R & E Petroleum, LLC, Ragheb Chaar, & Elsie Aradi Versus Lkm Convenience, LLC & Toan Hyunh

R & E PETROLEUM, LLC, RAGHEB CHAAR, NO. 22-CA-238
& ELSIE ARADI
FIFTH CIRCUIT
VERSUS
COURT OF APPEAL
LKM CONVENIENCE, LLC & TOAN HYUNH
STATE OF LOUISIANA

ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT
PARISH OF JEFFERSON, STATE OF LOUISIANA
NO. 802-522, DIVISION "N"
HONORABLE STEPHEN D. ENRIGHT, JR., JUDGE PRESIDING

February 01, 2023

FREDERICKA HOMBERG WICKER
JUDGE

Panel composed of Judges Susan M. Chehardy,
Fredericka Homberg Wicker, and Hans J. Liljeberg

REVERSED AS TO PORTION OF JUDGMENT APPEALED;
REMANDED
FHW
SMC
HJL

COUNSEL FOR DEFENDANT/APPELLEE,
LKM CONVENIENCE, L.L.C.
Steven M. Hannan
Justin A. Caprera

COUNSEL FOR DEFENDANT/APPELLANT,
TOAN HYUNH
Miles G. Trapolin

WICKER, J.

Defendant-lessor, Toan Huynh, seeks review of the trial court’s denial of his

cross-claim against defendant-lessee LKM Convenience, L.L.C. (“LKM”), for past

due rental payments, penalties, late fees, interest, attorney fees, and costs. For the

following reasons, we reverse the judgment insofar as it denied defendant-lessor’s

cross-claim for rent-related damages and remand to the trial court for calculation of

damages and determination of attorney fees and costs.

FACTUAL AND PROCEDURAL BACKGROUND

This litigation arises out of an August 1, 2015 Master Lease executed

between property owner-lessor, Hyunh, and defendant-sublessor, LKM, for a

property located at 1020 Bridge City Drive and operated as a convenience store

and fuel station. After LKM executed the Master Lease, on July 12, 2016, LKM

subleased the property to plaintiffs-sublessees, R&E Petroleum, L.L.C., Ragheb

Chaar, and Elsie Aradi (sometimes hereinafter referred to collectively as “R&E”)

for an increased monthly rental payment. After significant water intrusion and

termite issues arose, R&E filed suit against Huynh and LKM, contending that

Huynh was responsible for necessary repairs to the property as set forth in the

Master Lease, and seeking dissolution of the Sublease under La. C.C. art. 2719.1

LKM answered the suit, alleging that the Sublease contained a waiver of warranty

provision and further placed the duty of all repairs on sublessee R&E. LKM also

filed a reconventional demand against R&E for past due rental payments and late

fees, in addition to reasonable attorney fees and costs as provided for in the

Sublease between the parties. Huynh filed a cross-claim against LKM2, alleging

that LKM breached the Master Lease by failing to make rental payments and

1
R&E sought and received approval to deposit the monthly rental payments into the registry of the court
pending the outcome of the litigation.
2
The cross-claim also named Lenny Motwani, owner of LKM, individually. However, Motwani was
never served and all claims against him individually have been dismissed. On appeal, Huynh does not
complain of the judgment dismissing Motwani individually and, thus, that issue or portion of the
judgment is not before this Court.

22-CA-238 1

failing to enforce the terms of the Sublease between R&E and LKM. In his cross-

claim against LKM, Huynh sought damages for past due rental payments, taxes,

penalties, late fees, reimbursement for interior repairs made to the property, and

attorney fees and costs.

The matter proceeded to a bench trial on December 13 and 14, 2021. At

trial, the parties introduced into evidence the Master Lease and Sublease executed

between the parties. The August 1, 2015 Master Lease executed between owner-

lessor Hyunh and LKM, with a ten-year (120 month) term, provides that LKM pay

a monthly rent of $5,250.00 for the first 12 months of the lease, with a $100 annual

increment increase in addition to an annual inflation increase in rental payments

throughout the term of the lease. The Master Lease further provides that LKM is

responsible to repair or maintain the entirety of the leased premises, but that lessor

Huynh “shall be responsible only to maintain the roof, foundations and outside

walls.” The Master Lease allows for LKM to sublet the leased premises with

Huynh’s written consent. The July 12, 2016 Sublease between R&E and LKM

provides that R&E pay to LKM a monthly rental payment of $8,000.00 for the first

three-year period of the Sublease, with incremental increases throughout the term

of the Sublease.3 The Sublease further includes a waiver of warranty provision and

a provision providing that “[a]ll maintenance, repairs, and replacements which may

be required to the Lease Premises …shall be the sole responsibility and expense of

the Sublessee.”4

At trial, Lenny Motwani, owner of LKM, testified that he is a businessman

with a bachelor’s degree and a background in real estate and retail business. He

testified that he has been in the convenience store industry since 2008 and that he

3
The original Sublease provided the Sublease’s term as a month-to-month term. However, the parties
subsequently executed an Amendment to the Sublease to define a fixed term, with the lease extending to
July 31, 2025.
4
The Sublease also provided that R&E would pay all property taxes due for the Leased Premises during
the term of the Sublease.

22-CA-238 2

subleases several properties in the area. He understood that his obligations under

the Master Lease included paying the rent and maintaining the interior and exterior

of the building. He acknowledged that he did not obtain Huynh’s consent as

required under the Master Lease before allowing R&E to sublease and occupy the

property. He further testified that, under the Sublease with R&E, his only

obligations were simply to collect rent and collect insurance payments with all

maintenance and repair responsibilities to be borne by R&E. He testified that the

last rental payment he received from R&E for the property was in July 2019.5

Pini Weinstein, Huynh’s attorney and acting manager for the leased

premises at 1020 Bridge City, testified that LKM indicated a desire to sublease the

property beginning in 2016. Initially, Weinstein discouraged the owner-lessor,

Huynh, from approving any sublease between LKM and R&E because he had

concerns after reviewing the financial documentation R&E provided. At some

point thereafter, Weinstein reviewed the proposed Sublease between LKM and

R&E, which included a waiver of warranty provision and further placed all

responsibility for maintenance and repairs on R&E. Weinstein testified that those

restrictions in the Sublease “absolutely” factored into his recommendation to

Huynh to accept R&E as a sublessee and was a determining factor in Huynh’s

ultimate decision to approve the Sublease despite concerns over R&E’s finances.6

Weinstein testified that Huynh has not received any monthly rental payments from

LKM since August 2019.

5
Motwani testified that he had not received rental payments since July 2019 or insurance reimbursements
since December 2019. However, Motwani acknowledged that the parties had reached an agreement that
the rental payments would be placed in the registry of the court pending resolution of the litigation.
6
The testimony at trial reflects that, although the “Consent of Property Owner under Primary Lease” was
signed as a separate document and dated June 22, 2016, Huynh’s approval was not actually granted and
the document was not signed until January 2018. An August 2, 2017 email from Chaar to Motwani and
LKM’s counsel indicates that Weinstein had instructed him that R&E was occupying the building
illegally because the landlord had not consented to or approved the sublease at that time. The testimony
of all parties appears to indicate that the “Consent of the Property Owner” document was not actually
signed until January 2018.

22-CA-238 3

Each party presented testimony and evidence concerning water intrusion and

termite issues that arose during R&E’s occupancy of the property through its

sublease with LKM. Joseph Bosi, a senior project manager for Orleans Sheet

Metal and Roofing, testified that he conducted a roof inspection at the 1020 Bridge

City property and found nearly 40 deficiencies in the roof, which he opined caused

the intermittent water intrusion. 7 He recommended that the roof be replaced and

opined that it could not be repaired properly. Keith Gros, a roofer, testified that he

did not suspect the water intrusion was caused by any roof deficiencies. Rather,

Mr. Gros opined that the water intrusion through the ceiling was caused by “a

water line that was leaking from the ice machine” and a leaking air-conditioning

unit placed on top of the roof. Mr. Gros also observed significant termite damage

during his inspection. 8

On February 4, 2022, the trial court rendered its judgment dismissing

Huynh’s cross-claim against LKM, finding that Huynh’s failure to make repairs

pursuant to the Master Lease prevented Huynh from seeking past due rental

payments under the Master Lease. The judgment further dismissed R&E’s suit

against LKM and Huynh, finding that R&E is not entitled to dissolution of the

Sublease in light of the waiver of warranty provision and further considering the

provision within the Sublease placing the duty for repairs of the leased premises on

7
Video evidence of the water intrusion was also introduced into evidence.
8
Huynh also introduced the testimony of Sean Laurent with Dynamic Construction and Development,
Inc. Mr. Laurent testified that the owner of the property hired him to make some electrical, plumbing,
and other interior repairs to the 1020 Bridge City property to bring the property to Code after the Parish
issued citations. At trial, Weinstein testified that Huynh paid Dynamic Construction $25,245.48 for
interior repairs in order to bring the property to comply with Jefferson Parish Code, which Huynh
contends was LKM’s responsibility under the Master Lease. He further testified that Huynh paid
Terminix $1,352.00 to repair termite damage, which he also contends was LKM’s responsibility under the
Master Lease. On appeal, Huynh in his brief complains briefly of the cost for these interior repairs and
termite damage, contending that such repairs are LKM’s responsibility under the Master Lease.
However, the trial court’s denial of this reimbursement claim was not assigned as error on appeal, listed
as an issue for review, or properly briefed with any specificity or authority and, thus, is not before this
Court on appellate review. See Uniform Rules, Courts of Appeal, Rule 2-3; Dean v. Southmark Const.,
03-1051 (La. 7/6/04), 879 So.2d 112, 116; Rubin v. Am. Ins. Co., 16-53 (La. App. 5 Cir. 5/19/16), 193
So.3d 408, 410.

22-CA-238 4

R&E. The trial court judgment further sustained LKM’s reconventional demand,

finding that R&E was in default or breach of the Sublease and liable to LKM in the

amount of $252,056.12 in past due rental payments and fees.9

DISCUSSION

On appeal, Huynh contends that the trial court erred in finding that he is not

entitled to past due rental payments and other rent-related damages under the

Master Lease because of Huynh’s failure to repair the alleged roof damage. We

agree.10

Louisiana law provides that where a leased thing requires repairs or has been

destroyed, the lessee has specific remedies available under the law. If during the

lease the thing requires repair, and the lessor fails to perform his obligation to

make necessary repairs within a reasonable time, the lessee has the option to (1)

make the repairs and deduct the reasonable cost of repair from the rent due, or (2)

terminate the lease and surrender the premises to the lessor. La. C.C. art. 2694; 727

Toulouse, L.L.C. v. Bistro at the Maison De Ville, L.L.C., 2012-1014 (La. App. 4

Cir. 8/21/13), 122 So.3d 1152, 1162, writ denied, 13-2414 (La. 1/10/14), 130 So.3d

327.11 If the leased premises is partially lost or destroyed, or its use is

substantially impaired, then the lessee may obtain a diminution of rent or

dissolution of the lease, whichever is more appropriate under the circumstances.

La. C.C. art. 2715.

Therefore, in this case, LKM as the lessee could have sought to dissolve the

lease based on Huynh’s alleged failure to perform necessary repairs. Alternatively,

9
This portion of the February 4, 2022 judgment is the subject of a separate appeal in this Court, 22-CA-
376.
10
Huynh further assigns as error that the trial court “erred when it held that Huynh did not prove that
LKM failed to pay its rent to him.” A review of the judgment and reasons for judgment reflects that this
assignment makes an incorrect conclusion, and that the trial judge did not determine that Huynh failed to
prove that LKM did not make any rental payments from August 2019 to the time of trial. This
assignment is without merit.
11
First, although arguably R&E provided notice to Huynh of some issues or need for repairs, the record
does not reflect that LKM notified Huynh in writing of the alleged necessary repairs, as is required under
the Master Lease between the parties.

22-CA-238 5

LKM could have asserted that the property’s use was substantially impaired due to

the water intrusion issues and could have judicially sought a diminution of rent

under La. C.C. art. 2715. LKM sought neither of these remedies. Rather, LKM

maintained “possession” of the property through its sublessee, R&E, but ceased

paying the monthly rental payment. This course of action—continuing to occupy a

property but terminating any rent payments—is not permitted under Louisiana law.

See 727 Toulouse, L.L.C. v. Bistro at the Maison De Ville, L.L.C., 12-1014 (La.

App. 4 Cir. 8/21/13), 122 So.3d 1152, 1162, writ denied, 13-2414 (La. 1/10/14),

130 So.3d 327 (finding “lessee’s unilateral decision to refuse to pay rent and

remain in occupancy of the premises was an improper ‘self-help’ remedy”).

Further, LKM proved no damages as a result of the alleged water intrusion

or termites; rather, because the trial court ordered R&E to pay LKM all past due

rental payments under the Sublease—which judgment this Court has affirmed on

appeal in the companion case, 22-CA-376—LKM has sustained no damages.

Moreover, LKM’s “possession” of the property through R&E—considering that

LKM’s only responsibility under the Sublease was to collect rental payments and

this Court has affirmed the trial court’s award of past due rental payments to

LKM—has not been disturbed.

Accordingly, we find that the trial court erred in holding that LKM was

relieved of its obligation to pay rent to Huynh pursuant to the Master Lease

between the parties. Upon review of the Master Lease and the record, we are

unable to discern or calculate the damages due under the lease. We therefore

remand this matter to the trial court for a calculation of rent-related damages under

the Master Lease.

REVERSED AS TO
PORTION OF JUDGMENT
APPEALED; REMANDED

22-CA-238 6

SUSAN M. CHEHARDY CURTIS B. PURSELL

CHIEF JUDGE CLERK OF COURT

SUSAN S. BUCHHOLZ
FREDERICKA H. WICKER
INTERIM CHIEF DEPUTY CLERK
JUDE G. GRAVOIS
MARC E. JOHNSON
ROBERT A. CHAISSON LINDA M. WISEMAN
STEPHEN J. WINDHORST
FIRST DEPUTY CLERK
HANS J. LILJEBERG
JOHN J. MOLAISON, JR. FIFTH CIRCUIT
MELISSA C. LEDET
JUDGES 101 DERBIGNY STREET (70053)
DIRECTOR OF CENTRAL STAFF
POST OFFICE BOX 489
GRETNA, LOUISIANA 70054 (504) 376-1400

(504) 376-1498 FAX
www.fifthcircuit.org

NOTICE OF JUDGMENT AND CERTIFICATE OF DELIVERY
I CERTIFY THAT A COPY OF THE OPINION IN THE BELOW-NUMBERED MATTER HAS BEEN DELIVERED
IN ACCORDANCE WITH UNIFORM RULES - COURT OF APPEAL, RULE 2-16.4 AND 2-16.5 THIS DAY
FEBRUARY 1, 2023 TO THE TRIAL JUDGE, CLERK OF COURT, COUNSEL OF RECORD AND ALL PARTIES
NOT REPRESENTED BY COUNSEL, AS LISTED BELOW:

22-CA-238
E-NOTIFIED
24TH JUDICIAL DISTRICT COURT (CLERK)
HONORABLE STEPHEN D. ENRIGHT, JR. (DISTRICT JUDGE)
JUSTIN A. CAPRERA (APPELLEE) STEVEN M. HANNAN (APPELLEE) MILES G. TRAPOLIN (APPELLANT)

MAILED
JUSTIN E. ALSTERBERG (APPELLEE) MERVATT F. ELJAOUHARI (APPELLEE)
ATTORNEY AT LAW ATTORNEY AT LAW
3914 CANAL STREET 935 GRAVIER STREET
NEW ORLEANS, LA 70119 SUITE 2020
NEW ORLEANS, LA 70112