Vision Aviation, LLC v. Airport Authority for Airport dist.no. 1 of Cal. Parish, La

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

09-974, consolidated with 09-975, consolidated with 09-1107

VISION AVIATION, LLC

VERSUS

AIRPORT AUTHORITY FOR AIRPORT DISTRICT NO. 1 OF
CALCASIEU PARISH, LOUISIANA

***consolidated with***

AIRPORT AUTHORITY FOR AIRPORT DISTRICT NO. 1 OF
CALCASIEU PARISH, LOUISIANA

VERSUS

VISION AVIATION, LLC

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APPEAL FROM THE
FOURTEENTH JUDICIAL DISTRICT COURT
PARISH OF CALCASIEU, NO. 2006-2282 C/W 2007-954
HONORABLE WILFORD D. CARTER, DISTRICT JUDGE

**********

JOHN D. SAUNDERS
JUDGE

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Court composed of John D. Saunders, Oswald A. Decuir, and James T. Genovese,
Judges.

REVERSED AND REMANDED.

Rudie Ray Soileau, Jr.
Lundy, Lundy, Soileau, & South, L.L.P.
Attorney at Law
P. O. Box 3010
Lake Charles, LA 70602
(337) 439-0707
Counsel for Defendant/Appellee:
Airport Authority for Airport District No. 1 of Calcasier Parish, LA

Jill Anne Gautreaux
David J. Halpern
McGlinchey Stafford, PLLC
601 Poydras St, 12th Floor
New Orleans, LA 70130
(504) 586-1200
Counsel for Defendant/Appellee:
Airport Authority for Airport District No. 1 of Calcasieu Parish, LA

Kenneth Michael Wright
Attorney at Law
203 West Clarence St.
Lake Charles, LA 70601
(337) 439-6930
Counsel for Plaintiff Appellant:
Vision Aviation, LLC

SAUNDERS, Judge.

Herein we address the issue of whether the trial court erred in adjudicating the

termination of a Lease Agreement and Development Agreement between Vision

Aviation, LLC (“Vision”) and the Airport Authority for Airport District No. 1 of

Calcasieu Parish Louisiana (“Airport Authority”) without the presence of Whitney

National Bank (“Whitney”) as a party to the litigation. We find that the court erred,

and we reverse.

FACTS AND PROCEDURAL HISTORY:

This case addresses a business relationship between the Airport Authority and

Vision. The two parties reached an agreement involving the development of the Lake

Charles Regional Airport and the lease of certain properties there. Among the

documents representing this relationship were a Lease Agreement and a Development

Agreement wherein the Airport Authority leased hangers one, two, and three to

Vision.

For various reasons, the relationship between the parties eventually soured,

leading to the current litigation. Legal action commenced when Vision filed a

petition seeking declaratory relief in May of 2006. In February of 2007 the Airport

Authority filed an Answer and Reconventional Demand seeking to terminate the

development and lease agreements with Vision. In March and April of 2009 the 14th

Judicial District Court conducted a trial on the merits. This was a bifurcated trial that

only addressed the eviction of Vision from the Lake Charles Regional Airport and the

termination of the lease and development agreements. The trial court found in favor

of the Airport Authority, and a judgment was signed on May 5, 2009.

Following the judgment of the trial court, Vision instituted this appeal and

thereafter also filed in the trial court a Peremptory Exception of Failure to Join Parties

Needed for Just Adjudication. In the exception, Vision alleged that Whitney was a

necessary party in that it held a lease hold mortgage over the Development Agreement

terminated by the judgment of the trial court. The trial court granted the exception

on July 22, 2009, but no judgment had been filed at the time of this appeal.

ASSIGNMENTS OF ERROR:

In summary, Vision alleges that the trial court erred in ruling to terminate the

Development Agreement and evict Vision from the Lake Charles Regional Airport

without Whitney being joined as a party.

LAW AND DISCUSSION:

At issue before this court is whether the judgment rendered by the trial court

in favor of the Airport Authority is an absolute nullity for failure to join Whitney as

a party. For the following reasons, we find that it is.

Before addressing the matter before us, we note that the trial court previously

granted a Peremptory Exception of Failure to Join Parties Needed for Just

Adjudication. However, we give no effect to this ruling as it was issued after the trial

court had been divested of jurisdiction over the matter. Louisiana Code of Civil

Procedure Article 2088 reads, in pertinent part:

A. The jurisdiction of the trial court over all matters in the case
reviewable under the appeal is divested, and that of the appellate court
attaches, on the granting of the order of appeal and the timely filing of
the appeal bond, in the case of a suspensive appeal or on the granting of
the order of appeal, in the case of a devolutive appeal . . . .

Vision initially filed a suspensive appeal, but the action was ultimately

converted into a devolutive appeal. Accordingly, the jurisdiction of the trial court

came to a close upon the granting of the order of appeal, May 12, 2009. The trial

court’s grant of the peremptory exception did not occur until July of 2009, well after

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its jurisdiction had divested.

We further note that Vision did not address the issue of nonjoinder during the

trial on the merits. Ordinarily, this court would be prevented from addressing an

issue not raised at trial. However, La.Code Civ.P. art. 927(B) affords this court the

authority to raise the issue of nonjoinder on its own motion. We choose to exercise

this right. To that end, we now continue our analysis of this matter.

At the heart of this issue is La.Code Civ.P. art. 641. It reads as follows:

A person shall be joined as a party in the action when either:

(1) In his absence complete relief cannot be accorded among those
already parties.

(2) He claims an interest relating to the subject matter of the
action and is so situated that the adjudication of the action in his absence
may either:

(a) As a practical matter, impair or impede his ability to protect
that interest.

(b) Leave any of the persons already parties subject to a
substantial risk of incurring multiple or inconsistent obligations.

A Collateral Mortgage was granted by Vision to Whitney, securing a one

million dollar ($1,000,000.00) collateral mortgage note. The mortgage covers the

property known as the Vision Aviation aircraft hanger at 500 Airport Avenue, Lake

Charles, LA 70805, together with all of its present and future rights, privileges, and

advantages relating to the property. This mortgage is present in the record as of May

5, 2009—prior to the divestiture of jurisdiction from the trial court on May 12, 2009.

Not only does Whitney hold a mortgage on the property that is central to the dispute

between the parties, Whitney was also given certain rights as a leasehold Mortgagee

in the Development Agreement—leaving little doubt that Whitney had a significant

interest in the dispute between Vision and the Airport Authority. The following

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provisions are found in Section 15 of the Development Agreement:

(b) OWNER shall, upon serving DEVELOPER with any
notice of default, simultaneously serve a copy of such
notice upon the holder(s) of such leasehold Mortgage(s).
The leasehold Morgagee(s) shall thereupon have the same
period, after service of such notice upon it, to remedy or
cause to be remedied the defaults complained of, and
OWNER shall accept such performances by or at the
instigation of such leasehold Mortgagee(s) as if the same
had been done by DEVELOPER.

(c) Anything therein contained notwithstanding, while such
leasehold Mortgage(s) remains unsatisfied of record, or
until written notice of satisfaction is given by the holder(s)
to OWNER, if any default shall occur which, pursuant to
any provision of this Agreement, entitled OWNER to
terminate this Agreement, and if before the expiration of
thirty (30) days from the date of service of notice of
termination upon the leasehold Mortgagee(s) such
leasehold Mortgagee(s) shall have notified OWNER of its
desire to nullify such notice and shall have paid to
OWNER all rent and additional rent and other payments
herein provided for, and then in default and shall have
complied or shall commence the work of complying with
all of the other requirements of this Agreement, except as
provided in paragraph (g) of this Section, if any are then in
default, and shall prosecute the same to completion with
reasonable diligence, then in such event OWNER shall not
be entitled to terminate this Agreement and any notice of
termination theretofore given shall be void and of no
effect;

(d) If OWNER shall elect to terminate this Agreement by
reason of any default of DEVELOPER, the leasehold
Mortgagee(s) shall not only have the right to nullify any
notice of termination buy curing such default, as aforesaid,
but shall also have the right to postpone and extend the
specified date for the termination or this Agreement as
fixed by OWNER in its notice of termination, for a period
of not more than six (6) months, provided that such
leasehold Mortgagee(s) shall cure or cause to be cured any
then existing money defaults and meanwhile pay the rent,
additional rent and comply with and perform all of the
other terms, conditions and provisions of this Agreement
on DEVELOPER’s part to be complied with and
performed, other than past non-monetary defaults, and
provided further that the leasehold Mortgagee(s) shall

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forthwith take steps to acquire or sell DEVELOPER’s
interest in this Agreement by foreclosure of the
Mortgage(s) or otherwise and shall prosecute the same to
completion with all due diligence. If at the end of said six
(6) month period the leasehold Mortgagee(s) shall be
actively engaged in steps to acquire or sell DEVELOPER’s
interest herein, the time of said Mortgagee to comply with
the provisions of this Section shall be extended for such
period as shall be reasonably necessary to complete such
steps with reasonable diligence and continuity.

By providing that the Leasehold Mortgagee(s) shall be afforded the opportunity

to cure any defaults on the part of Vision, the Development Agreement acknowledges

the importance of Whitney’s interest in the property. The value of the collateral that

Whitney is holding is directly tied to the agreements between Vision and the Airport

Authority. Any judgment, in Whitney’s absence, terminating those agreements and

evicting Vision from the property is sure to impair Whitney’s ability to protect that

interest.

Richmond v. Board of Commissioners of the Orleans Levee District, 08-774

(La.App. 4 Cir. 11/26/08), 2 So.3d 485, is a recently decided and factually similar

case to the matter before us. The case involved a boat slip lease where the lessee

brought an action against the lessor seeking to terminate the lease and recoup

damages. The trial court granted summary judgment in favor of the lessee. Whitney

National Bank held a Leasehold Mortgage over the property subject to the lease but

was not joined as a party. On appeal, the court found that Whitney was a necessary

party and that the trial court erred in adjudicating the matter in its absence. “Here the

trial court adjudicated the rights of the lease with only the debtor, the plaintiff, being

represented. The trial court erred in adjudicating the rights to the lease without the

creditor’s presence because the termination of the lease rights affects the creditor, i.e.

Whitney.” Id. at 488. We find Richmond to be directly on point. Just as Whitney had

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an interest in the property subject to the boat slip lease, thus making it a party needed

for just adjudication, it had the same interest in the property subject to the

Development Agreement.

The Airport Authority suggests that the Collateral Mortgage evidencing

Whitney’s interest in the property may not have been properly in the record. The

claim is made despite the fact that the mortgage was included as part of the record

prior to the divestiture of the jurisdiction of the trial court on May, 12 2009.

Regardless of the propriety of the mortgage’s inclusion in the record, our decision is

rooted in the language of the Development Agreement. It is well-settled law that

contracts have the force of law between the parties. La.Civ.Code art. 1983. With that

in mind, we look to the Development Agreement and notice the benefits afforded to

the leasehold mortgagee in the event of default on the part of Vision. The agreement

provides the mortgagee with the right to cure the default, to postpone and extend the

date of the agreement’s termination, and it even contemplates the mortgagee

acquiring Vision’s interest in the agreement by way of foreclosure on the mortgage.

In short, the mortgagee is provided the opportunity to maintain its security. The grant

of such benefits to a mortgagee is addressed in La.Civ.Code art. 1978 as a stipulation

for a third party. This concept is better known in our jurisprudence as a stipulation

pour autrui.

The article provides that when a benefit in a contract is stipulated for a third

party, the contract may not be dissolved without the beneficiary’s agreement. There

are very few governing rules on third party beneficiary contracts, and determinations

on their existence must be made on a case by case basis. Joseph v. Hosp. Serv.

District No. 2 of Parish of St. Mary, 05-2364 (La. 10/15/06), 939 So.2d 1206. The

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most basic requirement for determining the existence of such a contract is whether the

contract clearly manifests an intent to stipulate a benefit for a third party. Id. As

stated above, we find that the intent to manifest a benefit was clear. We also find that

it was not necessary that Whitney be mentioned by name in the agreement.

“Although a stipulation pour autrui may be for the benefit of ‘undetermined persons,’

those beneficiaries must be determinable on the day in which the agreement is to have

effect for their benefit. Andrepont v. Acadia Drilling Co., 255 La. 347, 231 So.2d

347 (1969).” Camellia Place Subdivision–Block 1 Association v. Willet, 491 So.2d

764, 768 (La.App. 3 Cir. 1986), writ denied, 496 So.2d 349 (La.1986). Accordingly,

Whitney was properly a third party beneficiary under the agreement, despite not being

named specifically, because its existence as a mortgagee of the property was

determinable at the time of the agreement’s termination.

The Airport Authority urges that Vision should have brought Whitney in as a

party at the trial stage. However, the duty to do so is not singularly held by Vision.

Rather, it falls on both parties. The rights of the potential third party beneficiary must

be protected. Under the clear terms of the contract, the Airport Authority cannot evict

Vision to the detriment of the third party beneficiary. It follows that eviction was not

proper without either notice to the third party or proof that the Airport Authority was

never provided with information suggesting the third party’s existence. Thus, the

judgment of the trial court was not proper, even if we do not entertain the evidence

before us of Whitney’s interests.

We find that Whitney was a party needed for just adjudication as contemplated

by La.Code Civ.P. art. 641 and, at the very least, that there is an absence of evidence

showing that the Airport Authority was never notified of Whitney’s existence. For

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this reason, we find that the trial court erred in adjudicating the matter. The judgment

is an absolute nullity. See Terrebonne Parish School Board v. Bass Enterprises

Production Co., 02-2119 (La.App. 1 Cir. 8/8/03), 852 So.2d 541, writ denied, 03-

2786 (La. 1/9/04), 862 So.2d 984, writ denied, 03-2873 (La. 1/9/04), 862 So.2d 985.

Accordingly, we reverse the judgment of the trial court.

CONCLUSION:

For the foregoing reasons, we reverse the ruling of the trial court terminating

the Development Agreement between Vision and the Airport Authority and evicting

Vision from the Lake Charles Regional Airport. We find that Whitney was a party

needed for just adjudication and also that there is no evidence indicating that the

Airport Authority was not notified of the existence of Whitney. Thus, we find that

the judgment of the trial court in Whitney’s absence was an absolute nullity, and the

matter is reversed and remanded to the trial court for further proceedings. The costs

of this appeal are assessed to the appellee, Airport Authority.

REVERSED AND REMANDED.

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