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Bayou Liberty Property, LLC v. Best Buy Stores, Lp

United States District Court, E.D. Louisiana

December 2, 2014

BAYOU LIBERTY PROPERTY, LLC,
v.
BEST BUY STORES, LP, AND BEST BUY CO, INC., SECTION

ORDER AND REASONS

IVAN L.R. LEMELLE, District Judge.

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 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 a Memorandum of Lease, which was recorded in St. Tammany Parish, and provides restrictions on the Landlord's ability to lease or use the remainder of its parcel. The Ground 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 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) for declaratory judgment and breach of contract. Bayou Liberty seeks a declaration, pursuant to 28 U.S.C. ยง 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 efforts to find a subtenant or assignee to continue to operate the Lease Premises; (4) Best Buy's purported "sale" of the building when Best Buy has no legal ownership interest in immovable property belonging to Bayou Liberty; and (5) Best Buy's failure to maintain insurance coverage, providing certificates of insurance to Landlord, notifying its insurer-with 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 answer denying breaching any obligations to Bayou Liberty, and asserting counterclaims for: (1) declaratory relief - that Bayou Liberty is in violation of the Lease for failing to provide a timely estoppel certificate to Best Buy; (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. (Rec. Doc. No. 4). Levis Partners filed an answer denying the allegations and asserting affirmative defenses. (Rec. Doc. No. 17). 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).

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 was consistent with the terms of the Lease Agreement; and (4) as there is no violation of the Lease Agreement with Bayou Liberty, the assignee, Levis Partners, cannot "walk away." Although Best Buy entered 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; 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 ...


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