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Vekic v. Popich

Court of Appeals of Louisiana, Fourth Circuit

March 29, 2017


         APPEAL FROM ST. BERNARD 34TH JUDICIAL DISTRICT COURT NO. 2013-00508, DIVISION "E" Honorable Jacques A. Sanborn, Judge

          Paul A. Tabary III TABARY & BORNE, LLC Three Courthouse Square and James M. Dill THE DILL FIRM, APLC and David M. Culpepper DAVID M. CULPEPPER, L.L.C. and Helen Popich Harris HELEN POPICH HARRIS, APLC COUNSEL FOR DEFENDANTS/APPELLANTS

          Alvin J. Bordelon Jr. BORDELON & THERIOT & ABRAMS and Regina S. Wedig COUNSEL FOR PLAINTIFF/APPELLEE

          Court composed of Judge Terri F. Love, Judge Sandra Cabrina Jenkins, Judge Marion F. Edwards, Pro Tempore

          Terri F. Love Judge

         The instant appeal arises from a dispute over British Petroleum ("BP") settlement proceeds after the parties executed a sublease for certain oyster leases affected by the 2010 BP oil spill. The trial court found that it was the parties' intent that seller would receive $90, 000, and buyer would receive title to the leases. The trial court then found plaintiff was entitled to the settlement proceeds and any future damage distribution relating to the leases. We find the agreement entered into was a sublease with an option to purchase. Plaintiff was neither the leaseholder of record on the day of the Deepwater Horizon explosion, nor had he exercised his option to purchase, and the post-explosion purchase did not assign defendants' BP settlement claims. Therefore, the trial court erred when it entered judgment in favor of plaintiff. Accordingly, the trial court's judgment is reversed.


         In 2009, plaintiff Nikola Vekic ("Mr. Vekic") wanted to purchase three oyster leases (collectively "subleased property") owned by Dragutin Popich ("Mr. Popich") and his family (collectively "Popich family"). Mr. Popich was unwilling to execute a credit sale, but he agreed to enter a sublease with option to purchase. Roger Harris ("Mr. Harris"), an attorney and Mr. Popich's son-in-law, prepared a sublease with option to purchase, a designation of agent to harvest, and a proposed act of sale. The documents were forwarded and reviewed by Mr. Vekic and his attorney along with a transmittal letter indicating that Mr. Popich was "unwilling to do a credit sale."

         Mr. Vekic had no suggested changes or issues with the proposed documents. According to the express sublease terms, Mr. Vekic agreed to sublease three oyster leases in Bay Boudreau in St. Bernard Parish from the Popich family. The term of the sublease was four years unless it was terminated earlier by either party in accordance with the sublease provisions. The amount of rent for the term of the sublease was not to exceed $90, 000, and $30, 000 was due and payable to the Popich family upon execution of the agreement. Thereafter, rent in the amount of $20, 000 was due and payable on the anniversary of the sublease commencement date for the next three years.

         The sublease also set forth the terms that applied if Mr. Vekic exercised his option to purchase. The right and option to purchase was "exercisable at any time on or before April 30, 2012, to purchase the subleased property" for $90, 000. To exercise the option, Mr. Vekic was required to provide written notice to the Popich family prior to the deadline and "any rental payments paid pursuant to [the agreement would] be credited against the purchase price in dollar-for-dollar amount." Further, the subleased property was purchased and sold "as is."

         The parties executed the sublease agreement in April 2009 and Mr. Vekic issued the Popich family a check for $30, 000 indicating in the memo section "sublease agreement."

         The next year, on April 20, 2010, the Deepwater Horizon well exploded. At the time of the explosion, Mr. Vekic had not yet exercised his option to purchase and the Popich family remained the leaseholder of record. The following year, on or about June 19, 2011, Mr. Vekic exercised his option to purchase. The act of sale, originally prepared in 2009, was executed by the parties without any alterations to its original terms.

         Shortly after the Deepwater Horizon explosion, a plaintiff class sued BP for damages and losses resulting from the oil spill. By 2012, BP and the Plaintiffs' Steering Committee reached a settlement agreement ("BP Settlement Agreement"), which established a compensation plan for qualifying oyster leaseholders in exchange for settling their claims with BP and other released parties. To receive settlement proceeds, claimants were required to: (1) file a claim form with Deepwater Horizon Economic Claim Center ("DHECC"); (2) provide documents showing they were record owners of the leases with the Department of Wildlife Fisheries on the day of the explosion; (3) show that their oyster leases had State ID numbers; and (4) provide documents showing the geographic area in which the oyster leases were located.[1]

         In June 2012, Mr. Vekic filed a claim with DHECC for all of his lease holdings, including the subleased property. In January 2013, Helen Popich Harris ("Mrs. Harris"), attorney and daughter to Mr. Popich, prepared and filed claims for herself, her father, and her sister. Their claim forms expressly informed the DHECC of the 2009 sublease with Mr. Vekic and the 2011 post-explosion sale of the subleased property. They also indicated that "the claimants did not transfer or assign any rights to the cause of action for the Deepwater Horizon incident to Mr. Vekic."

         Subsequently, Mr. Vekic received a proposed settlement offer for his lease holdings. However, DHECC excluded the subleased property from Mr. Vekic's recovery. There is no indication in the record that Mr. Vekic sought review of DHECC's decision. The Popich family received notice of their proposed settlement offer as eligibile oyster leaseholders. The Popich family's proposed settlement offer for the subleased property totaled $901, 999.50.[2] In exchange for receipt of the settlement proceeds, the Popich family executed a release of any claims "arising out of, due to, or relating in any way to, directly or indirectly, the Deepwater Horizon Incident."

         After the first round of payment was issued, Mr. Vekic sued the Popich family alleging he was entitled to the BP settlement proceeds pursuant to their agreement. The Popich family later received eligibility notices for a second round payment, totaling $365, 797.79. Before the Popich family received the second round payment, the trial court ordered the proceeds deposited into the IOLTA account of counsel for the Popich family until further order from the court.[3]

         Mr. Vekic sought a declaratory judgment, claiming that he was entitled to the proceeds as a result of the sublease agreement. He amended his petition twice thereafter and ultimately claimed that the sublease was a disguised sale and security agreement. The first day of trial was held in January 2015 and the second day in March 2015, but judgment was not rendered until January 2016. The Popich family's motion for new trial was granted, and the trial court rendered a new judgment in March 2016.[4]

         The trial court interpreted the sublease agreement as a sale of subleased property to Mr. Vekic in exchange for $90, 000. Therefore, the trial court found Mr. Vekic was entitled to the BP settlement proceeds. The trial court awarded Mr. Vekic all of the proceeds, less the ten percent attorney's fees on past BP settlement proceeds and costs pursuant to the contingency fee agreement between the Popich family and their attorney. However, the trial court ruled that any future payments from BP belong to Mr. Vekic to the exclusion of the Popich family and without any reduction for further attorney's fees owed. The Popich family timely filed the instant appeal.


         In general, "a contract, subject to interpretation on the four corners of the instrument without the necessity of extrinsic evidence, is interpreted as a matter of law." New Orleans Jazz & Heritage Found., Inc. v. Kirksey, 09-1433, p. 9 (La.App. 4 Cir. 5/26/10), 40 So.3d 394, 401 (citing Bartlett Constr. Co., Inc. v. St.Bernard Parish Council, 99-1186, p. 6 (La.App. 4 Cir. 5/31/00), 763 So.2d 94, ...

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