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East Jefferson Medical Plaza, LLC v. Jefferson Parish Hospital District No. 2

United States District Court, E.D. Louisiana

March 28, 2019

EAST JEFFERSON MEDICAL PLAZA, LLC
v.
JEFFERSON PARISH HOSPITAL DISTRICT NO. 2, PARISH OF JEFFERSON d/b/a EAST JEFFERSON GENERAL HOSPITAL

         SECTION: “J” (4)

          ORDER AND REASONS

          CARL J. BARBIER UNITED STATES DISTRICT JUDGE

         Before the Court is a Motion for Summary Judgment (Rec. Doc. 9) filed by Plaintiff, East Jefferson Medical Plaza, LLC (“Landlord”). Defendant, Jefferson Parish Hospital District No. 2, Parish of Jefferson d/b/a East Jefferson General Hospital (“the Hospital”) opposes the motion (Rec. Doc. 18). Landlord filed a reply (Rec. Doc. 19). Having considered the motion and legal memoranda, the record, and the applicable law, the Court finds that the Motion for Summary Judgment should be GRANTED.

         FACTS AND PROCEDURAL HISTORY

         This litigation arises from the expiration of a Master Lease that was entered for a fixed term by the original landlord and the Hospital on September 22, 1995. Landlord acquired the subject property at 4228 Houma Boulevard on February 27, 2008 and took an assignment of the Master Lease. From 2003 to 2015, Landlord and the Hospital executed a series of amendments to the definition of “Premises” under the Master Lease. On September 30, 2016, Landlord and the Hospital executed the Eighth Amendment to the Master Lease, wherein the Hospital reduced the total amount of square footage to 58, 643 square feet and limited the office suites in the Premises to Suites 120, 130, 200, 310, 320, 330, 510, and 600.

         On April 30, 2017, the Master Lease expired. The record reflects that on May 2, 2017, a representative of the Hospital contacted Landlord to confirm that as of April 30, 2017, the Hospital had vacated and would no longer be paying rent for Suites 120, 310, 320, and 510. On May 4, 2017, Landlord advised that the suites referenced in the May 2 email are all part of the Master Lease and, barring completion of new leases as outlined in the letter of intent, the Master Lease-including the spaces that the Hospital indicated it had vacated-would continue on a month-to-month basis. After this email exchange, the Hospital continued occupying Suites 130, 200, 330, and 600 and Landlord continued invoicing the Hospital for the full amount of the rent owed for the Premises as defined in the Eighth Amendment to the Master Lease. The Hospital either paid or caused to be paid in full the rent due for Suites 130, 200, and 330. The parties dispute whether the Hospital paid or caused to be paid the full rent for Suites 120 and 310.[1] However, the record reflects that the Hospital refused to pay rent for Suites 320 and 510 and stopped paying the full rent for Suite 600.

         On February 23, 2018, Landlord and the Hospital executed a Termination of Master Lease with Reservation of Rights Agreement. Pursuant to the Termination Agreement, the parties agreed that the Master Lease would terminate, rent would cease to accrue, and possession of the Premises would be surrendered to the Landlord upon the execution of new leases for Suites 130, 140, 200, 410, and 530. Nevertheless, the parties stipulated that each party was reserving its rights, claims, and defenses against the other, including but not limited to claims for payment of past due rent and all other sums owed under the Master Lease. Thereafter, Landlord and the Hospital executed new leases for Suites 200 and 530 with an effective date of April 2, 2018. However, the parties amended the Termination Agreement to remove the requirement for execution of new leases for Suites 130, 140, and 410, stipulating that delivery of possession of these remaining suites was completed and rent ceased to accrue as of April 2, 2018.

         On June 8, 2018, Landlord filed the instant action against the Hospital seeking recovery of the full rental amount owed for the Premises under the Master Lease. (See Rec. Doc. 1). Specifically, Landlord alleges that it is entitled to recover $434, 422.37 in past due rent. (Rec. Doc. 1). Landlord filed the instant motion for summary judgment on August 21, 2018. (Rec. Doc. 9). The Hospital sought leave to file its opposition out of time on November 30, 2018. (Rec. Doc. 12). With Landlord's consent, the Hospital's opposition was filed into the record on December 12, 2018. (Rec. Doc. 18). Landlord filed a reply the same day. (Rec. Doc. 19).

         PARTIES' ARGUMENTS

         Landlord argues that it is entitled to judgment as a matter of law because the Master Lease was reconducted on a month-to-month basis when the Hospital continued to occupy portions of the Premises after the term expired. (Rec. Doc. 9-1 at 7). Specifically, Landlord asserts that it is undisputed that the Hospital continued to occupy Suites 130, 200, 330, and 600 of the Premises, either directly or through a subtenant, from April 30, 2017-the date the Master Lease expired-until April 2, 2018-the date the Master Lease was terminated. (Rec. Doc. 9-1 at 7). Given that “[t]here is no mechanism in the Master Lease or under Louisiana law for allowing the Hospital to partially surrender the Premises and unliterally reduce its rental obligation due under the Master Lease, ” Landlord argues that the Master Lease in its entirety was reconducted on a month-to-month basis. (Rec. Doc. 9-1 at 7). Landlord emphasizes that “[c]ourts interpreting article 2724 have held that ‘[a] reconducted lease is actually a continuation of the lease under the same terms and conditions except that the fixed term or period of duration in the old lease is voided and the reconducted lease is considered to be by the month.'” (Rec. Doc. 9-1 at 8). Based on the foregoing, Landlord concludes that the Hospital is not permitted to unilaterally redefine the Premises of a reconducted lease, and Landlord is entitled to recover the entire amount of rent for the Premises due under the Master Lease. (Rec. Doc. 9-1 at 12). Namely, Landlord asserts that the Hospital owes $43, 109.08 in past due rent for Suite 320, $129, 716.95 in past due rent for Suite 510, and $260, 505.14 in past due rent for Suite 600. (Rec. Doc. 9-1 at 12).

         The Hospital argues in opposition that summary judgment should not be granted in Landlord's favor because several issues of fact exist, the motion is premature, and the motion fails on the merits. (Rec. Doc. 18 at 1-2). The Hospital first argues that Landlord is not entitled to summary judgment because Landlord and the Hospital modified the Master Lease. (Rec. Doc. 18 at 4). Specifically, the Hospital notes that the May 2, 2017 email from Bub Millet to Michael Pousson put Landlord on notice that the Hospital would no longer be occupying and/or paying rent for Suites 120, 310, 320, and 510. (Rec. Doc. 18 at 5-6). The Hospital asserts that Michael Pousson's response on May 4, 2017 “makes it clear that [Landlord] was agreeable to the modification by stating that … ‘we also need to have any keys for the spaces indicated returned and any remaining items removed … but we're not anticipating any issues.” (Rec. Doc. 18 at 6-7). Moreover, the Hospital emphasizes that after this email exchange, Landlord accepted the Hospital's rental payments for the portions of the Premises that it was occupying. (Rec. Doc. 18 at 7). The Hospital essentially argues that Landlord's acceptance of the reduced rental payments and failure to evict the Hospital constitutes an acceptance of the proposed modification to the Premises under the Master Lease. (Rec. Doc. 18 at 7). Thus, the Hospital concludes that Landlord's motion should be denied on the merits. (Rec. Doc. 18 at 8).

         Additionally, the Hospital argues that the motion should be denied because questions of fact exist and the motion is premature. (Rec. Doc. 18 at 8). The Hospital contends that “[i]t is a question of fact as to whether there were oral agreements that modified the written contract.” (Rec. Doc. 18 at 8). The Hospital also asserts that there is an issue of material fact as to the amount owed (if any) and whether Landlord mitigated its damages by finding new tenants after the Hospital vacated Suites 120, 310, 320, and 510. (Rec. Doc. 18 at 8). In support of its argument that the instant motion is premature, the Hospital avers that at the time the motion was filed, neither party had conducted discovery. (Rec. Doc. 18 at 8).

         In reply, Landlord contends that its motion for summary judgment should be granted because the Hospital failed to produce any competent summary judgment evidence of a material factual dispute regarding its reconduction of the Master Lease or the amounts due under the Master Lease. (Rec. Doc. 19 at 1, 6). First, Landlord argues that the Hospital cannot, as a matter of law, establish an oral modification of the Master Lease. (Rec. Doc. 19 at 1). Landlord notes that Section 32 of the Master Lease prohibits amendment thereof “except by written agreement of Lessor and Lessee and the holder of any Mortgage secured by the Building.” (Rec. Doc. 19 at 1). Acknowledging that a written contract may, nevertheless, be modified by an oral agreement, Landlord emphasizes that the email exchange in early May 2017 did not constitute a “meeting of the minds” sufficient to amend the Master Lease by oral agreement. (Rec. Doc. 19 at 2). Specifically, Landlord asserts that “Mr. Pousson's response demonstrates that absent the Hospital's execution of new leases, the Landlord was specifically rejecting any modification of the Master Lease.” (Rec. Doc. 19 at 3). Landlord argues that when the Hospital failed to execute new leases as specified in the email, it had a choice of either terminating the Master Lease by vacating the Premises in its entirety or continuing the Master Lease on a reconducted month-to-month basis. (Rec. Doc. 19 at 3). However, Landlord argues that the Hospital could not “unilaterally change the terms of the reconducted Master Lease by re-defining … the Premises under the Master Lease to remove Suites 120, 310, 320, and 510, while continuing to claim a right of occupancy and enjoyment of Suites 130, 200, 330 and 600 under the Master Lease.” (Rec. Doc. 19 at 3-4). Thus, Landlord concludes that by retaining portions of the Premises after April 30, 2017 and failing to enter new leases, the Hospital reconducted the Master Lease on a month-to-month basis. (Rec. Doc. 19 at 4). Arguing that “Landlord was anything but silent, ” Landlord asserts that the Hospital's proposal to continue the Master Lease with less than all of the office suites defined as the Premises was flatly rejected in the May 4, 2017 email, Landlord continued to invoice the Hospital for the full amount of rent owed under the Master Lease from April 2017 until April 2018, and Landlord acknowledged receipt of the Hospital's partial rental payments on December 6, 2017 and March 13, 2018 while specifically reserving the right to collect the balance owed under the Master Lease. (Rec. Doc. 19 at 5).

         Second, Landlord argues that the Court's consideration of its motion is not premature under Rule 56(b) or the Local Rules of the Eastern District of Louisiana. (Rec. Doc. 19 at 7). Landlord notes that the instant lawsuit was filed on June 8, 2018, and a scheduling conference was held on August 29, 2018. (Rec. Doc. 19 at 7). Thereafter, the Hospital failed to take any action in the case until it filed a motion seeking leave to file its opposition out of time on November 30, 2018. (Rec. Doc. 19 at 7). Accordingly, Landlord argues that the Hospital ...


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