Opinion ID: 1812470
Heading Depth: 1
Heading Rank: 3

Heading: Abuse of Lessor's Right to Withhold Permission to Sublease

Text: Harvester contends alternatively that, if Illinois Central did not consent to its sublease to 1601 Poydras Corporation, the lessor's exercise of its right to withhold its consent was abusive under the facts of the instant case and therefore should not be enforced judicially. Article 2725 of the Louisiana Civil Code provides that the lessor may by contract prohibit the lessee from entering a sublease: The lessee has the right to underlease, or even to cede his lease to another person, unless this power has been expressly interdicted. The interdiction may be for the whole, or for a part; and this clause is always construed strictly. The article is not clear as to whether a clause expressly interdicting the lessee's right to sublease is to be construed strictly for or against the lessee. However, this Court has said that [t]he language is taken literally from the Napoleon Code; and the interpretation which it appears to have uniformly received in France . . . is that the prohibition must be construed strictly against the lessee. Cordeviolle v. Redon, 4 La.Ann. 40 (1849). [4] Harvester points out, however, that the leases in the instant case do not absolutely prohibit subleasing but merely require the prior written consent of the lessor. Consequently, Harvester contends, Illinois Central's refusal of consent should not be judicially enforced if in light of all the circumstances it was an abusive exercise of the lessor's contractual right. See, 2 Colin et Capitant, Droit civil Francais, No. 1041 at 690 (10th ed. 1948); Josserand D.P. 1923.2.172. This Court expressly recognized the doctrine of abuse of rights in Morse v. J. Ray McDermott & Co., Inc., 344 So.2d 1353 (La. 1977), and has employed a similar analysis in earlier decisions. Higgins Oil & Fuel Co. v. Guaranty Oil Co., 145 La. 233, 82 So. 206 (1919); Onorato v. Maestri, 173 La. 375,137 So. 67 (1931). Nevertheless, the doctrine of abuse of rights has been invoked sparingly in Louisiana and we must look to other civilian jurisdictions for its full articulation. The doctrine is the product of a French jurisprudential and doctrinal movement which has expanded into most of the civil law jurisdictions to the point of becoming a widely accepted principle of the Civil Law. Cueto-Rua, Abuse of Rights, 35 La.L.Rev. 965, 967 (1975). See, generally, Catala and Weir, Delict and Torts: A Study in Parallel (Part II), 38 Tul.L.Rev. 221 (1964); Herman, Classical Social Theories and the Doctrine of Abuse of Right, 37 La.L.Rev. 747 (1977); Maynard, Abuse of Rights in France and Quebec, 34 La.L.Rev. 993 (1974); Comment, 7 Tul.L.Rev. 426 (1933). The main body of French case law on abuse of rights is based on article 1382 of the French Civil Code, which is very similar in wording to article 2315 of the Louisiana Civil Code. In its origin, the abuse of rights doctrine was applied to prevent the holder of rights or powers from exercising those rights exclusively for the purpose of harming another, but today most courts in civil law jurisdictions will find an act abusive if the predominant motive for it was to cause harm. See, Cueto-Rua, supra, at 990-91; Catala and Weir, supra, at 222-26. The doctrine has been applied where an intent to harm was not proven, if it was shown that there was no serious and legitimate interest in the exercise of the right worthy of judicial protection. See, Cueto-Rua, supra, at 992-96; Catala and Weir, supra, at 230-34. Protection or enforcement of a right has been denied when the exercise of the right is against moral rules, good faith or elementary fairness. See, Cueto-Rua, supra, at 996-99. Another criteria, espoused originally by the French scholar Louis Josserand, would require an examination of the purpose for which the right was granted. If the holder of the right exercised the right for a purpose other than that for which the right was granted, then he may have abused the right. See, Cueto-Rua, supra, at 1000-1003; Catala and Weir, supra, at 227-29; Herman, supra, at 754-55. The foregoing principles seem to be the main criteria which have been formulated for applying the abuse of rights doctrine. These tests have met with varying degrees of acceptance in the civil law jurisdictions, and it should be kept in mind that the entire doctrine is in a state of flux. As Professor Cueto-Rua observes:    The doctrine of abuse of rights is in the making, it is `in fieri.' It is an important juridical-political element of modern civil law doctrine. Although there are still pending important questions concerning its scope as well as criteria for the definition of abusive use of rights, this we may safely say now: it will be difficult for a holder of an individual right, in most of the civil law jurisdictions today, to exercise such right to the detriment of other parties, just for the sheer sake of exercising it. At least a `serious and legitimate interest' will have to be shown in order to justify the exercise of its right. After evaluating the conduct of the parties in the present case under the jurisprudential and doctrinal tests, we conclude that judicial enforcement of Illinois Central's right to withhold permission for the sublease and change of use proposed by Harvester would not sanction an abuse of right. Illinois Central did not withhold its consent with a predominant intent to harm Harvester. Instead, the record reflects that it refused to grant permission for the purpose of attempting to negotiate a cancellation of the leases with Harvester. The railroad company's motive and intent were openly and honestly stated in its reply to Harvester's sublease proposal: Land values have risen so dramatically since the renewal of these leases that we are now receiving an inequitable rental compared to the present day market. In view of the existing conditions, rather than approve a sublease, we suggest as an alternative cancellation of both agreements subject to the terms contained in each. Since the property involved has greatly appreciated in value, reducing rental revenues to an inadequate level, Illinois Central's withholding of its immediate consent to a sublease for purposes of negotiating a cancellation was certainly based on a serious and legitimate motive. Moreover, it cannot be said that Illinois Central's refusal to consent to the sublease was adamant or irrevocable; and it does not appear that Harvester was insistent upon its request for permission. Harvester wrote two letters seeking its lessor's consent to the parking lot sublease, but in a third letter it offered to cancel the leases for a cash settlement of $69,886. From these letters it appears that Illinois Central could not have withheld its consent for more than ninety-eight days, and the record reflects that the parties' oral negotiations had shifted from sublease to cancellation much earlier. After this, Harvester never again requested permission to sublease; nor did it seek judicial relief from Illinois Central's alleged abusive conduct. Instead, during the time that its offer to cancel the leases apparently was still open, Harvester entered a sublease with 1601 Poydras Corporation without further notice to its lessor. We cannot say that Illinois Central exercised its right to withhold consent to a sublease for a purpose other than that for which it was granted. The record is devoid of evidence of the parties' intention in placing the clause in the leases. It cannot be assumed that the lessor merely sought by the clause to protect itself against an objectionable subtenant. The parties likely would have limited the interdiction to subleases with objectionable sublessees if this had been the lessor's only concern. Moreover, in the instant case, the lessee sought to do more than merely substitute an acceptable subtenant for itself; it sought as well to change the use of the premises from a truck retail outlet to a parking garage. Furthermore, Josserand's purpose-of-the-right test has not been generally accepted in the civil law jurisdictions. Cueto-Rua, supra, at 1002-1005; Catala and Weir, supra, at 228. The exercise of the right to withhold consent was plainly not against moral rules, good faith or elementary fairness. Nor did Illinois Central act without any regard for the interest of Harvester. The railroad company candidly disclosed its motives and intent, bargained in good faith, and offered significant concessions in an attempt to reach a settlement with Harvester. In summary, we do not find that Illinois Central's conduct falls within any of the definitions of abusive use of rights. The withholding of consent to a sublease was for a relatively brief period of time, not done for the sheer sake of exercising the right, but done for the purpose of attempting to carry on actual good faith negotiations for cancellation of the lease, in which the lessor had a serious and legitimate interest under the circumstances, and the lessee did not pursue its rights vigorously by insisting on a sublease or by proceeding against the lessor judicially before violating the agreements of the lease.