Bayou Liberty Property, LLC v. Best Buy Stores LP et al

Filing 42

ORDER AND REASONS granting in part and denying in part 22 Motion for Partial Summary Judgment; granting 30 Motion for Summary Judgment; denying in part and dismissing as moot 31 Motion Pursuant to FRCP 56(d). Signed by Judge Ivan L.R. Lemelle. (ijg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
BAYOU LIBERTY PROPERTY, LLC

CIVIL ACTION

VERSUS

NO. 14-1112

BEST BUY STORES, LP,
AND BEST BUY CO, INC.

SECTION "B"(4)
ORDER AND REASONS

Nature of the Motions and Relief Sought
There are multiple motions before the Court. The first is
Defendants, Best Buy Stores, LP and Best Buy Co. Inc.’s Motion
for Partial Summary Judgment. (Rec. Doc. No. 22). Plaintiff,
Bayou

Liberty

Property,

LLC

filed

a

Motion

to

Continue

Submission Date (Rec. Doc. No. 28), which the Court granted.
(Rec. Doc. No. 29). Third Party Defendant, Levis Partners, LLC.,
filed a cross Motion for Summary Judgment (Rec. Doc. No. 30).
Defendants (Third Party Plaintiffs) have filed an opposition to
this motion. (Rec. Doc. No. 36).
Plaintiff filed a Motion Pursuant to FRCP 56(d) seeking to
continue the submission date on the Motion for Partial Summary
Judgment (Rec. Doc. No. 22) due to a lack of information to
formulate a response. (Rec. Doc. No. 31). However, Plaintiff
filed a substantive opposition to (Rec. Doc. No. 22). (Rec. Doc.
No. 33). Defendants then filed an opposition to the Motion to
Continue Pursuant to Rule 56(d). (Rec. Doc. No. 34). This motion
1

is also before the Court. The motions, all set for submission on
November 12, 2014, are before the Court on the briefs without
oral argument, subject to further orders of the Court.
Accordingly,
IT IS ORDERED that Best Buy’s Motion for Partial Summary
Judgment (Rec. Doc. No. 22) is GRANTED in part and DENIED in
part; that Bayou Liberty’s Motion Pursuant to FRCP 56(d) (Rec.
Doc. No. 31) is DENIED in part and DISMISSED AS MOOT; and that
Levis Partners’ Motion for Summary Judgment (Rec. Doc. No. 30)
be GRANTED.
Procedural History and Facts of the Case
This breach of contract action arises out of a Ground Lease
for real property located in Slidell, Louisiana, between Bayou
Liberty Property, LLC (“Bayou Liberty”) as “Landlord” and Best
Buy

Stores,

LP,

as

“Tenant.”

The

parties

entered

into

a

Commencement Date Agreement, agreeing that the Commencement Date
would

be

November

15,

2001.

The

parties

executed

a

First

Amendment to Ground Lease on or about May 7, 2003. The parties
executed
Tammany

a

Memorandum

Parish,

and

of

Lease,

provides

which

was

restrictions

recorded

on

the

in

St.

Landlord’s

ability to lease or use the remainder of its parcel. The Ground

2

Lease,

First

Amendment,

and

Commencement

Date

Agreement

are

herein referred to as “Lease.”
On

or

about

March

21,

2001,

Best

Buy

Co.,

Inc.

(“Guarantor”) entered into a Guaranty Agreement, guaranteeing
Best Buy’s payment and performance under the Lease Agreement.
The Lease provided for a twenty year lease term, with the first
Lease Year beginning on the Commencement Date.
The Lease provides, “Tenant shall have the right at any
time to assign this Lease or sublet all or any part of the Lease
Premises, provided Tenant and Guarantor shall remain liable for
the full performance of all terms, covenants and conditions of
this Lease, and further provided, that Tenant shall give prior
written notice to Landlord, and any such assignee shall agree,
in writing to be bound by all the terms and provisions hereof.”1
The Lease requires Tenant maintain commercial general liability
insurance with a combined single limit of Five Million Dollars
for each occurrence and fire and extended coverage insurance for
the Building in an amount equal to the full replacement cost of
the Building.2
Bayou Liberty claims that, on or about October 17, 2011,
Best Buy assigned its right, title and interest in, to and under

1
2

Rec. Doc. No. 22-5 at 23.
Rec. Doc. No. 22-5 at 20.

3

the Lease, including its leasehold interest in the building and
other

improvements

and

base

building

fixtures,

to

Slidell

Development Company, LLC. (“SDC”)(hereinafter “SDC Agreement”).
Bayou Liberty claims the assignment was made by Best Buy to SDC
without any prior written notice to Bayou Liberty, as required
under the Lease. Further, Bayou Liberty claims the assignment
conveyed ownership interest in the Building and Improvements, in
violation of the Lease.
On

or

about

January

15,

2013,

SDC

assigned

to

Levis

Partners, LLC (“Levis” or “Levis Partners”) and Levis assumed
all of SDC’s rights, title and interest in, to and under the
Assignment from Best Buy to SDC (hereinafter “Levis Agreement”).
Bayou Liberty gave notice to Best Buy on February 25, 2014,
March 13, 2014, March 14, 2014 and March 21, 2014 that Best Buy
was in default of the Lease Agreement.
On May 15, 2014, Bayou Liberty filed suit against Best Buy
Stores and Best Buy Co. Inc. (as guarantor)
judgment

and

breach

of

contract.

Bayou

for declaratory

Liberty

seeks

a

declaration, pursuant to 28 U.S.C. § 2201, that Best Buy is in
violation of the Lease for (1) failing in two instances to give
Bayou Liberty prior written notice of the assignment of Lease;
(2)

failing

to

have

prospective

assignee

execute

a

specific

assumption of the entire lease; (3) failing to use reasonable
4

efforts to find a subtenant or assignee to continue to operate
the

Lease

building

Premises;
when

immovable
Buy’s

Best

property

failure

to

(4)
Buy

Best

Buy’s

purported

“sale”

has

no

legal

ownership

belonging

to

Bayou

Liberty;

maintain

insurance

of

the

interest
and

(5)

coverage,

in

Best

providing

certificates of insurance to Landlord, notifying its insurerwith copy to Landlord- of its vacancy, and making certain that
required

coverages

remain

in

full

force

and

effect

notwithstanding Tenant’s vacating the premises. (Rec. Doc. No.
1).
Based

on

the

foregoing

allegations,

Bayou

Liberty

also

seeks damages for breach of the Lease. Bayou Liberty claims to
have suffered damages as a result of the breach, including lost
rental opportunities. Bayou Liberty seeks to recover damages and
to

enter

the

Leased

Premises

and

take

full

and

absolute

possession thereof, and to accelerate the rent due under the
remaining

terms

of

the

Lease

Agreement,

in

the

amount

of

$1,549,602.
Best Buy Stores, L.P. and Best Buy Co., Inc. (“Defendants”)
filed

an

Liberty,

answer
and

denying

asserting

breaching

any

counterclaims

obligations
for:

(1)

to

Bayou

declaratory

relief- that Bayou Liberty is in violation of the Lease for
failing to provide a timely estoppel certificate to Best Buy;
5

(2) breach of contract based on the foregoing; and (3) deceptive
trade practices for the same. (Rec. Doc. No. 3). Bayou Liberty
filed an answer to the counterclaim. (Rec. Doc. No. 8).
Third Party Complaint
Best Buy filed a Third Party Complaint against Levis for
declaratory judgment and breach of contract. Best Buy seeks the
following declarations: (1) Best Buy is not in breach of the
Agreement with SDC; (2) Levis is in breach of the Agreement to
Assign

with

SDC;

and

(3)

Levis

must

satisfy

all

of

its

obligations under the Agreement to Assign. Best Buy claims that
as

a

result

of

Levis

Partners’

breach

of

the

Agreement

to

Assign, Best Buy suffered damages, including an inability to
satisfy certain conditions of the Lease.
Levis

Partners

asserting

filed

affirmative

an

answer

defenses.

denying
(Rec.

(Rec. Doc. No. 4).
the

Doc.

allegations
No.

17).

and

Levis

Partners filed a counterclaim seeking a declaration that Best
Buy had breached its obligations and return of $1,654,000 paid
by it into escrow under the SDC Agreement.
The Court now reviews contentions, alleged facts, and the
law concerning Best Buy’s Motion for Partial Summary Judgment;
Levis Partners’ Motion for Summary Judgment; and Bayou Liberty’s
Motion to Continue Pursuant to FRCP 56(d).

6

Law and Analysis
I.

Best Buy’s Motion for Partial Summary Judgment

Contentions of Movant Best Buy
Best Buy contends the following: (1) under the terms of the
Ground Lease notice was only required prior to assignment; (2)
the agreement with SDC was an agreement to assign and not an
actual assignment of the lease; (3) the later assignment to
Levis

Partners

Agreement;
Agreement
cannot

and
with

“walk

was

consistent

(4)

as

Bayou
away.”

there

with
is

Liberty,
Although

the

no

the

terms

of

the

Lease

violation

of

the

Lease

assignee,

Best

Buy

Levis

entered

Partners,
into

an

"Assignment and Assumption of Lease" with SDC on October 17,
2011, Best Buy contends

that the assignment to SDC took

place,

under the terms of the agreement, on the Transfer Date, defined
as the

opening date of Best Buy's new location in Fremaux, on

March 14, 2014. Best Buy contends that written notice of this
upcoming assignment was given to Bayou Liberty on February 19,
2014.
Best Buy further contends that SDC assumed all rights and
obligations under the Ground Lease; that Best Buy did not fail
to use reasonable efforts to find a subtenant or assignee to
operate the premises as Best Buy actually assigned the lease;

7

that Best Buy did not attempt to sell Bayou Liberty's property
to SDC; that Best Buy has provided all insurance and notice
required

under

the

lease;

and

that

any

alleged

breach

was

harmless, and Bayou Liberty did not suffer any damages.
Contentions of Respondent Bayou Liberty
Bayou Liberty contends that there are two assignments that
are in violation of the Lease. Bayou Liberty claims that on
October

17,

2011,

"Best

Buy

assigned

its

right,

title

and

interest in, to and under the Lease, including its leasehold
interest

in

the

Building

and

other

improvements

and

base

building fixtures to SDC." This assignment was completed without
giving prior notice to Bayou Liberty. Bayou Liberty did not
receive notice of this assignment until February 19, 2014.
A second assignment took place on January 15, 2013 from SDC
to Levis Partners. Bayou Liberty did not receive prior notice of
this assignment, and further: (1) the Levis Assignment does not
contain a specific assumption by Levis of the entire Lease, as
required

under

Assignment

does

the
not

terms

of

require

the

Lease,

Levis

to

and

(2)

operate

the
the

Levis
Leased

Premises. Bayou Liberty contends that contrary to Best Buy's
claim that the Agreement with SDC was an "agreement to assign,"
SDC itself assigned "all of SDC's right, title, and interest in,
to and under the Prior Assignment" to Levis on January 15, 2013,
8

two months before the "Transfer Date." To the extent that the
terms of the agreement between Best Buy and SDC are ambiguous,
summary judgment should be denied to ascertain the intent of the
parties.
Summary Judgment Standard
Summary

judgment

is

appropriate

only

if

“the

pleadings,

depositions, answers to interrogatories, and admissions on file,
together with the affidavits show that there is no genuine issue
as to any material fact and the movant is entitled to judgment
as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986); TIG Ins. Co. v. Sedgwick James, 276 F.3d 754, 749 (5th
Cir. 2002). A genuine dispute of material fact exists when the
“evidence is such that a reasonable jury could return a verdict
for

the

nonmoving

party.”

Royal

v.

CCC

&

R.

Tres

Arboles,

L.L.C., 736 F.3d 396, 400 (5th Cir. 2013).
Summary judgment is also proper if the party opposing the
motion fails to establish an essential element of his case. See
Celotex Corp., 477 U.S. at 322–23. In this regard, the nonmoving
party must do more than simply deny the allegations raised by
the moving party. See Donaghey v. Ocean Drilling & Exploration
Co., 974 F.2d 646, 649 (5th Cir. 1992). The mere argued existence
of

a

factual

dispute

does

not

defeat

an

otherwise

properly

supported motion. Contogouris v. Westpac Resources, 856 F.Supp.

9

2d 846, 850 (E.D. La. 2012)(citing Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986)).
Whether the October 17, 2011 Agreement with SDC Constituted an
Assignment of the Lease
Under Louisiana law, a contract between the parties is the
law between them, and the courts are obligated to give legal
effect to such contracts according to the true intent of the
parties. La. Civ. Code Ann. art. 2045. "Where the words of a
contract

are

consequences,
within

the

explained

clear,
meaning

four
or

explicit,
and

corners

and

intent
of

contradicted

of

the

by

lead

to

no

parties

must

instrument

and

parol

evidence;

absurd

be

sought

cannot

under

be

those

circumstances, interpretation of the contract is a matter of law
and summary judgment is appropriate." See La. Civ. Code Ann. art
2046; Claitor v. Brooks, 137 So.3d 638, 645 (La. App. 1 Cir.
12/27/13). Words

susceptible

of

different

meanings

must

interpreted as having the meaning that best conforms to

be
the

object of the contract. La. Civ. Code Ann art. 2048. Generally,
parol evidence is inadmissible to vary the terms of a written
contract. La. Civ. Code Ann. art. 1848.
Bayou Liberty and Best Buy differ in their interpretation of
how the words of the October 17, 2011 SDC Agreement express the
true intent of Best Buy and SDC. Bayou Liberty contends that the
parties to the contract, Best Buy and SDC, signed the agreement
10

with the intent to assign Best Buy's rights and obligations
under the Lease Agreement. As evidence of this intent, Bayou
Liberty

points

to

the

fact

that

SDC,

in

turn,

assigned

its

rights under the SDC Agreement to Levis Partners, two months
before the "Transfer Date." Bayou Liberty also points to the
Levis Agreement between SDC and Levis Partners, which references
a prior assignment from Best Buy to SDC.
The main dispute centers on whether there was a present
sense assignment of the Lease in the SDC Agreement. The Court
looks to the four corners of the SDC Agreement to ascertain
whether or not the words are clear and explicit. (Rec. Doc. No.
at

22-5

81).

Therein,

the

parties

recite

that

"[A]ssignor

desires to assign to Assignee, and Assignee desires to accept
and assume, all of Assignor's rights and obligations under the
(Ground) Lease, upon and subject to the terms and conditions of
this Agreement."
Under the terms of the Agreement: "Assignor...shall assign,
transfer and convey to Assignee all of Assignor's right, title
and interest in, to and under the Lease...effective as of the
Transfer Date." Further, the SDC Agreement provides that: "[t]he
assignment

and

assumption

of

the

Lease

under

this

Agreement

shall occur and be effective on the Commencement Date as defined
under that certain Lease by and between Assignor and Assignee
("the

Fremaux

Lease")."

Additionally,

the

SDC

Agreement
11

contained conditions precedent to the Transfer Date, including
the

execution

of

a

certificate

in

favor

of

Assignee,

and

regarding the requisite condition of the Lease Premises upon
delivery.
The

Agreement

contains

what

is

known

as

an

Integration

Clause that provides: "[t]his Agreement, including any recitals
and any attached Exhibits, all of which are made a part of this
Agreement,

contains

concerning

this

amendment

shall

the

subject
be

entire
matter."

binding

agreement

of

Under

Agreement,

unless

it

the
is

the

in

parties

writing

"[n]o
and

signed..." The Agreement contains a "No Assignment" provision
whereby, "[n]either party could assign prior to the satisfaction
of all conditions to the assignment and assumption of the Lease
and transfer of possession of the Premises to Assignee without
prior

written

consent

of

the

other

party."

However,

the

Agreement did not prohibit Assignee from further assigning on or
before the Transfer Date.
The foregoing overwhelmingly supports a finding that the
SDC Agreement was an agreement to assign, and not an assignment
of the Lease. "Assignor desires to assign," “Assignor...shall
assign...,”

and

"[t]he

assignment...of

the

Lease

under

this

Agreement shall occur," do not rise to a present assignment at
execution.

A conclusion to the contrary, which Bayou Liberty

12

encourages,

would

largely

moot

the

inclusion

of

"conditions

precedent."3
The Court notes that the SDC Agreement did not "prohibit
Assignee from further Assigning this Agreement or the Lease on
or before the Transfer Date," (Rec. Doc. No. 22-5 at 90) and
that the Levis Agreement, between SDC and Levis Partners, was
executed on January 15, 2013, two months before the Transfer
Date. However,
agreement
bearing

or
on

for

purposes

assignment
the

sufficiently

terms

clear.

by

of

this

analysis,

any

is

irrelevant

as

SDC

of

the

Further,

SDC

under

subsequent
it

Agreement,
the

terms

has

no

which
of

are

the

SDC

Agreement, SDC was simply free to assign its rights under that
agreement and to the Lease.
In sum, assignment under the SDC Agreement occurred on the
Transfer Date, March 14, 2014 and not on the date of agreement’s
execution,

as

the

agreement

did

not

trigger

a

present

or

immediate assignment. Prior written notice of this assignment
was given on February 19, 2014. On March 14, 2014, under the
terms of the SDC Agreement, assignment of Best Buy’s rights,
title, and interest in, to and under the Lease, was made to SDC
(“SDC

Assignment”).

Once

that

assignment

occurred,

the

3

Compare SDC Agreement with Levis Agreement (Rec. Doc. No. 22-5 at 176)(“SDC hereby assigns to Levis, and
Levis hereby assumes from SDC, all of SDC’s right, title and interests in, to and under the Prior Assignment).

13

assignment by SDC to Levis Partners became effective (“Levis
Assignment”).

Whether the SDC and Levis Assignments were in Accordance with
the Terms and Conditions of the Lease
Relevant Terms and Conditions of the Lease
Under the

terms of the

Lease, Tenant, Best Buy remains

liable for the full performance of all terms, covenants and
conditions. Prior to an assignment, prior written notice had to
be given to Bayou Liberty. (Rec. Doc. No. 22-5 at 23). Best Buy
was prohibited from conveying its right of occupancy, use and
enjoyment, and title to any Improvements without the specific
assumption of the entire Lease by the third party. (Rec. Doc.
No. 22-5 at 23).
Unrelated to Best Buy’s right of assignment is Best Buy’s
duty

to

obtain

and

maintain

insurance

and

provide

evidence

thereof annually, by January 31st of each year.4 (Rec. Doc. No.
22-5 at 23 at Section 22). The insurance policy had to require
thirty (30) days’ notice prior to cancellation, termination or
non-renewal. (Rec. Doc. No. 22-5 at

20).

In addition, under

Section 29 of the Lease, if Best Buy ceased operations in the
Leased Premises, and the remaining parcel had been developed as
4

General Liability Insurance: Tenant shall obtain and keep in force at Tenant’s expenses for the term of this Lease
commercial general liability insurance with a combined single limit of Five Million Dollars for each occurrence.
Fire and Extended Coverage Insurance: Tenant shall procure and maintain fire and extended coverage insurance in
an amount not less than the full replacement value of the Lease Premises, insuring Landlord (and mortgage lender)
and Tenant.

14

a

Shopping

Center,

Best

Buy

was

required

to

use

reasonable

efforts to find a subtenant or assignee to operate in the Leased
Premises.
The SDC Assignment
Best Buy provided prior written notice of the March 14,
2014

SDC

assignment.

(Rec.

Doc.

No.

22-5

at

194).

The

SDC

agreement provides that SDC “shall accept the assignment, and
assume and agree to perform and observe all of the obligations,
covenants, terms and conditions of Assignor, as tenant under the
Lease....” (Rec. Doc. No. 22-5 at 81). It is undisputed that
this agreement contained a specific assumption by the assignee,
SDC, of the Lease obligations. (Rec. Doc. No. 33 at 7).
Under Section 14 of the SDC Agreement, “Purchase Price for
Building

and

$1,654,000.00,

Improvements,”
for

initial

SDC

placement

was
into

to
an

pay

Best

escrow

Buy

account.

However, the Lease required Tenant to surrender possession of
the Leased Premises, including the building, upon expiration or
termination of the Lease. The foregoing provision’s terms are
ambiguous as to whether SDC and Best Buy intended for a sale of
the building. The Court concludes that it is a disputed issue of
material fact whether there was a sale of the building under the
SDC Agreement in contravention of the terms of the Lease. See
Comeaux v. C.F. Bean Corp., 750 So.2d 291 (La. App. 4 Cir.
12/15/99).
15

In this case, there is an insurance issue both related and
unrelated to the assignment. Best Buy claims to have provided
Bayou Liberty with the requisite annual insurance certificates
and to have provided the insurer with notification of vacancy.
Best

Buy’s

attachments

do

not

settle

the

issue

of

whether

insurance certificates were provided to Bayou Liberty by the
January 31st deadline, and/or whether thirty (30) day notice of
vacancy was given to the liability insurer, and/or whether a
copy

of

this

notification

was

sent

to

Bayou

Liberty,

all

consistent with Section 22 of the Lease. (Rec. Doc. No. 22-5 at
198-205). Thus, there is a genuine issue of material fact as to
whether Best Buy adhered to Section 22’s insurance notification
provisions

in

vacating

the

Leased

Premises

on

the

SDC

Assignment.
There is also a related “use” issue, as the Leased Premises
was subsequently developed. Best Buy claims to have complied
with Section 29 of the Lease by actually finding an assignee;
however, nothing in the SDC Agreement (or the Levis Agreement)
provides that SDC would operate the Leased Premises. Thus, it is
unclear

whether

Best

Buy

used

reasonable

efforts

to

find

a

subtenant or assignee to operate the Lease Premises. Therefore,
there

is

a

genuine

issue

of

material

fact

for

trial

as

to

whether, in ceasing operations and vacating the Leased Premises,

16

Best Buy used “reasonable efforts” under Section 29 to find a
subtenant or assignee to operate the Lease Premises.

The Levis Assignment
Bayou

Liberty

claims

that

prior

notice

of

the

Levis

assignment was not given by Best Buy. Best Buy appears to be
operating under the understanding that only prior notice of the
SDC assignment, the first assignment, was required under the
Lease. However, under the terms of the Lease, Best Buy remains
liable for the failure to provide prior notice of an assignment
or any other breach of terms and conditions. It is undisputed
that Bayou Liberty did not receive prior written notice of the
Levis Assignment. As prior notice of the Levis assignment was
required

under

the

Lease,

the

Court

cannot

find

that

the

assignment to Levis Partners was consistent with the terms of
the Lease.

Breach of Contract: Damages Requirement
Best Buy contends that Bayou Liberty’s breach of contract
claim fails as a matter of law, as Best Buy has continued to pay
rent, and Bayou Liberty has not otherwise suffered any damages
in the form of “lost rental opportunities.” Best Buy disregards
the fact that the Lease at issue is for a twenty (20) year term,
with approximately five to six years remaining on the lease.
17

Bayou Liberty also claims to have suffered damages as a
result of Best Buy’s failure to use reasonable efforts to find
an assignee to “operate” the Leased Premises as Best Buy was the
anchor tenant, and this failure affects the overall business
health of the shopping center. Best Buy further contends that
Best Buy failed to vacate the Lease Premises in good condition,
as required under the Lease. Bayou Liberty sufficiently pleads
damages

in

its

breach

of

contract

claim.

For

the

foregoing

reasons, Best Buy’s motion for partial summary judgment as to
liability on the breach of contract claims is denied.
Best Buy’s Counterclaims for Declaratory
Contract and Unfair Trade Practices

Relief,

Breach

of

Declaratory Judgment & Breach of Contract
Best Buy seeks partial summary judgment on its claim for a
declaration that Bayou Liberty is in violation of the Lease for
failing to timely provide a estoppel certificate to Best Buy.
The Lease provides that:
“Landlord and Tenant agree within thirty (30) days after
request therefor by the other to execute in recordable form
and deliver a statement, in writing, certifying (a) that
this Lease is in full force and effect...(e) that there are
no uncured defaults by Landlord or Tenant, or stating those
claimed by Tenant or by Landlord....”
(Rec. Doc. No. 22-5 at 29, Paragraph 31). Best Buy claims to
have requested an estoppel certificate on February 6, 2014 and

18

again on March 14, 2014. Bayou Liberty refused to provide one.
On

March

21,

2014,

Bayou

Liberty

provided

an

estoppel

certificate. (Rec. Doc. No. 22-5 at 14). Best Buy contends that
this delay interfered with Best Buy’s business relationship with
Levis

Partners,

judgment

on

and

its

therefore

breach

of

also

contract

seeks

partial

summary

Bayou

Liberty

claim.

acknowledges the delay. (Rec. Doc. No. 33 at 12). Therefore,
there is no genuine issue of material fact that Bayou Liberty
failed to timely deliver a written certification under Section
51 of the Lease.
However, for the Court to enter declaratory judgment on the
breach

of

addition

contract

to

claim

establishing

under
a

Louisiana

breach

of

law,

Best

Buy,

in

contractual

obligation,

must establish that the breach resulted in damages.

SnoWizard,

Inc. v. Robinson, 897 F.Supp. 2d 472, 478 (E.D. La. 2012). It is
unclear

whether

certificate

to

Bayou
Levis

Liberty’s
Partners

delay

interfered

in

furnishing

with

Best

a

Buy’s

business relationship with Levis, or rather, whether Best Buy’s
inability

to

obtain

a

“clean”

certificate

from

the

Landlord

dissuaded Levis Partners from completing the assignment.5
Levis Partners gave Best Buy notice of default on March 20,
2014, and again on April 2, 2014. (Rec. Doc. No. 30-6 at 6).
5

Levis Partners also claims that Best Buy has breached the SDC Agreement in a number other ways, including, Best
Buy’s failure (or inability) to certify that notice of default was not received from the Landlord under Section 9 of
the Lease Agreement, and Best Buy’s failure to provide a bill of sale. (Rec. Doc. No. 30-4 at 2, Paragraph 7; Rec.
Doc. No. 30-6 at 5).

19

However, according to Best Buy the estoppel certificate from
Bayou Liberty was finally obtained on March 21, 2014. (Rec. Doc.
No.

22-5

at

14;

Exhibit

12).

On

March

26,

2014,

Best

Buy

informed Levis Partners that an estoppel certificate from the
Landlord had been provided and that the certificate contained
allegations of default. (Rec. Doc. No. 30-6 at 7). Based on the
foregoing timeline, under the terms of the SDC Agreement, Best
Buy had an opportunity to cure default before the second notice
of

default

was

given,

after

accounting

for

Bayou

Liberty’s

delay. Thus, it is clear that a clean estoppel certificate was
critical

to

Levis

Partners

and

the

delay

was

likely

inconsequential. For these reasons, the Court declines to enter
partial summary judgment on Bayou Liberty’s liability on the
breach of contract claim.
II.

Bayou Liberty’s Motion to Continue Pursuant to FRCP 56(d)

To the extent Bayou Liberty’s motion seeks to continue the
submission date on the foregoing motion on the issue of whether
the October 17, 2011 SDC Agreement constituted an assignment of
the Lease, the Motion is denied as the Court has resolved the
issue related to contract interpretation as a matter of law.
Preston Law Firm, LLC v. Mariner Health Care Management, 622
F.3d 384, 392 n. 3 (5th Cir. 2010); In Re El Paso Refinery, LP,
171 F.3d 249, 257 (5th Cir. 1999). To the extent the motion
20

seeks to continue consideration on remaining issues, the motion
is dismissed as moot.
III.

Cross Motions for Summary Judgment by Best Buy and Levis
Partners
Best Buy seeks summary judgment to establish that: (1) Best

Buy is not in breach of the SDC Agreement; (2) that Levis is in
breach of the SDC Agreement for its withdrawal; and (3) that
Levis

must

satisfy

all

of

its

obligations

under

the

SDC

Agreement. Levis Partners moves for summary judgment: (1) to
have the claims asserted against it dismissed; (2) to establish
that its agreements with Best Buy are terminated; and (3) for
release of escrowed funds.
Contentions of Best Buy
Best Buy contends that Levis breached the SDC Agreement
through improper repudiation as Best Buy was still willing to
perform

on

the

contract;

and,

that

Best

Buy

itself

has

not

breached the agreement, and is therefore entitled to enforce it.
Contentions of Levis Partners
Levis Partners purchased SDC’s rights, title and interests
under the SDC Agreement and contends that Best Buy itself has
breached

the

SDC

Agreement

by

(1)

failing

to

“execute

and

deliver a certificate in favor of Levis as of the Transfer Date,
21

confirming that all statements, representations and warranties
contained in Section 9 of the SDC assignment are true, correct
and

complete”6;

and

(2)

failing

to

provide

an

estoppel

certificate, and a bill of sale conveying to Levis Partners Best
Buy’s interest in the building and improvements.7 Best Buy could
not certify to Levis Partners that Best Buy was not on notice of
a claimed default, as the estoppel certificate provided by the
Landlord contained allegations of default. Best Buy’s inability
to cure default in thirty (30) days terminated the agreement and
entitles Levis to a refund of escrowed funds.
Best Buy contends that the breaches alleged by the Landlord
in the estoppel certificate were demonstrably false; that the
alleged breaches were not material and did not impact Levis
Partners’ ability to take possession and make use of the Lease
Premises; and, that Levis Partners refused to accept a bill of
sale and keys to the property and refused to perform under the
SDC Agreement and take possession of the property.
6

Under Section 9 of the SDC Agreement, Best Buy represents, covenants and warrants: (a) a right to enter into the
agreement; (b) good title and full ownership of improvements on the Premises free and clear of all liens and
encumbrances; (c) that the Premise complies with all laws, ordinances, rules, etc.; (d) the absence of hazardous or
toxic waste, etc.; (e) that Best Buy has not received notice of any suits, judgments or violations relating to the
Premises; (f) that the Lease is in full effect; (g) that Best Bu currently occupies the Premises and has not transferred
assigned, or sublet any portion…; and (h) that to the best of Best Buy’s knowledge, all terms and conditions of the
Lease to be performed by Landlord or Best Buy necessary to the enforceability of the Lease have been satisfied and
neither Landlord nor Best Buy is in default…In addition, neither Landlord nor Best Buy has delivered any notice to
the other concerning an existing or potential default under the terms of the Lease…. (Rec. Doc. No. 30-7 at 6).
7
Levis Partners also claims Best Buy failed to provide the following: Best Buy’s most recent site survey; a copy of
any and all restrictive covenants or architectural guidelines affecting ownership and use; most recent title
insurance policy; copies of all geotechnical and environmental reports; and, a subordination, non-disturbance and
attornment agreement; and failing to delivery keys to the Premises and copies of preceding twelve months of
utilities. (Rec. Doc. No. 30-7 at 6).

22

Best Buy’s Breach of the SDC Agreement
The
defaults
warranty

SDC

Agreement

under
in

any

this

Section

8

provision,

Agreement,

and

provides
covenant,
fails

to

that

“if

Assignor

representation
cure

such

or

default

within thirty (30) days of Assignor’s receipt of written notice
of

such

remedies

default,

Assignee

available

at

shall

law

or

be

entitled

equity,

all

rights

including

and

specific

performance.” (Rec. Doc. No. 30-7 at 4).
Section 10(f) of the SDC Agreement provides that on the
Transfer Date

(March 14, 2014), [Best Buy] shall deliver to

[Levis Partners] (i) an estoppel certificate in accordance with
Section 31 of the Lease. Section 31 of the Lease, to which
Section 10(f) of the SDC Agreement refers, provides that the
estoppel

certificate

should

certify,

in

relevant

part,

that:

“(e) that there are no uncured defaults by Landlord or Tenant,
or stating those claimed by Tenant or stating those claimed by
Tenant or by Landlord.” (Rec. Doc. No. 22-5 at 29).
A “clean” estoppel certificate was not required under the
foregoing provision. Therefore, Best Buy could have satisfied
Section

10(f)

by

providing

an

estoppel

certificate

on

the

Transfer Date stating the defaults claimed by the Landlord. Best
Buy claims to have provided an estoppel certificate on March 21,
2014, and this is not disputed by Levis.

23

Section 10 (e) provides that: “[o]n or before the Execution
Date,

assignor

shall

deliver

to

assignee”

certain

specified

documents.8 As the Execution Date of the SDC Agreement precedes
the Levis Assignment, the Section 10(e) obligations could not
have been fulfilled by Best Buy with regard to Levis.
Section 10(a) is a condition to transfer and a condition
precedent

“to

the

Transfer

Date

under

this

Agreement,”

and

provides that: “[a]ssignor shall execute a certificate in favor
of assignee, dated as of the Transfer Date, confirming that all
statements, representations and warranties contained in Section
9 above are true, correct and complete as of the Transfer Date.”9
It is undisputed that Bayou Liberty’s allegations of default
continue

to

preclude

certification.
Section

8,

(Rec.

Best

Best

Buy

from

Doc.

No

22-2

is

in

default

Buy

at

making
20).
of

the

required

Therefore,

the

Section

under
10(a)

provision.
As Levis Partners’ obligation to complete the assignment is
subject

to

a

condition

precedent,

there

is

no

liability

or

obligation on the part of Levis and there can be no breach of
contract by Levis, unless and until the condition precedent is
performed or occurs. Cf. Yerger v. Simmons, 67 So. 3, *6 (La.
1914)(stating that ‘a condition precedent’ calls for some act or
8

(i) A recent survey and site plan; (ii) a copy of any and all restrictive covenants; (iii) assignor’s most recent title
insurance policy; (iv) copies of any and all environmental reports; (v) copies of any and all geotechnical reports;
and, (vi) copies of utility bills.
9
Supra text accompanying note 4.

24

event before the contract shall take effect”); Vector Elec. &
Controls, Inc. v. JE Merit Constructors, Inc., No. 2005CA2244,
2006WL3208462,

at

*1

(La.

App.

1

Cir.

11/8/06)(stating

that

“condition precedent is an obligation that must be performed
before the right dependent on it will accrue”). Louisiana Civil
Code

article

1990

provides

that:

“[w]hen

a

term

for

the

performance of an obligation is either fixed...the obligor is
put

in

default

by

the

mere

arrival

of

that

term.”

As

the

condition precedent was subject to a limited time, that is, as
of the Transfer Date with an additional time for cure, and the
condition has yet to be performed, the Court finds that Best Buy
has defaulted, thereby entitling Levis Partners to seek remedy
under Section 8 of the agreement.
Under Louisiana law, “where a party refuses and does not
merely

fail

obligation,

or
his

neglect
refusal

to

comply

constitutes

with

an

his

active

contractual

breach

of

the

contract.” Schaumburg v. State Farm Mut. Auto Ins. Co., 421 Fed.
Appx. 434, 438 (5th Cir. 2011)(citing Andrew Development Corp.
v. West Esplanade Corp., 347 So.2d 210, 212 (La. 1977)). The
foregoing;

however,

applies

in

the

anticipatory

repudiation

context. Sporting Land, LLC v. CHC Energy, LLC, No. 07-1692,
2007 WL 4124537, at *5 (W.D. La. Nov. 19, 2007); In re Merrill
Lynch

Auction

Rate

2010 WL 1924719

Securities

Litigation,

No.

09MD2030(LAP),

(S.D. N.Y. May 11, 2010)(citing Andrew Dev.
25

Corp. v. Esplanade Corp., 347 So.2d at 213). In other words,
anticipatory
there

is

repudiation

an

Schaumburg,

actual
for

announcement

is

not

refusal

example,

signified

actionable,

to

perform

the

intent

court
to

unless

by

the

until

obligor.

a

In

whether

analyzed

repudiate

and

an

contractual

obligation. 421 Fed. App’x. at 438.
This case is different: Best Buy has actually failed to
perform an obligation required by the agreement. Whether Best
Buy is still willing to perform is irrelevant as Best Buy is
precluded, and continues to be precluded from performing. This
is

not

a

case

where

there

is

time

remaining

to

perform

as

required. For these reasons, the Court grants the motion for
summary judgment by Levis Partners.

Levis Partners’ Entitlement to Escrow Funds
Levis

Partners

is

entitled

all

rights

and

remedies

available at law or equity under Section 8 of the SDC Agreement.
Louisiana

Civil

Code

article

995

provides

that

“damages

are

measured by the loss sustained by the obligee and the profit of
which he has been deprived.” Levis Partners claims loss in the
amount of escrowed funds paid under the SDC Agreement. The Court
finds that Levis Partners, LLC is entitled to release of the
funds paid into escrow by it.

26

Conclusion
Accordingly,
IT IS ORDERED that Best Buy’s Motion for Partial Summary
Judgment (Rec. Doc. No. 22) is GRANTED in part and DENIED in
part; that Bayou Liberty’s Motion Pursuant to FRCP 56(d) (Rec.
Doc. No. 31) is DENIED in part and DISMISSED AS MOOT; and that
Levis Partners’ Motion for Summary Judgment (Rec. Doc. No. 30)
is GRANTED.
New Orleans, Louisiana, this 2nd day of December, 2014.

____________________________
UNITED STATES DISTRICT JUDGE

27