Pursuant to 5 T H C IR . R. 47.5, the court has determined that thi s opinion should not * be publishe d and is not precedent except under the limited circu mstance s set forth in 5 T H C IR . R. 47.5 .4. 

### INTHE UNI TED S TATESCOU RT OFAPPEALS

FORTHE FIFTH CIRCU IT

N o. 08- 30650

SC H W E G M A N N FA M I LYTR U ST N O

. 2 P l ai n t i f f

- A pp el l ee v. JO H N H A N C O C KLIFE I N SU R A N C E C O M PA N Y , f or m er l y know n as Jo hn H anc o c k M ut ualLi fe I ns ur anc e Com pa ny
T h i rd P art y D efen da n t

- A pp el l ee v. T O Y S R U S I N C

. , i t s s u bsi di ari es & af f i l i ates D e fe nda nt

- Appe l l ant

A p p ea lf

rom the U n i tedS tates D i stri ct C ou rt f ort he E as t er n D i st r i c tof Loui si ana U SD C N o. 2: 06- C V

- 2478

B ef ore JO L LY , SM ITH , an d B E N AV ID E S , C i rcui tJu dg es . P E R C U R IA M: * D ef endant

- A ppel l antToys “R ” U s – D elaw a r e, I nc. , f or m er l y know n as T oys “R ” U s, I n c. , (“ T oys” ) app eal s t h e di st rict co u rt ’ s grant of sum m ary United States Court of App eals

Fifth Circuit 

### F I L E D Aug ust11, 2009 Cha rl es R. F ulb ru g e II I ClerkN o. 08- 30650

Schwegmann is a Louisiana tru st and Toys is a Delaware corporation. This ca se was 1 brou ght pursuant tothe di strict court’s diversityj uri sdiction. 28 U.S.C. § 1 332
. 2 ju d g m e n ti n fa v o ro f A p p e lle e , S c h w e g m a n n F a m ilyT r u s t N o . 2 (“S ch w e g m an n ” ) , enfor ci n g t h e t erm s of t h e l ease entered i n t o betw een S c h w e g m a n n a n dT o y s . T h e d is tr ic tc o u r th e ldth a t t h e le a s e s p e c ific a lly ad dr e s s e d t he c i r c um s t anc e s a ti s sue— c o nc e r ni ng t he e f fe c t s o f H ur r i c ane K atri n a onth e lea se dp ro p e rty

— a n dth u s h e ldth e co n tra ryp ro v ision s c o n t ai n ed i n t he Lo ui s i anaCivilCod e w e re i n appl i c ab l e . Fo rt he f o l l o w i ng r e as o ns , t he ju d g m e n t o f th e d is tr ic t c o u r t is a ffir m e d

. I. I n 199 2, T o ys e nt e r e d i nt o at w e nt y- f ive y e arl andl e as e w i t h Sc hw e gm ann f o rpr o pe r t y l o c at e d i n t he ea s t e r n se c t i o n o f N e w O r l e ans , Lo ui s i ana . Pur s uant to th e le a s e , T o y s co n s tr u c te dab u ild in go n th e le a s e dp r o p e r t yfr o m w h i c h it ope r at ed a t oy st or e. O n A ugust29, 2005, H urr i c ane K at r i na st r uck t he ar ea, dam agi ng t he s t or e l oc at ed o n t he l eas ed pr ope r ty and t he s urr oundi ng ar ea. T oy s cl ea red ou t t h e con ten ts of th e b u i l d i n g a n ddiscon ti n u ed pa ym en t of ren t. O n M ay1 1, 20 06 , Sc hw e gm ann s ue d Toy s i n di s t r i c tc o ur tt o e nf o r c e t he l ease an d co ll ectpast due ren t
. Toy s answ ered, f i l ed a cou n t ercl ai m f or 1 S chw egm an n ’ s fai l u re t o m ai n t ai n i t s l ease obl i gati on s, an d then f i l ed a thi rd par t y de m anda ga i ns tJ o hn H anc o c k M ut ualI ns ur anc e Com pa ny ( “Jo hn H anc o c k” ) , Sc hw e gm ann’ s m o r t ga ge e . On M ay1 6, 2 00 7, S chweg m ann f i l e d a
mo t i o n f o rs u mm a r yj u d g me n ts e e k i n ge n f o r c e me n to f

t h e t e r ms o f

t h e l e a s e . O n J u n e 1 2 , 20 0 7 , T o y s f i l ed a cro ss-m oti on f or su m m a ryj u d gm en t seek i n g to di ss olve t he l eas e pur suantt o Loui si ana C ivi l C ode A r t i c l e 2715. O n M ar c h 17, 20 08 , t he di s t r i c t c o ur t gr ant e d Sc hw e gm ann’ s m o t i o n and de ni e d T oys’
cro ss - m ot i on, hol di ng t hatt he t er m s of t he l eas e, r at hert han A r t i c l e 2 715, controlt h e parti es’obl i gati on s. Th e di st ri ctcourt ’ s or der decid e d th e i ssue of l i ab i l i t y o nl y, l e av i ng o pe n t he e xt e nta nd a m o unto f a ny da m ages. TheN o. 08- 30650

3 j u dg m en tw as cer t i f i ed f or i n t erl ocutory appea la n d f u rt h er t ri alcourt pr o c e e di ngs w e r e s t ay e d p e ndi ng ap pe al

. To ys no w a ppe al s t he o r de ro f t he d is tr ic t c o u r t g r a n tin gs u m m a r yju d g m e n t in fa v o ro f S c h w e g m a n n . II

. T h i s C ou rtrevi ew s a di st ri ctcourt ’ s grant of su m m ary j u dg m en tde n ovo, a p p ly in gth e s a m e s ta n d a r d s a s t h e d i s t r ic t c o u r t. S t rong v. Un i v. Heal t h care Sy s . , L

. L. C. , 4 8 2 F .3 d8 0 2 , 8 0 5 (5 th C ir . 2 0 0 7 ). S u m m a r yju d g m e n t is p r o p e rif t h e r e c o r d r e f

l e c t s “ t h a t t h e r e i s n o g e n u i n e i s s u e a s t o a n y m a t e r i a l fa c ta nd th a t th e m o v a n t is en titledto ju d g m e n t a s a m a tte r o f l a w .” F e d

. R

. C iv. P

. 5 6 (c). In deci di n g w h et h er a genu i n e is su e o f m ater i alfactexi st s, t h i s C ou rtm u st d ra w a l lrea son a b l e infere n ces infa vo r of t h e res p on d i n g p a rty
. L ittle v . L iq u id A i r Corp ., 3 7 F .3d 1 0 6 9 , 1 0 7 5 (5t h C ir. 1 9 9 4 ) ( e n b a n c) (p e r c u ria m ). III. T o y s a r g u e s t h a t th e le a s e a g r e e m e n t, g o v e r n e db yL o u is ia n a la w , sh o u ld b e d iss o lve dp u r s u a n t to L o u isia n a C ivil C o d e A rticle 2 7 1 5 (“A rticle 2 7 1 5 ”),
w h ic h p r o v id e s , inp e r tin e n t p a r t, th a t w h e r e th e th in gl e a s e dis “p a r tia lly d e s tr o y e d , lo s t, o re x p r o p r ia te d , o rits u s e is o th e r w is e s u b s ta n tia llyim p a ir e d ,” and t he i m pai r m ent “ w as c ause d by c ir c um st ance s ext er nalt o the l eas ed t hi ng, t he l es se e i s ent i t l ed t o a di ss ol ut i on of t he l eas e. ” La. C iv. C ode ar t
. 2715. Toys
as se r t s t hatas r es ul tof H urr i c ane K at r i na t he l ea sed prope r t y w as

“ sub st an t i al l y i m pa i red, ” an d thu s t h ey are enti t l ed to t erm i n ate t h e l ease un der Art i c l e 2 71 5. Sc hw e gm ann c o unt e r s t hatb e c aus e t he r ul e s o f t he CivilCod e o n lyb e c o m e a p p lic a b le fo rfillin ga n yg a p s in aco n tr a c t, th e ya r e in a p p l ic a b le h ere because t h e l easea gr e e m e ntha d aprovi si on add ress i n g t h e res pon sibi l i t i es o f t he pa r t i e s i n t he e ve nta“f i r e o ro t he rc as ualt y” da m ag e d o rde s t r o ye d t he p r o p e r ty
. U n der L ou i si an a l aw , t h e rul es of t h e C ivi lC o d e “b e com e app l i cabl e f or fil l i n g a n y g a p s i n th e pa rti es’ a gr ee m en t a n d for d eterm i n i n g it s ov era l lva l i d i tyN o. 08- 30650

4 a n d e f fe c t iv e n e s s . ” La

. Civ . Co d e a r t
. 2 6 6 8 c m t
. ( e )

. I n Tas s i n v . Sl i de l lMi ni St o r age, I

nc . , 396 So. 2d 12 61 (La

. 198 1) , t h e L ou i sia n a S u p rem e C ou rt exp l ai n ed the rol e of t h e rul es i n t h e C ivi lC ode w h en i n t erpret i n g contract s: [T] he c o da la r t i c l e s a nd s t at ut e s de f i ni ng t he r i ght s a nd o bli at i o ns ( si c) of l essor s and l essees are not proh ibi t ory l aw s w h i ch are u n a l tera b l e b y co n tractu a lag ree m en t, b u t are sim p l y in ten d ed to r e gul at e t he r e l at i o ns hi p b e t w e e n l e s s o rand l e s s e e w he n t he r e i s no contract u alsti pu l ati on im posedin the l ease. . . . O u r j u ri sprud en ce i s thatt he us ualw ar r ant i e s a nd o bli ga t i o ns i m po s e d un de rt he codalart i cl es and st atutes dea l i n g w i t h l ease m ay be w aivedor ot her w i sepr ovi ded f orby c ont r ac t ualagr ee m entof t he parties as l on g as such w aiver or renu n ci ati on does not af fectt h e ri gh t s of o t he r s a nd i s no tc o nt r ar y t o t he pub l i c g o o d.
T a ss in , 396 So. 2d at 1264. “ I n ot her w or ds, t he l eas e c ont r ac ti t se l f i s t he l aw bet w ee n t he par t i es ; i t def i nes t hei r r es pec t ive r i ght s and obl i gat i ons s o l ong as t he a gr e e m en td oes no ta f fe c tt he r i ght s o f

o t he r s a nd i s no tc o nt r ar y t o t he p u b l i c go od

. ” Ca r r i e r e v . Bank of La. , 7 0 2 S o . 2 d6 4 8 , 6 6 6 (L a . 1 9 9 6 ); seealso Cer n ig liav. Na

p o li , 517 So. 2d 1209, 1211 (La. C t
. A pp. 1987) (“ [A] r t i c l e [ 2697] i s a ppli c ab l e o nl y w he r e t he r e i s no l e as e a gr e e m e ntt o the co nt r ar y. I n t he p r e s e n t c a s e th e p a r tie s b ya d o p tin gt h e fir e cla u s e cle a r lyin te n d e dto a v o id aut om at i ct er m i nat i on o f t he l eas e i n t he eventof des t r uct i on o f

t he pr em i se s by
afir e .” (c ita tio n o m itt e d)). Ther e f o r e , if t he l e as e a gr e e m e nt“ w aive [ s ] o ro t he r w i s e pr o vi de [ s ] f o r” t he sit uat i on c ove r ed byA r t i c l e 2 715, t hen t he l eas e pro vi si on, and not A r t i c l e 2 715,
s h o u lda p p ly

. A r tic le 2 7 1 5 p r o v id e s :

If, w ith o u t t h e fa u lt o f th e le s s e e , th e th in gis p a r tia lly d e s tr o y e d , lo s t, o re x p r o p r ia te d , o rits u s e is o th e r w is e s u b s ta n tia lly i m p a i red , the l ess ee m a y, accor d i n g to th e circu m stan ces o f b oth pa rt i es, obtai n a di m i n u t i on of t h e rent or di ssol u t i on of th e lease, w hi c he ve ris m o r e a ppr o pr i at e und e rt he c i r c um s t anc e s . I f t he le s s o rw a s a t fa u lt, th e le s s e e m a ya ls o d e m a n dd a m a g e s .N o. 08- 30650

The “Demised Premises” is define d in§ 1.01 of the lea se a s the“Tenants Parcel and 2 the I mp rovem ents” erecte d thereon . 5

I f t he i m pai r m entof

t he useof

t he l eas ed t hi ng w as c ause d by ci rcu m stan ces e xte rn a lto t h e lease dthin g, th e lessee i s en ti tl ed to a di s s o l ut i o n o f

t he l e as e , b uti s no te nt i t l e d t o di m i nut i o n o f t he ren t.
L a. C iv. C ode art. 271 5. S chw egm an n contend s t h at § 12. 02 of t h e l ease covers t h e sit u ati on here, a n d obviat es the n eed t o look to the codal provi si on s. Sect i on 1 2
. 0 2 states th a t: In th e e v e n t t h e w h o le o ra n yp a r t o f th e D e m is e dP r e m is e s s h a ll, 2 du ri n g t h e L ease T erm , be da m aged or destr oyed by fire or other c as ualt y . . . Te nants hall

. . . c o m m e nc e a nd p r o c e ed w i t h du e di l i gen ce t o repai r, rest ore an d/or rebu i l d t h e D em i sed P rem i ses, or porti o n s thereof, substanti al l y t o t h ei r c on di t i on an d cha ract er im m e d ia te lyp r io rto s u c h d a m a g e . . . . T h e qu est i on posed h ere i s w h et h er § 12. 02 of t h e l ease p rovi des f or t h e sit u ati on at i ssue becau se H u rri can e K atr i n a w as a “ casua l t y” t h at “ da m aged ” t h e l eased property. I f

§ 12. 02 d oes c overth e in sta n tsit u ati on , t h en t h e l ease provi si on t rum ps A rt i cl e 2 7 1 5 an d S chw egm an n i s entit l ed to conti n u ati on of t h e l ease
w h ile T o y s is o b lig a te dto re p a irth e le a s e dp r o p e r tya s s p e c ifie din § 1 2 .0 2
. S chw egm an n F

am i l y TrustNo. 2 v. K

FCNa tion a lMan ag em ent Co. , N o. 0 6 -2 4 4 7 , 2 0 0 7 W L 6 0 9 7 1 (E .D . L a . J a n . 5 , 2 0 0 7 ), w h ic h in v o lv e das u b s ta n tia lly
s i m i l a rl e a s e b e t we e n K FC a n dS c h we g m a n n , i s i n s t r u c t iv e . I n t h a tc a s e , KFC , l i ke T oys, c o nt e nde d thatit s l eased p ropert i es w ere “ sub st an t i al l y i m pa i red such t hatt he pr o pe r t i e s w e r e no l o nge r f i t f o r t he e xp r e s s i nt e nde d us e o f o pe r at i ng a K e nt uc kyFr i e d Chi c ke n re s t aur ant” duet o t he e f fe c t s o f H ur r i c ane K at r i na and s o ugh t di s s o l ut i o n o f i t s l e as e w i t h Sc hw e gm ann vi a Art i c l e 271 5 of t he L o u is ia n aC iv il C o d e . Sc hweg m a nn v . KFC , 2 0 0 7 W L 60971, a t* 2
. Th e KFC lea se c on t ai n ed a “dest ructi on of prem i ses” provi si on w h i ch provided that “ [i]fN o. 08- 30650

6 th e b u ild in g u p o n th e d e m is e dp r e m is e s b e d a m a g e do rre n d e r e du n te n a n ta b le b yf ir e o ro th e rca s u a lty

. . . T e n a n t s h a ll .

. . re p a iro rre p la c e s a idb u ild in g .” Id

. at* 3. The di s t r i c tc o ur the l d t hatt he l e as e pr o vi s i o n a ddr e s s e d t he ri ght s a nd obli gat i ons of

t he par t i es i n t he e ventt hatt he l eas ed pr ope r t y w as dam aged by
aca s u a lty , a n de n c o m p a s s e dth e e ffe c ts o n t h e p r o p e r tyt h a t o c c u r r e da s a re s u lt
o f H u r r ic a n e K a tr in a . T h e r e fo r e , t h e c o u r t h e ldt h a t A r tic le 2 7 1 5 d idn o t a p p ly andK FC w as b o und byt he t e r m s o f t he l e as e t o r e pa i ro rr e pl ac e t he b ui l di ng a n dco n tin u e th e le a s e . Id . a t * 3

– 4
. Toy s a r gue s t hate ve n if t he l e as e p rovi des f o ras i t uat i o n i n whi c h t he pr e m i s e s a r e de s t r o ye d, i tdoe s notpr o vi de f o ras i t uat i o n i n whi c h t he us e o f t he prem i ses are “ sub st an t i al l y i m pa i red. ” T oys su bm i t t ed an a f f i da vi ta n d report f r o m al o c alde m o gr ap he r s t at i ng t hat t he ar e a ar o und t he s t o r e l o c at i o n a ti s s ue i s no l on ger com m erci al ly vi able becau se of decreased pop u l ati on an d sl ow reb u i l d i n g i n th e area . T oy s as serts th a t t h ese ch a n ge s to the bu sine ss cli m a te
o f t he a r e a ar e a“ s ubs t ant i ali m pa i r m e nt” t hati s no tc o ve r e d b y § 12. 02 o f t he le a s e . D e s pi t e To ys ’c o nt e nt i o n s, w e h ol d t hatt he l e as e i s no ts i l e nta s t o t he im p a ir m e n t a lle g e db yT o y s . F ir s t, § 1 2 .0 2 o f th e le a s e a d d r e s s e s s itu a tio n s in
w h i ch “t h e w h ol e or a n yp a rt of t h e D em i sed P rem i ses” i s “ da m aged or de s t r o ye d” b y a “ f

i r e o ro t he rc as ualt y. ” U nde rt he Lo ui si ana CivilCod e , t he
w or ds of

a c ont r ac t m ust be given t hei rge ner al l y pr evail i ng m eani ng. La. C iv. C ode art. 204 7. H u rri can e K atr i n a w as a casua l t y t h at dam aged or destr oyed th e lea se d p ro p e rty inp a rt. T h e or d in a rym e a n in gof th e v e rb “d a m a g e ” is “[t] o do o rc ause dam age t o; t o hur t , har m , i nj ure ; now c om m onl y t o i nj ure ( a t hi ng)
so a s to les se n ord e str o yits v a lu e .” O x for dE n g li sh D iction a ry(2d ed

. 1 9 8 9 ). T h e verb “i m pa i r” m ean s “ [t] o m ak e w orse, l ess valuab l e, or w eak er; t o l essen i nj u ri o u s ly; t o d a m a ge , i nj u re.” Id

. The r e i s s ubs t ant i alo ve r l ap b e t w e e n t he t w o c onc ept s. Thu s, t he e f fec t s of H urr i c ane K at r i na o n t he l eas ed pr ope r t y,N o. 08- 30650

7 i n cl u di n g i nj u ri es w h i ch l essenedi t s value, are squ arel y ad dressed by the l ease a n dth e le a s e s h o u ldg o v e r n th e rig h ts o f th e p a r tie s . S eeT a ss in , 396 So. 2d at 126 9 (h ol di n g t h at “ obl i gati on s i m posedun der t h e codalart i cl es and st atutes deal i ng w i t h l eas e m ay be w aived orot her w i se pr ovi ded f orby c ont r ac t ual ag r e e m e nt” )

. Se c o nd, a s i n S c h weg ma n n v . KFC , the l e as e “r e f l e c t s t hatt he p a r tie s d idco n s id e rcir c u m s ta n c e s in w h ic h d a m a g e to th e p r o p e r tie s co u ld
m ak e conti n u ati on of the lease n o longer v i able. ” 200 7 W L 609 71, at *4. Sect i on 1 2 .0 1 o f th e le a s e p r o v i d e s fo rte r m in a tio n o f th e le a s e if th e p r o p e r tyis dest r o ye d o r da m ag e d i n e xc e s s o f a c e r t ai n s pe c i f i e d am o unt “ dur i ng t h e l ast f ive ( 5) ye ar s of

t he Leas e Ter m ord u ri n g a n y r enew alper i od. ” The dam age h ere oc curred pri or t o t h at f ive- year m a rk a n d , t h eref ore, t h e provi si on s of §12. 02 requ i ri n g repai r and conti n u ati onof t h e l ease, rat h er t h an t erm i n ati on p r o v is io n s o f § 1 2 .0 1 , a p p ly

. E ven if the l ease d i d n otadd ress t h e i m pa i rm en tcom pl ai n ed of by T oys— and t hus A r t i c l e 2 715 go ver ned— di ss ol ut i on o f t he l eas e w oul d s t i l lnotbe
w ar r ant e d b e c aus e t he “t hi ng l e as e d” ha s no tb e e n “ s ubs t ant i all y i m pa i r e d”
w ith i n the m ea n i n g o f th e sta tu te. InMe ado w c r e s tPr of e s s i o nalBui l di ng Pa rtn er sh ip v . Tours arki s s i an , a Loui si ana cou r tr ej ec t ed t he c ont ent i on t hat
ne ga t ive c hang e s i n t he bus i ne s s c l i m at e af t e rH ur r i c ane K at r i na c o ns t i t ut e d a subs t ant i ali m pai r m entt o acom m er c i all eas e un derA r t i c l e 2 715. 1 So. 3d 555 , 5 5 6 (L a . C t. A p p . 2 0 0 8 ). T h e co u r t s ta te dth a t: [ E ] ven accept i n g defenda n t ’ s asser t i on abou tt h e neg ative bu si n ess c l i m at e a s t r ue, t hi s i s notthe t ype of s i t uat i on t o w hi c h A r t
. 2715 ap plies. T o rul e ot h erw i se w ou l d be to m ak e t h e enfor ceabi l i t y of l e a s e s d e p e n d e n to n t h e v a g a r i e s o f t h e ma r k e t p l a c e , a n dt h i s we decl i n e t o do.
Id. ; s e ea ls o Sc hweg m a nn v . KFC , 2 0 0 7 W L 6 0 9 7 1 , a t* 4 (no t i ngt hat

“ c hang e d e c o no m i ca nd d e m o gr ap hi c c o ndit i o ns [i n the s ur r o undi ng
n e ig h b o r h o o d ] d o n o t m a k e t h e le a s e dla n d , it s e lf, u n s u ita b le fo rare ta ilN o. 08- 30650

8 bu si n ess” )

. Th eref

ore, un der L ou i si an a l aw , t h e i m pa i rm en tcom pl ai n ed of by Toy s do e s no t c o ns t i t ut e a s ubs t ant i al i m pa i r m e nt and Toy s i s not
e n tit le dto d is s o lu tio n o f th e le a s e u n d e rA r tic le 2 7 1 5
. I V. B ased on t h e f

oregoi n g an al ysi s, t h e j u dg m en tof t h e di st ri ctcourt i s A F F I RMED.