Court Opinion

ID: 4367467
Source: CourtListenerOpinion
Date Created: 2019-02-13 19:01:16.445315+00
Date Added: 2024-06-11T14:48:41.913423
License: Public Domain

Case: 18-30702      Document: 00514833402         Page: 1    Date Filed: 02/13/2019

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT     United States Court of Appeals
                                                       Fifth Circuit

                                                                                   FILED
                                                                              February 13, 2019
                                      No. 18-30702
                                                                                Lyle W. Cayce
                                                                                     Clerk
K & B LOUISIANA CORPORATION, doing business as Rite Aid,

               Plaintiff - Appellant

v.

CAFFERY-SALOOM RETAIL, L.L.C.;
SOUTHWEST PROPERTY MANAGEMENT, INCORPORATED;
AMERICAN NATIONAL INSURANCE COMPANY,

               Defendants - Appellees

                   Appeal from the Unites States District Court
                      for the Western District of Louisiana
                             USDC No. 6:16-CV-503

Before CLEMENT, OWEN and HO, Circuit Judges.
PER CURIAM:*
       On January 23, 1995, K & B Louisiana Corporation executed a 20-year
lease with Caffery Center, L.L.C. for commercial retail space inside the Caffery
Center Shopping Center. A major point of the agreement was the continued
operation of a Winn-Dixie grocery store at the location to act as an anchor
tenant and attract business.

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                  No. 18-30702
      The companies specified that Winn-Dixie’s occupancy was “part of the
consideration to induce [K & B] to lease and pay rent for its store.”
Accordingly, the lease stipulated:

      Article 2 – Conditions Precedent and Continuing

      [S]hould Winn-Dixie fail or cease to operate or lease and pay rent
      for its store in the Shopping Center during the Lease Term as
      hereinafter set out, Lessee shall have the right and privilege of: (a)
      cancelling [sic] this Lease and of terminating all of its obligations
      hereunder at any time thereafter upon written notice by Lessee to
      Lessor, and such cancellation and termination shall be effective
      ninety (90) days after the mailing of such written notice; or (b)
      invoking the privileges of Article 20 herein. (Emphasis added).

The lease further instructed that should Winn-Dixie cease its operations
and/or lease, Caffery Center had six months to find a replacement prior to
K & B “invoking its rights and privileges as above.”          (Emphasis added).
However, should Caffery Center’s efforts fail, the lease permitted K & B to pay
half the rental amount until the breach was cured. Specifically, the lease
stated:

      Article 20 – Default

      Without in any way waiving, limiting, or restricting Lessee’s other
      remedies or options contained in this Lease, in the event of a violation of
      or the failure to Lessor or anyone else to observe the terms hereof, the
      monthly basic rental . . . shall be payable at half of the stipulated amounts
      therein stated for the period from the date of such default until Lessor
      cures any such violation or failure to observe the said provisions, which
      reduction shall be considered as liquidated damages for the periods
      during which any such violation may have existed. (Emphasis added).

The parties dispute whether these provisions required K & B to affirmatively
invoke its options under Article 20, or whether the half-rent provision was
triggered automatically six months after the breach occurred.

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                                 No. 18-30702
      Sometime between June 21, 2000, and February 28, 2005, Winn-Dixie
vacated its store-front and stopped paying rent.      Although a comparable
grocery store never took its place, K & B continued to pay the full rental rate
throughout the lease term.
      K & B did not act on its privileges and rights until December 17, 2015,
when it sent a letter, through counsel, to the property manager, Southwest
Property Management, Inc, declaring it and the parties to the lease in default.
The letter stated that K & B was invoking its Article 20 remedies and
demanded “the return of half of the total rental it paid during this period as
liquidated damages.”
      On March 9, 2016, K & B filed suit in state court. The petition named
Southwest Property Management, Inc. as a defendant, along with American
National Insurance Company and Caffery-Saloom Retail, L.L.C. Defendants
removed the case to federal court by means of diversity jurisdiction. Then,
after a period of discovery, they filed two separate motions for summary
judgment. The motions argued that K & B waived its right to overpayment
and that its attempts to recoup its losses exceeded the ten-year prescriptive
period.
      K & B opposed the motions and filed one of its own. It contended that
the half-rent provision in Article 20 took effect automatically and that the
company thus possessed a claim under Art. 2299 of the Louisiana Civil Code,
because Defendants had “received a payment or a thing not owed” and were
bound to restore it. LA. CIV. CODE Art. 2299. K & B further contended that
each installment had its own ten-year prescriptive period, meaning that the
company could still recover most of the money it had mistakenly surrendered.
      The district court granted summary judgment in favor of Defendants. It
held that the plain language of Articles 2 and 20 demanded that K & B
specifically invoke its rights before the company could benefit from the reduced
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                                     No. 18-30702
rent. Since K & B failed to do so before the ten-year prescriptive period ran
out, the company could not claim relief under Art. 2299. The district court
never reached a decision on the alternative issues raised by the moving parties.
K & B submitted its notice of appeal.
       A grant of summary judgment falls under de novo review. Am. Family
Life Assur. Co. of Columbus v. Biles, 714 F.3d 887, 895 (5th Cir. 2013) (per
curiam). We apply the same standard as the district court and view the
evidence in the light most favorable to the non-moving party. Id. Because our
jurisdiction is based on diversity of citizenship, the substantive law of
Louisiana governs our analysis. Nat’l Liability & Fire Ins. Co. v. R & R Marine,
Inc., 756 F.3d 825, 834 (5th Cir. 2014).
       The controversy before us presents a single dispositive question:
whether the terms of the lease required K & B to specifically invoke its
privileges in Article 20 for the one-half provision to take effect?
       We agree with the district court. Article 20 must be read in light of
Article 2. Article 2 provides two options in the event that Winn-Dixie ceases
to operate at the Shopping Center—K & B can either terminate its lease, or
“invok[e]” the privileges of Article 20. In light of this language, we construe
Article 20, in the context of Article 2, to require an affirmative election by
K & B to invoke its privileges under Article 20. K & B has made no such
election. Accordingly, K & B has no statutory claim under either the lease or
Art. 2299. 1 We therefore affirm the judgment of the district court.

      1The parties did not brief whether K & B was entitled to half rental payments for the
months after it invoked its Article 20 option. We therefore do not address it here.
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