Peyton Place, Cond. Associates v. Guastella

Decision Date29 May 2009
Docket NumberNo. 08-CA-365.,08-CA-365.
Citation18 So.3d 132
PartiesPEYTON PLACE, CONDOMINIUM ASSOCIATES, INC. v. Robert P. GUASTELLA, Peyton Place, Inc., and I-10, Inc. (Formerly Known as Management Equities Corporation).
CourtCourt of Appeal of Louisiana — District of US

Jacob Kansas, Alan F. Kansas, Attorneys at Law, Gretna, LA, for Plaintiff/Appellee.

Stephen D. Marx, Attorney at Law, Metairie, LA, for Defendant/Appellant.

Panel composed of Judges CLARENCE E. McMANUS, FREDERICKA HOMBERG WICKER, and MADELINE JASMINE, Pro Tempore.

FREDERICKA HOMBERG WICKER, Judge.

Peyton Place Condominium Association, Inc.1 (the "Association") filed this suit against Robert Guastella ("Guastella"), Peyton Place, Inc. ("PPI"), and I-10, Inc.2 ("I-10"), alleging that each defendant was liable to it for unpaid condominium fees, late fees, and the attorney's fees incurred as a result of this litigation.3 All three defendants reconvened against the Association, alleging that the Association was liable for unpaid rent on a party room and a recreation room that each of the defendants had owned at one point in time. The suit was consolidated with two separate suits filed by I-10. In both of the consolidated suits, I-10 alleged that the Association recorded illegal statutory privileges on condominium units that it owned. The trial court found that the Guastella defendants were liable to the Association for condominium fees and that the Association was not liable to the Guastella defendants for unpaid rent. In addition, the trial court awarded the Association attorney's fees and costs. The trial court also found that the Association was liable to I-10 for recording an illegal privilege. This appeal ensued.

The Guastella defendants assign as error the trial court's judgment as to liability to the Association for unpaid condominium fees, the denial of their unpaid rent claims and the trial court's award of attorney's fees and costs to the Association. The Association assigns as error the trial court finding that it is liable to I-10 for recording an illegal privilege, the trial court's ruling that the Guastella defendants were not a single entity, and a judgment of the trial court quashing a subpoena. For the foregoing reasons, we affirm in part, reverse in part, and render. In addition, we grant the Association's Motion for Partial Dismissal, the merits of which are discussed below.

FACTS AND PROCEDURAL HISTORY

The relevant facts are these. In 1969, Guastella incorporated I-10 with his brother and father. I-10 was originally formed to build and develop a Howard Johnson's hotel near the intersection of Veterans Boulevard and Interstate 10 in Metairie. Management Equities Corporation ("MEC-I") was incorporated on February 13, 1976 for the purpose of purchasing and managing an apartment complex located at 1161 Lake Avenue in Metairie. MEC-I purchased the apartment complex on May 27, 1976.

Several years later, Guastella began to investigate the feasibility of turning the 1161 Lake Avenue apartment complex into a condominium complex. Guastella merged MEC-I with I-10 in 1979. Although I-10 was the surviving corporation from this transaction, Guastella changed the corporate name of I-10 back to Management Equities Corporation (hereinafter referred to as "MEC-II"). According to Guastella, the purpose of these transactions was to utilize the losses of I-10 against any profits that were expected to arise from the development of the condominium. Guastella later changed the corporate name of MEC-II back to I-10, Inc., the defendant herein.

Guastella incorporated PPI on September 28, 1979. At that time, Guastella owned seventy percent of the shares of PPI and his former associate Charles Kovacs owned thirty percent of the shares. In addition, Guastella served as the corporation's president and Kovacs served as its secretary and treasurer. On October 18, 1979, PPI purchased the condominium complex from MEC-II in exchange for executing a $2,346,651.00 secured note in favor of MEC-II and assuming a $1,153,348.01 note in favor of Pan American Life Insurance Company.

Guastella filed a condominium declaration with the 24th Judicial District Court Clerk of Court's Office on September 5, 1979, which created the Association. Shortly thereafter, PPI began marketing the condominium units and selling them to consumers (the condominium complex will hereinafter be referred to as "Peyton Place"). When buyers purchased condominium units at Peyton Place, they paid five percent of the purchase price as a down payment, with the rest being financed by PPI. If the purchaser was able to pay off the rest of the note to PPI, PPI would pledge the mortgage of the purchaser's unit to Pan American Life Insurance Company to secure a partial release of its debt on the $1,153,348.01 note.

Guastella had previously lived in the apartment complex before Peyton Place was created. After Peyton Place was created, Guastella, PPI, and I-10 each continued to own Peyton Place units. In 1980, Guastella decided to designate one unit as a party room and one unit as a recreation room to make individual condominium units more desirable to potential Peyton Place buyers. Thus, on May 1, 1980, Guastella purchased two Peyton Place units from PPI to convert into a party room and a recreation room. No money changed hands during this transaction; Guastella used funds from PPI to finance the sale and wrote off $120,000 worth of debt owed to him personally by PPI. Guastella then spent several months renovating the units in order to make them suitable for their designated functions. On November 10, 1980, Guastella sold the party room and the recreation room to MEC-II. Again, no money changed hands; in exchange for receiving title to the party room and recreation room, MEC-II cancelled a $219,000 note which evidenced a debt that Guastella owed to MEC-II.

On the same day he purchased the recreation room and party room from MEC-II, Guastella leased both rooms to the Association for a term of fifty years. The terms of the lease dictated that the Association would pay Guastella $1,260 per month, with rent increases every five years. The Association never paid any rent to MEC-II, Guastella, or PPI, nor did MEC-II, Guastella, or PPI ever pay any condominium fees to the Association. Guastella alleges that he did not require the Association to pay rent for the party room and the recreation room in exchange for not paying condominium fees on Peyton Place units that he owned personally. With respect to four units owned by PPI, Guastella alleges that he did not require PPI to pay condominium fees because PPI provided cash advances to the Association every year to equalize the Association's annual operating deficit. Guastella alleges that MEC-II paid condominium fees for the units it owned but could not provide the trial court with records to verify the allegation.

After Guastella sold the recreation room and the party room to MEC-II, all sales of Peyton Place condominium units were made "subject to" the May 1, 1980 lease. MEC-II owned the party room and the recreation room from November 20, 1980 until October 6, 1986, at which time it sold both units to PPI. PPI owned both rooms until May 12, 1988 when it transferred all title, rights, and interest in both rooms to Pan American Life Insurance Company via a dation en paiement.

Throughout the course of the 1980's, the Peyton Place complex allegedly deteriorated to such an extent that Jefferson Parish officials threatened to condemn the property on several occasions. Guastella had controlled the presidency of the Association since it was created in the condominium declaration. In 1989, Association members declined to reelect Guastella to the Association presidency and installed their own board of directors after Guastella resigned. Guastella continued to own Peyton Place units but had no further role in the management of Peyton Place after 1989. PPI and I-10 also continued to own Peyton Place units.

On December 12, 1992, the Association filed a Petition for Damages against Guastella, I-10, and PPI. The petition alleged that Guastella, PPI, and I-10 had collectively owned eleven Peyton Place units at all pertinent times prior to filing. The Petition sought condominium fees dating back to 1979, late fees, special assessments levied against all Peyton Place owners in 1989, 1990, and 1991, and judicial interest. In addition, the petition alleged that Guastella treated PPI and I-10 as his personal assets and sought to hold Guastella liable in solido with PPI and I-10.

Guastella reconvened against the Association on February 24, 1993 for the rent due under the terms of the May 1, 1980 lease of the party room and the recreation room.4 The reconventional demand alleged that the Association owed past due rent under the lease and that the rent claims should be treated as an offset on past due condominium fees. Guastella further alleged that the rent owed by the Association exceeded his past due condominium fees. Guastella filed a Motion for Summary Judgment seeking judgment for unpaid rent and future accelerated rental payments. The Association filed a Motion for Partial Summary Judgment/Declaratory Judgment asking the court to rule that Guastella's right to collect rents terminated on November 20, 1980, the day he sold the recreation room and the party room to MEC-II.

On March 15, 1995, the trial court denied Guastella's Motion for Summary Judgment and granted the Association's Motion for Partial Summary Judgment/Declaratory Judgment. The trial court ruled that only the title owner of the party room and recreation room was entitled to collect rent due under the lease. In his Reasons for Judgment, the trial judge noted that the right to collect rentals was transferred in the sale and that the "subject to" language was "insufficient to entitle Guastella to the rentals." Thus, Guastella, MEC-II, and I-10 were only entitled to collect rental payments for the time that each was the...

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