Court Opinion

ID: 3463736
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:29:01.270041+00
Date Added: 2024-06-11T14:04:31.963623
License: Public Domain

Dear Mr. Temple:
You have requested an opinion of the Attorney General relative to an original lease agreement (Agreement), and an amendment thereto (Amendment), between the Sabine River Authority (Authority) and ALH Properties No. Five, Inc (ALH). You state that, under the Agreement, ALH is obligated to develop, construct and operate a hotel on property leased to it by the Authority.  After the opening date for the hotel, ALH is further obligated to manage and operate a conference center, golf course, clubhouse and other related facilities constructed by the Authority, all located on property belonging to the Authority.
The original lease was entered into as of February 1, 1997, for an initial term of seventy-five years from the opening date of the hotel. After the expiration of the initial term (April 1, 2074), the Agreement provides for its reconduction on a month to month basis on the same terms and conditions, unless either party gives thirty days written notice of its intent to terminate same.
Article 3.12.1 of the Agreement obligates ALH to manage the golf course and clubhouse prior to the opening date of the hotel. However, delays in the construction of the hotel and conference center resulted in the execution of the Amendment, pursuant to which the golf course and clubhouse were leased to ALH from June 26, 1997, to May 1, 2000, the date the hotel opened.  On that date, the Amendment terminated and the rights and duties of both parties were again subject to the provisions of the Agreement.
Article 3.12.2 of the Agreement requires ALH to establish a bank account (Account) for the deposit of all revenues from the operation of the golf course and clubhouse, as well as the payment of all expenses associated therewith.  The Authority is required to maintain a minimum balance of $50,000 in this account for working capital.  While the Agreement makes no provision for the date upon
which ALH is to return the $50,000 to the Authority, we have been advised by representatives of the Authority that it was the intent of the parties that the deposit would be returned upon the termination of the Agreement.
The Account is also referenced in Article 3.12.2 of the Amendment. It provides, in pertinent part, the following:
  SRA agrees to establish and maintain a minimum balance of $50,00.00 (sic) in an account, to be used for working capital, which original amount shall be returned to SRA upon the termination of this lease.
You specifically ask whether the $50,000 working capital account is to be returned to the Authority on April 1, 2074 (i.e., the termination date of the Agreement) or the earlier date upon which the Amendment terminated.  You state that ALH is of the opinion the balance is not returnable until April 1, 2074, while Authority board members differ among themselves as to the correct return date.
As previously noted, the Amendment unequivocally states that the $50,000 shall be returned to the Authority "upon the termination of this lease." The lease, by its own terms, expires or terminates on April 1, 2074.  In addition, Article XX of the Agreement provides for additional conditions under which the lease can be terminated by either party.
Assuming, arguendo, the provisions of the Agreement and Amendment are deemed ambiguous with respect to this issue, our jurisprudence is clear that this ambiguity must be interpreted in favor of the lessee (i.e., ALH).  Guilbeau v. C and D Reprographics-Lafayette,Inc., 568 So.2d 206 (La.App. 3rd Cir. 1990) writ denied.
Accordingly, it is the opinion of this office that ALH is obligated to return the $50,000 minimum balance in the Account to the Authority at the termination of the original lease on April 1, 2074.  Obviously, this return date is subject to change if the lease is terminated by either party pursuant to Article XX, or reconducted with the same terms and conditions after its initial term ends.
Trusting this adequately responds to your inquiries, I am
Very truly yours,
                             RICHARD P. IEYOUB Attorney General
                             By: _________________________ ROBERT E. HARROUN, III Assistant Attorney General
RPI/REH,3/sfj