Maw Enterprises, L.L.C. v. City of Marksville

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

13-456

MAW ENTERPRISES L.L.C. ET AL.

VERSUS

CITY OF MARKSVILLE, ET AL.

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APPEAL FROM THE
TWELFTH JUDICIAL DISTRICT COURT
PARISH OF AVOYELLES, NO. 2010-5073-A
HONORABLE MARK A. JEANSONNE, DISTRICT JUDGE

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ELIZABETH A. PICKETT
JUDGE

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Court composed of Jimmie C. Peters, Elizabeth A. Pickett, and J. David Painter,
Judges.

Peters, J., dissents and assigns reasons.

AFFIRMED AS AMENDED.

Rodney M. Rabalais
P. O. Box 447
Marksville, LA 71351
(318) 253-4622
COUNSEL FOR PLAINTIFF-APPELLEE:
Couvillon Payless, Inc.

Derrick M. Whittington
Whittington Law Firm
P. O. Box 127
Marksville, LA 71351
(318) 253-5852
COUNSEL FOR DEFENDANT-APPELLANT:
City of Marksville

PICKETT, Judge.

The City of Marksville appeals the judgment awarding the plaintiff damages

caused by the City’s wrongful denial of a license to sell alcohol to the plaintiff’s

lessee. As discussed below, we amend the judgment to increase the award of court

costs and affirm as amended.

DISCUSSION

In November 2009, MAW Enterprises, L.L.C. (MAW) entered into a lease

with Couvillon Payless Inc. (Couvillon), a family-owned business entity that owns

property in Marksville. A convenience store on the property has been operated by

various parties without interruption since 1978. A liquor license had been issued

to the premises continuously from 1978 through December 2009. Pursuant to the

terms of the lease: no rent was due the first three months; the next three months,

the rent was $.05 per gallon of the gas sold; and thereafter, the rent increased to

$4,000 per month.

MAW began operations in December 2009. The City granted MAW an

occupational license, and it began operating the convenience store. In January

2010, MAW submitted an application to obtain a liquor license that the City

denied. Couvillon agreed not to demand rent from MAW until MAW obtained a

liquor license.

MAW and Couvillon sued the City of Marksville in April 2010, seeking a

mandamus ordering the City to grant MAW a liquor license or, alternatively, a

declaratory judgment declaring the City’s ordinance to be without effect, together

with damages and attorney fees. In June 2010, the City granted a liquor license to

MAW. After its liquor license was issued, MAW dismissed with prejudice its

claims against the City and began paying Couvillon rent in July 2010. The City

filed peremptory exceptions of no cause of action and no right of action as to

Couvillon’s claims.

A hearing on the exceptions was held, and the trial court denied both

exceptions. The trial court immediately proceeded to trial on the merits of

Couvillon’s claims. At the conclusion of the trial, the trial court took the matter

under advisement and allowed the parties to submit post-trial memoranda.

Thereafter, the trial court issued Reasons for Ruling in which it concluded that the

City’s denial of a liquor license to MAW was unjustified. The trial court

determined that MAW terminated its lease with Couvillon due to the City’s

unjustified denial of a liquor license and that Couvillon proved it suffered damages

as a result of the City’s wrongful action in the amount of $72,000 for lost rentals,

less $15,000 in rent paid by MAW. It also awarded Couvillon $7,500 in attorney

fees. A judgment against the City awarding damages and attorney fees in these

amounts was signed.

The City appealed and assigned the following three errors with respect to the

trial court’s judgment:

1. The trial court erred in holding the City of Marksville liable to
Couvillon for damages because Couvillon’s claims arise from a
contract to which the City was not a party.

2. The trial court’s calculation of damages was erroneous.

3. The trial court erred in failing to consider the comparative fault
of Couvillon and MAW.

DISCUSSION

Couvillon’s Right to Recover Damages

The City urges that Couvillon has no cause of action against it for the relief

awarded by the trial court.

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The function of an Exception of No Cause of Action is to test
the legal sufficiency of a petition by determining whether the law
affords a remedy on the facts alleged in the pleading. Any doubts
must be resolved in favor of the sufficiency of the petition.

No evidence may be introduced to support or controvert the
objection that the petition fails to state a cause of action. When a
petition states a cause of action as to any ground or portion of the
demand, the exception of no cause of action must be denied. A
“cause of action” is an act by a Defendant which gives a Plaintiff a
right to invoke a judicial interference on his behalf.

La. Crawfish Producers Ass’n-West v. Amerada Hess Corp., 05-1156, p. 2

(La.App. 3 Cir. 7/12/06), 935 So.2d 380, 382, writ denied, 06-2301 (La. 12/8/06),

943 So.2d 1094 (quoting Harp v. Pine Bluff Sand & Gravel Co., 98-1634, p. 4

(La.App. 3 Cir. 11/24/99), 750 So.2d 226, 229 (citations omitted)).

The City asserts that because Couvillon was not a party to the contract

between it and MAW, Couvillon has no cause of action for the damages it seeks.

It argues that MAW, not Couvillon, has the right to collect the damages Couvillon

seeks and that Couvillon’s cause of action is against MAW not it. Pointing to

Louisiana Crawfish, 935 So.2d 380, PPG Industries, Inc. v. Bean Dredging, 447

So.2d 1058 (La.1984), and Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303,

48 S.Ct. 134 (1927) as support, the City urges that a contractual relationship such

as the lease agreement between Couvillon and MAW does not support the recovery

of damages by a party who was not directly injured by the tortfeasor.

In PPG, 447 So.2d 1058, the supreme court denied recovery to the customer

of a natural gas pipeline owner whose gas supply was interrupted when the

pipeline was damaged by the defendant’s dredging operation. The court utilized

the duty-risk analysis and concluded that the ease of association between the rule

of law not to negligently damage the property of another was not present with

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regard to the pipeline’s customer whose only interest in the damaged pipeline arose

from its contract with the owner.

Couvillon contends, however, that the City’s refusal to issue MAW a liquor

license constituted “a wrongful taking of an existing right” it owned and that the

wrongful taking deprived it of the benefits of an ongoing business. Specifically,

Couvillon argues that the City’s ordinance was preempted by state law because it

conflicted with an applicable state statute.

Louisiana Revised Statutes 26:81 governs the issuance of permits to sell

alcoholic beverages with regard to the location of businesses selling such

beverages. Section 81 (emphasis added) provides, in pertinent part:

A. No permit shall be granted under this Chapter in
contravention of any municipal or parish ordinances adopted pursuant
to the zoning laws of the state.

....

C. (1) When prohibited by municipal or parish ordinance, no
permit shall be granted for any premises situated within three hundred
feet or less, as fixed by the ordinance, of a public playground or of a
building used exclusively as a church or synagogue, public library,
school, full-time day care center as defined in R.S. 17:405(A)(4) . . . .

....

E. The prohibitions in this Section do not apply . . . to any
premises which have been licensed to deal in alcoholic beverages for
a period of one year or longer prior to the adoption of the ordinance.

Section 11-19.1 of the City’s Code of Ordinances, adopted on August 25,

1980, restricts the issuance of permits “to those persons licensed by the Town of

Marksville to deal in beverages of low alcoholic content continuously and without

interruption from August, 1978 or before, until the time of each successive

renewal, and only for the particular premises which those persons have so

licensed.” The state statute exempts the premises for which the liquor license is

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sought, not the person as the City ordinance does; therefore, the ordinance conflicts

with the state law. A municipal ordinance that conflicts with state law is

preempted by the state law. Sabine Parish Police Jury v. Comm’r of Alcohol &

Tobacco Control, 04-1833 (La. 4/12/05), 898 So.2d 1244.

The City does not dispute that its ordinance conflicts with La.R.S. 26:81 and

that it wrongfully denied MAW a liquor license based on its ordinance. Couvillon

owns the premises leased by MAW for which the City denied a liquor license and

was damaged by the City’s wrongful action. Accordingly, Couvillon stands in the

position of the property owners in Louisiana Crawfish, 935 So.2d 380, PPG

Industries, 447 So.2d 1058, and Robins, 275 U.S. 303, 48 S.Ct. 134, not the parties

to whom recovery was denied. Accordingly, the exception of no cause of action

was properly denied.

Damages

The City complains that the trial court’s award of damages exceeds the loss

proven by Couvillon. Specifically, it contends that the damages proven do not

exceed a period of approximately six months.

Mr. Couvillon testified that rental for tenants prior to MAW, except the

immediately preceding tenant, had been based on gas sales and averaged

approximately $4,000 or more per month. He then explained that the tenant

immediately preceding MAW had paid $4,000 per month in rent. Records of gas

sales for the years 2007-09 corroborate this testimony.

Mr. Couvillon also testified that after the City denied MAW a liquor license,

Couvillon orally amended its lease with MAW to waive rent on a month-by-month

basis until MAW obtained a liquor license and that rentals were to increase to

$4,000 per month thereafter. Mr. Couvillon further related that while MAW’s

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sales increased after its liquor license was issued, those sales were not sufficient to

sustain rent of $4,000 per month. Instead, MAW paid Couvillon rent totaling

$15,000 for the months of July through December 2010. William Brittain,

corporate representative of MAW, explained that MAW paid rentals of $2,000 for

the month of July, $3,000 per month for August through November, and it left gas

in the tank as rent for December 2010 when it left the premises.

Mr. Couvillon testified that a new tenant leased the premises a few weeks

after its lease with MAW was terminated and that the convenience store was closed

during that time. Mr. Couvillon also testified that Couvillon did not charge the

new tenant rent for six months, indicating this was done to allow sales to return to

a level that was profitable for the tenant. According to Mr. Couvillon, the

convenience store’s gas sales “went [d]own the tube” when MAW was denied a

liquor license and never improved to the level of sales before MAW’s lease. The

City did not present any evidence contradicting either Mr. Couvillon’s or

Mr. Brittain’s testimony.

An appellate court’s award of damages is a finding of fact. Rando v. Anco

Insulations, Inc., 08-1163, 08-1169 (La. 5/22/09), 16 So.3d 1065. An appellate

court cannot reverse a trial court’s finding of fact unless review of the entire record

shows that a reasonable factual basis does not exist for the finding and that the fact

finder was clearly wrong or manifestly erroneous. Id. When credibility of a

witness’s testimony is the basis of the factual finding, a fact finder’s decision to

accept the unchallenged testimony of a witness can virtually never be manifestly

erroneous. Adams v. Rhodia, Inc., 07-2110 (La. 5/21/08), 983 So.2d 798.

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As outlined above, the evidence establishes a reasonable factual basis exists

in the record for the trial court’s damage awards. Accordingly, we find no error in

the trial court’s damage award.

Comparative Fault

The City contends that Couvillon should be assessed with some percentage

of fault because it did not apply for a liquor license after the City denied MAW a

liquor license. Review of Darnell v. Taylor, 236 So.2d 57 (La.App. 3 Cir.), writ

denied, 239 So.2d 346, 256 La. 821 (1970), the case cited by the City as support

for this proposition, shows the error of this argument. The plaintiff in Darnell

could have, but failed, to minimize the damage he suffered after a leak developed

in a gas tank due to a defect in the tank because he did not properly monitor the

contents of the tank. Hence, the issue in Darnell was not comparative fault but

mitigation of damages.

The obligation of a party like Couvillon to mitigate its damages is provided

for in La.Civ.Code art. 2002. Article 2002 requires “[a]n obligee [to] make

reasonable efforts to mitigate the damage caused by the obligor’s failure to

perform.” If the obligee fails to take reasonable steps to mitigate its damages, the

obligor may seek to have the obligee’s damages reduced.

Mitigation of damages is an affirmative defense. MB Indus., LLC v. CNA

Ins. Co., 11-303, 11-304 (La. 10/25/11), 74 So.3d 1173. Affirmative defenses are

waived if not specifically plead. La.Code Civ.P. art. 1005. The City did not

affirmatively plead mitigation of damages when it answered Couvillon’s petition;

therefore, the defense was waived.

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DISPOSITION

Finding no error in the trial court’s denial of the exception of no cause of

action and awards of damages and attorney fees, we amend the judgment to

increase the award of court costs to $1,463.54 and affirm as amended.

AFFIRMED AS AMENDED.

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STATE OF LOUISIANA

COURT OF APPEAL, THIRD CIRCUIT

13-456

MAW ENTERPRISES L.L.C., ET AL.

VERSUS

CITY OF MARKSVILLE, ET AL.

PETERS, J. dissents.

I respectfully disagree with the majority’s determination that La.R.S. 26:81

affords Couvillon Payless, Inc. (Couvillon) a cause of action against the City of

Marksville (Marksville) for damages it sustained when MAW Enterprises, L.L.C.

(MAW) did not perform according to their lease agreement after Marksville denied

MAW a liquor license for the convenience store premises. The majority reaches

this conclusion based on the word “premises” rather than “person” in La.R.S.

26:81. Because Couvillon owns the premises leased to MAW, the majority

reasons, it has a cause of action for damages against Marksville despite the total

lack of a contractual relationship. I find that the emphasis on the statute, without

taking into consideration the other provisions concerning the grant of a liquor

license, is error. I would reverse the trial court judgment finding that Couvillon

does not have a cause of action against Marksville.

The Louisiana Alcohol Beverage Control Law, La.R.S. 26:1 et seq., clearly

provides that the person wishing to sell alcoholic beverages on a particular

premises is the party at interest in the granting or denying of a permit. Louisiana

Revised Statutes 26:71 provides in pertinent part that “before engaging in the

business of manufacturing, supplying, or dealing in alcoholic beverages, all

persons shall obtain from the commissioner . . . a permit to conduct each separate

business . . .” (Emphasis added.) A list of the fees to be collected for the issuance

of a particular license follows this language in the statutes and this list makes it

clear that the applicant must pay a separate fee for the operation of each separate

business location. Id.

With regard to the issuance of local permits, La.R.S. 26:74 does not refer to

the premises associated with the sale of alcoholic beverages, but instead provides

that “[p]arishes and municipalities may require annual permits and fees from

dealers holding state permits under this Chapter.” (Emphasis added.) Louisiana

Revised Statutes 26:2(5) defines a “dealer” in part as “any person who, as a

business . . . sells [or] offers for sale . . . any alcoholic beverage in the state or

engages herein in any business transaction relating to any such beverage.” In

keeping with the personal nature of the required permits, La.R.S. 26:75(A)

provides in pertinent part that “[n]o person shall do any act for which a permit is

required by this Chapter or by local authorities acting hereunder unless he holds

the proper state and local permit.” (Emphasis added.)

Louisiana Revised Statutes 26:76 also carries forward the personal nature of

the permit to sell alcoholic beverages. It provides that the permit is not assignable

or heritable, and that it must be surrendered if the “ownership of the business is

transferred or the business is terminated.” La.R.S. 26:76(A)(2). Of importance to

the resolution of the issue in this case is La.R.S. 26:76(A)(4) which provides:

When the location of a place of business is proposed to be
changed, the proposal shall be received and must be approved by the
issuing authority before such action is taken. The change of location
shall be noted on the permit by the issuing authority and the permit
shall be invalid unless the notation is made.

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Furthermore, the statutory scheme provides that the applicant for a liquor license

permit must be the party proposing to engage in the business or operation itself.

La.R.S. 26:77-80.

I acknowledge that La.R.S. 26:81(B)(3), (C)(1), (C)(2), and (E) all refer to

the “premises” as having been licensed. However, the title of this statute explains

the change in nomenclature for use in this particular instance. The statute’s title,

“Location of business limited,” does not refer to the licensing process, but

addresses the location of the business itself. That is to say, it merely sets forth the

limitations on where the liquor license may be exercised. I find nothing in the

language of La.R.S. 26:81 that suggests this single statue changes the particulars of

the remainder of the Chapter.

I would reverse the trial court’s judgment by granting Marksville’s

peremptory exception of no cause of action and dismiss the claims of Couvillon

Payless Inc. at its costs.

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