Marrero Land & Improvement Ass'n, Ltd. v. Paradigm Inv. Grp., LLC.
| Decision Date | 16 April 2020 |
| Docket Number | NO. 19-CA-487,19-CA-487 |
| Parties | MARRERO LAND AND IMPROVEMENT ASSOCIATION, LTD. v. PARADIGM INVESTMENT GROUP, LLC. |
| Court | Court of Appeal of Louisiana — District of US |
COUNSEL FOR DEFENDANT/APPELLEE, PARADIGM INVESTMENT GROUP, LLC, Peter J. Wanek, Lindsay G. Faulkner, Kathryn T. Trew, Jose R. Ruiz, New Orleans
COUNSEL FOR DEFENDANT/APPELLANT, SEENU G. KASTURI, Stanford B. Gauthier, II, Lafayette, Lee A. Archer
Panel composed of Judges Fredericka Homberg Wicker, Robert A. Chaisson, and Hans J. Liljeberg
Appellant/Third-Party Defendant, Seenu G. Kasturi, appeals a partial summary judgment granted against him and in favor of appellee/third-party plaintiff, Paradigm Investment Group, LLC. After conducting a de novo review, we find that pursuant to the clear and unambiguous language of the guaranty agreement entered into between these parties, Mr. Kasturi remains liable for the obligations he bound himself to fulfill in the guaranty agreement. However, the judgment entered by the trial court fails to specify the amount of damages Mr. Kasturi currently owes to Paradigm as a guarantor and also contains language that appears to improperly award Paradigm future undetermined amounts. While affirming the trial court's determination as to Mr. Kasturi's continuing liability under the guaranty agreement, we vacate the portions of the judgment that do not set forth an exact amount of damages that Mr. Kasturi currently owes to Paradigm, as well as the portions of the judgment awarding undetermined future damages. Accordingly, we remand the matter to the trial court to address the specific amount of damages Mr. Kasturi owes to Paradigm in a manner consistent with this opinion and decretal language requirements.
For these reasons and those explained more fully below, we affirm the trial court's judgment in part, vacate in part and remand to the trial court.
This matter evolved from the breach of a commercial lease agreement. Marrero Land and Improvement Association, Ltd. entered into a commercial lease agreement with Paradigm effective on August 1, 2013, with a term of over 20 years for the lease of property located on Lapalco Boulevard in Marrero, Louisiana ("Lease Agreement"). Paradigm was a franchisee of Hardee's and used the leased property to operate a fast food restaurant.
In January 2017, Paradigm entered into an Agreement for Purchase and Sale of Assets with HLaR, LLC, which involved HLaR's purchase of seven Hardee's restaurants, including the Lapalco Boulevard location ("Purchase Agreement"). Pursuant to Section 1.4 of the Purchase Agreement, HLaR agreed "to assume and perform the obligations under the Hardee's Franchise Agreement for each Restaurant, the Lease Agreement for each Restaurant, the Cox phone contracts and any other continuing contracts specifically assumed by [HLaR]." As part of the Purchase Agreement, Mr. Kasturi, co-owner of HLaR, agreed to execute a personal guaranty of HLaR's obligations under the Lease Agreement. Section 1.4 of the Purchase Agreement provided as follows with respect to his agreement to provide a personal guaranty:
The principal owner of [HLaR], Seenu Kasturi, shall personally guaranty and hold harmless [Paradigm] on the assumed lease obligations and post-closing proration's [sic] and payments, which guaranty and hold harmless shall be released eighteen (18) months from the date of Closing provided [HLaR] has fully complied with all obligations and post-closing proration's [sic] and payments and no defaults exist at the time of the requested release.
On January 25, 2017, Paradigm and HLaR entered into an Assignment and Assumption of Lease Agreement through which Paradigm assigned its Lease Agreement with Marrero Land to HLaR. HLaR agreed to perform all of Paradigm's obligations under the Lease Agreement and further agreed in Section 6 of the Assignment and Assumption of Lease Agreement to indemnify, defend and hold Paradigm harmless as follows:
[HLaR] hereby indemnifies [Paradigm] and agrees to indemnify, defend and hold harmless [Paradigm] from and against any claims, liabilities, losses, costs and expenses (including reasonable attorneys’ fees and costs, and court costs) arising from or related to [HLaR's] failure to perform its obligations under the Lease accruing or arising on or after the Effective Date.
On January 25, 2017, Mr. Kasturi and Paradigm also entered into a Guaranty. Section 1 of the Guaranty provides that Mr. Kasturi "guaranties unconditionally and promises to pay and perform all obligations of HLaR, LLC under the assigned real property leases, including but not limited to, any and all indemnity obligations owing to Paradigm ...." Further, Section 12 of the Guaranty requires a writing executed by Paradigm for Mr. Kasturi to be released from the obligations set forth in the Guaranty:
No provision of this Guaranty or right of Paradigm can be waived nor can any guarantor be released from its obligations except by a writing duly executed by Paradigm.
Section 17 sets forth the term and conditions for release from the Guaranty:
17. Term and Release of Guaranty. This Guaranty shall be released eighteen (18) months from the date of Closing provided [HLaR] has fully complied with all lease obligations and post-closing proration's [sic] and payments and no defaults exist at the time of the requested release . [Emphasis added.]
The parties agree the closing date occurred on January 25, 2017.
Paradigm alleges that on July 30, 2018, HLaR sent a letter to Marrero Land stating that it had ceased operations of the Hardee's restaurant on Lapalco Boulevard and further advised that it was paying rent through July 31, 2018. On September 6, 2018, Marrero Land filed a Petition for Breach of Commercial Lease Agreement and Damages against Paradigm, alleging that HLaR, inter alia , failed to pay rent in the amount of $6,562.50 due on August 1, 2018. On November 4, 2018, Paradigm filed an answer and third-party demands for defense and indemnity against HLaR and Mr. Kasturi.
On December 18, 2018, Marrero Land filed a motion for partial summary judgment against Paradigm to recover past due rental payments, ground maintenance expenses, unpaid real estate taxes, late fees, attorneys’ fees and costs. Marrero Land also reserved its right to recover subsequent amounts due under the Lease Agreement as they accrued. Following a hearing on February 5, 2019, the trial court granted the motion for partial summary judgment and entered judgment in favor of Marrero Land and against Paradigm for damages totaling $49,815.54, which included rental payments due through December 2018.1
Shortly thereafter on March 14, 2019, Paradigm filed the motion for partial summary judgment against Mr. Kasturi, which is at issue in the present matter. Paradigm argued that pursuant to the Guaranty, Purchase Agreement, and Assignment and Assumption of Lease Agreement, Mr. Kasturi must indemnify Paradigm for all amounts it currently owed or would become obligated to pay to Marrero Land under the Lease Agreement. Paradigm also sought to recover attorneys’ fees and court costs incurred to enforce Mr. Kasturi's obligations under the Guaranty.
In opposition, Mr. Kasturi argued that according to the terms of the Purchase Agreement and Guaranty, his obligations expired 18 months after the closing on July 25, 2018. He claimed that in order to enforce the Guaranty, Paradigm had the burden to prove that HLaR was in default of its obligations under the Lease Agreement on July 25, 2018, and that Paradigm failed to satisfy this burden in its summary judgment motion. Mr. Kasturi attached four affidavits to his opposition brief to establish that HLaR was in compliance with its lease obligations on July 25, 2018. As a result, Mr. Kasturi argued that he was automatically released from the Guaranty as of that date.
In its reply brief, Paradigm argued that pursuant to the terms of the Guaranty and Purchase Agreement, Mr. Kasturi remained obligated under the Guaranty until he requested and received an approved release from Paradigm. Paradigm pointed to the language in Section 12 of the Guaranty stating that a guarantor cannot be released "except by a writing duly executed by Paradigm" and Section 17 conditioning the release on full compliance with all lease obligations and the existence of no defaults at the time of the "requested release."
The trial court held a hearing on Paradigm's motion for partial summary judgment on May 21, 2019. After hearing oral argument, the district court agreed that the Guaranty required Mr. Kasturi to request and obtain a release from Paradigm to terminate his obligations under the Guaranty:
Whatever the reason for putting the language that it put into that agreement, it was a contract between the parties and the language is very specific that there needs to be a request to be released by the guarantor. There is no [issue] of material fact there was no request for a release and in light of that, the Court is going to grant the summary judgment as prayed for.
The trial court then entered a written judgment in favor of Paradigm on June 4, 2019, providing as follows:
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