and Control. Mr. Davis issued a decision on January 18, 2013, finding that the lease agreement was properly cancelled due to a lack of public funding. Mr. Davis specifically found that the Board properly exercised its right to cancel the lease agreement pursuant to paragraph twenty-two of the lease; that the Board experienced a significant reduction in public funding; and that the Board provided KAS with the requisite sixty-day written notice of its intent to cancel the lease agreement.

Thereafter, KAS filed an appeal of Mr. Davis’s decision with the Commissioner of the Division of Administration (Commissioner). On March 18, 2013, the Commissioner issued a decision, finding that the Board was justified in terminating the lease under paragraph twenty-two of the lease due to a reduction in public funding and denying KAS’s appeal. KAS filed a petition for judicial review in the Nineteenth Judicial District Court, naming the Board and the DOA as defendants and seeking review of the administrative decision rendered by the Commissioner. Following briefing and a hearing, the district court rendered judgment in favor of the Board and the DOA, affirming the Commissioner’s decision, upholding the Board’s termination of the lease, and dismissing KAS’s claims against the Board and the DOA with prejudice.

KAS now appeals from the district court’s judgment. In response to KAS’s appeal, the Board has filed a declinatory exception raising the objection of lack of | ¿subject matter jurisdiction and a motion to dismiss KAS’s appeal, asserting that according to La. R.S. 39:1691(E), KAS does not have a right to seek appeal of the district court’s judgment.

DISCUSSION

Appellate Jurisdiction

Actions by or against the state in connection with a contract are governed by La. R.S. 39:1691, which provides, in pertinent part:

C. Actions under contracts or for breach of contract. The Nineteenth Judicial District Court shall have exclusive venue over an action between the state and a contractor who contracts with the state, for any cause of action which arises under or by virtue of the contract, whether the action is on the contract or for a breach of the contract or whether the action is for declaratory, injunctive, or other equitable relief.
* * *
[1010]*1010E. Writs or appeals; district court decisions. Any party aggrieved by a final judgment or interlocutory order or ruling of the Nineteenth Judicial District Court may appeal or seek review thereof, as the case may be, to the Court of Appeal, First Circuit or the Supreme Court of Louisiana, as otherwise permitted in civil cases by law and the constitution

Subparagraph E, which provides for the right to appeal from a judgment of the district court, was enacted by 2008 La. Acts No. 789. Section 2 of Act 789, however, specifically provides that “[tjhis Act shall not apply to any claim or controversy arising out of any contract or agreement executed prior to August 1, 2008.” In addressing the 2008 enactment of subpara-graph E, the Louisiana Supreme Court confirmed that “the legislature did not intend that the Procurement Code provide a right of appeal relative to any claims or controversies arising out of any contract executed prior to August 1, 2008.” Willows v. State, Department of Health & Hospitals, 08-2357, p. 9 (La.5/5/09), 15 So.3d 56, 62. As such, the exclusive means of obtaining judicial review under La. R.S. 39:1691 for an action arising from a contract executed prior to August 1, 2008, is an appeal to the Nineteenth Judicial District Court. Willows, 08-2357 at p. 9, 15 So.3d at 62.

|.Jn the instant case, KAS and the Board executed a lease agreement on July 30, 2008, two days before the effective date of La. R.S. 39:1961(E). Further, although the lease agreement was subsequently amended on March 4, 2009, to modify the lease term and to increase the consideration paid by the Board, the remainder of the original lease, including the termination provision at issue, remained in effect. Consequently, because the amendment merely modified the obligation, without the intention to extinguish it, it did not create a new lease. See La. C.C. arts. 2726 and 1881; see also 5 Louisiana Civil Law Treatise, Law of Obligations § 17.14 (noting that an agreement by one party to pay the other party more than originally agreed is á mere modification of the earlier agreement). As such, because the lease agreement at issue was executed prior to August 1, 2008, this court lacks appellate jurisdiction to consider the merits of KAS’s appeal.

However, the supreme court has noted that even though this court lacks appellate jurisdiction to consider matters arising under La. R.S. 39:1691 when the contract was executed prior to August 1, 2008, we still retain the ability to consider the matter under this court’s supervisory jurisdiction. See Willows, 08-2357 at pp. 9-10, 15 So.3d at 62; see also La. Const, of 1974, art. V, § 10(A).

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167 So. 3d 1007, 2014 La.App. 1 Cir. 0566, 2015 La. App. LEXIS 806, 2015 WL 1813946, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kas-properties-llc-v-louisiana-board-of-supervisors-lactapp-2015.