Sonder USA, Inc v. 635 N. Scott, L.L.C.

CourtDistrict Court, E.D. Louisiana
DecidedAugust 5, 2020
Docket2:18-cv-13891
StatusUnknown

This text of Sonder USA, Inc v. 635 N. Scott, L.L.C. (Sonder USA, Inc v. 635 N. Scott, L.L.C.) is published on Counsel Stack Legal Research, covering District Court, E.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sonder USA, Inc v. 635 N. Scott, L.L.C., (E.D. La. 2020).

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA

SONDER USA, INC. CIVIL ACTION VERSUS CASE NO. 18-13891 635 N. SCOTT, LLC SECTION: “G”(5)

ORDER AND REASONS In this litigation, Plaintiff Sonder USA, Inc. (“Plaintiff”) brings claims against Defendant 635 N. Scott, LLC (“Defendant”) for allegedly failing to remedy maintenance issues in 635 Scott’s apartments.1 Before the Court is Defendant’s “Motion for Summary Judgment.”2 Oral argument was held on the motion via video conference on July 29, 2020.3 Considering the motion, the memoranda in support and in opposition, the record, and the applicable law, the Court denies the motion. I. Background On December 10, 2018, Plaintiff filed a Petition for Declaratory Judgment in the Civil District Court for the Parish of Orleans.4 In the Petition, Plaintiff alleges that it leased 26

apartments from Defendant to start a short-term rental business.5 Plaintiff alleges that Defendant was responsible for each apartment’s maintenance and failed to address mold, leaking air

1 Rec. Doc. 1-2; Rec. Doc. 32. 2 Rec. Doc. 70. 3 Rec. Doc. 91. 4 Rec. Doc. 1-2 at 1. 5 See id. conditioning units, and other defects in the apartments.6 As a result, Plaintiff seeks termination of the 26 lease agreements.7 On December 17, 2018, Defendant removed the case to this Court.8 On January 17, 2019,

Defendant filed an Answer and brought counterclaims against Plaintiff for breach of contract and violation of the Louisiana Unfair Trade Practices and Consumer Protection Law.9 On May 30, 2019, Plaintiff filed a First Amended and Restated Complaint for Declaratory Judgment and Damages.10 In the amended complaint, Plaintiff brings the following claims: (1) a claim for declaratory judgment that Defendant was in default of the leases and that the leases are terminated; (2) a claim for breach of warranty; (3) a claim for breach of contract; and (4) a claim for lost profits.11 On September 30, 2019, Defendant filed a First Amended and Restated Counterclaim.12 In the First Amended and Restated Counterclaim, Defendant brings claims for breach of contract and violation of the Louisiana Unfair Trade Practices and Consumer Protection Law.13 Defendant

contends that Plaintiff breached the 26 lease agreements by failing “to pay rent on any of the 26 apartments since September of 2018.”14 Defendant also contends that Plaintiff violated the

6 Id. at 2. 7 Id. at 3. 8 Rec. Doc. 1. 9 Rec. Doc. 10 at 8–9. 10 Rec. Doc. 32. 11 Id. 12 Rec. Doc. 48. 13 Id. 14 Id. at 8. Louisiana Unfair Trade Practices and Consumer Protection Law because Plaintiff “sought to manufacture grounds” to terminate the 26 lease agreements when it hired an unlicensed home inspection company to inspect mold contamination and prepare a report.15

On June 30, 2020, Defendant filed the instant motion for summary judgment.16 On July 7, 2020, Plaintiff filed an opposition to the motion.17 On July 17, 2020, with leave of Court, Defendant filed a reply brief in further support of the motion.18 The Court heard oral arguments on the motion via video conference on July 29, 2020.19 II. Parties’ Arguments A. Defendant’s Arguments in Support of the Motion for Summary Judgment Defendant raises two issues in the instant motion. First, Defendant asserts that under the terms of the leases it was Plaintiff’s obligation to clean the air conditioning units.20 Second, Defendant argues that Plaintiff was not entitled to cancel the leases.21 Addressing the first issue, Defendant argues that the mold damage to the apartment units occurred because Plaintiff misused the air conditioning units.22 According to Defendant, under

the terms of the leases, Plaintiff was responsible for keeping the units “in the same condition

15 Id. at 11. 16 Rec. Doc. 70. 17 Rec. Doc. 75. 18 Rec. Doc. 96. 19 Rec. Doc. 91. 20 Rec. Doc. 70-2 at 10. 21 Id. at 12. 22 Id. during the term of this lease at his expense.”23 Defendant asserts that it was only required to “perform repairs necessary to maintain and keep the Premises and all components in good working order, suitable for residential use, including, without limitation, all electrical, mechanical, plumbing, fire/life safety, and other building systems of the Premises.”24 According

to Defendant, even disagreement over the general definition of “repair” would render Plaintiff’s breach of contract claim meritless, as “repair” is generally defined as “to restore by replacing a part or putting together what is torn or broken.”25 Thus, Defendant argues that under this generally prevailing meaning, Defendant’s obligation to perform “repairs” does not include the obligation to routinely clean the air conditioning filters or to set the thermostat at appropriate temperatures in the units in Sonder’s possession.26 Accordingly, Defendant asserts any damages to the apartment units that resulted from Plaintiff’s misuse of the air conditioning units is attributable to Plaintiff’s failure to meet its own obligations under the lease.27 Furthermore, Defendant argues that any ambiguities in the leases must be construed against Plaintiff because Plaintiff drafted the initial proposed lease.28

Next, Defendant contends that Plaintiff is not entitled to lease cancellation.29 Defendant asserts that dissolution of a lease should not be granted under Louisiana law unless the party

23 Id. at 11. 24 Id. 25 Id. 26 Id. 27 Id. 28 Id. 29 Id. at 12. seeking cancellation is “undoubtedly entitled to such a cancellation.”30 Defendant asserts that Plaintiff sought to terminate the leases because the units were allegedly “uninhabitable” due to mold.31 However, Defendant contends that the All American Reports, upon which Plaintiff based

the termination, were inconclusive or did not detect the presence of mold in 16 of the units tested.32 Defendant concedes that high mold scores were reported in nine of the units, but Defendant contends that the All American Reports did not determine that those nine units were uninhabitable.33 Additionally, Defendant argues that the evidence suggests that the mold was caused by “HVAC condensation issues” resulting from failing to clean the air conditioning filters.34 Therefore, Defendant argues that Plaintiff had no basis to unilaterally terminate the leases in November 2018.35 Finally, Defendant asserts that Plaintiff did not provide Defendant with an adequate opportunity to perform under the lease.36 According to Defendant, the All American Reports recommended that a state licensed, mold remediation contractor be hired to assess the potential mold.37 Defendant asserts that it hired a contractor, as recommended, who found that the units

30 Id. (citing Dore Energy Corp. v. Prospective Inv. & Trading Co. Ltd., 570 F.3d 219, 229–30 (5th Cir. 2009)). 31 Id. 32 Id. at 12–13. 33 Id. at 13. 34 Id. 35 Id. 36 Id. 37 Id. at 14. were habitable and no mold remediation was necessary other than wiping down surface molds.38 Accordingly, Defendant asserts that Plaintiff’s claims for declaratory relief and damages should be dismissed.39

B. Plaintiff’s Arguments in opposition to the Motion for Summary Judgment In opposition, Plaintiff argues that the mold and water intrusion issues existed before Plaintiff took possession of any of the units.40 According to Plaintiff, it is undisputed that both Defendant’s mold expert and Plaintiff’s mold expert identified mold in the building after taking air samples, including areas with high levels of mold.41 Plaintiff cites deposition testimony of Josh Bruno, Defendant’s corporate representative, who testified that a tenant in Unit 22 tenant complained of a leaking wall and a recurring mold problem on her bathroom ceiling as she was vacating the Unit in April of 2018.42 Additionally, Plaintiff notes that Mr.

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Sonder USA, Inc v. 635 N. Scott, L.L.C., Counsel Stack Legal Research, https://law.counselstack.com/opinion/sonder-usa-inc-v-635-n-scott-llc-laed-2020.