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Cambrie Celeste LLC v. Starboard Management, LLC

Court of Appeals of Louisiana, Fourth Circuit

November 6, 2017

CAMBRIE CELESTE LLC AND CAMBRIE CELESTE COMMERCIAL TENANT, LLC
v.
STARBOARD MANAGEMENT, LLC, F.I.N.S. CONSTRUCTION LLC, CAMBRIE CELESTE DEVELOPER, LLC, ROBERT ARMBRUSTER, AND NICOLE ARMBRUSTER

         APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2012-01997 (F-7), DIVISION "F" Honorable Christopher J. Bruno, Judge

          Julie U. Quinn Justin E. Alsterberg QUINN ALSTERBERG, LLC FOR PLAINTIFFS/APPELLEES

          Thomas J. Barbera Fred L. Herman Mayra L. Scheuermann LAW OFFICES OF FRED L. HERMAN FOR DEFENDANTS/APPELLANTS

          Court composed of Chief Judge James F. McKay, III, Judge Terri F. Love, Judge Rosemary Ledet, Judge Regina Bartholomew Woods, Judge Terrel J. Broussard, Pro Tempore

          Terri F. Love Judge

         This appeal arises from an eviction and breach of contract dispute for failure to pay rent. Defendants appeal the trial court's judgment denying their motion for new trial with respect to the trial court's ruling that denied their motion for reconsideration of the imposition of sanctions and granted Plaintiffs' motion for summary judgment. Defendants claim the trial court improperly struck their affirmative defenses and reconventional demand, failed to enforce the settlement agreement, and genuine issues of material fact preclude summary judgment. We find the appeal of the sanctions issue is untimely, subject matter jurisdiction is lacking in order to consider an alleged settlement agreement, and summary judgment is inappropriate as to all defendants except Starboard. Accordingly, we dismiss the appeal in part, affirm in part, and reverse and remand in part.

         PROCEDURAL HISTORY AND FACTUAL BACKGROUND

         In this litigation, Cambrie Celeste, LLC, and Cambrie Celeste Commercial Tenant, LLC (collectively "Plaintiffs") are companies owned and controlled by Steven Anderson ("Mr. Anderson"), a property developer who specializes in companies owned and controlled by Robert Armbruster ("Mr. Armbruster"), a contractor.

         In this case, Plaintiffs sought to enforce alleged lease obligations that they contend Starboard owes pursuant to a March 22, 2010 lease of a building located at 621 Religious Street in New Orleans, Louisiana. Plaintiffs filed a petition for eviction and breach of contract, in March 2012, against Starboard; F.I.N.S. Construction, LLC; Cambrie Celeste Developer, LLC; and Robert and Nicole Armbruster (collectively "Defendants") for failure to pay rent.

         According to Defendants, in 2009, Mr. Anderson, through his companies obtained the property at 621 Religious Street from a real estate company owned by the Armbrusters. Defendants allege that the parties entered into a New Markets Tax Credit ("NMTC") transaction to obtain a low market loan to refinance the existing debt on the property. Defendants further allege that in order for the NMTC transaction to close, the property had to be leased; therefore, the parties executed a lease agreement in March 2010. As part of the lease agreement, the Armbrusters, F.I.N.S. Construction, LLC, and Cambrie Celeste Developer, LLC, executed a guaranty agreement.[1]

         Defendants allege that the contract contained a number of one-sided terms that favored Plaintiffs. However, Defendants claim that Mr. Anderson told claim that the parties later made a separate agreement that reflected their business arrangement.

         In March 2012, Plaintiffs filed a petition for eviction and breach of contract against Defendants for failure to pay rent. In June 2012, Defendants filed an exception of prematurity, alleging the matter was subject to arbitration, and an exception of unauthorized use of summary proceedings, claiming the lease was a simulation. Plaintiffs opposed the exception of prematurity stating that the evidence offered did not support Defendants' claim. Plaintiffs also opposed the exception of prematurity on the basis that Defendants submitted no evidence at all to demonstrate that the lease was a simulation. The trial court ultimately denied Defendants' exceptions.

         Around the time Defendants filed their exceptions in this case, however, the Armbrusters also filed a petition for bankruptcy in the United States Bankruptcy Court relative to another business entity they owned. The Armbrusters obtained a stay of Plaintiffs' eviction suit in this case. In July 2013, the stay was lifted, and Plaintiffs' eviction suit proceeded in the trial court.

         On July 17, 2013, Plaintiffs issued interrogatories and requests for production of documents to Starboard. When Starboard failed to produce responses, Plaintiffs filed a motion to compel, and at the August 15, 2013 hearing, the trial court orally granted the motion. The trial court issued a judgment on September 3, 2013, ordering Starboard to comply with Plaintiffs' discovery requests and awarded Plaintiffs $750.00 in attorneys' fees. Defendants then filed an answer and a reconventional demand, which alleged that the actions and damages set forth in Plaintiffs' petition were generally false, that they were barred under the law, and that Plaintiffs committed fraud, breach of contract, and "other illegal acts." On September 16, 2013, Plaintiffs filed its first motion for contempt for Starboard's continued refusal to provide discovery or to pay the attorneys' fees as ordered. A contempt hearing was set on the same day as the eviction proceeding in October 2013.

         At the eviction proceeding, counsel for Defendants argued that the lease was unenforceable because it was a simulation. However, the trial court noted that Defendants offered no evidence or testimony to support their contention. In its oral reasons for judgment, the trial court determined that a valid lease existed and ordered Starboard evicted from the property. In that Plaintiffs prevailed on the eviction of Starboard, the trial court requested that Plaintiffs withdraw the contempt motion for failure to provide discovery.

         Following the summary eviction proceeding, Plaintiffs sought to obtain a judgment in an ordinary proceeding on the damages Defendants allegedly owed for unpaid rent. However, in order for Plaintiffs to proceed on the damages issue, Plaintiffs contended it was essential that they have Defendants' responses to the outstanding discovery. Plaintiffs filed a second motion for contempt in November 2013, but the motion was denied in January 2014 for improper service. Although the trial court denied the motion, the trial court concluded, in its reasons for judgment, that Plaintiffs repeatedly attempted, via email and letter correspondence, to secure the requested discovery responses without having to file a second motion for contempt. The trial court also found that Defendants' counsel acknowledged receipt of Plaintiffs' correspondence "but did not request additional time nor did counsel indicate that he was having any difficulty in responding to this request."

         At that time, Defendants also amended their answer and reconventional demand, re-urging their claim that the lease was a simulation. However, just as they failed to attach supporting evidence to their exception of unauthorized use of summary proceeding, Defendants also failed to attach any evidence to support the claims alleged in their amended answer and reconventional demand.

         As of February 2014, Starboard still failed to respond to Plaintiffs' discovery requests, prompting Plaintiffs to file a third motion for contempt. Defendants filed an untimely "Opposition to Motion for Contempt and Incorporated Motion for Leave to File Opposition and Motion for Continuance." Defendants' opposition did not include any of the requested documents Plaintiffs sought in discovery. At the March 14, 2014 contempt hearing, the trial court found Starboard in contempt for failure to comply with its September 2013 order compelling Starboard to comply with Plaintiffs' discovery requests. The trial court dismissed with prejudice Starboard's affirmative defenses and reconventional demand and further ordered Starboard to "produce all documents having any connection to this matter to [Plaintiffs] at [Plaintiffs'] counsel's office (Quinn Law) on or before Monday, March 24th, 2014." Additionally, the trial court awarded Plaintiffs attorneys' fees and costs associated with the filing of the third motion for contempt. The contempt judgment was signed on April 3, 2014, and notice of the signing of the judgment was sent on April 4, 2014.

         On April 28, 2014, Plaintiffs filed a fourth motion for contempt after their requests for discovery were continually ignored, in violation of the trial court's September 2013 and April 2014 orders. Defendants' current counsel formally enrolled the next day; and, on May 1, 2014, Defendants filed a "Notice of Intent to Take Supervisory Writs/Appeal." Defendants, however, did not pursue appellate review of the April 2014 contempt judgment at that time.

         While Defendants later produced certain documents following the enrollment of new counsel, Plaintiffs alleged that Defendants' discovery responses remained incomplete. Plaintiffs elected to proceed and filed a motion for summary judgment in November 2014. Plaintiffs later agreed to continue the motion in an effort to reach a settlement agreement in this case ...


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