Alliance Hospitality, L.L.C. v. Esquivel

322 So.3d 253

ALLIANCE HOSPITALITY, L.L.C.

v.Dickie J. ESQUIVEL, Joyce Denino Esquivel, Daniel C. Esquivel, Stephanie LeBlanc Esquivel, Donald P. Esquivel, Cynthia Barrilleaux Esquivel, Kenneth J. Frederic, Jessica Claire Latino Frederic, Gene W. Suelzle, Patricia Jacob Suelzle, and Guillot Properties, L.L.C.

2020 CA 0807

Court of Appeal of Louisiana, First Circuit.

Decision Rendered: FEBRUARY 24, 2021

R. Heath Savant, Mark T. Assad, Baton Rouge, Louisiana, Attorneys for Plaintiff/Appellant Alliance Hospitality, L.L.C.

John M. Dubreuil, James L. Bradford III, Kirk N. Aurandt, Covington, Louisiana and Sidney A. Marchand III, Donaldsonville, Louisiana, Attorneys for Defendants/Appellees Dickie J. Esquivel, et al.

BEFORE: McDONALD, HOLDRIDGE, and PENZATO, JJ.

McDONALD, J.

A buyer of immovable property appeals a judgment dismissing its breach of contract suit against the sellers as prescribed. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

By cash deed dated March 14, 2007, Dickie J. Esquivel, Joyce Dinino Esquivel, Daniel C. Esquivel, Stephanie LeBlanc Esquivel, Donald P. Esquivel, Cynthia Barrilleaux Esquivel, Kenneth J. Frederic, Jessica Claire Latino Frederic, Gene W. Suelzle, Patricia Jacob Suelzle, and Guillot Properties, L.L.C. (the Esquivels) sold a 2-acre parcel of land in Donaldsonville, Louisiana, to Alliance Hospitality, L.L.C. (Alliance). The cash deed contained the following provision (the no-hotel restriction):

Sellers covenant and agree that they shall not sell any parcel of land within a One (1) Mile radius of the subject property without first restricting the property to be sold from being used as [a] hotel/motel or tourism court.

After the completed sale, Alliance built a Comfort Inn hotel on the two acres it bought from the Esquivels and began operations in 2009. Alliance alleges that, unknown to it, on or about August 8, 2009,¹ the Esquivels sold adjacent property to KEAS Rental Properties, L.L.C. (KEAS), without including the no-hotel restriction in the sale document. Alliance further alleges that, also unknown to it, on or about August 11, 2014, KEAS sold a parcel of the adjacent property to Vimal Patel, also without the no-hotel restriction. Lastly, Alliance alleges Mr. Patel later built a Holiday Inn Express hotel on the land he bought from KEAS, and he began operations in March 2017, in direct competition to Alliance's Comfort Inn.

On November 25, 2019, Alliance filed the present suit against the Esquivels, alleging the Esquivels' August 2009 sale to KEAS, without the no-hotel restriction, was a clear breach of contract. The Esquivels responded by filing a peremptory exception of prescription and supporting memorandum, claiming Alliance's suit was prescribed, because more than 10 years passed between August 8, 2009, the date of the alleged breach, and November 25, 2019, the date Alliance filed suit. The Esquivels attached and referenced several exhibits to and in their memorandum. Alliance filed an opposition memorandum, attaching and referencing one exhibit. In due course, the district court held a hearing on the exception. The parties argued their respective positions, but neither side introduced evidence at the hearing. The district court later signed reasons for judgment, and on April 9, 2020, signed a judgment sustaining the Esquivels' exception and dismissing Alliance's claims against them with prejudice.

Alliance appeals from the adverse judgment, contending the district court erred in dismissing its suit as prescribed. In four assignments of error, Alliance argues the district court committed legal error: (1) by ruling that the prescriptive period began when the contract was breached without Alliance's knowledge, rather than the date Alliance knew or should have known of the breach; (2) in failing to apply the discovery rule under the doctrine of contra non valentem; (3) in ruling the prescriptive period began to run before Alliance had a complete and actionable cause of action; and, (4) in relying on irrelevant factual assertions regarding Alliance's purchase of separate unrelated property.² Essentially, Alliance contends the doctrine of contra non valentem applies, and its suit against the Esquivels is timely, because prescription did not begin to run until March 2017, when Alliance discovered Mr. Patel was operating a competing hotel near Alliance's Comfort Inn.

DISCUSSION

Appellate review of a judgment ruling on a prescription exception depends on the manner in which the exception is heard. Templet v. State through DPSC, 19-0037 (La. App. 1 Cir. 11/15/19), 290 So.3d 187, 191. When a peremptory exception is pleaded before trial, evidence may be introduced to support or controvert the exception when the grounds thereof do not appear from the petition. La. C.C.P. art. 931. In the absence of evidence, the exception must be decided on the facts alleged in the petition, and the court accepts those factual allegations as true. Quinn v. La. Citizens Prop. Ins. Corp., 12-0152 (La. 11/2/12), 118 So.3d 1011, 1017 ; Templet, 290 So.3d at 191. In this case, neither the Esquivels nor Alliance introduced evidence at the exception hearing. Although both sides attached documents to their memoranda, and both referenced these documents during their argument at the exception hearing, such documents do not constitute evidence and cannot be considered on appeal. Denoux v. Vessel Mgmt. Svces, Inc., 07-2143 (La. 5/21/08), 983 So.2d 84, 88 ; Templet, 290 So.3d at 191. Accordingly, based solely on the facts alleged in Alliance's petition, this court's role is to determine if the trial court's ruling was legally correct. Williams v. Genuine Parts Co., 14-0857 (La. App. 1 Cir. 1/8/15), 2015 WL 127974 *2.

All personal actions, including an action on a contract, are subject to liberative prescription of ten years, unless otherwise provided by legislation. La. C.C. art. 3499 ; Smith v. Citadel Insurance Company, 19-00052 (La. 10/22/19), 285 So.3d 1062, 1067. The parties do not dispute that the applicable prescriptive period herein is ten years. Generally, on a breach of contract claim, prescription begins from the date the obligor breaches his obligation. Roba, Inc. v. Courtney, 09-0508 (La. App. 1 Cir. 8/10/10), 47 So.3d 500, 507.

In its petition, Alliance alleges the Esquivels breached their 2007 sale contract with Alliance by executing the August 2009 sale contract with KEAS, without including the no-hotel restriction in the latter sale contract. Thus, ordinarily, prescription on Alliance's breach of contract claim would have begun on August 8, 2009, the date of the latter sale, and would have expired on August 8, 2019, which is before Alliance filed the present suit on November 25, 2019. Alliance alleges, however, that it did not know nor should it have known that the Esquivels' August 2009 sale to KEAS did not include the no-hotel restriction, nor did it know that KEAS then sold a parcel of the adjacent property to Mr. Patel in 2014, also without including the no-hotel restriction.

Prescription runs against all persons unless exception is established by legislation. La. C.C. art. 3467. Louisiana courts, however, have applied the jurisprudential doctrine of contra not valentem as an exception to this statutory rule. Lomont v. Bennett, 14-2483 (La. 6/30/15), 172 So.3d 620, 637. The doctrine of contra non valentem is based on the premise that, in some circumstances, equity and justice require that prescription be suspended because the plaintiff is unable to exercise his cause of action when it accrues, for reasons outside his control. See Babineaux v. State ex rel. DOTD, 04-2649 (La. App. 1 Cir. 12/22/05), 927 So.2d 1121, 1124. Louisiana courts have recognized four limited situations when the doctrine applies. Each situation allows the courts to weigh the equitable nature of the circumstances in each individual case to determine whether prescription will be tolled. Williams v. The Library, 12-0220 (La. App. 1 Cir. 11/2/12), 111 So.3d 356, 358.

Alliance relies on the fourth category of contra non valentem, known as the discovery rule, which provides that prescription begins on the date the injured party discovers or should have discovered the facts upon which his cause of action is based. Id. Alliance asserts that Louisiana law is "rife with examples" of the application of contra non valentem. Louisiana courts, however, have uniformly held that the discovery rule is only to be applied in exceptional circumstances. La. C.C. art. 3467, Official Revision Comment (d). For example, see Renfroe v. State ex rel. DOTD, 01-1646 (La. 2/26/02), 809 So.2d 947, 953 ; Gibson v. Jalou Cash's, LLC, 19-1308 (La. App. 1 Cir. 7/17/20), 308 So.3d 1188, 1192–93 ; Hines v. Browning-Ferris, Inc., 46,577 (La. App. 2 Cir. 9/21/11), 73 So.3d 479, 484 ...