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Malik & Sons, LLC v. Circle K Stores Inc.

United States District Court, E.D. Louisiana

January 25, 2017

MALIK & SONS, LLC, Plaintiff
v.
CIRCLE K STORES, INC., Defendant

         SECTION: “E” (5)

          ORDER AND REASONS

          SUSIE MORGAN, UNITED STATES DISTRICT JUDGE

         Before the Court is a motion in limine and supplemental motion in limine filed by Plaintiff Malik & Son's, LLC (“Plaintiff”).[1] The motions are opposed.[2] For the following reasons, the motions in limine are DENIED IN PART and GRANTED IN PART.

         Plaintiff seeks to exclude evidence and testimony with respect to four issues: (1) Circle K's claim that Plaintiff failed to mitigate its damages, (2) Nancy Shirar's testimony regarding what she would have done under different circumstances, (3) Scott Dusang's testimony regarding what he would have done under different circumstances, and (4) Circle K's argument that a vice of consent existed. The Court will address each in turn.

         I. Mitigation of Damages

         Plaintiff seeks to exclude evidence or testimony that it failed to mitigate its damages.[3] Circle K contends Plaintiff had a duty to mitigate its damages under Louisiana Civil Code article 2002, and evidence as to whether Plaintiff reasonably fulfilled this duty is admissible.[4]

         Both parties cited Louisiana cases in support of their positions. In fact, there is a split among the Louisiana courts of appeal with respect to whether a lessor has the duty to mitigate his or her damages under Louisiana Civil Code article 2002 in the event of a lessee's default.[5] The Louisiana Supreme Court has not yet ruled on this issue. The Court need not decide this issue as Louisiana Civil Code article 1983, rather than article 2002, is the basis of the Court's opinion.

         Louisiana Civil Code article 1983 provides the contract is the law between the parties.[6] “The Civil Code, while defining and governing the relationship of the parties to a lease, still leaves the parties free to contractually agree to alter or deviate from all but the most fundamental provisions of the Civil Code, which govern their lease relationship.”[7]“[T]he codal articles and statutes defining the rights and obligations of lessors and lessees are not prohibitory laws which are unalterable by contractual agreement, but are simply intended to regulate the relationship between the lessor and lessee when there is no contractual stipulation imposed in the lease.”[8] The obligations imposed under the codal articles and statutes dealing with lease may be waived or altered by contractual agreement, as long as such agreement does not affect the rights of others and is not contrary to public policy.[9]

         The Court has found no Louisiana authority stating the rule of article 2002 is a matter of public policy from which the parties may not deviate. The Court finds the parties to a lease are free to contract with respect to the parties' rights and obligations in the event of default, and may choose not to impose a duty on the lessor to mitigate its damages. Such an agreement does not affect the rights of others and is not contrary to public policy.

         Section 18.1 of the lease in this case provides the landlord may exercise one of the following two remedies in the event of the tenant's default:

18.1.1 Landlord may continue this Lease in full force and effect, and the Lease will continue in effect as long as Landlord does not terminate Tenant's right to possession, and Landlord shall have the right to collect Base Rent, Additional Rent or any other charges as they come due. During the period Tenant is in default, Landlord can enter the Leased Premises and relet them, or any part of them, to third parties for Tenant's account. Reletting can be for a period shorter or longer than the remaining Lease Term. Tenant shall pay to Landlord the Base Rent, Additional Rent or any other charges due hereunder as the obligation arises, less all compensation Landlord receives from any reletting. After Tenant's default and for as long as Landlord does not terminate Tenant's right to possession of the Leased Premises, Tenant's right to assign or sublet the Leased Premises shall be preserved.
18.1.2 Landlord may terminate Tenant's right to possession of the Leased Premises at any time. No act by Landlord other than giving written notice to Tenant shall terminate this Lease. Upon such termination, Landlord shall be entitled to recover from Tenant the total amount of unpaid Base Rent, Additional Rent and other charges due as of the termination date, and a termination penalty equal to the total Base Rent due for the remainder of the Lease Term or the Base Rent due for six (6) months, whichever is less.

         The lease between Plaintiff and Circle K does not provide that Plaintiff has an obligation to mitigate its damages in the event of Circle K's default.[10] Instead, the lease provides the Plaintiff can relet the premises even if it chooses not to terminate the lessee's right of possession. The lease, however, does not state that the Plaintiff must relet the premises or otherwise mitigate its damages in the event of the lessee's default.

         The Court finds that the Plaintiff complied with its obligations under the lease and that evidence of any failure to mitigate damages would not be relevant. Accordingly, the motion in limine with respect to evidence relating to Plaintiff's effort to mitigate its damages is granted.

         II. Testimony ...


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