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L.L.C v. Paradigm Investment Group, LLC

United States District Court, E.D. Louisiana

June 4, 2018

ADDY'S BURGER, L.L.C.
v.
PARADIGM INVESTMENT GROUP, LLC

         SECTION: "I"(5)

          ORDER AND REASONS

          MICHAEL B. NORTH UNITED STATES MAGISTRATE JUDGE

         I. RELEVANT FACTS AND PROCEDURAL BACKGROUND

         This lawsuit arises out of an alleged breach of a lease agreement between Plaintiff, Addy's Burger, LLC (“Addy's Burger”) and its tenant, Paradigm Investment Group, LLC (“Paradigm”), which is said to have occurred after the sale of the property and the assignment of the lease by the original lessor, Chalmette Burgers, LLC (“Chalmette Burgers”).

         On March 15, 2013, Paradigm and Chalmette Burgers executed a Lease Agreement (the “Lease”) for property located at 8400 West Judge Perez Dr., Chalmette, LA 70043 (the “Property”). (Rec. doc. 1). Pursuant to the Lease, Paradigm would operate a Hardee's restaurant on the Property. Section 5.02 of the Lease contains an indemnity clause that provides, in pertinent part:

INDEMNITY: TENANT will indemnify, defend, and hold harmless LANDLORD . . . from any and all damages, losses, liabilities, obligations, penalties, claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements or expenses of any kind or nature whatsoever (including, without limitation, reasonable attorneys' fees and experts' fees and disbursements) (collectively, the “Liabilities”) arising from . . . (iv) any misrepresentation or breach of warranty by TENANT under this Lease.

(Rec. doc. 1-1).

         In late 2015 Chalmette Burgers decided to sell the Property and eventually did sell it to Addy's Burger. As part of the sale of the Property, on March 2, 2016, Chalmette Burgers and Addy's Burger executed an Assignment and Assumption of the Lease (the “Assignment”). (Rec. doc. 1-2). The Effective Date of the Assignment was March 2, 2016. (Id.). The Assignment provides, in pertinent part:

1. Assignment. As of the Effective Date, Assignor hereby assigns, conveys, transfers and sets over unto Assignee all of Assignor's right, title and interest in, to and under the Lease, including, without limitation, the Guaranty, if any, and all of Assignor's right, title and interest in and to security, cleaning or other deposits and in and to any claims for rent, arrears rent or any other claims arising under the Lease against any lessee thereunder, subject to the rights of the lessees under the Lease.
2. Assumption. Assignee hereby assumes and agrees to pay all sums, and perform, fulfill and comply with all covenants and obligations, which are to be paid, performed, fulfilled and complied with by the lessor under the Lease, from and after the Effective Date.

(Id.).

         Shortly after the Assignment and sale of the Property from Chalmette Burgers to Addy's Burger, Paradigm informed Addy's Burger that it would not be able to make its rental payments under the Lease and it vacated the Property. On March 23, 2017, Addy's Burger filed the instant lawsuit against Paradigm, seeking damages from Paradigm for its alleged breach of the Lease.

         Shortly thereafter, on March 29, 2017, Addy's Burger filed suit against Chalmette Burgers in the Civil District Court for the Parish of Orleans, seeking damages and rescission of the sale of the Property. On October 5, 2017, Addy's Burger filed its Second Amended and Supplemental Complaint in this Court, adding as defendants Chalmette Burgers; its principal, Paul Dorsey; and Capital Pacific Real Estate Brokerage Company, the real estate brokerage company hired by Chalmette Burgers to sell the Property. (Rec. doc. 28).

         On March 14, 2018, the Court granted Paradigm's motion for leave to file a crossclaim against Addy's Burger and a counterclaim against Chalmette Burgers. (Rec. docs. 67-69). Chalmette Burgers responded by filing its own crossclaim against Paradigm, seeking defense and indemnity under the Lease vis-à-vis Addy's Burger's claim against it, to wit:

Under the clear language of section 5.01 of the Lease, Paradigm owes Chalmette Burgers indemnity and defense to the claims brought by Addy's Burger. Accordingly, Chalmette Burgers seeks enforcement of the terms and provisions of the Lease by way of an award of its attorneys' fees and costs incurred to defend the underlying Action by Plaintiff, Addy's Burger, as well as indemnity for any and ...

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