Berthelot v. Le Investment, LLC

• Decision Date: 21 January 2004
• Docket Number: No. 2002-CA-2054.,2002-CA-2054.
• Citation: 866 So.2d 877
• Parties: Robert C. BERTHELOT and Marina Motel, Inc. v. The LE INVESTMENT, L.L.C. and Michael M. Le.
• Court: Court of Appeal of Louisiana — District of US

866 So.2d 877

Robert C. BERTHELOT and Marina Motel, Inc. v. The LE INVESTMENT, L.L.C. and Michael M. Le.

No. 2002-CA-2054.

Court of Appeal of Louisiana, Fourth Circuit.

January 21, 2004.

Rehearing Denied March 15, 2004.

A. Scott Tillery, Tillery & Tillery, Chalmette, LA, for Plaintiff/Appellee.

Kyle Schonekas, Marc D. Winsberg, Patrick S. McGoey, Schonekas, Winsberg, Evans & McGoey, L.L.C., New Orleans, LA, for Defendant/Appellant.

(Court composed of Chief Judge JOAN BERNARD ARMSTRONG, Judge LEON A. CANNIZZARO JR. and Judge Pro Tempore MOON LANDRIEU). MOON LANDRIEU, Judge Pro Tempore.

The defendants-appellants, Michael M. Le and The Le Investment, L.L.C., appeal the May 20, 2002 judgment on a rule for eviction ordering them to vacate the Quality Inn Marina Motel and deliver possession of the premises to the plaintiff-appellees, Robert C. Berthelot and Marina Motel, Inc. The judgment also cancelled and terminated the Lease Purchase Agreement executed by the litigants on September 8, 2000. The judgment further ordered the Clerk of Court to cancel and erase from the records the "Memorandum of said Lease/Purchase Agreement."

The plaintiffs filed a Petition for Damages for Breach of Contract and Eviction against the defendants on April 18, 2002. The judgment of eviction of May 20, 2002, which forms the basis of this appeal was rendered pursuant to summary procedure on a rule to show cause.

The thrust of the appellants' argument is that the legal effect of the agreement is that of a bond for deed in spite of the fact that the agreement is styled "Lease/Purchase Agreement," employs lease terminology and consistently refers to the parties thereto as "Lessors" and "Lessee."

The plaintiffs convinced the trial court that the agreement was a lease with an option to purchase, and that the defendants breached that portion of the agreement placing upon them the obligation that the property "shall at all times be maintained in such conditions as to meet the requirements of the Quality Inn franchise, or its successor in interest, or equal thereto."

It is undisputed that on September 8, 2000, the litigants executed a document entitled "Lease/Purchase Agreement by Robert C. Berthelot and Marina Motel, Inc. to The Le Investment, Inc., L.L.C." Appellant, Michael M. Le, signed the agreement on behalf of the L.L.C. and he also signed individually as a surety. The parties do not dispute the statement made in the agreement that:

The consideration for this Lease/Purchase Agreement is a non-refundable payment of $500,000.00 payable at the time of the execution of this document plus a monthly payment of $30,196.00 payable each month with the first payment due at the time of the execution of this agreement and payable monthly thereafter for a full term of twenty-five (25) years.

Later in the agreement in a section entitled "Purchase Agreement," the appellees agreed to sell the property to the defendants for $4,250,000. The agreement required a non-refundable down payment of $500,000 to be paid with the balance of $3,750,000 at an interest rate of 8.5% per annum to be paid in monthly installments of $30,196 until the final sale is consummated. The agreement states that:

The final sale is to be executed twenty-five (25) years from the date of this instrument, or at any time prior to that date by specific agreement ... The intent of this document is that the LESSEE shall be given credit against the sale price for each monthly payment made first as to interest and then as to principal as if it were paying a note in the same amount as the sum of $3,750,000 bearing interest at the rate of 8.5% per annum from date until paid....

[I]f the sale is consummated at the end of the twenty-five (25) year period, it is agreed that the final act of sale shall be passed within forty (40) days of the date upon which the parties agree to the closing or forty (40) days from the end of the twenty-five (25) year period. The LESSORS shall deliver to the LESSEE a valid and merchantable title to the subject property free and clear of all liens, mortgages, and encumbrances.

In other words, the purchase of the property would be completed after all the monthly installments were made with no further consideration for the sale. Berthelot admitted that the $30,196 monthly payments credited against the sale price were based on a monthly amortization of the $3,750,000 balance at 8.5% interest for twenty-five years.

It is undisputed that the defendants did in fact make a payment of $530,196 (the down payment plus the first monthly installment) at the time of the execution of the agreement, and that pursuant to the agreement the defendants made monthly payments of $30,196 based on the amortization schedule. The defendants had timely tendered all payments called for under the agreement at the time this litigation was instituted.

In order to resolve the issues before us, we must determine the nature and effect of the agreement executed by the parties. The proper interpretation of a contract is a question of law subject to de novo review. Montz v. Theard, XXXX-XXXX (La.App. 1 Cir. 2/27/02), 818 So.2d 181.

La. R.S. 9:2941 defines a bond for deed as a contract to sell real property, in which the purchase price is to be paid by the buyer to the seller in installments and in which the seller after payment of a stipulated sum agrees to deliver title to the buyer. The bond for deed statute sets forth a number of particular directives the seller must comply with in the transaction including a guarantee to the purchaser from any mortgage holder that it will release the mortgage when it is paid in full, a method for cancellation of the contract in the event of non-payment by the purchaser, and appointment of a bank to receive payments from the purchaser. Id. at 187.

In this case, Berthelot agreed to deliver to Le a valid...