The opinion
NOT DESIGNATED FOR PUBLICATION
STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT
16-804
BLACK WATER MARSH, LLC
VERSUS
ROGER C. FERRISS PROPERTIES, INC.
**********
APPEAL FROM THE
FOURTEENTH JUDICIAL DISTRICT COURT
PARISH OF CALCASIEU, NO. 2011-4641 “F”
HONORABLE SHARON WILSON, DISTRICT JUDGE
**********
JOHN D. SAUNDERS
JUDGE
**********
Court composed of Ulysses Gene Thibodeaux, Chief Judge, John D. Saunders,
Marc T. Amy, Shannon J. Gremillion, and Candyce G. Perret, Judges.
AFFIRMED.
Amy, J., concurs in part, dissents in part, and assigns reasons.
David B. McCain
Jennifer M. Swann
McCain & Swann, L.L.C.
1800 Ryan St., Suite 102
Lake Charles, LA 70601
(337) 439-4571
COUNSEL FOR PLAINTIFF/APPELLANT/APPELLEE:
Black Water Marsh, L.L.C.
Gary Lavoi
Timothy O’Dowd
Attorney at Law
921 Ryan St., Suite D
Lake Charles, LA 70601
(337) 310-2304
COUNSEL FOR DEFENDANT/APPELLANT/APPELLEE:
Janice Ferriss
Roger C. Ferriss Properties, Inc.
SAUNDERS, Judge.
This is a case wherein the lessor breached a marsh lease that was improperly
recorded by the lessee. The lessor sold the property but failed to insure that the
lessee’s hunting rights were recognized by the purchaser. This created an action
for the lessee against the lessor under La.Civ.Code art. 2682.
The trial court awarded the lessee damages for the lessor’s breach of the
lease. The damages were reimbursement of the rent the lessee paid for the year of
the sale and reimbursement for improvements made on the property by the lessee
under La.Civ.Code art. 2695. The trial court denied the lessee’s request for
damages for lost profits under the remaining years of the breached lease and for
any debts the lessee may have to persons for the hunting memberships he sold to
them. Both lessor and lessee assign errors in this appeal.
FACTS AND PROCEDURAL HISTORY:
This case is before us for the third time. The first was via an unpublished
opinion, Black Water Marsh, LLC v. Roger C. Ferriss Properties, Inc., 12-423
(La.App. 3 Cir. 8/6/12). The second is in a published opinion wherein the
following facts and procedural history are hereby incorporated:
This litigation arises from a March 13, 2006 written marsh lease
agreement involving [600] acres of Calcasieu and Jefferson Davis
Parish immovable property. The parties are identified in the lease as
“Roger Ferris[s] Properties” as lessor, and “Black Water Marshes,
Inc.,” as lessee. Janice Ferriss executed the lease on behalf of Roger
Ferris[s] Properties, and Gary M. Lavoi executed the lease on behalf
of the named corporation. The lease provided for a twelve-year term
with an annual payment of $12,000.00, and generally provided that
Roger Ferriss Properties was granting the corporation hunting and
fishing privileges on the property. Of significance to this litigation is
the clause in the lease granting the lessee “the first right of refusal” of
the leased property “should leaser[sic] decide to sell said properties.”
On August 2, 2011, and after having a title search of the
Calcasieu and Jefferson Davis Parish conveyance records conducted
on his behalf, Timothy Litel purchased the property subject to the
lease from Roger C. Ferriss Properties, Inc., the record owner.
Although the marsh lease had been placed of record in both Calcasieu
and Jefferson Davis Parishes, the title search did not reveal its
existence as a result of various recording errors.
On October 11, 2011, the litigation now before us began with
the filing of a suit by Black Water Marsh, LLC, not Black Water
Marshes, Inc. The initial paragraph of the petition describes the
plaintiff as a Louisiana corporation having its domicile in Calcasieu
Parish, Louisiana, and being represented by “its duly authorized
president, GARY M. LAVOI.” The petition named Timothy J. Litel,
Roger C. Ferriss Properties, Inc., and Janice Ferriss as defendants and
sought (1) injunctive relief against Timothy J. Litel to prohibit him
from denying the plaintiff access to the property for the 2011 hunting
season; (2) dissolution of the act of sale between Roger C. Ferriss
Properties, Inc. and Timothy J. Litel; and (3) in the alternative, a
money judgment against the defendants for the losses the plaintiff
suffered as a result of being denied the right of first refusal in the sale
of the property.
Roger C. Ferriss Properties, Inc. responded to the petition on
November 14, 2011, by filing a dilatory exception of lack of
procedural capacity and peremptory exceptions of no right of action
and of no cause of action. Ms. Ferriss appeared as the pro se
representative of Roger C. Ferriss Properties, Inc. in the filing. On the
same day, Mr. Litel, represented by counsel, filed the same
exceptions, as did Ms. Ferriss individually, who was also represented
by counsel in her filing. Ms. Ferriss added the dilatory exception of
vagueness to the other three exceptions. All three defendants asserted
in the common exceptions that Black Water Marsh, LLC did not have
the right to enforce any rights that might belong to Black Water
Marshes, Inc., the entity that executed the lease; and that in fact, there
existed no corporation named Black Water Marshes, Inc.
Additionally, Ms. Ferriss asserted that because most of the petition
lumped her and Roger C. Ferriss Properties, Inc. together, she could
not safely plead to the allegations.
After a January 6, 2012 hearing on the exceptions, the trial
court rendered judgment rejecting the remaining exceptions filed by
Roger C. Ferriss Properties, Inc. and Ms. Ferriss, and executed a
judgment to this effect on January 30, 2012. In a separate judgment
executed the same day, the trial court, among other relief, rejected Mr.
Litel’s exception of lack of procedural capacity, but granted his
exceptions of no right and no cause of action, and dismissed the
claims against him.
By a pleading filed February 10, 2012, Black Water Marsh,
LLC sought reconsideration of the judgment in favor of Timothy J.
Litel, but before a hearing could be had on this motion, Roger Ferriss
Properties, Inc. and Ms. Ferriss sought supervisory writ relief from
this court. In an unpublished opinion rendered August 6, 2012, this
court found no error in the trial court’s rejection of the exception of no
2
cause of action, but found that the trial court erred in rejecting the
exception of no right of action without providing a time for
amendment of the pleadings to state a right of action. Black Water
Marsh, LLC v. Roger C. Ferriss Properties, Inc., 12-423 (La.App. 3
Cir. 8/6/12). In finding error in the trial court’s ruling on the exception
of no right of action, this court stated:
Respondent, Black Water Marsh, LLC, was not a party to
the lease at issue, and, therefore, has no standing to
enforce the terms of the lease. We, therefore, order that
Respondent amend its pleadings by no later than August
12, 2012, to add a proper party plaintiff under penalty of
dismissal.
Id.
On August 10, 2012, Black Water Marsh, LLC responded to
this court’s ruling by filing a second supplemental and amending
petition wherein it named Gary Lavoi d/b/a Black Water Marshes, Inc.
as an additional party plaintiff.
Roger C. Ferriss Properties, Inc. and Ms. Ferriss responded to
the addition of the new plaintiff by filing new peremptory exceptions
of no right and no cause of action. These exceptions, together with the
February 10, 2012 request for reconsideration of the ruling on Mr.
Litel’s exceptions, came for a hearing on October 5, 2012. This
hearing resulted in a trial court judgment executed on October 22,
2012, rejecting the exceptions filed by Roger C. Ferriss Properties,
Inc. and Ms. Ferriss, and rejecting the request for reconsideration of
the ruling granting Mr. Litel’s exceptions.
Black Water Marsh, LLC. v. Roger C. Ferriss Properties, Inc., 13-477, pp. 1-4
(La.App. 3 Cir. 1/8/14), 130 So.3d 968, 970-72 (footnotes omitted), writ denied,
14-660 (La. 5/2/14), 138 So.3d 1248.
This court affirmed the trial court’s judgment dismissing the claims of Black
Water Marsh, LLC and Gary Lavoi d/b/a Black Water Marshes, Inc. against
Timothy J. Litel via the grant of the peremptory exception of no cause of action.
After writs were denied, a trial was held on this matter in February 2016.
On February 5, 2016, the trial court ruled in favor of Ferriss on Lavoi’s
claim of right of first refusal. The trial court noted that Ferriss had offered to sell
Lavoi the property, but Lavoi did not accept the offer within 30 days. The trial
3
court found in favor of Lavoi on the breach of lease claim, awarding damages to
Lavoi in the amount of $105,000.00. This amount was reached by awarding Lavoi
$12,000.00 for rent money paid in 2011, and for improvements to the leased
premises under La.Civ.Code art. 2695 in the amount of $93,000.00. The trial court
found Mrs. Ferriss personally liable under the now repealed, but then in effect,
La.R.S. 12:142.1. Finally, the trial court denied Lavoi’s request for damages for
lost profits. Both Lavoi and Ferriss appeal this judgment.
FERRISS’ ASSIGNMENTS OF ERROR:
1. The trial court erred in finding that Ferriss breached the lease
with Lavoi.
2. The trial court legally erred in finding that Lavoi was damaged
by the sale of the leased premises, in awarding excessive damages and
in granting reimbursement pursuant to [La.Civ.Code art.] 2695 for
leasehold improvements that was neither demanded upon termination
of lease rights, plead, or presented at trial.
3. The trial court legally erred in finding that Janice Ferriss was
personally liable for any damages that Lavoi may have sustained.
LAVOI’S ASSIGNMENTS OF ERROR:
1. The Trial Court erred as a matter of law in holding that Lavoi
had a duty to “mitigate his damages” by agreeing to a new lease with
the new buyer-owner under clearly less favorable terms, a condition
of which would have been a release of claims for remaining years of
the lease.
2. The Trial Court erred in failing to award Lavoi damages for his
loss of profits for the last six years of the lease.
3. The Trial Court erred in failing to award Lavoi any damages for
his responsibility to return his hunting club members their hunting and
fishing fees that had already been collected for the 2011-2012 season.
FERRISS’ ASSIGNMENT OF ERROR NUMBER ONE:
Ferriss asserts that the trial court erred in finding that they breached the lease
with Lavoi in their first assignment of error. We disagree.
4
When an issue raised on appeal posits a question of law, the standard of
review is that of de novo wherein the appellate court determines whether the lower
court was legally correct. Tran v. Williams, 10-1030 (La.App. 3 Cir. 2/9/11), 56
So.3d 1224.
Louisiana Civil Code Article 2682 states, “The lessor is bound: (1) To
deliver the thing to the lessee; (2) To maintain the thing in a condition suitable for
the purpose of which it was leased; and (3) To protect the lessee’s peaceful
possession for the duration of the lease.”
Ferriss argues that any loss Lavoi may have suffered is a result of his own
actions, not as a result of the sale to Litel. This argument does not address the
assigned error. The assigned error is that the trial court erred in finding that Ferriss
breached the lease with Lavoi. Contrarily, Ferriss’ argument is regarding whether
Lavoi suffered any damages as a result of the breach of the lease.
It is clear that Ferriss breached the lease with Lavoi. They had a duty to
insure Lavoi’s “peaceful possession for the duration of the lease” and failed to do
so when they sold the land to Litel without insuring that Litel would honor that
lease as a condition of the sale. Accordingly, we find no merit to this assignment
of error.
FERRISS’ ASSIGNMENT OF ERROR NUMBER TWO:
In their second assignment of error, Ferriss asserts that the trial court legally
erred in awarding Lavoi reimbursement of the rent he paid Ferriss for the 2011
hunting season and in awarding Lavoi reimbursement pursuant to La.Civ.Code art.
2695 for leasehold improvements that were neither demanded upon termination of
lease rights, plead, or presented at trial. We find no merit to this assignment of
error.
5
As noted above, when an issue raised on appeal posits a question of law, the
standard of review is that of de novo wherein the appellate court determines
whether the lower court was legally correct. Tran, 56 So.3d 1224. Louisiana Civil
Code Article 2712 states:
A third person who acquires an immovable that is subject to an
unrecorded lease is not bound by the lease.
In the absence of a contrary provision in the lease contract, the
lessee has an action against the lessor for any loss the lessee sustained
as a result of the transfer.
First, Ferriss contends that the trial court erroneously found that Lavoi is
entitled to reimbursement of the rent he paid to Ferriss for the 2011 hunting season.
According to Ferriss, Lavoi did not suffer any loss due to any alleged breach of
their lease for the 2011 hunting season because Lavoi received payment from the
members of his hunting club for the 2011 hunting season.
After reviewing the record, it is accurate that Lavoi was paid membership
dues by hunting club members for the 2011 hunting season, as Lavoi testified as
such. However, the evidence in the record also establishes that Lavoi was denied
the right to hunt for most of the 2011 hunting season despite the fact that Lavoi
paid rent in 2011 for certain hunting rights. Quite simply, Lavoi did not get what
he paid for from Ferriss in the 2011 hunting season. As such, we find no merit to
Ferriss’ assertion that Lavoi did not suffer any loss by any alleged breach of their
lease during the 2011 hunting season, and the trial court made no legal error in this
regard.
Ferriss next argues that the trial court erroneously reimbursed Lavoi the rent
he paid for the 2011 hunting season because Lavoi failed to mitigate the damages
he suffered during the 2011 hunting season. According to Ferriss, Lavoi could
6
have suffered no damages for the 2011 hunting season by entering into a lease with
Litel.
The scope of the duty to mitigate damages is determined on a case by case
basis, and actions that are likely futile or unduly costly are not required by a party.
MB Indus., LLC v. CNA Ins. Co., 11-303 (La. 10/25/11), 74 So.3d 1173. A trial
court’s determination regarding whether an injured party failed to mitigate its
damages is subject to the manifest error standard of review. Al’s Trucking, Inc. v.
State Farm Fire & Cas. Co., 98-1542 (La.App. 3 Cir. 5/12/99), 735 So.2d 833,
writ denied, 99-1681 (La. 9/24/99), 747 So.2d 1122.
The record indicates that during the 2011 hunting season, Lavoi was in
negotiations with Litel as to what rights, if any, he and his hunting club members
could acquire or preserve on the land. During these negotiations, Litel actually
sent a letter to Lavoi that he was not to enter into the land or he would be treated as
a trespasser. The time that these negotiations took place interrupted a portion of
the 2011 hunting season. Further, it is reasonable to find that such negotiations
would take time to transpire and this time would continue to disrupt the 2011
hunting season, one which Lavoi already had a right to hunt the land under the
lease between he and Ferriss. The 2011 hunting season was disrupted due to
Ferriss’ failure to insure that their lease with Lavoi was honored prior to selling the
land. As such, given the circumstances present during the 2011 hunting season, we
cannot say that the trial court was manifestly erroneous in giving no credence to
Ferriss’ assertion that Lavoi failed to mitigate his damages incurred during that
season. Likewise, we find no error by the trial court in finding that Ferriss owes
Lavoi reimbursement for the rent Lavoi paid for the 2011 hunting season.
We note that it was established in the record that Lavoi leased the land to
conduct a hunting club business that harvested ducks, alligators, and other wildlife.
7
It is true that Lavio had use of the property for roughly four months in 2011.
However, a reduction of the full year’s reimbursement granted by the trial court is
improper. We take judicial notice of the Louisiana Department of Wildlife and
Fisheries hunting seasons for 2011. No hunting season was open for any species
of wildlife for which Lavoi had been using the land. Rather, the months for which
Lavoi had access to the land are generally when a hunter prepares the land in order
for it to be hunted for those species his club had been hunting. While the lease
didn’t specify which species of animals were to be hunted, the record establishes
the actual use of the land under the lease. In this situation, to reduce the value of
the reimbursement of the rent, or remove it altogether, would be akin to reducing a
farmer’s entitlement to reimbursement for a portion of his annual lease because he
was able to plant his crops, regardless of the fact that he was unable to harvest said
crops, simply because he had access to the land to plant those crops and the
farming lease simply said it was a farming lease rather than saying it was a lease to
plant and harvest crops.
Next, Ferriss avers that the trial court improperly awarded Lavoi
reimbursement pursuant to La.Civ.Code art. 2695 for leasehold improvements that
were neither demanded upon termination of lease rights, plead, or presented at
trial. Louisiana Civil Code Article 2695 states:
In the absence of contrary agreement, upon termination of the
lease, the rights and obligations of the parties with regard to
attachments, additions, or other improvements made to the leased
thing by the lessee are as follows:
(1) The lessee may remove all improvements that he made to
the leased thing, provided that he restore the thing to its former
condition.
(2) If the lessee does not remove the improvements, the lessor
may:
8
(a) Appropriate ownership of the improvements by reimbursing
the lessee for their costs or for the enhanced value of the leased thing
whichever is less; or
(b) Demand that the lessee remove the improvements within a
reasonable time and restore the leased thing to its former condition. If
the lessee fails to do so, the lessor may remove the improvements and
restore the leased thing to its former condition at the expense of the
lessee or appropriate ownership of the improvements without any
obligation of reimbursement to the lessee. Appropriation of the
improvement by the lessor may only be accomplished by providing
additional notice by certified mail to the lessee after expiration of the
time given the lessee to remove the improvements.
(c) Until such time as the lessor appropriates the improvement,
the improvements shall remain the property of the lessee and the
lessee shall be solely responsible for any harm caused by the
improvements.
Ferriss argues that because Lavoi did not demand reimbursement for
leasehold improvements or plead the issue, they did not present evidence to show
the minimal enhanced value the leasehold improvements added to the property. As
such, according to Ferriss, the trial court’s award to Lavoi of $93,000.00,
representing the actual cost of the leasehold improvements paid by Lavoi, denied
Ferriss the right to pay “whichever is less” under La.Civ.Code art. 2695(2)(a).
First, we address whether the pleadings were properly expanded. Louisiana
Code of Civil Procedure Article 1154 states, in pertinent part, “[w]hen issues not
raised by the pleadings are tried by express or implied consent of the parties, they
shall be treated in all respects as if they had been raised by the pleading.” The
supreme court, in Roberson v. Provident House, 576 So.2d 992, 995 (La.1991),
stated: “The general rule . . . is that pleadings may be enlarged by evidence
adduced without objection when such evidence is not pertinent to any other issue
raised by the pleadings and, hence, would have been excluded if objected to
timely.”
9
The standard of review applicable to the propriety of evidence expressly or
impliedly expanding the pleadings is that of abuse of discretion afforded the trial
court. In re Eleanor Pierce (Marshall) Stevens Living Trust, 14-697 (La.App. 3
Cir. 2/18/15), 159 So.3d 1101.
Here, Exhibit P-17 was admitted into evidence without objection. P-17
consists of receipts for actual amounts paid by Lavoi in constructing a camp on the
property he was leasing from Ferriss. Lavoi and Ferriss do not agree why these
receipts were admitted into evidence.
Ferriss contends that these receipts were introduced in connection with
Lavoi’s request for lost profits because Litel re-sold the property for a profit which
Lavoi felt he should have received. According to Ferriss, Lavoi was seeking lost
profits, not leasehold improvements.
Lavoi points to evidence in the record that he asserts indicates otherwise. In
Lavoi’s testimony relative to the admission of P-17, the following took place:
Q. [W]as the corporation [Blackwater Marsh, L.L.C.] able to let
hunters hunt during that season?
A. No.
Q. And were you able to provide that right to Blackwater Marsh,
L.L.C. as Gary Lavoi individually?
A. I was not.
Q. And as the reason that you, individually, were not able to
provide that service to them is because Janice Ferriss breached
her lease with you?
A. Yes.
Q. What about any amounts that Blackwater Marsh put into the
building of the camp on the Ferriss property?
A. Loss that [sic].
Q. Did you start - - had there been a camp on the property that was
destroyed?
10
A. Yes.
Q. Did you more or less have to tear something down and start
over again?
A. Yes.
Q. And this was on the Ferriss Property?
A. Yes.
Q. And so for several years, did you save the receipts for the
improvements that were going onto that camp that you were
building on the Ferriss Property?
A. Yes.
Q. Did [you] ever complete construction of it?
A. No.
Q. About what percentage of completion did you think you got to?
A. Over half, probably around sixty percent.
Q. And did it ever reach a point that you were able to let the
hunters of the club use that property?
A. No.
Q. So you were expending money toward that camp, but you never
got to reap any benefit from it because the lease was dishonored
before the hunters could even use that; is that correct?
A. Yes.
Q. I’m going to show you a list of receipts for improvements
which were made on the camp on the Ferriss property. I’m
going to ask you look through that list, of course, I’ve asked
you to do this previously. But while you’re here in court, go
ahead and look at that list again. And tell me, is that a list of
the invoices that were expended for improvements made, the
building of the camp that was being constructed on the Ferriss
[property]?
A. Yes, this does look like a list of the receipts that I did use for
the camp on the Ferriss property.
Q. And you never got any benefit whatsoever from it?
11
A. That is correct. I did not.
Q. Nor did Blackwater Marsh?
A. Nor did Blackwater Marsh.
Q. Nor did the hunters?
A. Nor did the hunters.
MR. MCCAIN:
I offer as “P-17” this list with receipts attached.
THE COURT:
Is there an objection?
MR. O’DOWD:
No objection.
Given the excerpt above, we cannot say that the trial court abused its great
discretion to expand Lavoi’s pleading to include a claim for reimbursement for
improvements made on the land. The testimony above, directly leading to P-17’s
admission without objection, certainly was sufficient to put Ferriss on notice that it
could be liable for these type of damages not specifically plead. As such, we find
no error by the trial court in expanding the pleadings to allow for an award to
Lavoi of $93,000.00 for reimbursement of leasehold improvements added to the
property.
Next, we address whether the trial court’s award denied Ferriss the right to
pay “whichever is less” under La.Civ.Code art. 2695(2)(a), as she alleges. In its
oral reasons for judgment, the trial court stated that La.Civ.Code art. 2695 was the
basis for its award to Lavoi of $93,000.00 for reimbursement of leasehold
improvements added to the property.
Louisiana Civil Code Article 2695 states, in pertinent part (emphasis added):
12
In the absence of contrary agreement, upon termination of the
lease, the rights and obligations of the parties with regard to
attachments, additions, or other improvements made to the leased
thing by the lessee are as follows:
(1) The lessee may remove all improvements that he made to the
leased thing, provided that he restore the thing to its former condition.
(2) If the lessee does not remove the improvements, the lessor may:
(a) Appropriate ownership of the improvements by reimbursing the
lessee for their costs or for the enhanced value of the leased thing
whichever is less; or
(b) Demand that the lessee remove the improvements within a
reasonable time and restore the leased thing to its former condition. If
the lessee fails to do so, the lessor may remove the improvements and
restore the leased thing to its former condition at the expense of the
lessee or appropriate ownership of the improvements without any
obligation of reimbursement to the lessee. Appropriation of the
improvement by the lessor may only be accomplished by providing
additional notice by certified mail to the lessee after expiration of the
time given the lessee to remove the improvements.
(c) Until such time as the lessor appropriates the improvement, the
improvements shall remain the property of the lessee and the lessee
shall be solely responsible for any harm caused by the improvements.
Our reading of La.Civ.Code art. 2695 is that it does not apply under the facts
of this case because the lease was not terminated. The trial court seemingly agreed
in its oral reasons for judgment when it stated, “[I]t is clear to me that the parties
were bound under this lease for a period of twelve years, and the lease commenced
on March 13, 2006.” Without termination of the lease, Article 2695 does not
apply.
Moreover, even if La.Civ.Code art. 2695 were to apply, Ferriss must
appropriate ownership of the improvements prior to being given the opportunity to
reimburse Lavoi either the lesser of improvement cost or enhanced value. This
requires Ferriss to take certain actions of which there is no evidence in the record
that she did.
13
As such, the trial court clearly stated the incorrect code article as its basis for
its award to Lavoi of $93,000.00 for reimbursement of leasehold improvements
added to the property in its reasons for judgment. However, this does not mean
that an error of law has occurred or that the award must be reversed.
[A]ppellate courts review judgments, not reasons for judgment.”
Bellard v. American Cent. Ins. Co., 2007–1335 p. 25 (La.4/18/08),
980 So.2d 654, 671; Greater New Orleans Expressway Commission v.
Olivier, 2002–2795 p. 3 (La.11/18/03), 860 So.2d 22, 24 (“Appeals
are taken from the judgment, not the written reasons for judgment.”);
La. C.C.P. arts. 1918, 2082 and 2083. Judgments are often upheld on
appeal for reasons different than those assigned by the district judges.
“The written reasons for judgment are merely an explication of the
trial court’s determinations. They do not alter, amend, or affect the
final judgment being appealed. . . .” State in the Interest of Mason,
356 So.2d 530, 532 (La.App. 1 Cir.1977).
Wooley v. Lucksinger, 09-571, pp. 77-78 (La. 4/1/11), 61 So.3d 507, 572.
Louisiana Civil Code Article 2712 states:
A third person who acquires an immovable that is subject to an
unrecorded lease is not bound by the lease.
In the absence of a contrary provision in the lease contract, the
lessee has an action against the lessor for any loss the lessee sustained
as a result of the transfer.
Article 2712 allows for the trial court to have awarded Lavoi $93,000.00 for
reimbursement of leasehold improvements added to the property as the amount he
paid for the materials qualify as a loss he sustained due to the transfer. Further, it
is clear from our review of the record that a reasonable basis exists to uphold the
trial court’s award from those materials. Lavoi presented evidence, via Exhibit P-
17 in the form of receipts that indicate he paid $93,000.00 for the improvements
made to the land. Accordingly, we find no error in the trial court’s award of this
amount to Lavoi and no merit to this assignment of error.
FERRISS’ ASSIGNMENT OF ERROR NUMBER THREE:
14
In its final assignment of error, Ferriss avers that the trial court legally erred
in finding that Janice Ferriss was personally liable for any damages that Lavoi may
have sustained. We disagree.
Louisiana Revised Statutes 12:142.1, repealed by 2014 La. Acts No. 328, §
5, effective January 1, 2015 (emphasis added), stated:
A. In addition to all other methods of dissolution, if the
corporation is not doing business, owes no debts, and owns no
immovable property, it may be dissolved by filing an affidavit with
the secretary of state executed by the shareholders, or by the
incorporator if no shares have been issued, attesting to such facts and
requesting that the corporation be dissolved. Thereafter, the
shareholders, or the incorporator if no shares have been issued, shall
be personally liable for any debts or claims, if any, against the
corporation in proportion to their ownership in the shares of the
corporation.
B. The secretary of state shall reinstate a corporation which has
been dissolved pursuant to this Section only upon receipt of a court
order directing him to so reinstate the corporation.
On December 19, 2013, Janice Ferriss signed an affidavit to dissolve
corporation. Under the language of La.R.S. 12:142.1 in effect at that time, Janice
Ferriss is personally liable for “any debts or claims . . . against the corporation.”
While we recognize that the law has since been changed, there is no doubt
that the trial court was legally correct in finding that Janice Ferriss was personally
liable in this matter under the applicable law at that time. As such, we find that
this assignment of error lacks merit.
LAVOI’S ASSIGNMENT OF ERROR NUMBER ONE:
In Lavoi’s first assignment of error, he contends that the trial court erred as a
matter of law in holding that he had a duty to mitigate his damages by agreeing to a
new lease with Litel under less favorable terms including a condition to release the
claims for remaining years of the lease. We find no merit to this assignment of
error.
15
As stated above in Ferriss’ assignment of error number two, the scope of the
duty to mitigate damages is determined on a case by case basis, and actions that are
likely futile or unduly costly are not required by a party subject to the manifest
error standard of review. See MB Indus., LLC, 74 So.3d 1173, and Al’s Trucking,
Inc., 735 So.2d 833, respectively.
“An obligee must make reasonable efforts to mitigate the damage caused by
the obligor’s failure to perform. When an obligee fails to make these efforts, the
obligor may demand that the damages be accordingly reduced.” La.Civ.Code art.
2002.
Perhaps the best exposition of the principle [of mitigation of
damages] . . . appears in 22 American Jurisprudence, 2d, pages 53, 61
and 282, verbo ‘Damages’ (Sections 32, 37 and 203). Therein it is
stated: ‘Section 32. Under the doctrine of avoidable consequences,
The injured person need not make extraordinary efforts or do what is
unreasonable or impracticable in his efforts to minimize damages;
reasonable diligence and ordinary care are all that is required to allow
full recovery of all damages caused by the defendant’s wrongful
activity. More completely stated, the consequences of an injury are
recoverable where the injured party acts with such care and diligence
as a man of Ordinary prudence would under the circumstances, and
his efforts to minimize damages are determined by the rules of
common sense, good faith, and fair dealing. What constitutes
reasonable care depends upon the circumstances of the particular case,
taking into consideration time, knowledge, opportunity, and expense.
An injured person may recover to the full extent of his injury where
he shows reasonable grounds for his failure to make an effort to lessen
his damages. Thus, the repeated assurances of the defendant after an
injury has begun that he will remedy the condition is sufficient
justification for the plaintiff’s failure to take steps to minimize loss, so
long, at least, as there is ground for expecting that he will perform.
‘Section 37. Following a breach, it is Sometimes possible for
the nondefaulting party to minimize his damages by spending a sum
of money. If the courts were to require this expenditure in Every case
in which it turns out, as a matter of Hindsight, that such expenditure
would have minimized the loss, courts would effectively be requiring
the innocent party to incur risks beyond those in the contract In the
hope that damages could be recovered from the breacher. Therefore,
courts generally do not determine damages based upon the making of
these expenditures unless (1) they are small in comparison to the
possible losses, and (2) It is virtually certain that the risks incurred
will avoid at least a part of the loss. Damages will not be decreased
16
through showing that a Substantial expenditure would have minimized
the total loss or that the suggested expenditure may or may not have
decreased damages. The defaulter is in no position to cast this risk of
substantial expenditures on the plaintiff. Since such risks arose
because of the breach, they are to be borne by the defaulting party.
‘Where the party whose duty it is to perform a contract has
equal opportunity for performance and equal knowledge of the
consequences of nonperformance, he cannot, while the contract is
subsisting and in force, be heard to say that the plaintiff might have
performed for him. Thus, where one who is bound to indemnify
another points out to the latter how he may avoid the loss, the
indemnitee is not bound to resort to such means if the indemnitor had
an equal opportunity to avail himself thereof. * * *
‘Section 203. * * * Following breach, the nondefaulting party’s
damages will be measured as though he had acted Reasonably in not
enhancing the damages caused by the breach. To the extent that the
nondefaulting party has not acted reasonably and has thereby failed to
avoid certain consequences which are now claimed as damages, the
party who is in default may show those consequences in reduction of
damages. Therefore, if a Reasonably prudent person acting under the
facts and circumstances in which the nondefaulting party found
himself would have minimized the claimed losses by entering into
other contracts either with a third party or, in some jurisdictions, with
the defaulting party, this fact may be shown in reduction of damages.
* * * The party who is in default may not, however, mitigate his
damages by showing that the other party Could have reduced those
damages by expending large amounts of money or by incurring
substantial obligations.’ (Italics ours.)
Unverzagt v. Young Builders, Inc., 252 La. 1091, 1097-99, 215 So.2d 823, 825-26
(La.1968).
Here, the trial court found “Mr. [Litel’s] testimony to be very truthful and
very forthright. . . . Mr. [Litel] bought this property with the knowledge that there
was an existing lease. And I believe his testimony when he says that he intended to
honor that lease.” The trial court also found that “Mr. Lavoi was very much
interested in the right of first refusal and owning this property. . . . [T]hat’s what he
was chasing. [Mr. Lavoi] actually became an obstructionist to the process of
continuing this business.”
17
After a thorough review of the record, we find sufficient evidence to support
the trial court’s findings. Mr. Litel testified that he intended to honor the lease
between Ferriss and Lavoi. According to a letter dated September 7, 2011, in order
for Lavoi and his hunting club members to continue to hunt, Lavoi would have had
to agree to cancel his lease with Ferriss, release Ferriss from any responsibility
owed to him, and enter into a new lease with Litel. While it is certainly
contestable whether all the proposed stipulations made by Litel in the September 7,
2011 letter were reasonable, this letter is evidence to support Litel’s testimony and
the trial court’s finding that Litel had every intention to continue to allow Lavoi to
conduct his business. Given Litel’s testimony, this letter, and the applicable
standard of review, we cannot say that the trial court’s finding that Lavoi failed to
mitigate his damages was unreasonable or manifestly erroneous.
LAVOI’S ASSIGNMENT OF ERROR NUMBER TWO:
Next, Lavoi asserts that the trial court erred in failing to award him damages
for his loss of profits for the last six years of the lease. We disagree.
“Damages are measured by the loss sustained by the obligee and the profit of
which he has been deprived.” La.Civ.Code art. 1995. “An obligor in good faith is
liable only for the damages that were foreseeable at the time the contract was
made.” La.Civ.Code art. 1996. “The rule is that lost profits, as an element of
damages for the breach of a contract, may be recovered where they are not
speculative or uncertain in their nature, and are susceptible of proof with
reasonable certainty.” George W. Garig Transfer, Inc. v. Harris, 226 La. 117, 130,
75 So.2d 28, 33 (La.1954). The standard of review applicable on appellate review
of whether to award damages for lost profits is abuse of discretion. La. Farms v.
La. Dept. of Wildlife and Fisheries, 95-845 (La.App. 3 Cir. 10/9/96), 685 So.2d
18
1086, writs denied, 97-486 (La. 4/4/97), 692 So.2d 420, 97-507 (La. 4/4/97), 692
So.2d 422.
Here, Lavoi seeks to recover $468,000.00 in lost profits. However, in order
to recover these lost profits, Lavoi must show that he was damaged by Ferriss’
breach of the lease for the remaining years on that lease. In Lavoi’s assignment of
error number one, we found no manifest error by the trial court when it determined
that Lavoi was not entitled to damages for the remaining years of his lease with
Ferriss because Lavoi failed to mitigate his damages by entering into a new lease
with Litel. Accordingly, this assignment of error is pretermitted.
We do note, however, that Lavoi supports his claim for lost profits with only
his own testimony, his handwritten five-year plan, and his tax records for the
previous years under the lease. These tax returns indicate that Lavoi earned a net
profit averaging $8,078.00 yearly. While we need not reach the issue given our
upholding of the trial court’s reasoning above, it certainly can be argued that
Lavoi’s requested $468,000.00 in lost profits is speculative and unsupported by the
evidence in the record.
LAVOI’S ASSIGNMENT OF ERROR NUMBER THREE:
Lavoi avers that the trial court erred in failing to award any damages for his
responsibility to return his hunting club members their hunting and fishing fees
that had already been collected for the 2011-2012 season in the last error assigned.
We find no merit to this assignment.
A plaintiff had the burden to prove damages suffered due to a defendant’s
fault and must support any award for the damages with evidence in the record.
Borden, Inc. v. Howard Trucking Co. Inc., 454 So.2d 1081 (La.1983). A
determination whether to award damages for an item when a lease is breached is
subject to appellate review under the abuse of discretion standard. Hai Nam
19
Chinese Rest. P’ship v. B & B Const. of New Iberia, 06-729 (La.App. 3 Cir.
11/2/06), 942 So.2d 97, writ denied, 06-2751 (La. 1/26/07), 34 So.3d 261.
Here, there is no evidence in the record that any club member demanded
Lavoi to return their 2011 hunting season dues. In fact, Lavoi admitted that no
demands were made or lawsuits filed at the time of the trial by any members for
the return of their dues. Further, there is no evidence in the record that Lavoi
actually refunded any dues. Finally, even if Lavoi had produced evidence of such
demands, suits or refunds, there is no evidence in the record that Lavoi invested
any of these membership dues into the land for purposes of providing hunting to
the members.
Accordingly, we find no abuse of the trial court’s discretion in denying
Lavoi’s request to be awarded damages for his potential responsibility to return his
hunting club members their hunting and fishing dues that had already been
collected for the 2011-2012 season.
DISPOSITION:
Janice Ferriss and Gary M. Lavoi each raise three assignments of error. We
find no merit to any of the assignments raised. As such, we affirm the trial court’s
judgment and assess the costs of these proceedings to be split equally between
Janice Ferriss and Gary M. Lavoi.
AFFIRMED.
This opinion is NOT DESIGNATED FOR PUBLICATION.
Uniform Rules– Courts of Appeal, Rule 2–16.3.
20
NUMBER 16-804
COURT OF APPEAL, THIRD CIRCUIT
STATE OF LOUISIANA
BLACK WATER MARSH, LLC
VERSUS
ROGER C. FERRISS PROPERTIES, INC.
AMY, J., concurring in part and dissenting in part.
I respectfully dissent from the majority opinion in two respects. First, I
dissent from the award of the entirety of the 2011 rental payment. Notably, the
record indicates that the $12,000 annual payment required by the lease became
due—and was paid—in March 2011. The transfer of the property did not occur
until August 2011.
In shaping the award, the trial court addressed this lease, and the rental
payment, within the context of “hunting season[.]” Yet, the “Marsh Lease” is for
the entirety of the year and is not limited to hunting rights (other than those the
lessor reserved for her own family members) or a particular type of hunting. It
instead generally refers to a “HUNTING and FISHING privilege[.]” Thus, the
award of the entire year’s rental payment due to the plaintiff’s inability to enjoy
“hunting season” is error in my view. Also, the lessee explained that, in addition
to a hunting club, he offered membership for fishing on the property. Accordingly,
I would reduce the $12,000 award to account for the four months of use prior to the
transfer of the property.
Second, I dissent from the majority’s affirmation of the entirety of the
$93,000 as “any loss the lessee sustained as a result of the transfer” per
La.Civ.Code art. 2712. Instead, I do not find support for that figure as the record
amount of expenditures on the property. At most, I find that the record supports an
award of the approximately $14,000 of receipts reflected in Exhibit P-17.
Accordingly, I would affirm the trial court’s award only to the amount reflected in
that exhibit, reversing the remainder of the award for expenditures.
Although I dissent from the majority opinion on these issues, I concur in the
majority’s affirmation of the remainder of the judgment.
2