RCC PROPERTIES v. Wenstar Properties

930 So. 2d 1233, 2006 La. App. LEXIS 1329, 2006 WL 1521601
CourtLouisiana Court of Appeal
DecidedJune 5, 2006
Docket40,996-CA
StatusPublished
Cited by6 cases

This text of 930 So. 2d 1233 (RCC PROPERTIES v. Wenstar Properties) 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
RCC PROPERTIES v. Wenstar Properties, 930 So. 2d 1233, 2006 La. App. LEXIS 1329, 2006 WL 1521601 (La. Ct. App. 2006).

Opinion

930 So.2d 1233 (2006)

RCC PROPERTIES, L.L.C., Plaintiff-Appellee,
v.
WENSTAR PROPERTIES, L.P., Defendant-Appellant.

No. 40,996-CA.

Court of Appeal of Louisiana, Second Circuit.

June 5, 2006.

*1234 Snellings, Breard, Sartor, Inabnett & Trascher, L.L.P. by Clara Moss Sartor Wendy E.W. Giovingo, for Appellant.

Hudson, Potts & Bernstein, L.L.P. by William Craig Henry, Counsel for Appellee.

Before PEATROSS, DREW and MOORE, JJ.

DREW, J.

Wenstar Properties, L.P., appeals from a judgment invalidating a predial servitude in favor of an estate owned by Wenstar. We reverse and render.

FACTS

In 2002, AZT Winnsboro La., Inc., (AZT) sold a tract[1] to Wenstar. A Wendy's restaurant is currently operating on the Wenstar property (the dominant estate). In the "Act of Cash Sale and Servitude," AZT, the vendor, granted to Wenstar, the vendee, a servitude in the following language:

Vendor also grants to vendee a predial servitude in favor of the Property prohibiting the use of the property adjacent to the Property that is owned by Vendor and described on Exhibit A attached hereto and made a part hereof (hereinafter, Vendor's Adjacent Property) or any part or parcel thereof for a restaurant with a drive-thru pick-up window, the primary business of which is the sale of hamburgers, hamburger products or chicken sandwiches (or any combination thereof). For the purposes of this servitude and restriction, a restaurant has the aforesaid products as its primary business if fifteen percent (15%) or more of its gross sales, exclusive of taxes, beverage and dairy product sales, consists of sales of hamburgers, hamburger products or chicken sandwiches (or any combination thereof). This servitude and restriction shall burden Vendor's Adjacent Property for a period of twenty (20) years from the date of this act of sale; provided, however, that this servitude *1235 and restriction shall terminate at such time that the Property is no longer used as a Wendy's restaurant or if operation of a Wendy's restaurant ceases on the Property for a continuous period of three (3) months.

In 2004, AZT sold the adjacent property[2] (the servient estate) to R.C.C. Properties, L.L.C. R.C.C. subsequently received an offer to purchase this tract from Hannon's Food Service of Vicksburg, Inc., which intended to build a KFC (Kentucky Fried Chicken) franchise on the property. Hannon's agreed to purchase the property only if R.C.C. could obtain a satisfactory release of the servitude.

In February 2005, R.C.C. filed a petition for a declaratory judgment asking the district court either to invalidate the servitude or declare it inapplicable to the R.C.C. property. R.C.C. subsequently added Hannon's and Wendy's International, Inc., as defendants.

The court held a trial in July 2005 and heard testimony from several witnesses. Among the witnesses was Bobby Hannon, chairman of Hannon's, who explained that a KFC restaurant serves several types of chicken sandwiches and that any KFC built on the R.C.C. property would serve these sandwiches. Hannon also stated that "the deal would be off" as far as he was concerned if the servitude binding the property was found to be valid.

Edward Buchner, III, a certified public accountant from Vicksburg who handled Hannon's business, also testified. Buchner reviewed Hannon's sales figures for Hannon's KFC restaurants to determine what percentage of KFC restaurant sales[3] consisted of chicken sandwiches. For 2003, chicken sandwiches amounted to 1.77% of total sales; for 2004, the percentage was *1236 1.81%, and for the first six months of 2005, the percentages were January-1.91%; February-4.87%, March-14.18%, April-11.2%, May-10.8%, and June-6.7%.

Pete Subowicz, a field director for real estate for Wendy's International, testified that he negotiated this predial servitude with the original property owner when Wenstar acquired its Winnsboro property. He explained that deed restrictions limiting competition are a "pretty common standard" in the fast food industry. The servitude defined "primary business" as the sale of hamburgers, hamburger products or chicken sandwiches "if fifteen percent (15%) or more of its gross sales, exclusive of taxes, beverage and dairy product sales, consists of sales of hamburgers, hamburger products or chicken sandwiches (or any combination thereof)." In his view, a particular restaurant that wanted to locate on the servient estate would have to establish that its hamburger and chicken sandwich sales did not exceed 15%, as described above. In his view, that restaurant would have to establish that fact by submission of national sales records, then regional sales records and sales records of existing restaurants. Subowicz admitted that the existing predial servitude would not prohibit the construction of a KFC store provided the KFC owners could demonstrate that its sales of the proscribed sandwiches was less than 15%. Subowicz testified Wendy's International would never agree to the release of a predial servitude.

The court subsequently issued reasons for judgment stating its intent to invalidate the servitude in its entirety. The court stated, in part:

This Court understands that predial servitudes are to be strictly construed, and any doubts as to the extent or exercise of rights created by such servitudes should be resolved in favor of the servient estate. This Court believes that this predial servitude is unclear and ambiguous. It is not clear as to what time period the chicken sandwich sales are to be measured. Is it one week, one month, one quarter or one year? It is also unclear how the determination is to be made. Does the owner of the dominant estate have the right to examine the books and records on demand or must legal action be taken, or does the owner of the servient estate have a duty to provide those records on a weekly, monthly, quarterly, or annual basis? Since the servitude is silent as to both the time period and manner of showing compliance, this Court must determine the servitude to be ambiguous. Since servitudes are not favored and are to be strictly construed, any ambiguity is to be assessed against the dominant estate.

The court also noted that it did not consider the parol evidence presented by the parties regarding the intent when the servitude was negotiated and effected. On August 12, 2005, the court signed a judgment invalidating the servitude.

DISCUSSION

In Blanchard v. Rand, 34,442 (La. App.3/2/01), 781 So.2d 881, writs denied, 01-0897, 01-0931 (La.6/1/01), 793 So.2d 193, 194, this court explained that a predial servitude is a real right burdening an immovable. To have a predial servitude requires two different tracts belonging to different owners. A predial servitude is due to the estate rather than the owner of the estate and is a charge on the servient estate for the benefit of the dominant estate. La. C.C. art. 646.

La. C.C. art. 697 provides:

Predial servitudes may be established by an owner on his estate or acquired for its benefit.
The use and extent of such servitudes are regulated by the title by which they *1237 are created, and, in the absence of such regulation, by the following rules.

A predial servitude restricting or prohibiting commercial use of property is a negative, nonapparent servitude which may be acquired only by title. La. C.C. arts. 706, 707, 739; Mardis v. Brantley, 30,773 (La.App.2d Cir.8/25/98), 717 So.2d 702, 704, writ denied,

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930 So. 2d 1233, 2006 La. App. LEXIS 1329, 2006 WL 1521601, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rcc-properties-v-wenstar-properties-lactapp-2006.