721 ST CHARLES LLC v. COMMERCIAL REALTY DEVELOPERS LLC 731 LLC (2026)

Relators, Commercial Realty Developers, LLC, Oliver S. Montagnet, Jr., Monica C. Montagnet, and 731 St. Charles Ave., LLC, seek supervisory review of the district court's July 2, 2026 judgment denying their peremptory exceptions of res judicata, no right of action, and/or no cause of action. For the following reasons, we grant Relators’ writ application, reverse the district court's July 2, 2026 judgment, and grant Relators’ peremptory exception of res judicata.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

These parties previously appeared before this Court in 721 St. Charles, LLC v. Gibbs Residential, LLC, 2024-0603 (La. App. 4 Cir. 5/8/25), 421 So.3d 136. There, this Court summarized the facts of this case as follows:

At issue is a contract dispute between the owner of 721 St. Charles Ave. (“721”) and two companies, Gibbs Residential, LLC (“Gibbs”) and Commercial Real Estate Developers, LLC (“CRD”). On February 18, 2018, Gibbs signed a standard form contract that exclusively leased 721 (“The Gibbs Lease”) to serve as a staging ground for the construction of a condominium building on the adjacent 731 St. Charles Ave. Steve Montagnet is a principle owner of 731 St. Charles Ave. LLC (“731”).

The standard form Lease was confected by 721. The Lease contained a damages and repairs provision, (“Clause 13”) that stated:

13. REPAIR AND MAINTENANCE. Tenant shall, at its expense, repair all damage caused by Tenant's employees and invitees, maintain striping, and perform routine custodial services to keep the surfaces within the Premises (if any) in a clean condition. All other maintenance, repair and/or replacement of or on the Premises shall be promptly and diligently performed by Tenant at Tenant's expense, so that the Premises shall be in good condition and repair at all times and in compliance with the Americans with Disabilities Act of 1990. Tenant shall specifically maintain the parking surface of the Leased Premises and return it to the Landlord in the condition received at the commencement of the Lease.

Gibbs failed to complete the construction project in a timely manner preventing a third-party parking company, S and P Parking (“SP”), from taking possession of 721. Gibbs was discharged from the 731-construction project and ceased use of 721 on or around December 1, 2019.

The owner of 731, Steve Montagnet, arranged for his company CRD to take over the Gibbs Lease in order to prevent project delays. CRD entered into a Lease with 721 on December 1, 2019, which was extended through June 30, 2020 (“CRD Lease”). The CRD Lease was almost identical to the Lease signed by Gibbs, with the exception of a hand-written provision inserted under Clause 13, added by the owners of 721 and agreed to by CRD. The distinction bound CRD to be responsible for any damages caused by their possession of 721 and to repair damages caused by Gibbs’ possession. The addition to Clause 13 stated: “This shall apply to Gibbs Residential LLC & damage applicable to [its] use up until 12/19 and throughout previous use of lot and drive.”

Damages caused during Gibbs’ possession included a removal of an electrical pole that fed power to light fixtures, damaged and destroyed brick pavers, removal of underground wiring and removal of electrical boxes. There was extensive damage to the lot's asphalt surface and striping paint. Gibbs did not make, nor was it asked, to make any repairs on the lot after termination from the 731 job or the cessation of its possession of 721.

At the end of its 721 possession, CRD performed patch work repairs on the asphalt surface and restriped parking lines. CRD did not address any of the aforementioned damages caused by Gibbs. An owner of 721, Craig Boes (“Boes”) repined that the work done by CRD was inadequate to return the lot to pre-Gibbs condition and hired an outside company to repair the damages at the expense of $106,077.89. Repairs included complete asphalt resurfacing.

On October 9, 2020, 721 filed suit for breach of contract naming Gibbs and CRD as joint defendants. It avers that 721 was not returned to proper condition and sought repair damages, lost profits from the SP Lease, attorney's fees, and post judgment interest. Gibbs settled claims with 721 prior to the one-day bench trial held on February 20, 2024, releasing it from all claims without prejudice. The trial court concluded that CRD was liable for damages caused during the duration of the Leases. The court awarded all of 721's repair costs, ($106,077.87). At a later hearing on May 15, 2024, the court awarded attorney's fees ($51,770.71) and judicial interest to 721; CRD appealed.

721 St. Charles, LLC, 2024-0603, pp. 1-3, 421 So.3d at 138-39. On appeal, this Court “affirm[ed] the finding that CRD [was] liable to 721 for a breach in contract” and “conclude[d] that Gibbs and CRD [were] solidarily liable for the obligations required during the duration of the Gibbs Lease.” Id., 2024-0603, pp. 9, 11-12, 421 So.3d at 142, 144. Accordingly, we “amend[ed] the judgment to reduce and credit the damages owed by 50%,” i.e., “by Gibbs’ virile share,” given that 721 settled with Gibbs prior to trial. Id.

Following this Court's decision in 721 St. Charles, LLC, 721 filed a writ application with the Louisiana Supreme Court on June 6, 2025. The Louisiana Supreme Court denied the writ application. 721 St. Charles, LLC v. Gibbs Residential, LLC, 2025-00719 (La. 10/14/25), 419 So.3d 353.

On December 18, 2025, 721 filed a petition to enforce suretyship and for damages, wherein it asserted that CRD has not paid any amount of the judgment that the district court awarded in the prior lawsuit. Moreover, 721 claimed that it brought this lawsuit to recover the remaining 50% of damages due for Gibbs’ fault that was not adjudicated in the underlying lawsuit. In the petition, 721 averred that its settlement with Gibbs was only for lost rents, not property damage. Also, 721 argued that when CRD agreed to fulfill Gibbs’ obligation in the CRD Lease, Relators thereby bound themselves to Gibbs’ share of property damage fault through a contract of suretyship.

Relators filed peremptory exceptions of res judicata and no right of action and/or no cause of action on April 7, 2026 with supporting memorandum. Relators claimed that 721's petition mischaracterized the proceedings in the previous litigation and attempted to revive claims and causes of action that have already been adjudicated. Relators attached the following exhibits in support of their peremptory exceptions: (1) a copy of the December 1, 2019 CRD Lease; (2) a copy of the October 9, 2020 petition for damages that is related to the first litigation; (3) a copy of the April 18, 2024 judgment regarding the underlying CRD litigation that granted 721 $106,077.89 in damages and attorneys’ fees against CRD; (4) a copy of the May 23, 2024 judgment regarding the underlying CRD litigation that granted 721 $51,770.71 in attorneys’ fees against CRD; (5) a copy of this Court's May 8, 2025 opinion in 721 St. Charles, LLC v. Gibbs Residential, LLC, 2024-0603 (La. App. 4 Cir. 5/8/25), 421 So.3d 136; and (6) a copy of 721's June 6, 2025 writ of certiorari to the Louisiana Supreme Court.

On May 20, 2026, 721 filed an opposition to Relators’ peremptory exceptions with memorandum in support, asserting that res judicata does not apply when the same party, CRD, was sued in a different capacity than the prior underlying litigation. Further, 721 asserted that its settlement with Gibbs was only for its lost rent claim and not the property damage claim. Lastly, 721 argued that despite not being parties to the CRD Lease, the Montagnets were proper parties because CRD was the alter ego of the Montagnets and 731.

On May 26, 2026, Relators filed a reply memorandum. Relators argued that this Court's prior opinion in 721 St. Charles, LLC characterized CRD's and Gibbs’ liability as solidary and that CRD's legal capacity did not change simply because 721 re-characterized the claims as surety claims. Moreover, Relators argued that, in accordance with this Court's 721 St. Charles, LLC opinion, the amount 721 could recover was reduced by 50% to account for Gibbs’ virile share credit when Gibbs settled with 721. Relators attached the following exhibits in support of their reply: (1) a copy of the February 20, 2024 order dismissing all of 721's claims against Gibbs; and (2) a copy of 721's appellate brief to this Court in 721 St. Charles, LLC.

The hearing on Relators’ peremptory exceptions took place on May 28, 2026. The district court denied the exceptions. Relators filed a Notice of Intent to Apply for Supervisory Writs on July 14, 2026. The trial court signed the order on July 15, 2026 and set August 5, 2026 as the return date. Relators timely filed their writ application on August 5, 2026.

ISSUES FOR SUPERVISORY REVIEW

Relators request supervisory review of the district court's July 2, 2026 judgment denying their peremptory exceptions of res judicata, no right of action, and/or no cause of action. However, we need only address the denial of Relators’ peremptory exception of res judicata as it is dispositive.

STANDARD OF REVIEW

This Court has previously set forth the standard of review of a trial court's decision to grant or deny a peremptory exception of res judicata:

[A]ppellate courts must determine whether the trial court's decision to grant or deny an exception of res judicata was “legally correct or incorrect.” Thus, appellate courts review the matter de novo “because ‘[t]he res judicata effect of a prior judgment’ constitutes ‘a question of law.’ ” If the trial court made any factual determinations in its res judicata ruling, then the appellate court reviews these under the manifest error/clearly wrong standard.

225 Baronne Complex, LLC v. Roy Anderson Corp., 2024-0401, pp. 18-19 (La. App. 4 Cir. 1/31/25), 408 So.3d 291, 304 (citations omitted).

DISCUSSION

This Court has laid out the elements required to establish a res judicata exception.

Jurisprudence has construed La. R.S. 13:4231 to require the following elements satisfied to sustain an exception of res judicata:

(1) the judgment is valid; (2) the judgment is final; (3) the parties are the same; (4) the cause or causes of action asserted in the second suit existed at the time of final judgment in the first litigation; and (5) the cause or causes of action asserted in the second suit arose out of the transaction or occurrence that was the subject matter of the first litigation.

Soule v. Woodward Design + Build, LLC, 2024-0267, p. 6 (La. App. 4 Cir. 8/15/24), 399 So.3d 648, 654 (citing Burguieres v. Pollingue, 2002-1385, p. 8 (La. 2/25/03), 843 So.2d 1049, 1053).

In the writ application sub judice, it is undisputed that the prior lawsuit involving CRD and Gibbs resulted in a valid and final judgment, thus satisfying the first two elements required to establish a res judicata exception. Moreover, CRD was a defendant in 721's prior lawsuit for its property damage claims resulting from damage to its parking lot during the duration of the Gibbs and CRD Leases. Though 721 attempts to argue that it is suing CRD in a different capacity than the prior suit (i.e., as the surety of Gibbs), so the parties are not truly the same as required by the third element required to establish a res judicata exception, this argument is meritless. The third element is satisfied.

Regarding the fourth element required to establish a res judicata exception, 721 previously asserted the suretyship theory and property damage claims in its brief to this Court in the underlying litigation as well as to the Louisiana Supreme Court. This Court rejected the theory, and the Louisiana Supreme Court denied writs.

In 721 St. Charles, LLC, this Court unequivocally established that CRD and Gibbs are solidary obligors with respect to 721's property damage claims against them, reasoning:

“The coextensive obligations for the ‘same thing’ create the solidarity of the obligations. When it is not clear that the parties are all obliged to the same thing․ then an obligation in solido is not presumed and must be expressly stipulated. However, when it is entirely clear that the parties are all obliged to the same thing․ then there is an obligation in solido by definition, as a matter of law.” Berlier v. A.P. Green Indus., Inc., 01-1530, p. 9 (La. 4/3/02), 815 So. 2d 39, 45.

2024-0603, pp. 6-7, 421 So.3d at 141. Thus, because both CRD and Gibbs contracted to be liable to 721 for damage to its parking lot, this Court found that the parties were solidarily liable to 721, thereby defeating 721's suretyship argument.¹ The fourth element required to establish a res judicata exception is satisfied.

The fifth element required to establish a res judicata exception is also satisfied. In its petition, 721 alleged a cause of action against CRD to enforce suretyship, seeking to recover the 50% of damages Gibbs purportedly owed for the parking lot damage. This cause of action arose out of the same transaction or occurrence that was the subject matter of the first litigation, namely, the damage that occurred to 721's parking lot during the duration of the Gibbs and CRD Leases.

In essence, 721 seeks to recover from CRD the 50% owed by Gibbs as a solidary obligor. “An obligation is solidary for the obligors when each obligor is liable for the whole performance.” La. C.C. art. 1794. This means that had 721 not settled with Gibbs, 721 could have requested the whole performance – Gibbs’ and CRD's shares of the property damage – from CRD alone. CRD would have then had the right to recover Gibbs’ 50% virile share. “Among solidary obligors, each is liable for his virile portion.” La. C.C. art. 1804. However, 721 settled with Gibbs prior to trial. “Remission of debt by the obligee in favor of one obligor, or a transaction or compromise between the obligee and one obligor, benefits the other solidary obligors in the amount of the portion of that obligor.” La. C.C. art. 1803. The settlement between 721 and Gibbs limited how much 721 could recover from CRD, namely, 50% of the property damages.

Considering that this Court previously classified CRD and Gibbs as solidary obligors, CRD cannot also be Gibbs’ surety, and 721 therefore cannot sue CRD as a surety to recover the property damages purportedly owed by Gibbs. Because 721 can only sue CRD as a solidary obligor of Gibbs, which it previously did in 721 St. Charles, LLC, the fifth element required to establish a res judicata exception is satisfied.

Even assuming, arguendo, that CRD was the surety of Gibbs, 721 remitted Gibbs’ obligation when it settled with Gibbs. “[W]hile ordinarily premised on a final judgment, the doctrine of res judicata also applies where there is a compromise or settlement of a disputed claim or matter that has been entered into between the parties.” 1955 Nola Holdings, L.L.C. v. Windy Hill Pictures L.L.C., 2023-0050, p. 6 (La. App. 4 Cir. 10/2/23), 376 So.3d 200, 205 (quoting Lewis v. Wieber, 2021-0476, p. 13 (La. App. 4 Cir. 7/6/22), 344 So.3d 168, 176) (alteration in original). Thus, the res judicata exception would apply to extinguish 721's theoretical claim against CRD as surety of Gibbs. By settling with Gibbs, 721 extinguished the principal obligation that CRD's suretyship was intended to secure.

In sum, each element required to establish res judicata as alleged by Relators is satisfied. CRD and Gibbs are solidary obligors, and therefore, they do not have a surety-principal obligor relationship; regardless, even if CRD were the surety of Gibbs, 721 forfeited its right to recover from CRD for Gibbs’ obligation when it settled with Gibbs, thus barring further recovery due to res judicata.

CONCLUSION

For the foregoing reasons, we grant Relators’ writ application, reverse the district court's July 2, 2026 judgment denying their peremptory exceptions of res judicata, no right of action, and/or no cause of action, and grant Relators’ peremptory exception of res judicata.

WRIT GRANTED; JUDGMENT REVERSED

FOOTNOTES

1.   A suretyship involves a principal obligor and a surety who “binds himself to a creditor to fulfill the obligation of [the principal obligor] upon the failure of the latter to do so.” La. C.C. art. 3035. “A surety who pays the creditor is entitled to reimbursement from the principal obligor.” La. C.C. art. 3049. CRD cannot be the surety of Gibbs because CRD would not be entitled to reimbursement from Gibbs if it paid the full amount of damages awarded to 721 for its property damage claim, given that CRD was found to be liable as well. Rather, CRD could only have recovered an amount equal to Gibbs’ virile share, or 50% of the damages owed, if it paid 721 the full amount. “Among solidary obligors, each is liable for his virile portion.” La. C.C. art. 1804.

Judge Rachael D. Johnson