Title: LNM1, LLC, and Mohamed Alsahqani v. TP Properties, LLC
Citation: N/A
Docket Number: 1170708
State: Alabama
Issuer: Alabama Supreme Court
Date: November 1, 2019

REL: November 1, 2019
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2019-2020
____________________
1170708
____________________
LNM1, LLC, and Mohamed Alsahqani
v.
TP Properties, LLC
Appeal from Hale Circuit Court
(CV-17-5)
MITCHELL, Justice.
This is a commercial-lease dispute.  Since November 2012,
LNM1, LLC, has operated a gasoline station and convenience
store in Greensboro under a lease agreement with the owner of
the property, TP Properties, LLC.  In August 2017, TP
1170708
Properties sued LNM1 and its owner Mohamed Alsahqani in the
Hale Circuit Court, seeking to terminate the lease because
LNM1 had not maintained all the required insurance coverages. 
The trial court entered a summary judgment in favor of TP
Properties, holding that LNM1's failure to maintain the
insurance required by the lease agreement constituted a
material breach of that agreement, thus entitling TP
Properties to terminate the lease.  LNM1 and Alsahqani appeal. 
We affirm.
Facts and Procedural History
On October 12, 2012, LNM1 and TP Properties executed a
lease agreement with a term of 10 years.  That agreement
authorized LNM1 to operate a gasoline station and convenience
store that TP Properties owned in Greensboro.  LNM1 agreed to
pay TP Properties "base rent" of $7,000 per month.  Under a
section of the lease agreement captioned "Additional Rent,"
LNM1 also agreed to purchase and maintain the following
insurance 
coverages: 
(1) 
a 
general-liability policy 
written 
by
an insurer rated "A" or better by A.M. Best Company, Inc.,
providing $1,000,000 of coverage per occurrence and 
listing TP
Properties as an additional insured; (2) a liquor-liability
2
1170708
policy providing $500,000 of coverage and listing TP
Properties as an additional insured; and (3) a policy insuring
the building and canopy on the property.  A separate provision
in the lease agreement obligated LNM1 to obtain $1,000,000 of
environmental-impairment-liability insurance and to list TP
Properties as an additional insured on that policy.
The lease agreement also granted LNM1 an option to
purchase the property at any time during the term of the lease
for a base price of $850,000, with a credit to be given for
all sums previously paid as rent.  TP Properties agreed that
if a third party offered to purchase the property during the
term of the lease, LNM1 would have 45 days to exercise its
purchase option after being given notice of the other offer.
Finally, the lease agreement provided that TP Properties
could terminate the lease at any time if LNM1 failed (1) "to
substantially comply with any material provision of [the]
Lease" or (2) "to exert good faith efforts to carry out
provisions of [the] Lease."
LNM1 began operating the gasoline station and convenience
store in November 2012.  Alsahqani has stated in an affidavit
that LNM1 made various capital improvements to the property
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1170708
upon taking possession and that he has invested several
hundred thousand dollars in the business.  There is no
indication in the record that LNM1 ever failed to pay the
$7,000 monthly base rent or that there were any disputes
regarding the property or the lease until the summer of 2017.
On June 27, 2017, TP Properties notified LNM1 that it had
received a bona fide offer to purchase the property.  LNM1
thereafter promptly notified TP Properties that it would
exercise its option to purchase the property.  TP Properties
subsequently requested information from LNM1 regarding the
insurance policies LNM1 held so that TP Properties could
determine any post-sale liabilities it might have related to
the property.  After LNM1 provided the requested information,
TP Properties discovered that LNM1 had not obtained all the
insurance 
coverages 
required 
by 
the 
lease 
agreement. 
Specifically, although LNM1 had, in November 2012, purchased
a 
$2,000,000 
general-liability policy 
listing 
TP 
Properties 
as
an additional insured, LNM1 had changed carriers in November
2016; the new policy, also providing $2,000,000 in coverage,
did not list TP Properties as an additional insured. 
Additionally, LNM1 
had 
procured 
a 
liquor-liability policy 
with
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a limit of only $100,000, as opposed to the $500,000 limit the
lease agreement required, and that policy had never listed TP
Properties as an additional insured.  Finally, LNM1 had never
purchased or held any environmental-impairment-liability
insurance whatsoever.
LNM1 and Alsahqani state that TP Properties thereafter
told them that it would still proceed with the sale of the
property to LNM1 but that it first needed Alsahqani to execute
an affidavit and an indemnification agreement.  On August 11,
2017, Alsahqani executed an affidavit acknowledging that TP
Properties was not listed as an additional insured on the
general-liability policy covering the property and that LNM1
had never purchased the environmental-impairment-liability
insurance required by the lease agreement.1  Alsahqani further
stated in that affidavit that LNM1 had no knowledge of any
"claims, actions, suits, complaints, liens or investigations
of any kind" related to the property.  Three days later,
Alsahqani executed an indemnification agreement agreeing that
he and LNM1 would pay any claims or costs that TP Properties
1Alsahqani's affidavit did not address the liquor-
liability insurance required by the lease agreement.
5
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subsequently became obligated to pay stemming from LNM1's use
of the property during the term of the lease agreement.
On August 24, 2017, TP Properties filed a two-count
complaint against LNM1 and Alsahqani.  The first count of the
complaint sought rescission of the lease agreement, alleging
that rescission was warranted because LNM1's failure to 
obtain
the 
required 
insurance 
coverages 
constituted 
a 
material 
breach
of the agreement.  TP Properties' second count requested that
the trial court enter a judgment declaring that LNM1 had
materially breached the lease agreement and that the 
agreement
was thus rescinded.  TP Properties supported its complaint
with a copy of the lease agreement, LNM1's general-liability
policy, and the affidavit and indemnification agreement that
Alsahqani had executed.  TP Properties simultaneously moved
the trial court to enter a temporary restraining order and
preliminary injunction barring LNM1 from proceeding with its
purchase of the property through the exercise of the purchase
option in the lease agreement.  The trial court entered the
requested temporary restraining order that same day and,
following a 
hearing, 
converted 
the 
temporary 
restraining order
to a preliminary injunction.
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Over the following weeks, LNM1 took steps to obtain the
insurance coverages required by the lease agreement.  It first
added TP Properties as an additional insured on its general-
liability policy effective September 6, 2017.  LNM1
subsequently acquired new $500,000 liquor-liability and
$1,000,000 environmental-impairment-liability policies that
took effect on September 18, 2017; both policies listed TP
Properties as an additional insured.  
On October 2, 2017, LNM1 and Alsahqani answered TP
Properties' complaint and filed a counterclaim seeking a
judgment declaring that TP Properties was obligated to sell
the property to LNM1 in accordance with the purchase option in
the lease agreement.  LNM1 and Alsahqani did not disclose in
their responsive pleading that, since the filing of the
complaint, they had acquired the insurance policies required
by the lease agreement.
On January 12, 2018, LNM1 and Alsahqani moved the trial
court to enter a summary judgment in their favor, arguing (1)
that LNM1 had substantially complied with the terms of the
lease agreement; (2) that LNM1 had properly exercised the
purchase option before TP Properties gave it notice of
7
1170708
noncompliance or initiated efforts to terminate the 
lease; and
(3) that the parties had modified the terms of the lease
agreement by executing the indemnification agreement.  TP
Properties thereafter filed its own summary-judgment motion,
arguing that it was entitled to terminate the lease because,
it said, (1) LNM1's failure to obtain the insurance policies
required by the lease agreement was a material breach of that
agreement and (2) LNM1's apparent failure to make any effort
to obtain three of the four required policies in 2012 "and
continuing to this day" demonstrated its lack of good faith,
which constituted an alternative basis for terminating the
lease.  
Following a hearing on the parties' dueling summary-
judgment motions, the trial court allowed the parties to
submit additional materials in support of their arguments.  TP
Properties did so, emphasizing to the trial court that "[i]t
has been five months since this lawsuit was filed and LNM1
hasn't cured anything.  LNM1 does not even contest that it has
never cured the insurance breaches."  TP Properties also
submitted an affidavit from a local insurance agent in which
the agent stated that it was effectively impossible for LNM1
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1170708
to fully cure its breach because there was no insurance
available that would retroactively cover any claims that arose
from incidents that had occurred during the previous years of
the lease.  LNM1 and Alsahqani also submitted a post-hearing
brief, but they did not address the allegation that LNM1 had
not cured its default.
On February 6, 2018, the trial court entered a summary
judgment in favor of TP Properties in which it made the
following findings of fact and conclusions of law:
"(1) 
LNM1's 
obligations 
to 
provide 
insurance
coverages, 
particularly 
those 
which 
the 
lease
instrument calls 'Additional Rent,' are material terms
of the lease.
"(2) LNM1 has been in continuous breach of material
terms of the lease, from the beginning of the lease in
2012 and continuing to this day, by failing to obtain
those coverages and failing to name TP [Properties] as
[an] additional insured.
"(3) TP [Properties] is entitled to rescission of the
lease.
"(4) LNM1 is not entitled to enforce any purported
option in the lease where it admittedly was in breach
of material terms of the lease at the time it tried to
exercise same, and where it remains in breach today,
even many months after purportedly exercising its
option.  ...  Despite having been on notice of TP
[Properties'] position at least since this lawsuit was
filed in August of 2017 (even though LNM1 obviously
knew it was breaching the agreement from the start),
LNM1 still has not cured the breaches." 
9
1170708
LNM1 and Alsahqani thereafter obtained new counsel and
filed a postjudgment motion asking the trial court to alter,
amend, or vacate the summary judgment entered in favor of TP
Properties.  In that motion, LNM1 and Alsahqani repeated the
arguments they had previously made but also argued that the
trial court's emphasis on LNM1's failure to cure its breach
was unwarranted because, in fact, LNM1 had obtained all the
insurance coverages required by the lease agreement within
approximately a month of TP Properties' notifying LNM1 of the
deficiency.  While recognizing that the trial court was not
required to consider evidence submitted after the entry of the
summary judgment, LNM1 and Alsahqani argued that the trial
court should exercise its discretion to do so.  Accordingly,
LNM1 and Alsahqani submitted evidence of the insurance
policies now held by LNM1 –– as well as evidence of all
previous insurance policies held by LNM1 –- and an affidavit
from Alsahqani in which he stated that his previous counsel
had never asked him about the insurance policies.
TP Properties opposed LNM1 and Alsahqani's postjudgment
motion, arguing that the evidence submitted by LNM1 and
Alsahqani merely confirmed LNM1's breach of the lease
10
1170708
agreement by establishing (1) that LNM1 had not listed TP
Properties as an additional insured on its general-liability
policy from November 2016, when it changed carriers, to
September 6, 2017; (2) that the liquor-liability policy held
by LNM1 from November 2012 to September 2017 had also failed
to list TP Properties as an additional insured, while
providing only $100,000 of coverage instead of the $500,000 of
coverage mandated by the lease agreement; and (3) that LNM1
did not purchase any environmental-impairment-liability
insurance until September 2017.  TP Properties further argued
that the trial court should exercise its discretion by not
considering the newly submitted evidence offered by LNM1 and
Alsahqani because that evidence had been in their possession
at all relevant times and they had failed to produce it
earlier, even though TP Properties had repeatedly asked for
all evidence of the insurance policies held by LNM1. 
Following a hearing, the trial court denied LNM1 and
Alsahqani's postjudgment motion.  LNM1 and Alsahqani filed
this appeal.
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Standard of Review
"Summary judgment is appropriate only when there is no
genuine issue of any material fact and the moving party is
entitled to judgment as a matter of law."  Hooper v. Columbus
Reg'l Healthcare Sys., Inc., 956 So. 2d 1135, 1139 (Ala. 2006)
(citing Rule 56(c)(3), Ala. R. Civ. P.).  On appeal, LNM1 and
Alsahqani argue that the trial court erred by entering a
summary judgment against them and in favor of TP Properties. 
This Court has explained that, when a party "appeals from a
summary judgment, our review is de novo."  Nationwide Prop. &
Cas. Ins. Co. v. DPF Architects, P.C., 792 So. 2d 369, 372
(Ala. 2000).  The Nationwide Court further detailed how we
conduct that review, explaining:
"Once a party moving for a summary judgment
establishes that no genuine issue of material fact
exists, the burden shifts to the nonmovant to
present substantial evidence creating a genuine
issue of material fact.  Bass v. SouthTrust Bank of
Baldwin County, 538 So. 2d 794, 797–98 (Ala. 1989). 
'Substantial evidence' is 'evidence of such weight
and quality that fair-minded persons in the exercise
of impartial judgment can reasonably infer the
existence of the fact sought to be proved.'  West v.
Founders Life Assur. Co. of Florida, 547 So. 2d 870,
871 (Ala. 1989).  In reviewing a summary judgment,
we view the evidence in the light most favorable to
the 
nonmovant 
and 
entertain 
such 
reasonable
inferences as the jury would have been free to draw. 
Jefferson County Comm'n v. ECO Preservation Servs.,
12
1170708
L.L.C., [788 So. 2d 121 (Ala. 2000)] (citing Renfro
v. Georgia Power Co., 604 So. 2d 408 (Ala. 1992))."
792 So. 2d at 372.  We further emphasize that, in determining
whether a genuine issue of material fact exists, we can
consider "only the evidence before the trial court at the time
it ruled upon the motion for a summary judgment."  Smith v.
Fisher, 143 So. 3d 110, 124 (Ala. 2013).
Analysis
The parties agree that the lease agreement gave TP
Properties the right to terminate the lease if LNM1 failed
either "to substantially comply with any material provision of
this lease" or "to exert good faith efforts to carry out the
provisions of this lease."  We dispose of this case by holding
that TP Properties was entitled to terminate the lease based
on the first ground. 
Determining whether a party has substantially complied
with the terms of a contract is effectively the same as
determining whether that party's alleged breach is material. 
See Harrison v. Family Home Builders, LLC, 84 So. 3d 879, 889
(Ala. Civ. App. 2011) ("'Substantial performance is the
antithesis of material breach.  If a breach is material, it
follows that substantial performance has not been rendered.'"
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1170708
(quoting John D. Calamari & Joseph M. Perillo, The Law of
Contracts § 11.18(b) (4th ed. 1998))); see also Restatement
(Second) of Contracts § 237 cmt. d (1981) ("The considerations
in determining whether performance is substantial are [the
same as those] for determining whether a failure is
material.").  This determination is typically for a jury to
make, but "'if in a particular case the question is so clear
as to be decided only in one way, it is a question of law for
the court.'"  Harrison, 84 So. 3d at 890 (quoting Birmingham
News Co. v. Fitzgerald, 222 Ala. 386, 388, 133 So. 31, 32
(1931)); see also Karl Storz Endoscopy-America, Inc. v.
Integrated Med. Sys., Inc., 808 So. 2d 999, 1013 (Ala. 2001)
("Whether a breach is material is ordinarily a question for
the trier of fact." (emphasis added)).  Accordingly, we must
determine whether the evidence in this case is so clear that
the trial court could only conclude that LNM1's breach of the
lease agreement was material, thus permitting TP 
Properties to
terminate the lease.
It is undisputed that LNM1 breached the terms of the
lease agreement by not purchasing the insurance policies the
lease agreement required.  TP Properties states that the
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provisions in the lease agreement requiring LNM1 to purchase
those policies were obviously material terms, as evidenced by
the fact that LNM1's obligation to purchase the required
insurance was denominated in the lease agreement as
"Additional Rent."  TP Properties further argues that those
insurance policies were as critical as the base rent paid by
LNM1.  Because of the nature of the business conducted on the
leased premises –– a gasoline station and a convenience store
at which alcoholic beverages were sold –– TP Properties faced
not only potential liability for the typical slip-and-fall
accidents that might occur with a business open to the public,
but also 
ongoing 
potential 
liability 
to governmental
regulators and neighboring property owners for any leaks
associated with the property's underground gas tanks and
liability on any dram-shop claims that might result from the
sale of alcoholic beverages at the convenience store.  TP
Properties asserts that it is self-evident that the failure to
make rent payments is a material breach of any lease.  
LNM1 and Alsahqani argue in response that, although the
provisions in the lease agreement obligating LNM1 to purchase
and maintain certain insurance policies may be 
material terms,
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it does not necessarily follow that the breach of those terms
constitutes a material breach of the lease agreement.  They
note that this Court has described a material breach as a
breach "that touches the fundamental purposes of the contract
and defeats the object of the parties in making the contract,"
Sokol v. Bruno's, Inc., 527 So. 2d 1245, 1248 (Ala. 1988), and
they argue that the fundamental purpose of the lease has not
been defeated by LNM1's failure to hold the required insurance
coverages.  Rather, they argue, LNM1's breach has had no
impact on TP Properties because (1) no claims have been filed
against TP Properties that would have been covered by the
insurance LNM1 failed to acquire and (2) LNM1 and Alsahqani
have agreed to indemnify TP Properties for any such claims
that might be asserted in the future.  Thus, LNM1 and
Alsahqani conclude, TP Properties has not been harmed by
LNM1's failure to purchase the required insurance policies and
LNM1's breach of the lease agreement cannot be considered
material.  See Crestview Mem'l Funeral Home, Inc. v. Gilmore,
79 So. 3d 585, 592 (Ala. 2011) (holding that there was a
question of fact about whether a funeral home's failure to use
a licensed embalmer was a material breach of a contract
16
1170708
providing that a licensed embalmer would be used where there
was no evidence that the embalming "was done improperly or
that it did not serve its alleged purposes").
The parties have identified no Alabama caselaw discussing
whether a tenant's failure to maintain insurance coverages
required by a lease agreement constitutes a material breach of
that lease agreement.  But TP Properties has cited several
cases from other jurisdictions in which courts have held that
such a failure is a material breach of the lease agreement. 
A review of those cases is instructive.  
First, in Bouwkamp v. McNeill, 902 P.2d 725 (Wyo. 1995),
the Supreme Court of Wyoming considered a summary judgment
entered in favor of landlords who had terminated a lease
allowing the tenants to operate a restaurant on the leased
premises.  The landlords claimed that the tenants had
"breached the lease agreement in several significant ways,"
including failing to make timely rent payments and not
maintaining 
insurance 
coverage 
required 
by the 
lease
agreement.  Id. at 726.  The Bouwkamp court concluded that,
although there was an issue of fact about whether the tenants
were late in paying their rent, "the failure of the [tenants]
17
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to have maintained the insurance coverages required by the
unambiguous terms of the lease were obviously material
breaches of the lease."  902 P.2d at 727.  The court further
emphasized that the tenants' failures in that regard were "not
trivial, 
inadvertent, 
or 
technical 
problems 
but 
are 
violations
which went to the heart of the agreement between the parties." 
Id.  Although the tenants had obtained the required insurance
coverage at the time the landlords terminated their lease, the
Bouwkamp court affirmed the summary judgment entered by the
trial court.
Second, in Kyung Sik Kim v. Idylwood, N.Y., LLC, 886
N.Y.S.2d 337, 66 A.D.3d 528, 529 (N.Y. App. Div. 2009), a New
York appellate court considered similar facts and reached the
same 
conclusion, holding 
that 
the 
tenant's 
subsequent 
purchase
of insurance in no way cured the previous breach:
"The motion court found, after a hearing, that
plaintiffs had not previously and continuously
maintained insurance coverage as required by their
commercial lease.  This violation was a material
breach of the lease (see C & N Camera & Elecs. v
Farmore Realty, 178 A.D.2d 310, 311 [(N.Y. App. Div.
1991)]) and, in these circumstances, an incurable
violation ....  Plaintiffs' attempt to demonstrate
their ability and readiness to cure the alleged
violation by procuring, during the cure period,
insurance coverage prospectively for the remaining
10 months of their lease term is unavailing, as such
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policy does not protect defendant against the
unknown universe of any claims arising during the
period of no insurance coverage."
Third, in D & D Realty Trust v. Borgerson, 2015 Mass.
App. Div. 115 (Mass. Dist. Ct. 2015) (not reported in North
Eastern Reporter), a Massachusetts appellate court concluded
that a tenant's failure to comply with mandatory insurance
provisions in a lease agreement constituted a material breach
of that lease agreement.  The tenant in D & D Realty, like the
present case,  operated a leased gasoline station and
convenience store, and the governing lease agreement required
the tenant to maintain certain insurance policies and to list
the landlord as an additional insured on those policies. 
Partway through the term of the lease, the landlord sued the
tenant, alleging that the tenant had breached the terms of the
lease agreement by not acquiring the required insurance.  The
evidence presented at trial established that the tenant had,
in fact, not complied with the provisions of the lease
agreement requiring it to procure insurance coverage.  The D
& D Realty court concluded that the tenant's breach was
"material and significant," explaining:
"[The tenant's] at least intermittent failure to
insure the property against claims for personal
19
1170708
injury, 
property 
damage, 
or 
hazardous 
waste
contamination, and to name [the landlord] as an
insured, was the equivalent of playing financial
Russian roulette.  The fact that no potentially
covered loss occurred during that period does not
minimize the seriousness of [the tenant's] failure
to insure against it, as the lease explicitly
required."
Accordingly, the D & D Realty court affirmed the judgment of
the trial court allowing the landlord to terminate the
tenant's lease.
Finally, the Minnesota Court of Appeals emphasized in Las
Americas, Inc. v. American Indian Neighborhood Development
Corp., No. A04-505 (Minn Ct. App. 2004) (not reported in North
Western Reporter), the risk to a landlord that accompanies a
tenant's failure to acquire insurance coverage mandated by a
lease agreement.  In Las Americas, the court held "as a matter
of law" that the failure to provide proof of insurance
required by a lease agreement was a material breach of that
agreement and that the tenant's "failure to maintain the
required liability insurance exposed [the landlord] to a
potentially significant liability risk [that] could not have
been corrected by [the tenant] paying insurance premiums or
obtaining coverage after the fact."
20
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The cases cited by TP Properties demonstrate that LNM1's
breach of the lease agreement was not harmless.  As the D & D
Realty court explained, a tenant's failure to 
procure required
insurance coverage protecting a landlord is tantamount to
playing "financial Russian roulette," and the fact that no
claims were incurred during the period when 
insurance coverage
was lacking "does not minimize the seriousness of [the
tenant's] failure to insure."  In this case, it appears that
no claims were filed against TP Properties for incidents
occurring during the period in which LNM1 did not have the
insurance required by the lease agreement before this appeal
was initiated in April 2018.  But because LNM1 did not obtain
the required insurance coverages until September 2017, TP
Properties asserts that it will be exposed to potential claims
until at least September 2019 (assuming the general two-year
statute of limitations in § 6-2-38(l), Ala. Code 1975, would
apply).  Moreover, TP Properties asserts that it will be
approximately 20 years until it can be absolutely assured that
no claims will be filed against it based on incidents that
occurred before LNM1 obtained the required insurance, because
minors have 2 years after they reach the age of majority to
21
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assert claims belonging to them.  See § 6-2-8(a), Ala. Code
1975 (providing that the statute of limitations applicable to
a claim held by a minor is tolled until the minor reaches the
age of majority).
It is impossible for LNM1 or TP Properties to fully
mitigate the unknown risk that TP Properties faces going
forward.  TP Properties' expert indicated that he was unaware
of any insurance that could be obtained to cover retroactively
the gaps in coverage created by LNM1's failure to maintain the
required coverages.  LNM1 and Alsahqani have submitted no
evidence that would refute the expert's testimony.  And,
although Alsahqani executed an agreement promising to
indemnify TP Properties for any liability it incurs as a
result 
of 
LNM1's 
breach, 
that 
indemnification agreement 
cannot
take the place of the insurance coverages for which TP
Properties bargained.  The indemnification agreement is
contingent on LNM1 and Alsahqani's future ability to fulfill
their obligations under that agreement, and there is no
evidence in the record regarding their ability to do so.  Even
if there was such evidence, however, an indemnification
agreement from parties that would likely be codefendants in
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any legal action covered by the agreement is clearly not the
same as insurance written by an insurer rated "A" or better by
A.M. Best –– which is what the lease agreement required with
respect to the general-liability policy LNM1 was obligated to
obtain.  Cf. Austin Props. LLLP v. Huntington Beach 2, LLC,
No. A-16-CA-1080-SS (W.D. Tex. 2017) (not reported in the
Federal 
Supplement) 
(holding 
that 
a 
subtenant's 
self-insurance
statement did not meet the requirement in a lease agreement
that the tenant maintain insurance written by a "responsible
insurance company").
LNM1 and Alsahqani argue that the out-of-state cases
cited by TP Properties are distinguishable.  This argument is
not convincing.  Bouwkamp, Kyung Sik Kim, D & D Realty, and
Las Americas are all cases involving commercial leases in
which it was established that the tenant had breached the
terms of a lease agreement by not obtaining the required
insurance coverage.  In each case, the court concluded that
the tenant's breach was material and that the landlord was
entitled to terminate the lease.  The reasoning of those cases
is persuasive, and we agree that LNM1's failure to acquire the
required insurance was not a "trivial, inadvertent, or
23
1170708
technical problem[]" but was instead a "violation[] which went
to the heart of the agreement between the parties."  Bouwkamp,
902 P.2d at 727.  Or, to state it in terms that this Court has
previously used, LNM1's failure was a breach "that touche[d]
the fundamental purposes of the contract and defeat[ed] the
object of the parties in making the contract."  Sokol, 527 So.
2d at 1248.  That breach was therefore material.  Because the
evidence supports no other conclusion, the trial court did not
err in making that determination as a matter of law. 2
Conclusion
The provisions in the lease agreement requiring LNM1 to
purchase and maintain insurance coverages for both its own
benefit and the benefit of TP Properties were an integral part
of the lease agreement.  As discussed above, LNM1's undisputed
failure to comply with those provisions was a material breach
2LNM1 and Alsahqani have also argued that the trial court
exceeded its discretion by not considering the evidence they
submitted after the summary judgment was entered establishing
that LNM1 had acquired all the required policies by September
2017.  Even if considered, that evidence would not have
created an issue of fact regarding whether LNM1 had materially
breached the lease agreement by failing to maintain the
required insurance.  See Kyung Sik Kim, 66 A.D.3d at 529
(concluding 
that 
the 
tenant's 
subsequent purchase 
of 
insurance
covering the remainder of its lease was insufficient to cure
the material breach already committed when insurance was not
procured for the initial lease period).
24
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of the lease agreement, which entitled TP Properties to
terminate the lease.  Accordingly, the summary judgment
entered by the trial court in favor of TP Properties is hereby
affirmed.
AFFIRMED.
Parker, C.J., and Wise, Mendheim, and Stewart, JJ.,
concur.
Bryan, J., concurs specially.
Bolin, Shaw, and Sellers, JJ., concur in the result.
25
1170708
BRYAN, Justice (concurring specially).
The lease agreement at issue relates to a "fuel
dispensing station" owned by TP Properties, LLC, and leased
and operated by LNM1, LLC ("LNM1").  Under certain
circumstances, owners and operators of such facilities may be
subject to substantial liability under both state and federal
law for environmental impacts resulting from underground
storage tanks.  See § 22-36-1 et seq., Ala. Code 1975; and 42
U.S.C. § 6991 et seq.
In light of the potential liability for owners and
operators of such facilities, I view LNM1's undisputed failure
to obtain environmental-impairment-liability insurance in
accordance with 
the 
applicable 
lease 
provision 
as 
significant. 
Taking into consideration LNM1's breach in this regard along
with its failure to comply with the other lease provisions
discussed in the main opinion, I agree that the trial court's
judgment should be affirmed.
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