The Leasing Hotline

Lessee's Repair Obligations

In Schwegmann Family Trust v. John Hancock Life Ins. Co. Inc., No. 08-30650, 5th U.S. Circuit Court of Appeals, Aug. 11, 2009, the lessee's store built on the lessor's property was damaged during Hurricane Katrina, and the lessee contended that the lease should be dissolved under Article 2715 because the leased property was substantially impaired. The district court held that the lease specifically addressed the circumstances at issue, concerning the effects of Hurricane Katrina on the leased property, and thus held that the contrary provisions of Article 2715 did not apply in that there were no gaps in the lease limiting enforceability under La. Civ. Code Ann. Art. 2668. On review, the court affirmed, agreeing that the lessor was entitled to continuation of the lease while the lessee was obligated to repair the leased property as specified in the lease agreement. The words of the lease had to be given their prevailing meaning under La. Civ. Code Ann. art. 2047, and the lease addressed situations in which the whole or any part of the demised premises was damaged or destroyed by fire or other casualty. Hurricane Katrina was a casualty under the lease, and the negative changes in the business climate after the hurricane did not constitute a substantial impairment to dissolve the lease under Article 2715.

Lessee's Repair Obligations

In Schwegmann Family Trust v. John Hancock Life Ins. Co. Inc., No. 08-30650, 5th U.S. Circuit Court of Appeals, Aug. 11, 2009, the lessee's store built on the lessor's property was damaged during Hurricane Katrina, and the lessee contended that the lease should be dissolved under Article 2715 because the leased property was substantially impaired. The district court held that the lease specifically addressed the circumstances at issue, concerning the effects of Hurricane Katrina on the leased property, and thus held that the contrary provisions of Article 2715 did not apply in that there were no gaps in the lease limiting enforceability under La. Civ. Code Ann. Art. 2668. On review, the court affirmed, agreeing that the lessor was entitled to continuation of the lease while the lessee was obligated to repair the leased property as specified in the lease agreement. The words of the lease had to be given their prevailing meaning under La. Civ. Code Ann. art. 2047, and the lease addressed situations in which the whole or any part of the demised premises was damaged or destroyed by fire or other casualty. Hurricane Katrina was a casualty under the lease, and the negative changes in the business climate after the hurricane did not constitute a substantial impairment to dissolve the lease under Article 2715.