*Circuit Judge of the Eighth Circuit, sitting by

designation. 

1

United States Court of Appeals,

Fifth Circuit.

No. 95-30451.

Leon CHASTANT, Plaintiff-Appellee,

v.

HEADRICK OUTDOOR INC., Defendant-Appellant.

April 18, 1996.

Appeal from the United States District Court for the Western

District of Louisiana.

Before LAY*, HIGGINBOTHAM and STEWART, Circuit Judges.

STEWART, Circuit Judge:

Headrick Outdoor, Inc. ("Headrick"), an outdoor advertising

company, leased property from Chastant. When Headrick broke its

habit of paying rent on the anniversary month of the leases, and

payment was delayed for three successive years, Chastant served

notice of default. Headrick appeals from the lower court's finding

that Chastant had properly dissolved the leases when Headrick

failed to timely pay rent. Finding no errors, we AFFIRM.

FACTS

Headrick, a company incorporated in Mississippi, leased the

property on which its two billboards are located from plaintiff

Chastant. Both billboards are located in Lafayette, Louisiana.

One billboard is on Ambassador Caffery Parkway, and the other

billboard is on Kaliste Saloom Road. Though the leases were

executed on separate, identical lease forms, the Ambassador Caffery
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lease was agreed upon on October 7, 1985, and the Kaliste Saloom

lease was dated January 14, 1986. The forms provided for annual

rentals, but did not indicate when those rentals were to be paid.

In the first several years of the leases, Headrick habitually

paid in the anniversary month for a given lease: it would

typically render its Ambassador Caffery rental payments every

October and its Kaliste Saloom payments every January. Headrick's

Chief Financial Officer, Milton Ray Cole, testified that Headrick

paid in this manner, not out of a legal obligation to do so, but

"as a matter of administering its business in good faith."

Headrick claims that financial difficulties in the early 1990's

forced it to pay after the anniversary month. For the lease rights

to the Ambassador Caffery location, the 1990 rental check was dated

November 21, 1990. The next year, 1991, the check was dated March

6, 1992. Headrick tried to pay for the term ending in 1992 with a

check dated March 11, 1993. Similarly, with the Kaliste Saloom

location, the rental checks were dated after the January

anniversary: February 20, 1991; March 6, 1992; and March 25,

1993.

One month prior to paying the 1991 Kaliste Saloom rent,

Headrick sent a letter explaining that it was facing some temporary

financial difficulties and would be sending rent checks one month

later than usual. The following year, in January of 1992, Chastant

sent a letter to Headrick stating that rent was due in October and

January respectively, and asking for timely payment; additionally,

there was some testimony that Chastant had orally objected to the
3

late payments several times in the first three years of this

decade. Finally, on March 23, 1993, Chastant sent a letter stating

that because Headrick was in default for failure to pay the leases

on time, he was canceling the leases and asking that the signs be

removed within 10 days of receipt of the letter. At the same time,

Chastant returned the two checks that Headrick had tendered for

payment of the leases.

DISCUSSION

Standard of Review

The standard of review for contract interpretation is de

novo, but if the interpretation of the contract turns on the

consideration of extrinsic evidence, such as evidence of the intent

of the parties, the standard of review is clearly erroneous.

National Union Fire Ins. Co. of Pittsburgh, Pa. v. Circle, Inc.,

915 F.2d 986 (5th Cir.1990).

Applicable Law

Louisiana law governs the resolution of this diversity

dispute. While a contract of lease is governed by certain rules,

it is also subject to the rules of other conventional obligations.

LA.CIV.C. art. 2668. Thus, the interpretation of a contract of

lease, as with any other conventional obligation, is the

determination of the common intent of the parties. See LA.CIV.CODE

art. 2045. When the words of a contract are clear and explicit and

lead to no absurd consequences, no further interpretation may be

made in search of the parties' intent. LA.CIV.CODE art. 2046.

However, there are times when the common intent of the parties
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cannot be gleaned from an otherwise binding contract because the

contract made no provision for the particular situation at issue.

Where this is the case, it must be assumed that the parties

intended to bind themselves to whatever the law, equity, or usage

regards as implied in a contract of that kind or necessary for the

contract to achieve its purpose. LA.CIV.CODE art. 2054.

The billboard leases at issue in the case sub judice did not

provide for when rent was due, though the leases themselves

contained the three essential elements: the thing, the price, and

the consent (see LA.CIV.CODE art. 2670). Based on the authority of

article 2054, the trial court looked to the behavior of the parties

themselves to imply a due date. Examining Headrick's own records,

and the testimony of Headrick's representative that Headrick's

longstanding practice was to pay in the month of the anniversary of

the lease, the court concluded that the appropriate due date was

the month of the lease anniversary. A careful review of the record

shows that this finding is not clearly erroneous.

In addition to the gap filling provision of article 2054, the

Civil Code further provides that a lessee may be expelled from the

property if he fails to pay the rent when it becomes due.

LA.CIV.CODE art. 2712. Thus, since rental payments were late on

both leases, Chastant had a right to terminate them when he sent

the March 23 letter placing Headrick in default and giving him ten

days to vacate the premises. As the lower court found, the March

23 letter fulfilled the procedural requirement that, upon default,

the lessor shall cause written notice to vacate the premises to be
 

1LA.CIV.C.ANN. art. 2689 (legal notice required before a

lessor can evict a tenant from a house or room) (West compiled

ed., 1972). 

 

2LA.CIV.C.ANN. art. 2712 (West compiled ed., 1972). 

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delivered to the lessee, and that such notice shall allow no less

than five days from the date of delivery to vacate. See LA.CIV.CODE

PROC. art. 4701; see also, LA.CIV.CODE art. 2686 (requiring notice

of termination when the parties have failed to agree upon the

duration of a lease).

Headrick argues that equity demands that the leases not be

regarded as terminated because lease cancellation is not favored in

Louisiana and a lease will be dissolved only when a lessor proves

clear entitlement to dissolution, citing Housing Authority of Town

of Lake Providence v. Burks, 486 So.2d 1068 (La.App.2d Cir.1986).

Moreover, Headrick argues, because of this disfavor, the right to

lease cancellation is subject to judicial control, and in the

absence of a specific agreement, Headrick should only have been

required to pay at a reasonable time during the lease, citing

Ergon, Inc., v. Allen, 593 So.2d 438, 440 (La.App.2d Cir.1992).

While it is true that, in Louisiana, a lessor's unilateral

termination of a lease has been disfavored since the Civil Code of

1808,1 it is also true that it has long been the law in Louisiana

that a lessee may be expelled from the property if he fails to pay

the rent when it becomes due.2

Louisiana courts are vested with discretion under certain

circumstances to decline to grant a lessor cancellation of a lease

although such right appears to be otherwise available to him.
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Ergon, 592 So.2d at 440. A court may choose to exercise such

discretion if a lessee has made a good faith error and acted

reasonably to correct it: for example, where rent was late due to

faulty mail delivery, or where the lease failed to indicate the

place for payment (but payment was otherwise timely), or where the

third party check tendered as rent was returned for insufficient

funds. Id. (citations omitted). Additionally, a court may decline

to grant cancellation of a lease to the lessor where the lessee

justifiably retained a portion of the rent because the lessor had

failed to make required repairs. Plunkett v. D. & L. Family

Pharmacy, Inc., 562 So.2d 1048 (La.App. 3d Cir.1990); KPW

Associates v. S.S. Kresge Co., 535 So.2d 1173 (La.App.2d Cir.1988),

writ denied 537 So.2d 1167 (La.1989).

In addition to these instances in which the court may

exercise its discretion to deny dissolution of the lease, the

landlord's right to eviction for nonpayment of rent is vitiated if

he fails to give proper notice. Versailles Arms Apartments v.

Pete, 545 So.2d 1193 (La.App. 4th Cir.1989). His right to eviction

for late payment is also vitiated if he customarily accepts late

rental payments, id., though the estoppel effect of whatever custom

of accepting late rental payments is destroyed when the lessor

notifies the lessee that the rent must be thereafter paid promptly.

Farmers Gas Co., Inc. v. LaHaye, 195 So.2d 329, 330 (La.App. 3d

Cir.1967). And even where the lessor gives proper notice of

eviction, if he accepts a late rental payment after the date of the

notice of eviction, he has waived his right to immediate eviction
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and must send a new notice. Housing Authority v. Burks, 486 So.2d

at 1069; West End Landing, Inc. v. Board of Levee Comm'rs of the

Orleans Levee Dist., 299 So.2d 418 (La.App. 4th Cir.1974).

Chastant established that he was not in the habit of accepting

late payments, he served Headrick with proper notice of default and

eviction, and he did not accept any late payments after serving

notice. Thus, the lower court's holding that Headrick properly

terminated both leases is AFFIRMED.