LOUISIANA GAMING CORPORATION v. Kayell Enterprises, Inc.

804 So. 2d 736, 2001 WL 1540407
CourtLouisiana Court of Appeal
DecidedDecember 5, 2001
Docket35,297-CA
StatusPublished
Cited by1 cases

This text of 804 So. 2d 736 (LOUISIANA GAMING CORPORATION v. Kayell Enterprises, 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
LOUISIANA GAMING CORPORATION v. Kayell Enterprises, Inc., 804 So. 2d 736, 2001 WL 1540407 (La. Ct. App. 2001).

Opinion

804 So.2d 736 (2001)

LOUISIANA GAMING CORPORATION, Plaintiff-Appellant,
v.
KAYELL ENTERPRISES, INC., d/b/a Industrial Coffee Shop, Defendant-Appellee.

No. 35,297-CA.

Court of Appeal of Louisiana, Second Circuit.

December 5, 2001.
Rehearing Denied January 17, 2002.

*737 Onebane, Bernard, Torian, Diaz, McNamara & Abell by Frank H. Spruiell, Jr., Shreveport, Counsel for Appellant.

Lance P. Havener, Shreveport, Counsel for Appellee.

Before STEWART, GASKINS and CARAWAY, JJ.

STEWART, J.

This is an appeal by Louisiana Gaming Corporation (LGC) from a judgment rejecting its demands for injunctive relief, specific performance and damages following the alleged breach of a contract by Kayell Enterprises, Inc. For the following reasons, we affirm.

FACTS

The Industrial Coffee Shop is a restaurant located in Shreveport, Louisiana. For many years, it was owned and operated by Henry and Edna Barajas. On March 24, 1995, the Barajas signed a five-year contract with Southwest Gaming Services (SGS) for the placement of video poker gaming machines in the restaurant. The contract gave SGS exclusive rights to install the machines at the restaurant on the condition that the profits from the machines would be divided equally between the Barajas and SGS. The contract provided that it was to be effective against any purchaser of the premises. However, the "exclusive rights" provision of the contract provided that the agreement could be terminated earlier than the five year term by SGS simply by removing its machines from the premises. This contract was recorded in the Caddo Parish conveyance records.

In October 1997, the Barajas sold the restaurant property and buildings—but not the business itself or its movables—to Kayell Enterprises, Inc. (Kayell). Kayell is a corporation owned in its entirety by Mr. Krishan Bhatia. Kayell did not purchase the entire business outright because it had not yet obtained license to operate video poker machines. In preparation for operating the business, Mr. Bhatia and his daughter Kanta Dhaliwal investigated other *738 video poker equipment providers. During this process, Kayell was approached by LGC, a competitor of SGS, who wished to purchase the business from them. However, an agreement could not be reached regarding the prosed sale, but Kayell agreed to allow LGC to provide video poker machines for their business. On January 5, 1998, Kayell, through Mr. Bhatia, signed a contract agreeing to allow LGC the exclusive right to place video poker machines at the restaurant for 60 months:

commencing on the date of execution hereof or on such date that LGC places the first video draw poker device in the Establishment and the machines are turned on and available for customer play, whichever is the later date.

Although the contract does not itself utilize the term, the agreement defines "commencement date" as follows:

"Commencement Date"—shall mean the date of execution hereof or on such date that LGC places the first video draw poker device in the Establishment and the machines are turned on and available for customer play, whichever is the later date. However, this agreement is binding to the signed parties at the time of execution. LGC shall place at least one device in the Establishment within fifteen (15) days after the Establishment's license (sic) granted.

In a section captioned Special Conditions, the contract further provides, in part:

It is understood that this agreement shall begin on the effective ending date of the preceding contractual agreement. LGC agrees to spend up to $25,000.00 for lease hold improvements to the Establishment, any monies spent above the allocated twenty-five thousand will be repaid by Kayell Enterprises, Inc. through the operation of video draw poker devices at a reasonable deducted amount.

Kanta Dhaliwal, who negotiated the contract on behalf of Kayell, stated that the minimum of $25,000 LGC offered to provide for renovations was the primary factor that caused Kayell to choose their services. A copy of this contract is attached as an unpublished appendix to this opinion. Coincident with the signing of this contract, LGC representative Billy Allen applied to the Louisiana State Police for a gaming license for Kayell.

In February 1998, in anticipation of the receipt of the video poker license, Kayell purchased the business itself and its movables from the Barajas. This contract provided, in part:

7.1 Business Debts: Purchaser does not assume or agree to be responsible for any debts, contracts or obligations of Seller in connection with the operation of a business at 1100 Joseph Street, Shreveport, Louisiana, and Seller agrees to hold Purchaser harmless therefrom.

According to Mr. Bhatia, this provision was intended to relieve Kayell from any obligation under the Barajas' contract with SGS. However, despite this provision and the new contract with LGC, Kayell did not immediately remove the SGS poker machines from the restaurant because it did not have a license to operate the machines on its own.

Mr. Bhatia testified that his gaming license to operate video poker machines was approved in late February 1998 (State Police records indicate February 25, 1998), and that he thereafter tried "a number of times" via telephone to contact Billy Allen, the LGC representative, to have LGC install its machines. He testified:

A: ... And whenever I called they would ask who's calling, I would give my name. I'm told he's not there, he was out. I would leave a message for him to *739 contact me, and the message was never returned.
Q: How many times can you estimate you tried to call Mr. Allen?
A: If I remember correctly, off and on the whole month of March, March 1998.

Mr. Bhatia said that he was never able to speak to Mr. Allen. Likewise, Kanta Dhaliwal testified that she tried "very repeatedly" during March 1998 to contact Mr. Allen but stopped "after March or soon after" because she received no response to her repeated phone calls.

Mr. Allen testified that he met with Kanta Dhaliwal on several occasions following the grant of Kayell's video poker license, probably in mid-1998, to discuss the planned renovation of the restaurant's gaming area. In fact, Allen testified that the restaurant's gaming license was discussed on "several occasions." He said that, normally, the licensee would contact him upon receipt of the license and the licensee would fax a copy to LGC for its records, but that this procedure did not occur in this case. Allen had no records of any meeting with Kanta Dhaliwal and LGC did not keep records of telephone calls.

The restaurant maintained its relationship with SGS until May 1999, when Kayell bought and installed its own machines and SGS removed its machines. On February 10, 2000, LGC filed suit against Kayell and sought injunctive relief, specific performance and monetary damages. Trial of this matter was held on March 14, 2001, and on March 16, 2001, the court signed a judgment rejecting LGC's demands. The court found that LGC failed to comply with the contract when it failed to place a video poker machine at the restaurant within 15 days of the approval of Kayell's gaming license. The court also found that the contract suspended the LGC's obligation until the SGS contract expired, and the court gave the date of expiration as April 1999. The court further found that Kayell did not attempt to prevent LGC from learning when either of these conditions occurred.

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804 So. 2d 736, 2001 WL 1540407, Counsel Stack Legal Research, https://law.counselstack.com/opinion/louisiana-gaming-corporation-v-kayell-enterprises-inc-lactapp-2001.