Stewart Development, LLC v. 111 Veterans Boulevard, LLC

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
STEWART DEVELOPMENT, LLC 	CIVIL ACTION
VERSUS 	NO. 23-2085
111 VETERANS BOULEVARD, LLC 	SECTION “O”
FINDINGS OF FACT AND CONCLUSIONS OF LAW
I. 	INTRODUCTION
This action stems from a dispute over the insurance provision of a ground lease
between 	Plaintiff 	Stewart 	Development, 	LLC 	(“Stewart”) 	and 	Defendant 	111
Veterans Boulevard, LLC (“111 Veterans”). 1 Stewart owns Heritage Plaza (the
“Building”), an office tower in Metairie, Louisiana, but leases the land on which it sits
from 111 Veterans. In 2023, 111 Veterans sent a default letter to Stewart alleging
that Stewart was in violation of the ground lease by failing to maintain insurance
coverage and insurance deductibles in amounts required by the lease.
The Court conducted a five-day bench trial on Stewart’s claims against 111
Veterans for breach of contract in bad faith and violations of the Louisiana Unfair
Trade Practices and Consumer Protection Act (“LUTPA”).2 In connection with these
claims, Stewart seeks damages and declaratory judgments against 111 Veterans. The
Court also tried 111 Veterans’ counterclaim requesting declaratory judgments that
Stewart breached its obligations in the ground lessee.
1 ECF No. 1.
2 ECF Nos. 85–89.
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At the conclusion of the five-day bench trial, the Court ordered the parties to
submit additional briefing and responses. 3 Now, having carefully considered the
testimony of all witnesses, the exhibits admitted into evidence during trial, the
applicable law, and the arguments by the parties, pursuant to Rule 52(a) of the
Federal Rules of Civil Procedure, the Court is prepared to rule as follows.4
II. 	FINDINGS OF FACT
A. 	Background
1. 	Plaintiff 	Stewart 	Development, 	LLC 	built 	and 	owns 	the 	Class 	A
commercial 	office 	building 	known 	as 	Heritage 	Plaza 	located 	at 	111 	Veterans
Memorial Blvd, Metairie, Louisiana 70005. The building was completed in the early
1980’s. 5 Heritage Plaza is the sole asset of Stewart Development, LLC. 6 Stewart
Development, LLC, through intermediary entities, is owned by Frank Stewart, who
funds the LLC’s operations.7
2. 	The only other Class A commercial office buildings in Metairie, besides
Heritage Plaza, are Galleria and the three-building complex known as Lakeway
Center. Galleria and Lakeway Center were also completed in the 1980’s and have
competed with Heritage Plaza for tenants since their completion.8
3 ECF Nos. 97, 98, 99, 100.
4 To the extent any of the Court’s findings of fact are more properly characterized as
conclusions of law, the Court adopts those findings as conclusions of law, and to the extent any
conclusions of law constitute findings of fact, the Court adopts those conclusions as findings of fact.
5 ECF No. 73, Uncontested Material Facts, at 7(1); Testimony of Mohamad Motahari.
6 Testimony of Mohamad Motahari.
7 Id.
8 ECF No. 73 at 7(5); Testimony of Colette Wharton; Stewart Trial Exhibit (“Stewart Ex.”) 443.
Heritage Plaza has a total of approximately 350,000 square feet of office space. Testimony of Mary
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3. 	Plaintiff 	Stewart 	Development, 	LLC 	(“Stewart”) 	leases 	space 	in
Heritage Plaza to a variety of tenants including law firms, medical practices, and a
restaurant. 9
4. 	Stewart does not own the land on which Heritage Plaza sits. Since 1980,
Stewart has leased that land pursuant to a ground lease.10
5. 	In 2003, Stewart obtained a commercial loan backed by the Building. 11
As a condition of the loan, the lender required Stewart and then-landowner/lessor, a
Trust created under the Will of Margaret E. Lauer, to amend the existing ground
lease to include a provision requiring Stewart to maintain certain insurance coverage
on the Building. 12 This was the fourth such amendment to the ground lease,
referenced herein as “Section 3(g) of the Fourth Amendment of the Ground Lease” or
simply “Section 3(g).”
6. 	Stewart and the lender were named loss payees who would receive the
insurance proceeds in the event a claim was paid out. Because the ground lessor had
no ownership interest in the Building itself, the lessor would receive no insurance
proceeds in the event of a Building loss.13
7. 	On November 2, 2017, 111 Veterans purchased the land under Heritage
Plaza. 14
Beth Verdigets. The Galleria’s square footage is just under 500,000 square feet, and the three Lakeway
buildings have approximately 1.2 million square feet. Testimony of Colette Wharton.
9 Testimony of Mary Beth Verdigets.
10 ECF No. 73 at 7(2); Testimony of Mohamad Motahari.
11 ECF No. 73 at 7(7).
12 Testimony of Mohamad Motahari; Stewart Ex. 2.
13 Id.
14 ECF No. 73 at 7(3).
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8. 	111 Veterans is one of a set of affiliated companies that operate under
the trade name of The Feil Organization. 15 Jeffrey Feil is the ultimate decision maker
for companies within The Feil Organization.
9. 	Companies within The Feil Organization acquired Galleria on February
1, 2005, and all of Lakeway Center, except for a hotel unit in Lakeway III, on June
11, 2013. The Feil Organization continues to own these buildings.16 As the owner of
the only other Class A commercial office buildings in Metairie, The Feil Organization
is a direct competitor of Stewart. 17
10. 	Upon acquiring the land under Heritage Plaza in 2017, 111 Veterans
executed an Assignment and Assumption of the Heritage Plaza ground lease. 18
Through this assignment, 111 Veterans became Heritage Plaza’s ground lessor.
11. 	As the ground lessor, 111 Veterans owns the ground but has no
ownership interest in the Building itself.19
12. 	Section 3(g) of the Fourth Amendment of the Ground Lease binds 111
Veterans and Stewart as lessor and lessee.20 That section reads:
Whichever 	party 	is 	required 	to 	maintain 	fire 	insurance 	on 	the
improvements on the Demised Premises shall keep same insured with
financially sound and reputable insurance companies against loss or
damage by fire, theft, lightning, windstorm, hail, explosion, riot and civil
commotion, aircraft and vehicles, and smoke and such other casualties
as 	are 	presently 	included 	in 	the 	so-called 	Extended 	Coverage
15 ECF No. 73 at 7(4). Colette Wharton testified that the Feil Organization is “a $7 billion real
estate group that owns and manages a large portfolio in New York, Louisiana, Florida, Illinois, and a
few hundred ground leases throughout the United States.” The Feil Organization is a “fictitious name
where each – where each of the properties stands on its own entity.” Testimony of Colette Wharton.
16 ECF No. 73 at 7(6).
17 ECF No. 73 at 7(5).
18 ECF No. 73 at 7(10); Testimony of Eric Lowenstein; Stewart Ex. 22.
19 ECF No. 73 at 7(9); Testimony of Eric Lowenstein.
20 Stewart Ex. 2.
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Endorsement; and flood, if reasonably obtainable, in amounts sufficient
to prevent the insured from becoming a co-insurer within the terms of
the insurance policies covering such risks, but in any event in an amount
not less than 100% of the actual replacement cost of such improvements
(exclusive of excavation and foundation costs and costs of underground
tanks, conduits, pipes, pilings and other similar underground items),
less the actual physical depreciation thereof, and with not more than a
$10,000 deductible from the loss payable for any particular occurrence.
13. 	Interpreting this Section, Stewart was required to maintain insurance
coverage limits up to its actual replacement cost (exclusive of certain delineated
costs), less actual physical depreciation, 21 and maintain deductibles of not more than
$10,000.
14. 	This requirement was subject to a condition—Stewart was required to
secure coverage at replacement cost for the itemized casualties only if such coverage
was “reasonably obtainable.”
15. 	In ruling on the parties’ motions for summary judgment under FED . R.
CIV. P. 56, 22 the Court determined that the phrase “if reasonably obtainable” in
Section 3(g) modifies all types of casualties listed in Section 3(g)—including “fire,
theft, lightning, windstorm, hail, explosion, riot and civil commotion, aircraft and
vehicles, and smoke”—and is not limited to modification of “flood.” Put another way,
Section 3(g) obligates Stewart to maintain insurance “against loss or damage by fire,
theft, lightning, windstorm, hail, explosion, riot and civil commotion, aircraft and
vehicles, and smoke and such other casualties[,] and flood” in an amount not less than
21 Replacement cost is “the cost to repair or replace property with like, kind, and quality
without deductible for depreciation.” Testimony of Anderson Baker.
22 ECF No. 83.
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100% of replacement cost, less physical depreciation, only if such insurance is
“reasonably obtainable.” This fact was treated as established in the case.23
16. 	The ground lease does not define the term “reasonably obtainable.”24
17. 	The casualties for which Stewart is required to maintain insurance
coverage under Section 3(g) include wind and flood, as well as a range of other
casualties colloquially known as “all other perils” or “AOP” (e.g., fire, theft, lightning,
explosion, etc.). 25
18. 	As the ground lessor, 111 Veterans is not entitled to any insurance
proceeds under Section 3(g).26
19. 	Section 30 of the ground lease governs “Events of Default.”27 Under that
section, the “Lessor [111 Veterans] may, if lessor so elects, and with or without any
demand or notice whatsoever, except as hereinafter expressly provided, terminate
this lease upon the happening, occurrence, or existence of any one or more of the
following Events of Default[.]” Section 30(b) then lists as an “Event of Default” the
23 ECF No. 83 at 1.
24 Stewart Ex. 2.
25 In trial testimony, Andrew Schutzman, Feil’s insurance consultant, described all-other-
perils coverage as follows:
So when we talk about all other perils, you know, most policies are written on
what we call a special form which covers all perils except what’s specifically excluded.
And so, there is a huge -- you know, there is a long listing of perils that can damage
property, and they fall under all other perils. Catastrophic perils most of the time are
excluded. That would include -- flood and earthquake is a standard exclusion, and
windstorm and named windstorms in exclusion in areas that are subject to a high
degree of exposure to windstorm.
So, for Louisiana, when you talk about all other perils, you're talking about all
these other perils -- fires, malicious mischief damage, cars crashing into the building,
anything you could pretty much think of that's not excluded; but, it would not cover
catastrophic perils such as windstorm, flood, and earthquake, even though it’s not
applicable in Louisiana.
26 Testimony of Mohamad Motahari; Testimony of Arthur Sterbcow; Stewart Ex. 198.
27 Stewart Ex. 2.
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“Failure of Lessee [Stewart] to promptly and fully perform or comply with any
agreement, promise, covenant, or provision of this lease to be performed or complied
with by Lessee . . . .”
20. 	Section 30 goes on: an “Event of Default shall be considered to exist for
all purposes of this lease, immediately upon its happening, occurrence or existence
whether or not it continues unremedied or uncured for such period of time that . . .
Lessor has the election to terminate this lease.”28
21. 	Section 30 further states:29
Lessor’s right to elect to terminate this lease for any other Event of
Default shall not accrue until after 60 days following written notice by
Lessor to Lessee specifying the instance or instances of default followed
by Lessee’s failure to cure each specified Event of Default or to take such
steps as may be necessary to avert the effect of any such default[.] . . .
Where, by the terms of this Section, notice is required and the default
as specifically set forth in said notice, shall not be cured within the time
set forth in such notice, and as provided in this Section, this lease and
all Lessee’s rights and interests under it shall terminate and be at an
end[.]
22. 	Highlighting and summarizing the pertinent provisions of Section 30:
(1) it is considered an event of default if Stewart fails to comply with any provision of
the lease, including Section 3(g) of the Fourth Amendment of the Ground Lease; (2)
an event of default exists at the time the event happens, not at the time 111 Veterans
issues notice of default; and (3) after receiving notice, Stewart has a 60-day cure
period to remedy the default before 111 Veterans can terminate the lease.
28 Id.
29 Id.
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B. 	Stewart’s Insurance Coverage on Heritage Plaza
23. 	A 2013 appraisal of Heritage Plaza determined that the building had a
market value of $40.7 million.30
24. 	On or around April 1, 2013, Stewart’s insurance broker ran a report
calculating the “Insurable Value (Replacement Cost)” of Heritage Plaza, minus
certain exclusions, to be $49,836,778. 31
25. 	Stewart requested permission from its lender to insure the Building at
its appraised value of $40 million, even though its replacement cost was higher at
$49,836,778. 32 On or around April 1, 2013, Stewart’s lender agreed to accept $40
million 	of 	insurance 	coverage, 	even 	though 	that 	amount 	was 	less 	than 	the
replacement cost (minus depreciation) of the Building.
26. 	The ground lessor/landowner in 2013 (who preceded 111 Veterans) knew
the Building was insured for less than replacement cost with deductibles over $10,000
and never objected.33
27. 	From 2013 until 2021, Stewart continued to maintain roughly $40
million of insurance coverage and deductibles over $10,000 each year, including after
111 Veterans purchased the land under Heritage Plaza and assumed the lease in
2017. 34
30 ECF No. 73 at 7(8); Testimony of Mohamad Motahari.
31 Testimony of Mohamad Motahari; Stewart Ex. 134.
32 Testimony of Mohamad Motahari; Stewart Ex. 134.
33 Testimony of Mohamad Motahari.
34 Testimony of Eric Lowenstein; Stewart Exs. 24–31.
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28. 	At the time it sold the land and turned over the lease to 111 Veterans, 35
the prior landowner/lessor certified that Stewart was in compliance with the lease.
111 Veterans accepted this certification.36
29. 	Each subsequent year, 111 Veterans received from Stewart a record of
the 	Building’s 	insurance 	coverage—called 	a 	certificate 	of 	insurance—showing
Stewart’s coverage amounts.37
30. 	On February 22, 2018, Jason Provenzano at HUB International, 111
Veterans’ insurance broker, ran a CoreLogic valuation report which estimated the
replacement cost of the Building to be $80,187,954. 38 Provenzano assumed, but could
not say for sure whether, this report was provided to The Feil Organization. 111
Veterans claims it has no record of receiving the report in 2018. Stewart maintained
$40,000,000 in total loss insurance coverage on the Building in 2018.
31. 	In 	2021, 	Stewart’s 	insurance 	broker 	Arthur 	J. 	Gallagher 	Risk
Management, 	Inc. 	(“Gallagher”) 	used 	a 	CoreLogic 	report 	to 	determine 	the
replacement cost of the Building to be $62,952,212. 39 In 2021, Stewart obtained
insurance with total loss coverage limits in the amount of $62,952,212.40
32. 	In 2022, Anderson Baker, an insurance agent with Gallagher who
represented Stewart, ran a CoreLogic report to determine the replacement cost of the
35 Stewart Ex. 22.
36 Testimony of Eric Lowenstein.
37 ECF No. 73 at 7(13); Testimony of Colette Wharton; Stewart Ex.s 29–33.
38 ECF No. 73 at 7(11); Stewart Ex. 6; Stewart Ex. 5, Deposition Testimony of Jason
Provenzano.
39 Testimony of Anderson Baker; Stewart Ex. 154.
40 Stewart Ex. 32.
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Building. 41 According to the February 8, 2022 report, the replacement value had
increased to $106,226,647. 42 Based on this figure, Gallagher estimated that the
replacement cost of the Building, after deduction for the foundation, was $93,256,654
(not including personal property and business income).43
33. 	On April 5, 2022, Baker transmitted this report to Mohamad Motahari,
Stewart’s CEO. 44
34. 	On May 29, 2022, Stewart renewed its insurance policy on the Building.
The policy included a total loss limit of $40,000,000 rather than the replacement cost
(minus depreciation) of $93,256,694. 45 The wind/hail deductible was $100,000, and
the named storm deductible was 7.5% with a $100,000 minimum.
35. 	At trial, Anderson Baker testified that AmWINS, the surplus lines
insurance broker used by Baker, had been unwilling to offer a policy for all perils with
total loss limits of $93,256,694 in 2022. 46 Baker testified that he did not remember
shopping around for another underwriter who might be willing to provide additional
coverage, nor did he consider adding a layer of AOP-specific coverage above the $40
million loss limit.
36. 	At the time Baker had been unaware of Section 3(g) of the Fourth
Amendment of the Ground Lease, and thus was unaware of Stewart’s obligation to
41 Testimony of Anderson Baker; 111 Veterans Trial Exhibit (111 Vets Ex.) 23.
42 Id.
43 Testimony of Anderson Baker; Stewart Ex. 391.
44 111 Vets Ex. 23.
45 Testimony of Anderson Baker; Stewart Ex. 33.
46 Testimony of Anderson Baker.
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carry 	insurance 	coverage 	for 	certain, 	delineated 	categories 	of 	casualty 	up 	to
replacement cost if reasonably obtainable.47
37. 	On March 16, 2023, 111 Veterans sent Stewart a default letter stating
that Stewart was in breach of Section 3(g).48 The default letter reads in relevant part:
The purpose of this notice is to inform you that Tenant [Stewart] is
currently in violation of the Lease in two respects:
1. Pursuant to Section 3(g) of the Fourth Amendment of Ground Lease
dated April 10, 2003 (the “Fourth Amendment”), Tenant is required to
maintain property insurance in “an amount not less than 100% of the
actual replacement cost of [the] improvements (exclusive of excavation
and foundation costs and costs of underground tanks, conduits, pipes,
pilings and other similar underground items), less the actual physical
depreciation thereof. . .”
According to the Certificate of Insurance most recently made available
by Tenant to Landlord [111 Veterans], the existing property insurance
carried by Tenant is in the amount of $40,000,000.00, which figure also
includes personal property and loss of income coverages. The personal
property amount of $250,000.00 and the loss of income amount is
$8,535,535.00, which yields coverage for the improvements themselves
in the amount of $31,214,465.00.
Landlord’s insurance consultant and its advisors fix the replacement
cost of the improvements at $123,000,000.00. Tenant is obligated, under
Section 23 and other provisions of the Lease, to keep the improvements
in good condition. Therefore, actual physical depreciation should be
minimal. Allowing for an actual physical depreciation factor of 10% due
to wear and tear of various components of the improvements, property
insurance in the amount of $110,700,000.00 would be required. Thus,
the amount of property insurance currently being carried by Tenant is
deficient under the Lease by any reasonable measure, and Tenant is
therefore in violation of the Lease.
2. The same provision of the Lease requires that the property insurance
be maintained with a deductible of no more than $10,000.00. Again,
according to the available Certificate of Insurance, this deductible is not
met for wind/hail coverage (for which the deductible is $100,000.00) or
47 Id.
48 ECF No. 73 at 7(21); Stewart Ex. 63.
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for named storm wind/hail coverage (for which the deductible is 7.5% of
the total insurable value). Again, Tenant is in violation of the Lease’s
requirements regarding the maximum possible deductible under the
property insurance.
Please consider this letter as Landlord’s written notice to Tenant of
default on the part of Tenant under the Lease in the respects set forth
above. As required under the Fourth Amendment, we are sending a copy
of this letter to each leasehold mortgagee of record. Landlord reserves
the right to exercise all of its available rights and remedies under the
Lease, including without limitation termination of the Lease, if the
defaults are not cured within the applicable time periods under the
Lease.
38. 	At the time of the March 16, 2023 notice, Stewart maintained total loss
coverage of $40 million—which was less than the Building’s replacement cost minus
depreciation—and maintained a $100,000 deductible for wind and named storm.49
39. 	At no point from its 2017 acquisition of the land until March 16, 2023,
had 111 Veterans ever formally objected to Stewart’s insurance coverage on the
Building. 50
40. 	After receiving the default notice in March 2023, Stewart contacted
Anderson Baker at Gallagher to assess how to comply with 111 Veterans’ demand.51
Baker in turn contacted AmWINS and Risk Place Services, underwriting companies
that survey the world-wide market for available insurance. Neither AmWINS nor
Risk Place Service would provide a quote for all-perils coverage at replacement cost.52
49 Stewart Ex. 33.
50 ECF No. 73 at 7(14). Testimony of Mohamad Motahari.
51 Testimony of Mohamad Motahari.
52 Testimony of Mohamad Motahari; Testimony of Anderson Baker.
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Baker testified at trial that $110 million of full coverage for all perils on Heritage
Plaza with a $10,000 deductible was “not available, period,” in the market.53
41. 	Significantly, when tasking Baker to find coverage that would address
111 Veterans’ alleged default, Stewart had asked Baker to identify all perils coverage
up to replacement cost.54 Baker did not attempt to secure AOP-specific coverage up
to replacement cost.55 After his search, Baker informed Stewart that total all-perils
coverage was not available up to replacement cost.56
42. 	Based on this feedback from Baker, Stewart sent a response letter to
111 Veterans on March 31, 2023 detailing the impacts of hurricanes on the market
and reasons why the demanded coverage was not “reasonably obtainable.” 57
43. 	Upon receiving Stewart’s response, 111 Veterans sent a supplemental
default notice that highlighted Stewart’s alleged deficient windstorm coverage and
deductibles: “[F]or the most serious threat of major casualty loss that Heritage Plaza
faces, damage from a serious wind storm, the building has only $10,000,000 of third-
party insurance, and even that coverage is only reached after a deductible nearly that
large is first satisfied.”58 111 Veterans did not demand standalone AOP coverage in
this supplement.
53 Testimony of Anderson Baker.
54 Testimony of Mohamad Motahari; Testimony of Anderson Baker.
55 Testimony of Mohamad Motahari; Testimony of Anderson Baker.
56 Testimony of Mohamad Motahari; Testimony of Anderson Baker.
57 Stewart Ex. 67.
58 Stewart Ex. 77.
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C. 	The Reasonable Obtainability of AOP Coverage
44. 	In the aftermath of Hurricane Ida in 2021, insurance rates were
increasing. 59
45. 	In 2023, full replacement cost coverage on wind and flood risks in South
Louisiana came at a “very exorbitant cost,”60 if it was available at all. AOP coverage,
however, remained largely unchanged after Hurricane Ida in 2021.61
46. 	The availability of insurance in the market was entirely dependent on
what underwriters were willing to offer.62 Commercial insureds, like Stewart and 111
Veterans, “rely exclusively” on professional brokers to find available coverage. 63
Underwriters may refuse to provide coverage entirely or may limit what coverage
they are willing to offer. It is the responsibility of a broker (like Andersen Baker at
Gallagher) to contact carriers and distributors, find available coverage, and relay
those options to an insured.64
47. 	Importantly, Baker’s 2023 inquiries with AmWINS and Risk Place
Service were focused on securing total insurance coverage for all casualties, including
wind and flood. Baker did not seek quotes for all-other-perils coverage or inquire
whether AOP-specific coverage was available up to Heritage Plaza’s replacement
cost.65
59 Testimony of Timothy Gold.
60 Testimony of Andrew Schutzman.
61 Id.
62 Testimony of Eric Lowenstein.
63 Testimony of Mohamad Motahari.
64 Testimony of Eric Lowenstein; Testimony of Mohamad Motahari.
65 Testimony of Anderson Baker.
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48. 	In its post-trial briefing, Stewart acknowledges that “it is routine for a
broker to request full coverage and for an underwriter to offer AOP coverage only.”66
49. 	The Court heard from several witnesses about the availability and cost
of non-wind, non-flood insurance coverage (i.e., AOP coverage)67 between 2022 and
2024. Those witnesses included Eric Lowenstein, Feil’s Chief Financial Officer;
Andrew Schutzman, The Feil Organization’s insurance consultant; Timothy Gold,
111 Veterans’ insurance brokerage expert; and Anderson Baker, Stewart’s insurance
broker.
1. 	Eric Lowenstein, Feil’s Chief Financial Officer
50. 	Lowenstein 	testified 	that 	the 	Feil 	Organization 	has 	no 	internal
employee solely responsible for deciding insurance issues, but that Lowenstein works
with an outside group (Andrew Schutzman at AMS) to review pricing and availability
of insurance for Feil properties.68
51. 	Responding to a question at trial about the availability of insurance in
the spring of 2023, Lowenstein testified that AOP coverage at replacement cost limits
for Heritage Plaza was both available and cheap: “I think it was very clear that for
AOP coverage, it was available and very cheap; so for wind, it was available but
expensive. Okay. But for AOP coverage for the full replacement cost, it was there, it
was available, and very, very cheap.”69
66 ECF No. 98 at 9; Testimony of Eric Lowenstein.
67 Testimony of Anderson Baker. Baker testified that “when you have AOP coverage . . . wind
is separate.”
68 Testimony of Eric Lowenstein.
69 Id.
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52. 	Lowenstein testified that Feil obtained AOP insurance coverage for the
Lakeway III building up to full replacement cost of approximately $122 million for
approximately $159,000. 70 That same insurer was unwilling to write a wind policy for
Lakeway III. According to Lowenstein, “you can go to the market and say, don’t give
us wind insurance; just give us AOP coverage. You’re able to restrict what you’re
bidding out.”
53. 	In the time that Lowenstein has worked for Feil, he has never had a
property with AOP coverage at less than full replacement cost.71
2. 	Andrew Schutzman, Feil’s Insurance Consultant
54. 	Schutzman, 	an 	insurance 	consultant 	who 	assisted 	Feil 	in 	putting
together insurance programs for over twenty years, testified that named storm and
wind coverage up to replacement cost were exorbitantly expensive. 72 But Schutzman
never 	encountered 	difficulty 	in 	obtaining 	AOP 	coverage 	for 	Feil’s 	Louisiana
properties for their total insured value (“TIV”)—a combination of the value of real
property, personal property, and lost business income—at a commercially reasonable
rate. While Hurricane Ida caused a sharp increase in the cost of wind coverage in
southeast Louisiana, Schutzman testified that Ida did not have significant effect on
the cost of AOP coverage because the storm did not change the carriers’ AOP
70 Id.
71 Id.
72 Testimony of Andrew Schutzman.
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exposure. 73 Damage from a hurricane, including flood and wind damage, does not
impact the likelihood of future exposure from non-hurricane perils.74
55. 	Bolstering 	Schutzman’s 	point 	was 	testimony 	about 	the 	Lakeway
buildings, which are owned by Feil and were insured separately from Feil’s other
properties in southeastern Louisiana. Schutzman testified that full limits AOP
coverage for the 2023-24 period for Lakeway III, a large commercial condominium
building, cost $159,930 for a TIV of just over $134 million.75 Schutzman extrapolated
that the cost of AOP coverage up to Lakeway III’s TIV for 2021-2022 and 2022-2023
was similar.
56. 	Moreover, for Lakeway I and Lakeway II, two adjacent buildings with a
combined TIV in excess of $200 million, Feil had no difficulty obtaining full limits
AOP coverage from 2020 forward.76
57. 	Schuztman testified, based on his experience, that it was “reasonable”
to “weigh[] the coverage that you’re buying versus the cost.”77 Schutzman concluded
that 	full 	limits 	AOP 	coverage 	was 	reasonably 	obtainable 	and 	available 	at 	a
commercially reasonable price for the Feil buildings.
3. 	Timothy Gold, 111 Veterans’ Insurance Brokerage Expert
58. 	Timothy Gold, an experienced New Orleans insurance professional,
testified as a defense expert in the placement of insurance coverage on commercial
73 Id. Anderson Baker agreed that the primary driver of increases in premiums in 2022 and
later was coverage for wind exposure. Testimony of Anderson Baker.
74 Testimony of Andrew Schutzman.
75 Id.; 111 Vets Ex. 93; 111 Vets Ex. 96.
76 Testimony of Andrew Schutzman. But see Stewart Ex. 162 (insuring Lakeway I and II up to
replacement cost in 2022/2023, but not in 2023/2024).
77 Testimony of Andrew Schutzman.
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property.78 Gold explained that during the period from 2022 to 2024, insurance rates
were going up, driven by the cost of wind coverage, but AOP coverage was increasing
only at a pace consistent with inflation. Gold had placed coverage for thousands of
properties 	and 	rarely 	had 	any 	difficulty 	placing 	separate 	AOP 	coverage 	on
commercial properties in the New Orleans area at TIV limits at a reasonable price. 79
Gold “firmly believe[d]” full limits AOP coverage could have been obtained for
Heritage Plaza at a reasonable price. According to Gold, “It was very, very unusual
that you couldn’t place a property policy that excludes wind [i.e., AOP coverage] to
full—to the full limits you were requesting.”80 Based on his own experience placing
AOP coverage up to full limits “[t]housands” of times, 81 and confirmed by his
conversations with three experienced surplus line brokers, Gold had “full confidence”
that it would have been possible to purchase AOP coverage at a reasonable price in
2022 and 2023 for the total insured value of Heritage Plaza.
4. 	Anderson Baker, Stewart’s Insurance Broker
59. 	In 2022 and 2023, Stewart relied exclusively on Baker’s team at
Gallagher to find available insurance.82
60. 	Baker testified that, when he was searching for insurance coverage for
Stewart, no underwriter offered him AOP coverage and he does not believe it would
have been available at a commercially reasonable price.83
78 Testimony of Timothy Gold.
79 Id.
80 Id.
81 Timothy Gold acknowledged that he has not placed coverage in a Class A high rise office
building like Heritage Plaza. Testimony of Timothy Gold.
82 Testimony of Mohamad Motahari.
83 Testimony of Anderson Baker.
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61. 	Baker testified that AmWINS was unwilling to underwrite a policy with
coverage up to replacement cost in 2022. 84 Motahari, Stewart’s CEO, while not happy
with the cost of the 2022 renewal policy from AmWINS, was satisfied to have $40
million of total coverage and was not interested in seeking higher AOP limits.
62. 	The most amount of damage Heritage Plaza had ever sustained was
approximately $16 million in damages caused by Hurricane Katrina. 85 The largest
AOP loss the building had ever sustained was approximately $100,000.
63. 	Baker adhered to Motahari’s wishes in 2022 and made no effort to find
a layer of AOP coverage above the $40 million limit.86
64. 	Baker testified that, despite Baker’s brokerage firm having worked for
Heritage Plaza since approximately 2007, he was unaware of Section 3(g) of the
Fourth Amendment of the Ground Lease and thus unaware of Stewart’s obligation to
carry 	insurance 	coverage 	for 	certain, 	delineated 	categories 	of 	casualty 	up 	to
replacement cost if reasonably obtainable. Baker learned of Section 3(g)’s insurance
obligation only upon receiving a copy of the March 16, 2023 default letter—after
having placed only $40 million of total loss coverage on Heritage Plaza during the
2022 renewal cycle.87
65. 	Baker conceded that, after receiving the default letter, he did not ask
underwriters to quote AOP-specific coverage. Baker testified that, in 2023, he “never
84 Id.
85 Testimony of Mohamad Motahari.
86 Testimony of Anderson Baker.
87 Id.
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had the discussion [with Stewart] to get AOP only” and “was not instructed to ask the
question.”88
66. 	Baker speculated that if he had sought additional AOP coverage in 2022
or 	2023 	to 	reach 	Heritage 	Plaza’s 	total 	insured 	value, 	he 	would 	have 	been
unsuccessful. 89 He further speculated that, if requested by his client, he “could have
gotten 	AOP 	standalone 	using 	a 	layered 	approach, 	but 	it 	would 	have 	been
exorbitant.” 90 When asked to guess how much it would have cost to layer AOP
coverage up to replacement cost, Baker said he “d[id] not know,” and when asked
again, he guessed: “in the range of another $200,000” but he “d[id] not know” because
he was “never asked” by Stewart to find such coverage and had not asked insurance
companies to quote AOP-only coverage.
67. 	Baker also testified that any comparison of coverages between Heritage
Plaza and Lakeway I and II were inapt, because those two buildings were insured
together, and a program that insures risks across more than one building will achieve
coverages that a single building like Heritage Plaza cannot.91 Baker further testified
that 	any 	comparison 	between 	Heritage 	Plaza 	and 	Lakeway 	III 	was 	similarly
inappropriate, because Lakeway III’s coverage only included the building’s outer
shell, whereas Heritage Plaza’s coverage included the interiors of the building, such
as interior walls, fixtures, carpeting, and the like.92
88 Id.
89 Id.
90 Id.
91 Id.
92 Id.
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68. 	During trial, Baker was shown charts reflecting Lakeway III’s shared
and layered insurance program each year between 2020 and 2024. 93 A shared
program is one in which multiple insurance carriers share the risk of coverage up to
certain loss levels; a layered program involves increasing “layers” of desired coverage,
with each layer costing an additional premium. 94 According to the charts, for
Lakeway III, for each annual renewal period between 2020 and 2023, Feil paid
premiums between $65,000 and $71,500 to obtain “layered” AOP coverage that
increased Lakeway III’s loss limit from $50 million to its TIV of $127,569,795. 95 In
the 2023-2024 renewal cycle, Feil paid $156,794 to increase Lakeway III’s AOP
coverage from $30 million to its TIV of $134,040,047.96
69. 	In 	his 	trial 	testimony, 	Baker 	acknowledged 	that 	these 	additional
premiums were a reasonable cost for the amount of additional AOP coverage
Lakeway III obtained. 97
D. 	In an Attempt to Avoid Default, Stewart Obtains a Captive Cell Policy
70. 	After Stewart received the March 2023 default letter and Baker was
unable to secure higher coverage from AmWINS and Risk Place Services, Baker’s
attention turned to finding a captive cell policy. 98
71. 	Section 3(g) of the Ground Lease requires that Stewart “keep [Heritage
Plaza] insured with financially sound and reputable insurance companies.” 99 The
93 Id.; 111 Vets Ex. 96.
94 Testimony of Anderson Baker; Testimony of Andrew Schutzman.
95 Testimony of Anderson Baker; 111 Vets Ex. 96.
96 Testimony of Anderson Baker; 111 Vets Ex. 96.
97 Testimony of Anderson Baker.
98 ECF No. 73 at 7(22); Testimony of Anderson Baker.
99 Stewart Ex. 2.
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Ground 	Lease 	does 	not 	define 	a 	“financially 	sound 	and 	reputable 	insurance
compan[y].”
72. 	Hartwell Insurance Company is a “protected cell captive insurance
company” organized under Tennessee law. 100 It administers a set of “protected cells,”
which function as separate captive insurers pursuant to participant contracts. Tenn.
Code Ann. § 56-13-202(2), (4)(6). The protected cells operate independently: “The cells
are walled off from each other via contract, so no one shares cash, no one shares
liabilities. [E]ach cell . . . operates like a separate company.”101
73. 	Hartwell received an A rating from a ratings firm called Demotech. 102
Hartwell 	is 	regulated 	by 	the 	Tennessee 	Insurance 	Department, 	which 	has 	a
subdivision specifically devoted to captive insurance.
74. 	Effective on or around May 29, 2023, Stewart obtained a captive cell
property 	insurance 	policy 	from 	Hartwell 	with 	up 	to 	$110,700,000 	of 	casualty
coverage. 103
75. 	Stewart’s insurance expert Frank Hale Stewart Jr. (no relation to Frank
Stewart, who owns Plaintiff corporation) used this hypothetical example to describe
a captive cell insurance arrangement:104
A 	captive 	insurance 	company 	very 	generally 	is 	a 	wholly 	owned
insurance subsidiary of a parent company. So, for example, Acme
Manufacturing is at the top of the corporate food chain. They form Acme
Captive, which sits below it. Acme Manufacturing owns all the shares of
100 Testimony of Frank Hale Stewart Jr.
101 Id.
102 Stewart Ex. 176.
103 ECF No. 73 at 7(23); Stewart Ex. 140.
104 Testimony of Frank Hale Stewart Jr.
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Acme Captive. Acme Manufacturing pays a premium to Acme Captive,
which then provides insurance coverage to Acme Manufacturing.
In this example, Acme Manufacturing would be Plaintiff Stewart Development, LLC,
and Acme Captive would be Stewart Development Protected Cell.
76. 	Stewart’s captive cell was established by a Participation Agreement
under 	which 	Stewart 	Development 	Protected 	Cell 	became 	“an 	unincorporated
protected cell” of Hartwell. 105 Under the policy and the participation agreement,
Stewart Development, LLC was responsible for all contributions of capital and
surplus to the Stewart Development Protected Cell, as well as for all expenses and
charges attributable to the protected cell. 106 That is, while Hartwell managed the
Stewart Development Protected Cell, all financial burdens associated with the
protected cell rested with Stewart Development, LLC.
77. 	The policy, issued by Hartwell “by and on behalf of Stewart Development
Protected Cell,” states in two places, “The First Named Insured is Self-Insured
Through a Captive Insurance Company.”107 Stewart Development, LLC is the first
named insured.108
78. 	Hartwell’s role was “largely administrative,” for which it was paid a
service fee, but it had no obligation to contribute funds to the protected cell.109
79. 	To illustrate, Stewart Development, LLC paid an annual premium into
the Stewart Development Protected Cell (the captive cell). Any claims covered under
105 111 Vets Ex. 86.
106 111 Vets Ex. 82; 111 Vets Ex. 86.
107 111 Vets Ex. 82.
108 Stewart Ex. 140.
109 Testimony of Frank Hale Stewart Jr.
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the 	policy 	would 	be 	paid 	from 	Stewart 	Development 	Protected 	Cell. 	Stewart
Development, LLC was responsible to pay additional premiums to the captive cell if
the amount of a claim exceeded the balance in the captive cell’s account.110 No person
or entity other than Stewart Development, LLC had any legal obligation to fund the
captive cell.
80. 	Hartwell bore none of the insured risk. 111 Rather, Hartwell merely
administered the Stewart Development Protected Cell, the entirety of which was
funded by Stewart Development, LLC.
81. 	Baker explained that the Hartwell policy “filled the gap above $10
million for wind and above $40 million for all other perils, up to the limit of $110
million.”112
82. 	The captive cell policy obtained by Stewart in May 2023 did not transfer
the risk of casualty loss from Stewart Development, LLC to a third-party.113
83. 	Frank Hale Stewart Jr., Plaintiff’s expert, opined that the Stewart
Development Protected Cell was financially sound. 114 Frank Hale Stewart Jr.’s
opinion was based on the assumption that Frank Stewart (the owner of Plaintiff
Stewart Development, LLC) would fund Stewart Development, LLC’s obligations
under the captive cell policy to the extent necessary. Indeed, to obtain the policy from
Hartwell, Frank Stewart was required to submit his personal financial statements.
110 Testimony of Frank Hale Stewart Jr.; 111 Vets Ex. 82.
111 Testimony of Frank Hale Stewart Jr.
112 Testimony of Anderson Baker.
113 Testimony of Frank Hale Stewart Jr.
114 Id.
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Since 1980, Frank Stewart has infused funding into Stewart Development, LLC and
the Building as needed.115
84. 	Stewart Development, LLC is insolvent because its debt exceeds the
value of the Building.116
85. 	Frank Stewart loaned Stewart the roughly $1.3 million needed to create
the captive. 117 Frank Stewart’s net worth is $127 million. 118
86. 	Frank Hale Stewart Jr. acknowledged that he was aware of no legal
obligation for Frank Stewart to fund the captive cell policy.119 Frank Hale Stewart
Jr. further testified that, if Frank Stewart were unwilling or unable to fund the policy,
Frank Hale Stewart Jr. would no longer contend that the captive cell was financially
sound.
87. 	Timothy Gold, 111 Veterans’ insurance broker, testified that before
determining whether an insurance company was financially sound, there would need
to be “enough funds in reserve or access to enough funds in reserve by the listed
parties that were responsible in the documentation.”120
88. 	Notwithstanding the captive cell policy, on June 14, 2023, 111 Veterans
sent a letter to Stewart stating that Stewart was still in default.121
115 Testimony of Mohamad Motahari.
116 Testimony of Eric Lowenstein; Testimony of Ed Comeaux.
117 Testimony of Mohamad Motahari.
118 Id.; Stewart Ex. 132.
119 Testimony of Frank Hale Stewart Jr.
120 Testimony of Timothy Gold
121 ECF No. 73 at 7(24); 111 Vets Ex. 91.
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E. 	Stewart Attempts to Sell Heritage Plaza, While 111 Veterans Seeks To
Exploit Stewart’s Rent Roll
89. 	Occurring around the same time as and set against the backdrop of 111
Veterans’ decision to default Stewart was Stewart’s efforts to sell Heritage Plaza.
90. 	In late April 2022, almost a year before 111 Veterans sent Stewart the
default letter, Mohamad Motahari, CEO of Stewart, approached Colette Wharton,
asset manager who oversees 111 Veterans, offering to sell the Building to Feil.122
91. 	In furtherance of its efforts to sell the Building to Feil, effective as of
May 	1, 	2022, 	Stewart 	and 	The 	Feil 	Organization 	executed 	a 	Confidentiality
Agreement under which Stewart sent information to Feil. 123
92. 	The Confidentiality Agreement excluded from the term “Confidential
Information” any information that “was known by or in the possession of the
Recipient or its Representatives prior to being disclosed by or on behalf of the
Disclosing Party pursuant to the Agreement.”124
93. 	On 	May 	2, 	2022, 	Stewart 	emailed 	111 	Veterans 	the 	signed
Confidentiality Agreement along with a marketing package that included materials
and information concerning Heritage Plaza. 125 The marketing package contained
Stewart’s “rent roll” as of April 1, 2022.126
122 111 Vets Exs. 24, 26. Although the Benson Group reportedly was interested in purchasing
the Building in cooperation with The Feil Organization, the Benson Group ultimately decided not to
make an offer on the Building. Testimony of Evan Stone; Stewart Ex. 116 (“Benson remains interested
in pursuing Heritage, but they are only going to do so in collaboration with you [Feil])”; Stewart Ex.
187. 123 ECF No. 73 at 7(15); Stewart Ex. 136.
124 Stewart Ex. 136.
125 Stewart Ex. 137.
126 ECF No. 73 at 7(16); Stewart Ex. 137.
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94. 	A rent roll generally contains the rates a building’s tenants are paying
to the landlord for their leases and the tenants’ lease expiration dates, among other
information. 127
95. 	Rent rolls are included in a building’s offering memorandum and are
generally provided subject to confidentiality agreements.128
96. 	The rent roll Stewart provided to Feil set forth lease expiration dates,
minimum rent charges, minimum rent per square foot, and expense bases for
Heritage Plaza’s tenants.129 Stewart’s rent roll contained information that was not
publicly available. 130
97. 	According to the testimony of Arthur Sterbcow, Stewart’s commercial
real estate expert, information within Stewart’s rent roll was valuable to a market
competitor like The Feil Organization because it showed the rates Stewart’s tenants
were paying to rent space in Heritage Plaza, along with lease expiration dates. A
competitive leasing broker could use that information to attract or steal Heritage
Plaza’s tenants.131 Sterbcow testified that “[having the rent roll of a competitor was]
like playing poker and being able to see the hand of the other person.” Evan Stone,
the Heritage Plaza listing agent, described rent rolls as “the holy grail of information.
This is what leasing agents and competitors, tenant reps . . . want.” 132
127 Testimony of Evan Stone; Testimony of Arthur Sterbcow.
128 Testimony of Evan Stone.
129 Testimony of Mohamad Motahari; Stewart Ex. 137.
130 Testimony of Eric Lowenstein; Testimony of Evan Stone; Testimony of Arthur Sterbcow.
131 Testimony of Arthur Sterbcow.
132 Testimony of Evan Stone.
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98. 	There are only five Class A office buildings in Metairie—the three
Lakeway Towers, Galleria, and Heritage Plaza—all of which were built in the 1980s.
Demand for commercial office space in Metairie has been stagnant. 133 Few new
tenants are entering the market for leased office space in Metairie. Accordingly, each
building necessarily pursues the other buildings’ tenants to fill vacant space.134
99. 	It is not unusual for brokers to solicit tenants from competing buildings
given the lack of demand for office space in the New Orleans market. 135 Arthur
Sterbcow, Stewart’s commercial real estate expert, testified that it was “perfectly all
right” to lure tenants from a competitor building so long as the tenants are not being
induced to break their leases.136
100. 	After 	receiving 	the 	Heritage 	Plaza 	rent 	roll, 	Jeffrey 	Feil 	emailed
Stewart’s rent roll to Michael Siegel at Corporate Realty, the brokerage firm that
handles leasing for Feil’s commercial properties in the New Orleans area.137 In the
May 11, 2022, email, Jeffrey Feil told Michael Siegal to “[g]o get these tenants.”138
101. 	Jeffrey 	Feil 	was 	aware 	that 	Stewart 	would 	have 	to 	refinance 	its
mortgage in April 2023. Eric Lowenstein had advised Jeffrey Feil that Stewart would
have significant problems refinancing its mortgage if the Building’s tenant occupancy
decreased.139
133 Testimony of Michael Siegel.
134 Testimony of Michael Siegel; Testimony of Bruce Sossaman.
135 Testimony of Bruce Sossaman; Testimony of Arthur Sterbcow.
136 Testimony of Arthur Sterbcow.
137 ECF No. 73 at 7(17); Stewart Ex. 295.
138 Testimony of Arthur Sterbcow; Stewart Ex. 295.
139 Testimony of Eric Lowenstein; Stewart Ex. 39.
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102. 	Siegel used the rent roll he received from Feil to create a list of Heritage
Plaza tenants to target for Feil buildings, including tenants Carr, Riggs & Ingram
(“Carr Riggs”) and Audubon Engineering (“Audubon”).140
103. 	On May 12, 2022, Siegel emailed Bruce Sossaman and Scott Graf,
leasing agents for Corporate Realty, a list of the targeted tenants based on Stewart’s
rent roll. In the email, Siegel wrote, “Super confidential . . . Let’s discuss.” 141
Sossaman was the agent responsible for leasing Feil’s Lakeway buildings, and Graf
was responsible for leasing the Galleria.142
104. 	Graf responded to Siegel’s email, noting that Heritage Plaza’s rent
“rates are going to be hard to compete with at Galleria and Lakeway.”143 Graf then
suggested, “Maybe Mr. Feil will ‘buy a tenant.’”
105. 	On May 12, 2022, Siegel emailed Jeffrey Feil, Brian Feil (Jeffrey’s son),
and Collette Wharton, “Here are our targets,” attaching a list entitled “Prospects
Heritage Plaza (111 Veterans Blvd), from 4/1/2022 rent roll.” Carr Riggs and
Audubon were two of the Heritage Plaza tenants on the list.144 At trial, when asked
whether he was going to use the information in the attachment to pursue Stewart’s
tenants, 	Siegel 	responded, 	“[t]hat 	information 	and 	other 	information 	that 	we
probably had on our own.”145
140 Testimony of Michael Siegel.
141 Stewart Ex. 104.
142 Testimony of Michael Siegel.
143 Testimony of Michael Siegel; Stewart Ex. 105.
144 Stewart Ex. 106.
145 Testimony of Michael Siegel.
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106. 	Later that day, Siegel sent another email advising Jeffrey Feil, Brian
Feil, and Colette Wharton that Stewart did not have “many long leases in which
[operating 	expenses] 	would 	have 	increased 	significantly.” 146 	Drawing 	from
information learned in the rent roll, Siegel stated, “The other detail about the rent
roll to note is that there are very, very few stepped up rates,” concluding that Stewart
tended to do “flat rate deals.” Siegel then remarked, “Good for the tenants but not
good when you are trying to steal someone. Notwithstanding all this, we will take
this info and do our best to get every tenant interested in one of our buildings.”
107. 	On May 12, 2022, Jeffrey Feil responded to Siegel: “Stop all your bs and
go make some deals!! The mortgage is due next year. The chillers are old. Bathroom
smell. The lobby looks like the name of the building! U know what I expect.”147
108. 	Meanwhile, 	Siegel 	assigned 	Sossaman 	and 	Graf 	specific 	Stewart
tenants to target on behalf of Feil. On May 26, 2022, reporting his progress to Siegel,
Sossaman stated that he had called and spoken to Carr Riggs and their broker and
they were “agreeable to starting process in about 90 days.”148 Sossaman further noted
that he was “[w]aiting for feedback on [Carr Riggs’] size, in 2020 they were 20k
[rentable square foot], curious to see how big now.”149
109. 	On June 1, 2022, Eric Lowenstein emailed Stewart CEO Motahari
regarding Stewart’s efforts to sell Heritage Plaza to Feil. Lowenstein stated: “Hi
Mamal. I spoke with Mr. Feil. At the current price and proposed deal structure, he
146 Testimony of Michael Siegel. Stewart Ex. 107.
147 Stewart Ex. 42.
148 Testimony of Michael Siegel; Stewart Ex. 110.
149 Testimony of Michael Siegel. Stewart Ex. 110.
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has declined. Thank you for your time.”150 Lowenstein testified that he had examined
the financial information provided by Stewart and came to the conclusion that
Heritage Plaza was worth approximately $24 million—less than the price Stewart
was seeking. 151
110. 	On August 30, 2022, Sossaman emailed an update to Siegel and Graf.152
He reported that he had spoken with Carr Riggs’ broker and was “hoping to have tour
with Carr Riggs in September.” He also reported that he had spoken with Audubon’s
broker “to see if any interest.”
111. 	On September 7, 2022, Sossaman prepared for the Feils a proposal
recommending lease terms for Carr Riggs in Feil’s Lakeway III building. 153 In the
memorandum discussing the lease, Sossaman noted that Carr Riggs is “located at
Heritage Plaza, expiring March 31, 2024, we toured them a year ago, but their
expiration date was too far out.”
112. 	Around this time, Stewart retained Evan Stone of Goodwin Advisors to
market and sell Heritage Plaza. 154 Stone contacted Jeffrey Feil on August 10, 2022 to
notify Feil that he had been engaged to sell Heritage Plaza. Feil responded that
Stewart’s valuation was too high, but he also told Stone that “when you put it all
together, I will re engage.”155
150 ECF No. 73 at 7(18); 111 Vets Ex. 30.
151 Testimony of Eric Lowenstein; 111 Vets Ex. 27.
152 Testimony of Michael Siegel; Stewart Ex. 113.
153 111 Vets Ex. 33.
154 Testimony of Evan Stone.
155 Stewart Ex. 46.
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113. 	Internally, The Feil Organization continued to discuss the possibility of
owning Heritage Plaza. One plan considered by Jeffrey Feil and Brian Feil involved
converting the Building from office space to residences, forcing the Building’s
commercial 	tenants 	into 	Feil-owned 	buildings, 	and 	thereby 	monopolizing 	the
Metairie market. 156 On October 14, 2022, Brian Feil emailed Jeffrey Feil: “If you
removed Heritage Plaza from the competition you control the class A market. Reduce
competition. Can maybe drive the rents further in the market place. And make a first-
class residential building. It’s a long shot. But worth looking at. I think they call it a
MOON shot.”157
114. 	On December 12, 2022, Jeffrey Feil emailed Siegel, Sossaman, and Graf
an attachment containing Heritage Plaza tenant cost analysis, noting that Corporate
Realty had “a lot If [sic] info” and that Heritage Plaza “[l]ooks like they are getting
leasing done.” 158
115. 	The following day, Siegel emailed Sossaman and Graf Heritage Plaza’s
rent roll with additional annotations and the instruction: “[K]eep confidential. Let’s
review by the end of this week.”159
116. 	Stone placed Heritage Plaza on the market in December 2022. 160 Stone
testified that Heritage Plaza marketing materials were sent to almost 4,700 potential
investors. Stone prepared monthly status reports for Motahari detailing the progress
156 Stewart Ex. 87.
157 Stewart Ex. 47.
158 Testimony of Michael Siegel; Stewart Ex. 114.
159 Testimony of Michael Siegel; Stewart Ex. 115.
160 Testimony of Evan Stone; Stewart Exs. 194–96.
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of his marketing efforts and investors’ interest in the Building. On his March 9, 2023
status report, Stone wrote that “[they] have cleaned up the non-responsive investors
and are down to a handful of investors.” Stone also noted that Feil was the “most
interested/communicative of all investors.”
117. 	Stone transmitted an offering memorandum to Feil for the building in
January 2023. 161 Lowenstein reviewed the information in it and reached the same
conclusion as before—the building was not worth more than $24 million.162
118. 	On January 15, 2023, Jeffrey Feil sent an email to Stone discussing the
insurance at Heritage Plaza and requesting a copy of Stewart’s insurance policy.163
In his January 15, 2023 email, Jeffrey Feil stated that he was asking in his capacity
“as a buyer for the time being” and not as a ground lessor.164 Feil also stated, “[d]o
not know what is in the ground lease.” Stone testified that he felt as though Feil was
“fishing for information” beyond what a normal buyer would ask, and it “raised [his]
antenna up a bit.”
119. 	On or around January 20, 2023, 111 Veterans asked its insurance
broker, HUB International, to investigate the cost to insure the Building.165
120. 	In a memorandum from Michael Siegel to Jeffrey Feil dated January
20, 2023, Siegel summarized his opinion of Feil’s potential purchase of Heritage Plaza
161 111 Vets Ex. 35.
162 Testimony of Eric Lowenstein.
163 ECF No. 73 at 7(19); Stewart Ex. 188.
164 Testimony of Evan Stone; Stewart Exs. 49–50.
165 ECF No. 73 at 7(20).
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along with the status of Corporate Realty’s efforts to capture tenants from Heritage
Plaza: 166
I have reviewed the [offering memoranda] for . . . Heritage Plaza. As we
discussed on the phone yesterday, it is my opinion that Heritage Plaza
is well worth pursuing . . . Heritage Plaza rounds out your office building
portfolio in Metairie and allows you to truly control the Class A portion
of this market . . . . One of the benefits of receiving the subject OMs is
the lease information on each building. I have reviewed all of the leases
very closely with special attention on understanding the new leases in
each building for 2020, 2021, and 2022 . . . . [T]his data will hopefully
help us target and capture more new tenants in the future.
Siegel emailed this memorandum to Jeffrey Feil and Brian Feil on January 20, 2023.
121. 	Brian Feil was not satisfied and emailed Siegel, copying Jeffrey Feil,
Sossaman, Graf, Wharton, and Lowenstein: “Didn’t we see the rent roll on this
property months ago? Not sure how ‘you missed some.’ King Siegel of the market
doesn’t know all.”167
122. 	Under pressure from the Feils, on January 30, 2023, Siegel emailed
Sossaman 	and 	Graf 	to 	keep 	“Quietly 	Target[ing] 	and 	Pursu[ing]” 	Stewart’s
tenants,168 including tenants Carr Riggs and Audubon Engineering. 169 To this email
Siegel attached a document containing lease expiration dates and prices per square
foot for Heritage Plaza leases, along with annotations.170
123. 	In a February 1, 2023 memorandum, Siegel committed to Jeffrey Feil
and Brian Feil that Corporate Realty would be “more aggressive, more pro-active,
166 Stewart Ex. 116.
167 Testimony of Michael Siegel; Stewart Ex. 117.
168 Testimony of Michael Siegel; Stewart Ex. 118.
169 Stewart Ex. 118.
170 Id.
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and more creative in marketing the Feil office buildings in New Orleans.”171 Siegel
attached a number of materials relating to Heritage Plaza tenants. In the memo,
Siegel stated:
I have reviewed these Rent Rolls and prepared a list of tenants
(Enclosure #1) that Bruce and Scott will target (call on directly). We
have to be careful how we use the information we were given in the
Offering Memoranda for these two properties. This is why I have
proposed a smaller list of targeted tenants to pursue, and we are not just
sending out a mass mailing to every tenant.
124. 	On February 7, 2023, Siegel sent another memorandum to the Feils
advising that Corporate Realty was continuing to “direct calls to specifically targeted
tenants in Heritage Plaza,” including Audubon and Carr Riggs.172
125. 	On 	February 	14, 	2023, 	Siegel 	exchanged 	emails 	with 	the 	Feils,
beginning with Siegel providing an update on his team’s efforts to recruit Heritage
Plaza tenants on behalf of the Feils.173 Siegel noted, “It is more effective, in light of
the fact that we have the rent rolls, to make calls rather than just show up on
someone’s doorstep.”174
126. 	Arthur Sterbcow, Stewart’s commercial real estate expert, testified that
Feil’s sharing the rent roll with Corporate Realty was “clearly unethical and certainly
violated the confidentiality agreement. That’s the purpose of the confidentiality
agreement [to prevent sharing such information].”175 He further testified that, in his
171 Testimony of Michael Siegel; Stewart Ex. 119.
172 Testimony of Michael Siegel; Stewart Ex. 120.
173 Stewart Ex. 121.
174 Stewart Ex. 122.
175 Testimony of Arthur Sterbcow.
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years within the commercial real estate industry, he has never seen a company use a
confidential rent roll to lure tenants from a competitor.
127. 	In testimony at trial, Sossaman, who has been a longtime leasing agent
for Feil properties in Metairie, sought to downplay the significance of receiving
Heritage Plaza’s rent roll in May 2022. 176 Sossaman testified that he keeps an
extensive personal database tracking proposals he has made to tenants of non-Feil
buildings, including Heritage Plaza. That information includes the lease terms,
expiration date, and square footage involved in unsuccessful proposals—the most
important data points for knowing when to approach a tenant in a competing building
and what its space needs are likely to be.177 Sossaman testified that, other than some
information 	about 	the 	tenants’ 	respective 	expense 	bases, 	which 	he 	would 	not
normally track, there was virtually nothing in the rent roll for Heritage Plaza’s larger
tenants that Sossaman did not already possess.
128. 	Sossaman testified he had been in touch with Carr Riggs’ broker about
Carr Riggs leasing space in a Feil building well before receiving Heritage Plaza’s rent
roll. According to Sossaman, Carr Riggs’ broker approached Sossaman unsolicited in
2020, four years before its Heritage Plaza lease was due to expire. Because it was too
early to negotiate toward a 2024 lease and because Carr Riggs was downsizing space,
Sossaman put the discussions on hold. Sossaman testified that he then received a
request for proposal from Carr Riggs’s broker in 2021. 178 In 2022, Sossaman put
176 Testimony of Bruce Sossaman.
177 Id.
178 Id.
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together a proposal that included Lakeway’s standard rental rate, making no use of
Heritage Plaza’s rent rolls. 179 The rental rate, rental term of 123 months, and
improvement allowances were not influenced by information in the Heritage Plaza
rent roll and were consistent with terms offered to other tenants.180 After a series of
proposals and counterproposals, Carr Riggs reached an agreement with Lakeway on
a lease that commenced in the spring of 2024.181
129. 	According to testimony from Sossaman, Audubon’s broker, Martin
Miller, contacted Sossaman unsolicited prior to May 2022 (when Sossaman received
the Heritage Plaza rent roll), telling Sossaman that he would be sending a request
for proposal when Audubon’s lease expiration date approached. Miller sent Sossaman
an email on March 13, 2023 seeking information about the availability of 35,000
square feet of office space, noting that Audubon’s lease was expiring in October
2024. 182 In response, Sossaman prepared a proposal, again using Lakeway’s standard
rental rate and terms and using no information from the rent rolls. 183 This time
however, the negotiations were not successful, with Audubon opting to renew at
Heritage Plaza. 184 Under the terms of the 10-year lease that Audubon signed with
Stewart, Stewart agreed to a $1.00 per square foot discount; Motahari testified that
this discount was necessary for Stewart “to be competitive” and prevent Audubon
from moving to a Feil building.185
179 Id.; 111 Vets Ex. 33.
180 Testimony of Colette Wharton; Testimony of Bruce Sossaman.
181 ECF No. 73 at 7(25); Testimony of Bruce Sossaman; 111 Vets Ex. 66.
182 Testimony of Bruce Sossaman; 111 Vets Ex. 58.
183 111 Vets Ex. 81.
184 Testimony of Bruce Sossaman.
185 Testimony of Mohamad Motahari; Stewart Exs 148, 406.
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130. 	Sossaman testified that MAPS, a litigation arbitration firm, had been a
Lakeway tenant. However, Stewart successfully lured MAPS to sign a lease with
Heritage Plaza in 2023. Sossaman explained, “Their proposal was superior to ours,
and they won the tenant fair and square.”186
131. 	On March 17, 2023, one day after the default letter was sent, Jeffrey
Feil sent an email to Collette Wharton, Siegel, and Sossaman, stating: “Mortgage is
due in April.”187 Eric Lowenstein advised Jeffrey Feil that it would be difficult for
Stewart to refinance its mortgage as of April 2023 if Heritage Plaza’s occupancy rate
decreased, meaning if it lost tenants.188
132. 	Stone testified that Feil’s decision to default Heritage Plaza hurt
Stewart’s ability to sell Heritage Plaza: “[h]aving the Feil issue” became “too much
noise, too much risk.” 189 Having an “adversarial landowner . . . dissuades people from
being very interested.” Heritage Plaza was taken off the market in April 2023. 190
133. 	On June 1, 2023, 111 Veterans’ attorney wrote to members of the Feil
Organization, “The deadline for the lessee to cure [the default] is June 19, but the
mortgagee gets another 30 days. Once that date arrives, I will formally notify Stewart
that the lease has been terminated and have a suit ready to file. Second, once we
issue a formal notice of termination, we have to stop accepting rent.”191
186 Testimony of Bruce Sossaman.
187 Stewart Ex. 318.
188 Testimony of Eric Lowenstein.
189 Testimony of Evan Stone.
190 Testimony of Evan Stone; Stewart Ex. 199.
191 Stewart Ex. 128.
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134. 	On June 15, 2023, Stewart filed the instant complaint against 111
Veterans seeking declaratory judgment and damages.192
135. 	On June 27, 2023, the Louisiana Attorney General put 111 Veterans on
notice that its conduct may be in violation of LUTPA.193
III. 	CONCLUSIONS OF LAW
1. 	The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332.
For purposes of diversity, Stewart is a citizen of Louisiana and Texas, and 111
Veterans is a citizen of New York, Massachusetts, and Florida. The parties stipulate
that the amount in controversy exceeds $75,000.
2. 	Where, 	as 	here, 	the 	Court’s 	jurisdiction 	is 	based 	on 	diversity 	of
citizenship, the Court applies the substantive law of the forum state, Louisiana. See
Wisznia Co. v. Gen. Star Indem. Co., 759 F.3d 446, 448 (5th Cir. 2014).
3. 	Plaintiff has the burden of proof by a preponderance of the evidence in
this civil trial. See Burden of Proof: Preponderance of the Evidence 3.2, Fifth Circuit
Pattern Jury Instruction (2020); Beauregard, Inc. v. S. Louisiana Bank, No. CIV. A.
94-3331, 1995 WL 591331, at *5 (E.D. La. Oct. 4, 1995).
192 ECF No. 1.
193 Stewart Ex. 219.
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A. 	Stewart’s Breach-of-Contract Claim
1. 	Legal Framework
4. 	By its terms, the ground lease giving rise to Stewart’s breach-of-contract
claim is governed under Louisiana law.194
5. 	Under Louisiana law, the elements for a breach-of-contract claim are
“(1) the obligor’s undertaking an obligation to perform, (2) the obligor failed to
perform the obligation (the breach), and (3) the failure to perform resulted in damages
to the obligee.” Favrot v. Favrot, 2010-0986 (La. App. 4 Cir. 2/9/11), 68 So.3d 1099,
1108-09, writ denied, 2011-0636 (La. 5/6/11), 62 So. 3d 127. “A failure to perform
results from nonperformance, defective performance, or delay in performance.” LA.
CIV. CODE ANN . art. 1994. “An obligor is liable for the damages caused by his failure
to perform a conventional obligation.” Id.
6. 	Louisiana law requires that contracts be performed in good faith. LA.
CIV. CODE ANN . art. 1983. Although the Civil Code does not explicitly define “good
faith,” it explains that “[a]n obligor is in bad faith if he intentionally and maliciously
fails to perform his obligation.” LA. CIV. C ODE ANN . art. 1997, cmt. (b).
7. 	Bad faith requires finding “more than mere bad judgment or negligence,
it implies the conscious doing of a wrong for dishonest or morally questionable
motives.” MKR Servs., L.L.C. v. Dean Hart Const., L.L.C., 44,456 (La. App. 2 Cir.
7/8/09), 16 So.3d 562, 566. “An obligor in bad faith is liable for all the damages,
194 Stewart Ex. 2.
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foreseeable or not, that are a direct consequence of his failure to perform.” LA. CIV.
CODE A NN . art. 1997.195
8. 	Finding a breach was in bad faith is only actionable when preceded by a
finding that the actor breached the contract. Favrot, 68 So.3d at 1109-10.
2. 	AOP Coverage Was Reasonably Obtainable
9. 	Stewart claims that 111 Veterans breached the ground lease with
Stewart by improperly placing Stewart in default of Section 3(g) of the Fourth
Amendment to the Ground Lease.
10. 	Section 3(g) obligates Stewart to maintain insurance on Heritage Plaza:
with 	financially 	sound 	and 	reputable 	insurance 	companies
against loss or damage by fire, theft, lightning, windstorm, hail,
explosion, riot and civil commotion, aircraft and vehicles, and
smoke and such other casualties as are presently included in the
so-called 	Extended 	Coverage 	Endorsement; 	and 	flood, 	if
reasonably obtainable, . . . in any event in an amount not less than
100% 	of 	the 	actual 	replacement 	cost 	of 	such 	improvements
(exclusive 	of 	excavation 	and 	foundation 	costs 	and 	costs 	of
underground tanks, conduits, pipes, pilings and other similar
underground items), less the actual physical depreciation thereof,
and with not more than a $10,000 deductible from the loss
payable for any particular occurrence.
11. 	As this Court previously held, 196 the Court finds that the phrase “if
reasonably obtainable” in Section 3(g) of the Fourth Amendment of the Ground Lease
195 “ The only differences between a typical breach-of-contract claim and a bad-faith breach-of-
contract claim are that the latter alleges a culpable mental state and allows the recovery of all the
damages from the defendant's failure to perform, rather than merely those that were reasonably
foreseeable.” White v. State Farm Mut. Auto. Ins. Co., 479 F. App’x 556, 561 (5th Cir. 2012).
196 ECF No. 83. “But the Court finds, consistent with Stewart’s contention, that there is no
genuine dispute of material fact that the phrase ‘if reasonably obtainable’ in Section 3(g) modifies all
types of insurance listed in Section 3(g), not just flood insurance. This fact will be treated as established
in the case.” ECF No. 83 at 1.
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modifies all types of casualties listed in Section 3(g) and is not limited to modification
of “flood” only.
12. 	It merits emphasizing that Section 3(g) itemizes categories of perils for
which Stewart was required to secure insurance coverage, if reasonably obtainable,
up 	to 	the 	replacement 	cost 	of 	the 	Building 	(less 	depreciation). 	Those 	specific
categories include AOP (e.g., fire, theft, lightning, explosion, riot and civil commotion)
and non-AOP (e.g., windstorm, flood). The Court finds that Section 3(g) should be
read to require Stewart to obtain coverage up to replacement cost for each category
of peril, if reasonably obtainable, and that Stewart’s inability to reasonably obtain
replacement cost coverage for any one category (such as wind) or to meet the
deductibility requirement ($10,000 or less) does not extinguish Stewart’s obligation
to secure reasonably obtainable replacement cost coverage for all other categories of
peril.
13. 	In fact, as Stewart has conceded, it is routine for a broker to request full
coverage on a property and for an underwriter to offer AOP coverage only.
14. 	On March 16, 2023, 111 Veterans sent Stewart a default letter stating
that Stewart was in breach of Section 3(g) for failing to maintain insurance at 100%
of replacement cost less depreciation and failing to maintain deductibles of no more
than $10,000.
15. 	Stewart alleges that 111 Veterans breached the Ground Lease by
improperly defaulting Stewart on March 16, 2023. It further alleges that the breach
was in bad faith.
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16. 	Stewart’s breach-of-contract claim fails if Stewart is unable to prove that
111 Veterans breached the lease when it placed Stewart in default. A well-founded
notice of default on a contract cannot serve as the basis for a breach-of-contract claim,
bad faith or otherwise, brought by the defaulting party. The Court thus examines
whether 111 Veterans had grounds to place Stewart in default.
17. 	As a starting point, Stewart does not dispute that the replacement cost
of the Building in 2022 and 2023 was assessed to be close to $100 million. Moreover,
Stewart agrees that the total loss limit of its insurance policy between May, 29, 2022
(the date the policy was renewed) and the March 16, 2023 default letter was
$40,000,000. This $40,000,000 loss limit included coverages for loss of personal
property in the amount of $250,000 and loss of income of $8,535,535, leaving coverage
for damage to the building at $31,214,465. The Court thus concludes that Stewart did
not maintain total coverage on Heritage Plaza at 100% of actual replacement cost less
depreciation.
18. 	The next question, then, is whether coverage up to replacement cost was
“reasonably obtainable” in the insurance market in 2022 and 2023.
19. 	The term “reasonably obtainable” is not defined in the ground lease and
has no established meaning within the insurance industry. Moreover, the Court is
unaware 	of 	any 	formal 	definition 	of 	the 	term 	under 	controlling 	authorities.
Accordingly, “reasonably obtainable” must be given its generally prevailing meaning.
LA. CIV. C ODE art. 2047.
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20. 	111 Veterans proposes that the Court define “reasonably obtainable” as
whether a reasonable commercial property owner would deem the required insurance
coverages to be overly burdensome given contractual obligations, cost, and risk.197
This framing is sensible and aligns with how the term “reasonable” has been defined
in other contexts under Louisiana law—pursuant to an objective, rather than a
subjective standard. See Atlas Iron & Metal Co. v. Ashy, 2005-458 (La. App. 3 Cir.
1/4/06), 918 So.2d 1205, 1211, writ not considered, 2006-0296 (La. 4/28/06), 927 So.
2d 276 (“[T]he reasonable man standard is unequivocally an objective standard, not
a subjective one[.]”); Wright v. Waguespack, 2002-0603 (La. App. 1 Cir. 12/20/02); 836
So.2d 436, 438 (adopting a definition of “reasonable diligence” as the “fair degree of
diligence expected from someone of ordinary prudence under circumstances like those
at 	issue”) 	(quoting 	Black’s 	Law 	Dictionary 	468 	(7th 	ed. 	1999)). 	See 	also
REASONABLE, Black’s Law Dictionary (12th ed. 2024) (defining “reasonable” as
“fair and proper under the circumstances”). 111 Veterans’ formulation of “reasonably
obtainable” thus asks the Court to consider, from the perspective of an ordinary
commercial property owner, whether its contractual obligations, risk, and insurance
costs justify obtaining coverage in this instance up to the building’s replacement cost
less depreciation.
21. 	Having weighed the evidence, the Court finds that wind, flood, and
named storm coverages were not reasonably obtainable at total loss limits in 2022
and 2023. All witnesses essentially agree with this proposition. There is also
197 ECF No. 97.
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widespread agreement that deductibles of $10,000 or less for wind and storm
coverage were not reasonably obtainable during this timeframe.
22. 	But the balance of evidence shows that AOP coverage up to replacement
cost (less depreciation) was reasonably obtainable for Heritage Plaza in 2022 and
2023.
23. 	It is important to remember that after Hurricane Ida, premiums for
wind coverage spiked. But, critically, AOP premiums increased at a pace in line with
inflation.
24. 	The Court credits the three witnesses who provided consistent and
corroborating testimony that AOP coverage at the Building’s replacement cost value
was available and reasonably obtainable in 2022 and 2023. Those witnesses were
Andrew 	Schutzman, 	Feil’s 	insurance 	consultant; 	Eric 	Lowenstein, 	Feil’s 	Chief
Financial Officer; and Timothy Gold, 111 Veterans’ insurance brokerage expert.
25. 	Schutzman, 	an 	outside 	insurance 	consultant 	who 	assisted 	Feil 	in
putting together insurance programs for over twenty years, testified that he never
encountered difficulty in obtaining AOP coverage for Feil’s Louisiana properties for
their total insured value (“TIV”) at a commercially reasonable rate. Lowenstein, who
worked as part of a group at Feil that reviews insurance renewals, pricing, limits,
and capacity, testified that AOP coverage in 2023 at replacement cost limits for
commercial properties in southeast Louisiana was both available and cheap. And
Gold, whom 111 Veterans tendered as an expert in the placement of property
insurance coverage on commercial property, testified that he has placed coverage for
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thousands of properties and rarely had difficulty placing AOP coverage on commercial
properties in New Orleans at TIV limits at a reasonable cost. Gold also testified that
his understanding of the AOP coverage market was informed by three experienced
surplus line brokers, whose input he sought in evaluating Heritage Plaza’s coverage
options. Gold had “full confidence” that it would have been possible to purchase AOP
coverage at a reasonable price in 2022 and 2023 for the total insured value of Heritage
Plaza.
26. 	This testimony was consistent with and substantiated by evidence of the
insurance 	coverage 	for 	the 	three 	Lakeway 	buildings 	between 	2020 	and 	2024.
Lakeway III had full limits AOP coverage for the policy period beginning June 11,
2022 based on a total insured value of $127,569,795. Under Lakeway III’s layered
approach, in 2022 it cost Feil an additional $71,500 premium to increase AOP
coverage from $50 million to $127,569,795. In the 2023-2024 renewal cycle, Feil paid
$156,794 to increase Lakeway III’s AOP coverage from $30 million to its TIV of
$134,040,047. Similarly, Lakeway I and II had full limits coverage for the same policy
periods based on a total insured value in excess of $200 million.
27. 	Anderson Baker, Stewart’s insurance broker whose firm has worked
with Stewart since approximately 2007, placed Stewart’s May 2022/2023 policy on
Heritage Plaza. Baker was unaware of the insurance requirements imposed under
Section 3(g) until he received a copy of the March 16, 2023 default letter. As far as
Baker knew, Stewart’s insurance obligations to its mortgage lender were satisfied
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upon obtaining a $40 million total loss policy, even though the replacement cost for
the Building exceeded that loss limit.
28. 	In 	the 	spring 	of 	2022, 	Heritage 	Plaza’s 	TIV 	had 	increased 	to
$106,226,647. Baker initially sought insurance coverage for Heritage Plaza up to the
TIV. But AmWINS, the surplus lines broker used by Baker, informed Baker that
AmRISC, the insurance consortium with which AmWINS contracts, was only willing
to offer a $40 million policy. Baker did not attempt to find another underwriter to
provide a layer of AOP coverage above the $40 million loss limit. That is in part
because Stewart’s CEO Motahari, while unhappy with the cost of the AmRISC policy,
was satisfied that he had $40 million of coverage and was uninterested in seeking
higher AOP limits from elsewhere. Accordingly, Baker, unaware of the requirements
of the ground lease, adhered to Motahari’s wishes and made no effort to find a layer
of AOP coverage above the $40 million offered by AmRISC.
29. 	After 111 Veterans placed Stewart in default in 2023, at the request of
Stewart, Baker sought quotes for coverage up to replacement cost. Baker contacted
two—and only two—insurance underwriting companies, AmWINS and Risk Place
Services. Neither company was willing to offer total loss coverage at Heritage Plaza’s
replacement cost. But, critically, Baker made no effort to seek AOP coverage up to
replacement cost separate from wind coverage; according to Baker, “[t]hat was not
my charge.” Stewart requested only for Baker to find all-perils coverage (rather than
AOP coverage) at TIV limits, which neither AmWINS nor Risk Place Services was
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willing to do. Moreover, Baker made no effort in either 2022 or 2023 to obtain a layer
of additional AOP coverage above AmRISC’s $40 million policy.
30. 	Baker speculated that, if he had requested separate AOP coverage, the
cost of such coverage would have been exorbitant in 2022 and 2023. But Baker’s
contention is uncorroborated, uninformed by articulable facts, and inconsistent with
the weight of other evidence, and thus not credited by the Court.
31. 	Moreover, even Baker acknowledged that Feil, for his Lakeway III
property, paid reasonable premiums to obtain additional layers of AOP coverage up
to the TIV of the building. For Lakeway III, Feil paid $71,500 in the 2022/2023
insurance cycle to increase AOP coverage from $50 million to its TIV of $127,569,795.
Baker found this additional premium to be reasonable.
32. 	Accordingly, the Court finds that, as of the May 29, 2022 policy renewal,
Stewart was in default of the ground lease for failing to obtain AOP coverage for
Heritage Plaza at full replacement cost less depreciation as required by Section 3(g).
And because Stewart in fact was in default of the lease, 111 Veterans did not breach
its contract with Stewart by providing notice of Stewart’s default on March 16, 2023.
33. 	Stewart 	advances 	numerous 	counterarguments, 	which 	the 	Court
addresses in turn.
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3. 	The Parties’ History of Allowing Stewart to Maintain AOP
Coverage Less Than Replacement Cost Is Not Proof That
AOP 	Coverage 	Was 	Not 	Reasonably 	Obtainable 	in
2022/2023
34. 	Stewart claims that the historical practice of permitting Stewart to
maintain less-than-full TIV coverage should inform the Court’s determination of
what constitutes “reasonably obtainable” coverage.198 The Court disagrees.
35. 	Beginning in 2013, Stewart had been permitted to maintain $40 million
of insurance coverage on Heritage Plaza, even though the replacement cost of the
Building was higher. Indeed, 111 Veterans’ March 16, 2023 default letter was the
first time any party had objected to Stewart’s coverage limits.
36. 	Stewart contends that, since 2013, the Building was not insured up to
replacement cost for AOP because “the parties agreed that such coverage was not
‘reasonably obtainable.’”199 No evidence in the record supports this.
37. 	It is true that in 2013 the lender agreed to, and the landlord did not
oppose, Stewart’s coverage limit of $40 million even though it was below the
Building’s almost $50 million replacement cost. But Stewart asks the Court, based
on this concession by the lender, to conclude that the lender, landlord, and Stewart
came to a meeting of the minds that $40 million was a reasonably obtainable amount
of coverage for Heritage Plaza.
198 ECF No. 98 at 3–5; ECF No. 100 at 4–5. In its complaint, Stewart makes a distinct but
related argument that was foreclosed during pretrial litigation. Specifically, Stewart requested a
declaratory judgment that “[b]y accepting the lower limits obtained by Stewart and not objecting for
several years, [111 Veterans] is estopped from or has waived any objection to the insurance limits
obtained by Stewart[.]” Section I of the Court, who was originally allotted this case, granted 111
Veterans’ Rule 12(b)(6) motion as to Stewart’s claim that 111 Veterans, through its inaction, waived
objection to Stewart’s insurance limits. ECF No. 13 at 11–15. The issue was not raised during the trial.
199 ECF No. 100 at 5, 8.
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38. 	To the contrary, there is no evidence that Stewart’s lender in 2013 was
motivated by Section 3(g) or the question of “reasonable obtainability” when it agreed
to the $40 million coverage. Stewart offers no proof that any party, Stewart included,
made an informed determination in 2013 that $40 million met the definition of
“reasonably obtainable”—or the inverse, that anything beyond $40 million was not
“reasonably obtainable” as defined in Section 3(g). The mortgage lender merely sent
an email in 2013 agreeing to accept the $40 million limit in coverage. The lender
communicated this decision with no reference to Section 3(g) or analysis of market
factors supporting a determination that a $40 million limit was all that was
reasonably obtainable.
39. 	Stewart likewise points to no evidence that, after 2013, it was permitted
to carry less AOP coverage because the parties made an informed determination that
full 	limits 	AOP 	coverage 	was 	not 	reasonably 	obtainable. 	As 	the 	Court 	heard
throughout the trial, costs of insurance can increase or decrease from year-to-year.
So can the replacement cost of a building. Whether insurance coverage for a certain
casualty and at a certain limit is reasonably obtainable can change—which explains
why Section 3(g) requires an amount of coverage based on a variable like the
replacement cost of the building and not a fixed dollar amount. Just because the
parties had an understanding from 2013 to 2021 that $40 million in coverage on
Heritage Plaza was acceptable does not necessitate the conclusion that $40 million of
coverage was “reasonably obtainable” in 2022 and 2023.
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40. 	Anderson Baker, who handled the placement of insurance for Stewart,
was not even aware of Section 3(g) or its insurance requirement until receiving the
March 2023 default letter. Stewart cannot plausibly claim that insurance coverage
decisions were informed by a desire to satisfy Section 3(g) and secure only such
coverage that was “reasonably obtainable.”
41. 	Stewart nonetheless posits that its own judgment on what constitutes
reasonably obtainable coverage under Section 3(g) should be “given the most, if not
exclusive, weight.”200 That is, according to Stewart, its subjective judgment as to what
level of coverage is reasonably obtainable should control the outcome. That assertion
fails. First, it renders compliance with Section 3(g) subject to Stewart’s whim.
Stewart could decide, for example, that its dire finances justify a lower level of
coverage than a reasonable owner otherwise would consider appropriate. Or it could
simply decide that Section 3(g)’s requirements are inherently unreasonable. In
Stewart’s view, it can buy whatever coverage it wishes and that coverage de facto
becomes all that is “reasonably obtainable” for purposes of Section 3(g), leaving the
ground lessor no choice but to accept it. But a suspensive condition, such as “if
reasonably obtainable,” that depends solely on Stewart’s whim would render Section
3(g) null. LA. CIV. CODE art. 1770. “Louisiana law does not favor the interpretation of
contract conditions as purely potestative”—i.e., dependent on the whim of one of the
parties. Sam’s Style Shop v. Cosmos Broadcasting Co., 694 F.2d 998, 1002 (5th Cir.
200 ECF No. 98 at 5.
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1982). “[I]nstead, whenever possible agreements are to be interpreted to preserve
their validity.” Id.
42. 	Stewart cannot decree unilaterally that it need not purchase reasonably
obtainable insurance consistent with the coverage requirements of Section 3(g)
simply because it would prefer to purchase less insurance.
4. 	Comparisons Between Heritage Plaza and the Lakeway
Properties Are Useful
43. 	Stewart argues that 111 Veterans’ reliance on comparisons between
Heritage Plaza and Lakeway properties is misplaced because (1) unlike Heritage
Plaza, Lakeway I and II were insured under a program that combined the two
buildings for coverage, and even so the buildings were not insured up to their
replacement cost for the period 2023-2024; and (2) unlike Heritage Plaza, Lakeway
III was insured only as to the exterior (shell) of the building and did not include
coverage for interiors.201
44. 	As for Lakeway I and II, Stewart is correct that the buildings were not
insured up to replacement cost for 2023/2024—a fact that Stewart offers no evidence
to explain, other than speculation that insurance costs were too expensive for that
year. But for the 2022/2023 cycle, Lakeway I and II were insured up to their full TIV.
In fact, for that policy period, Feil paid only $150,000 (out of a total premium of
roughly $2.7 million) to purchase over $154 million of layered AOP coverage, taking
coverage from $50 million to the full TIV of $204,591,057.
201 ECF No. 100 at 5–6.
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45. 	As for Lakeway III, Stewart argues that any comparison with Heritage
Plaza is inapt because Lakeway III’s coverage applied only to the exterior and did not
include interiors, whereas Heritage Plaza’s coverage included interior walls, fixtures,
and the like. This may be true, but the value of Heritage Plaza interiors was relatively
small compared to the replacement cost of Heritage Plaza on the whole. According to
the 2022 CoreLogic report—i.e., the report that was used to establish Heritage Plaza’s
2022 TIV—the replacement cost for all interiors was approximately $10 million, a
figure that represents less than 10% of the total Heritage Plaza replacement cost
($106,226,647).
46. 	Moreover, Lakeway III had a comparable, albeit slightly higher, TIV
during the same timeframe ($127,569,795). Stewart has not shown that the small
distinction in the scope of coverage warrants disregarding Lakeway III as a reliable
comparator for the same time period. As previously noted, between 2020 and 2023,
Feil paid premiums between $65,000 and $71,500 to obtain “layered” AOP coverage
that increased Lakeway III’s loss limit from $50 million to its TIV of $127,569,795.
In the 2023-2024 renewal cycle, Feil paid $156,794 to increase Lakeway III’s AOP
coverage from $30 million to its TIV of $134,040,047. In his trial testimony, Baker
acknowledged that these additional premiums were a reasonable price for the amount
of additional AOP coverage that Lakeway III obtained.
47. 	Furthermore, Stewart complains that “[n]ot a single witness could point
to a similar building insured for AOP coverage up to replacement cost.” 202 But as the
202 ECF No. 100 at 6.
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trial evidence showed, there are only three sets of buildings in the Metairie Class A
office market: Heritage Plaza, the Lakeway buildings, and Galleria. Given the narrow
universe, it is hard to discount Lakeway III as a reliable comparator building in the
Metairie market.
5. 	111 Veterans Did Not Forfeit Its Right to Default Stewart
for Failure to Maintain AOP Coverage or Its Ability to
Argue the Same at Trial
48. 	Stewart contends that 111 Veterans should be barred from claiming that
Stewart was required to obtain reasonable AOP coverage under Section 3(g) because
(1) 111 Veterans did not specifically cite insufficient AOP coverage as its grounds for
default in the March 16, 2023 letter, and (2) according to Stewart, 111 Veterans did
not make known its intent to default Stewart for insufficient AOP coverage until the
third day of trial.203
49. 	As to the first argument, the default letter claimed that Stewart was in
violation 	of 	Section 	3(g) 	because 	“property 	insurance 	in 	the 	amount 	of
$110,700,000.00 [is] required,” but “the amount of property insurance currently being
carried by Tenant is deficient under the Lease by any reasonable measure.” 	The
letter did not specify that Stewart was being placed in default for failing to obtain
AOP coverage at replacement cost limits.
50. 	Under the terms of the lease, any failure by Stewart to “promptly and
fully perform” its obligations under Section 3(g) is an “Event of Default” that “shall
be considered to exist for all purposes of this lease, immediately upon its happening,
203 ECF No. 98 at 5–11; ECF No. 100 at 1–4.
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occurrence or existence.” As the Court has found, Stewart was in default even before
111 Veterans sent Stewart the notice of default. Specifically, Stewart was in default
when it failed to secure, much less attempt to secure, AOP coverage up to replacement
cost for the 2022/2023 renewal cycle. The event of default occurred at the moment the
May 29, 2022 insurance policy went into effect.
51. 	It is irrelevant that 111 Veterans did not reference Stewart’s insufficient
AOP coverage in the default letter. With or without notice, the event of default had
already occurred. 111 Veterans had no obligation to reference AOP coverage in the
letter, under either Louisiana law or the terms of the lease. Under Louisiana law,
notice is not required “absent an express requirement of notice of default in the
agreement under consideration.” Gen. Elec. Capital Corp. v. Se. Health Care, Inc., 950
F.2d 944, 952 (5th Cir. 1991). Accord La. Civ. Code Ann. art. 1989 (“Damages for
delay in the performance of an obligation are owed from the time the obligor is put in
default. Other damages are owed from the time the obligor has failed to perform.”).
Giving an obligor notice of default is not necessary when seeking damages for
defective performance, as 111 Veterans sought against Stewart. LA. CIV. CODE ANN .
art. 1989, rev. cmt. (c).
52. 	Moreover, notice of default was not required under the lease unless 111
Veterans sought to terminate the lease. Section 30 of the lease states, “Lessor’s right
to elect to terminate this lease for [a violation of Section 3(g)] shall not accrue until
after 60 days following written notice by Lessor to Lessee specifying the instance or
instances of default.” 111 Veterans, therefore, must give notice and a 60-day cure
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period before terminating the lease. During that 60-day window, Stewart has a right
to cure the event of default before termination.
53. 	But 111 Veterans has not terminated the lease. There is no evidence
that 111 Veterans in fact terminated or communicated termination of the lease to
Stewart. In the default letter, 111 Veterans made clear that it had not terminated the
lease, stating, “Landlord reserves the right to exercise all of its available rights and
remedies under the Lease, including without limitation termination of the Lease, if
the defaults are not cured within the applicable time periods under the Lease.” This
statement reflects that 111 Veterans is contemplating a lease termination to occur
sometime in the future; it has not happened yet. Stewart also cites emails over the
ensuing weeks and months among Feil officers and 111 Veterans’ attorney discussing
a plan to terminate the Stewart lease. But no termination notice was communicated
to Stewart, which means the lease was never terminated. And because the lease has
not been terminated, 111 Veterans is under no obligation to provide notice of default
for the event of default to exist, much less provide specific notice of Stewart’s
insufficient AOP coverage.
54. 	Stewart advances a different reading of Section 30, arguing that notice
of default is both required under the lease and must articulate “specifically” the basis
for default. Stewart claims: “Section 30 dictates that ‘notice is required’ and that there
is no breach unless ‘the default as specifically set forth in said notice, shall not be
cured within the time set forth in such notice.’” 204 This argument misreads and
204 ECF No. 98 at 8.
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misinterprets the requirements of Section 30. The applicable Section 30 provision
actually states:
Where, by the terms of this Section, notice is required and the default
as specifically set forth in said notice, shall not be cured within the time
set forth in such notice, and as provided in this Section, this lease and
all Lessee’s rights and interests under it shall terminate and be at an
end[.]
55. 	Under this provision, if notice is required (which it was not, for an event
of default to come into existence) and if Stewart failed to cure the default as
specifically set forth in the notice, then Stewart’s rights and interests shall terminate.
The provision does not state, as Stewart contrives, that before Stewart can be found
in default of the lease, the default notice must “specifically” identify the bases for the
default. Again, Stewart was in default immediately upon the “happening, occurrence
or existence” of an Event of Default—here, failing to obtain AOP coverage up to
replacement cost in 2022. It is immaterial that 111 Veterans did not specifically
reference AOP coverage in the default letter.
56. 	Moreover, the cases cited by Stewart in support of its contention that
AOP-specific notice was required are inapposite. In those cases, the leases at issue
required a notice of default followed by a cure period before any action could be taken
for breach. See Walker v. Ford Leasing Div. Co., 1995 WL 498866, (E.D. La. Aug. 21,
1995) *3 (in eviction suit, lease required written notice of default and 30 days to cure);
McCrary v. Park South Properties, 560 So.2d 38, 47 (La. App. 1 Cir.), writ denied, 563
So. 2d 1156 (La. 1990) (formal written notice of default required, with 30-day cure
period, before any action for breach of lease can be asserted). “It is the Lease that
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provides the governing law between the parties on this issue.” Walker, 1995 WL
498866, at *3 (citing McCrary, 560 So.2d at 45 (“Agreements legally entered into have
the effect of laws on those who have formed them.”)). Here, the ground lease required
no notice of default to Stewart because 111 Veterans had not attempted to terminate
the lease. Stewart was in default at the moment the May 29, 2022 policy became
effective, not the moment it received the default letter.
57. 	Turning to Stewart’s second argument—that 111 Veterans did not make
known its intent to default Stewart for insufficient AOP coverage until the third day
of trial—Stewart argues that it suffers prejudice by having to defend against a new
theory of liability first introduced in the middle of trial. This claim has no basis in the
record.
58. 	Stewart takes aim at 111 Veterans’ “pleadings [as] focus[ed] only on
wind and storm coverage and deductibles and are devoid of any reference to AOP.”
Indeed, 111 Veterans’ counterclaim makes no mention of Stewart’s insufficient AOP
coverage, but it also does not specifically allege insufficient wind or named-storm
coverage limits. 205 The counterclaim generically notes: “The coverage limits at all
times from March 16, 2023 to date have fallen substantially short of the level required
by Section 3(g), and the deductible for windstorms at all times from March 16, 2023
has been substantially higher than the $10,000 cap set by Section 3(g).”
59. 	Despite the general language of the counterclaim, 111 Veterans made
known its intent to challenge the sufficiency of Stewart’s AOP coverage at multiple
205 ECF No. 15 ¶ XI(a).
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stages of this litigation. For instance, Stewart’s insufficient AOP coverage was
squarely presented in the Pretrial Order without any objection from Stewart.
Contested Issue of Law #5 states in relevant part:
If the phrase “if reasonably obtainable” applies to all types of casualties
listed, whether coverage for “all other perils” was reasonably obtainable
on or about March 16, 2023 at limits equal to 100% of the actual
replacement cost of Heritage Plaza (exclusive of the items delineated in
Section 3(g)) less actual physical depreciation . . . .206
60. 	Under Federal Rule of Civil Procedure 16(d), a pretrial order “controls
the course of the action unless the court modifies it.” A party has presented an issue
in the trial court if it has been raised “in either the pleadings or the pretrial order, or
if the parties have tried the issue by consent.” Portis v. First Nat’l Bank of New
Albany, Miss., 34 F.3d 325, 331 (5th Cir. 1994).
61. 	Moreover, the adequacy of Stewart’s AOP coverage did not arise for the
first time as an issue in the Pretrial Order. 111 Veterans raised the issue directly in
its opposition to Stewart’s Motion for Partial Summary Judgment filed in June
2024. 207 111 Veterans raised the issue again in its proposed findings of fact, noting,
“[t]he evidence before the Court establishes that ‘all other perils’ coverage at full
replacement value limits was reasonably obtainable in the Metairie Class A office
market in 2022 and 2023.” 208 Stewart filed both a Daubert motion directed to Timothy
Gold’s testimony and an omnibus motion in limine, but neither motion sought to
exclude evidence concerning AOP coverage. The issue was also raised throughout the
206 ECF No. 73 at 26.
207 ECF No. 45 at 20.
208 ECF No. 80 at 21–22.
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trial, including in testimony of Eric Lowenstein on Day 1, and Stewart never objected
to questions bearing on AOP coverage.
62. 	Accordingly, even were the Court to conclude that the sufficiency of AOP
coverage was not properly raised in either the pleadings or the pretrial order, they
were tried with the implied consent of the parties. Fed. R. Civ. P. 15(b)(2). Whether
an issue has been tried with the implied consent of the parties depends on (a) whether
the parties recognized that the issue entered the case at trial, (b) whether evidence
on the issue was introduced without objection, and (c) whether the opposing party
was prejudiced. United States v. Shanbaum, 10 F.3d 305, 312–13 (5th Cir. 1994). All
three factors weigh in favor of permitting 111 Veterans to argue Stewart’s default
based on insufficient AOP coverage.
63. 	In short, the question of whether Heritage Plaza’s AOP coverage
complied with Section 3(g) was properly before the Court at trial, whether viewed
through the prism of the pleadings, the pretrial order, the pretrial briefing, or Rule
15(b)(2).
6. 	Stewart Places Undue Significance on Heritage Plaza’s
Claims History
64. 	Stewart argues that, in evaluating reasonable obtainability, the Court
must take into account the improbability of an AOP event ever requiring a full
replacement of the Building. 209 This is particularly so, according to Stewart, when
the largest AOP loss the building ever sustained was approximately $100,000 after
Hurricane Katrina.
209 ECF No. 98 at 10–11.
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65. 	Stewart places too great an emphasis on this factor, and the Court is not
persuaded to rely so heavily on history as a guide. One could imagine any number of
scenarios (unpleasant as they may be) that would result in a total loss of the Building
due to an AOP casualty. In fact, this is what insurance companies do—imagine the
worst scenarios and price their policies according to the likelihood of that risk. Just
because a catastrophic loss from an AOP casualty has not happened to the Building,
or the risk might be exceedingly low, does not mean that Stewart is entitled to choose
its own level of AOP coverage; Stewart knowingly agreed to obtain reasonably
obtainable replacement cost coverage when it agreed to Section 3(g), the evidence
shows AOP coverage was available at a reasonable cost in 2022 and 2023, and even
Stewart’s insurance broker (Baker) admitted that the cost of full limits AOP coverage
on a comparable property in the market (Lakeway III) was reasonable.
7. 	Stewart’s Captive Cell Policy Did Not Cure Default
66. 	In an attempt to cure the default alleged in the March 16, 2023 notice,
Stewart obtained a Tennessee captive cell policy dated May 15, 2023. This so-called
“protected cell” policy is a form of self-insurance authorized under Tennessee law.
67. 	The 	policy 	is 	administered 	by 	Hartwell 	Insurance 	Co., 	although
Hartwell’s role is largely administrative. Hartwell gets paid a service fee, but it has
no obligation to contribute any funds to the protected cell.
68. 	The policy designates Stewart as the “First Named Insured” and states
on its first page, “The First Named Insured Is Self-Insured Through a Captive
Insurance Policy.” The policy’s liability limits purport to provide Heritage Plaza with
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all the insurance coverage required under Section 3(g) that was not already being
provided under the policy purchased through Gallagher.
69. 	At the inception of the captive cell policy, Stewart was required to place
$1,158,950 into a segregated claims account. To the extent losses on future claims
exceed the balance in the segregated claims account, Stewart must place additional
amounts into the account in multiples of $500,000 sufficient to pay the losses.
70. 	All financial burdens associated with the protected cell rest with
Stewart Development, LLC.
71. 	There is no reinsurance treaty in effect with a third-party insurer for
any of the risk insured against by the captive cell policy. And while Frank Stewart’s
personal financial statement was submitted to the Tennessee authorities to obtain
regulatory approval for the policy, Mr. Stewart has no contractual or other legal
obligation to fund any of the losses insured against by the captive cell policy. In short,
the only entity required to fund the obligations under the captive cell policy is Stewart
itself.
72. 	Section 3(g) requires that all insurance acquired by Stewart for Heritage
Plaza be “with financially sound and reputable insurance companies.” The captive
cell insurance does not satisfy this condition because the Stewart Development
Protected Cell, the insurance vehicle providing the coverage, is not financially sound.
73. 	Stewart Development, LLC is insolvent, with liabilities far exceeding
the value of its assets. As a consequence of its insolvency, it funded its initial
contribution to the segregated claims account with funds borrowed from a related
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entity controlled by Frank Stewart. But Frank Stewart in under no legal obligation
to fund the captive cell policy. The Court credits the expert testimony of Frank Hale
Stewart Jr. insofar as he testified that, if Frank Stewart were unwilling or unable to
fund the policy, the captive cell would not be financially sound.
74. 	Stewart Development, LLC is the sole entity with the legal obligation to
fund losses covered by the captive cell policy.
75. 	Under Louisiana law, which governs under the ground lease, insurance
is “a contract whereby one undertakes to indemnify another or pay a specified amount
upon determinable contingencies.” La. Rev. Stat. Ann. § 22:46(13)(a). Here, under the
Stewart Development Protected Cell policy, Stewart Development, LLC functions as
both insurer and insured, obligated to indemnify itself against losses up to $110
million despite lacking the resources to pay an initial $1.2 million premium.
76. 	For these reasons, the captive cell policy was not issued by a financially
sound insurer and does not represent any shifting of risk. It therefore does not cure
Stewart’s default under Section 3(g).
8. 	Stewart Has Not Shown That 111 Veterans Breached the
Lease by Failing to Perform an Obligation
77. 	Even if the Court were to find that AOP coverage was not reasonably
obtainable at the Building’s replacement cost level, Stewart still does not prevail in
its breach-of-contract claim because it fails to show that 111 Veterans failed to
perform an obligation under the lease.
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78. 	Stewart’s claim for breach against 111 Veterans is that the defendant
improperly defaulted Stewart on March 16, 2023, and did so in bad faith. Stewart
makes no other claims for breach beyond alleging that it was improperly defaulted.
79. 	Louisiana Civil Code Article 1756 defines “obligation” as follows: “An
obligation is a legal relationship whereby a person, called the obligor, is bound to
render a performance in favor of another, called the obligee. Performance may consist
of giving, doing, or not doing something.” Under Louisiana law, a breach of contract
occurs when an obligor “undertak[es] an obligation to perform” and then “fail[s] to
perform the obligation,” resulting in damages to the obligee. Favrot, 68 So. 3d at
1108–09.
80. 	Stewart asserts that 111 Veterans, as the obligor, committed breach of
contract when it improperly defaulted Stewart for violating Section 3(g). In its post-
trial briefing, Stewart more narrowly claims that 111 Veterans breached Section 2 of
the ground lease, which requires that “Lessee shall be maintained in the peaceful and
undisturbed possession and enjoyment of the leased premises.”210
81. 	Supporting its contention that placing Stewart in default violated
Section 2, Stewart cites Stroope v. Smith, 50,685 (La. App. 2 Cir. 5/18/16), 199 So.3d
612, 626, on reh’g (July 28, 2016). But Stroope is factually distinct. There, the court
found that the lessor-defendant violated his duty to provide the lessee-plaintiff with
“peaceful possession of the leased premises” when the defendant entered the premises
without permission of the plaintiff; took it back for his own purposes; locked the
210 ECF No. 98 at 15 (citing Stewart Ex. 2 § 2). Stewart also alleges that 111 Veterans breached
Section 30 of the lease. The Court addressed the Section 30 argument supra.
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plaintiff out of the property even though the plaintiff’s personal property remained
on the premises; failed to provide notice of the plaintiff’s alleged default or make a
demand for repayment of rent before reentering the leased property; and failed to
provide the plaintiff with a cure period. By contrast, here, 111 Veterans sent Stewart
a default letter claiming Stewart was not upholding its insurance obligations under
the lease. 111 Veterans did not terminate the lease, seize the property, or otherwise
deny Stewart the use of Heritage Plaza after sending the default letter. Compare
Lakefront Mgmt. Auth. v. J & J Partners, L.L.C., 2025-0324 (La. App. 4 Cir. 2/13/26)
(finding that “filing a Petition for Possession and Rule to Evict does not itself amount
to a disturbance of [the lessee’s] peaceful possession”), and Naquin v. Bollinger
Shipyards, Inc., 2013-1638 (La. App. 1 Cir. 5/2/14), 147 So.3d 207, 212, writ denied,
2014-1091 (La. 9/12/14), 148 So.3d 933 (holding lawsuit brought by lessor to cancel
lease was not a “disturbance” sufficient to establish a breach of the warranty of
peaceful possession), with Creole Corp. v. McMillan, 379 So.2d 805, 807 (La. Ct. App.
1980) (finding that the act of illegally padlocking a premises and denying a tenant’s
use violated the peaceful possession guaranteed by the lease). As 111 Veterans notes
in its post-trial briefing: “There is no obligation under the Ground Lease (or any
contract, for that matter) [for 111 Veterans] to assert only successful breach of
contract claims.”
82. 	Of course, all obligations, including contractual ones, must be performed
in good faith. LA. CIV . CODE arts. 1759, 1983. But the “implied duty of good faith . . .
arises only in the context of performance of a contract.” Jones v. Honeywell Int’l, Inc.,
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295 F. Supp. 2d 652, 672 (M.D. La. 2003). Thus, the requirement of good faith “applies
only to obligations related to the specific contractual duties.” Innovative Sales, LLC
v. Northwood Mfg., Inc., 2008 WL 3244114, *4 (5th Cir., Aug. 6, 2008). Without proof
that the party whose conduct at issue has failed to perform a specific contractual
obligation, that party’s good faith or bad faith is irrelevant. “[W]e do not examine a
party’s good faith (or bad faith) unless and until we find that the party has failed to
perform an obligation, from which the obligor has sustained damages.” Favrot, 68
So.3d at 1109 (emphasis in original).
83. 	Stewart cannot point to any other contractual obligation that 111
Veterans has breached. Its generalized allegations that 111 Veterans breached its
right to maintain peaceful enjoyment of the premises and acted in bad faith are not
sufficient to sustain a breach-of-contract claim.
84. 	Thus, even if the Court had found that Stewart was not in violation of
Section 3(g) because AOP coverage was not reasonably obtainable at replacement cost
levels, Stewart’s breach of contract claim against 111 Veterans would still falter.
B. 	Stewart’s Louisiana Unfair Trade Practice and Consumer Protection
Act (“LUTPA”) Claim
1. 	Legal Framework
85. 	The LUTPA prohibits the use of “[u]nfair methods of competition and
unfair or deceptive acts or practices in the conduct of any trade or commerce.” LA.
STAT. ANN . § 51:1405(A).
86. 	“[T]he elements of a cause of action under the LUTPA are: (1) an unfair
or deceptive trade practice declared unlawful; (2) that impacts a consumer, business
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competitor or other person to whom the statute grants a private right of action; (3)
which has caused ascertainable loss.” Flood v. Uber Techs., Inc., No. CV 18-4322, 2018
WL 3387536, at *4 (E.D. La. July 12, 2018) (quoting Who Dat Yat LLC v. Who Dat?
LLC, No. 10-1333, 2011 WL 39043, at *3 (E.D. La. Jan. 4, 2011)).
87. 	“Any person who suffers any ascertainable loss of money or movable
property, corporeal or incorporeal, as a result of the use or employment by another
person of an unfair or deceptive method, act, or practice declared unlawful by R.S.
51:1405, may bring an action individually . . . to recover actual damages.” LA. S TAT.
ANN . § 51:1409.
88. 	“Business consumers and competitors are included in the group afforded
a private right of action under the LUTPA.” Flood, 2018 WL 3387536, at *4 (E.D. La.
July 12, 2018) (internal quotations omitted).
89. 	The LUTPA does not specifically define an “unfair trade practice.” “It
has been left to the courts to decide, on a case-by-case basis, what conduct falls within
the statute’s prohibition.” Cheramie Servs., Inc. v. Shell Deepwater Prod., Inc., 2009-
1633 (La. 4/23/10), 35 So.3d 1053, 1059 (citations omitted).
90. 	Courts have repeatedly held that a plaintiff must show conduct that
“offends 	established 	public 	policy 	and 	. 	. 	. 	is 	immoral, 	unethical, 	oppressive,
unscrupulous, or substantially injurious.” Id., quoting Moore v. Goodyear Tire &
Rubber Co., 364 So.2d 630, 633 (La. App. 2 Cir. 1978).
91. 	“The range of prohibited practices under LUTPA is extremely narrow
and includes only egregious actions involving elements of fraud, misrepresentation,
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deception, or other unethical conduct.” IberiaBank v. Broussard, 907 F.3d 826, 839
(5th Cir. 2018) (internal quotations omitted).
92. 	In assessing a LUTPA claim, the “defendant’s motivation” is a critical
factor—his “actions must have been taken with the specific purpose of harming the
competition.” Id. at 839–40 (internal quotations omitted).
93. 	As explained by the Fifth Circuit in Turner v. Purina Mills, Inc:
LUTPA does not prohibit sound business practices, the exercise of
permissible 	business 	judgment, 	or 	appropriate 	free 	enterprise
transactions. The statute does not forbid a business to do what everyone
knows a business must do: make money. Businesses in Louisiana are
still free to pursue profit, even at the expense of competitors, so long as
the means used are not egregious.
989 F.2d 1419, 1422 (5th Cir. 1993) (internal citation omitted).
94. 	Moreover, “the statute does not provide an alternate remedy for simple
breaches of contract. . . . There is a great deal of daylight between a breach of contract
claim and the egregious behavior the statute proscribes.” Id. (internal citation
omitted). But a “breach of a contract can have deceptive and unethical ‘undertones’
that would allow a LUTPA claim to stand in addition to the breach of contract claims.”
First Am. Bankcard, Inc. v. Smart Bus. Tech., Inc., 178 F. Supp. 3d 390, 406 (E.D. La.
2016).
2. 	111 Veterans Has Not Committed a LUTPA Violation
95. 	In post-trial briefing, Stewart clarifies that its LUTPA claim is not based
on Jeffrey Feil’s decision not to purchase the Building in 2022 and 2023, his business
relationship with the Benson Group, his desire to convert the Building to residences,
or his status as a competitor in the market. As Stewart points out, “Stewart and Mr.
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Feil are competitors, and they can fairly compete in any number of ways.” Rather,
Stewart bases its LUTPA claim on “the deceptive and unfair actions taken by 111
Veterans and Mr. Feil (i.e., stealing tenants, targeting the mortgage, improperly
defaulting Stewart) to manufacture economic pressure and try to force a takeover of
Stewart’s Building.” For the reasons that follow, Stewart’s LUTPA claim fails.
96. 	To begin, Stewart has no LUTPA claim for “improperly defaulting
Stewart.” Stewart was in violation of the insurance coverage requirements of Section
3(g). 111 Veterans acted within its rights under the lease to default Stewart based on
its violation of the lease.
97. 	Next, Stewart’s claim fails to the extent it is predicated on 111 Veterans’
efforts to steal its tenants using Stewart’s rent roll. To be sure, 111 Veterans acted in
an underhanded fashion when it shared Heritage Plaza’s confidential rent roll with
its commercial leasing broker and then encouraged the broker to use the rent roll to
steal 	Heritage 	Plaza 	tenants. 	Whether 	such 	conduct 	constitutes 	an 	unfair 	or
deceptive trade practice, the first element of a LUTPA claim, need not be decided.
That is because Stewart’s LUTPA claim fails on the second and third elements:
Stewart fails to show that 111 Veterans’ use of Stewart’s rent roll “impact[ed]”
Stewart to the extent it “caused ascertainable loss.” See Flood, 2018 WL 3387536, at
*4.
98. 	The Metairie Class A office market has been stagnant for decades, with
no new buildings coming online since the 1980’s. Few new office tenants have entered
the market. Accordingly, each of the buildings necessarily pursues the others’ tenants
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as part of their strategy to fill vacant space. Pursuing other buildings’ tenants is,
considered on its own, ordinary competitive behavior that is not proscribed by
LUTPA. Cheramie, 35 So.3d at 1060.
99. 	Stewart nonetheless points to Jeffrey Feil’s transmission of the Heritage
Plaza rent roll to the leasing agents at Corporate Realty as evidence of improper
conduct. While some of the information on the rent roll was non-public and hence
governed by the May 2022 Confidentiality Agreement between Feil and Stewart,
some 	of 	the 	information 	was 	not 	confidential. 	The 	Confidentiality 	Agreement
excludes from the term “Confidential Information” any information that “was known
by or in the possession of the Recipient or its Representatives prior to being disclosed
by or on behalf of the Disclosing Party pursuant to the Agreement.” Thus, to the
extent that any information in the rent roll was already in the possession of Feil or
its agents, that information is not covered by the Agreement.
100. 	The Court credits the undisputed testimony of Bruce Sossaman, the
longtime Corporate Realty leasing agent at Lakeway, that he keeps an extensive
personal database which tracks past unsuccessful proposals he has made to tenants
of other buildings, including Heritage Plaza. That information includes the lease
terms, expiration date, and square footage involved in the unsuccessful proposals, the
most important data points for knowing when to approach a tenant in a competing
building and what its space needs are likely to be. Indeed, other than some
information 	about 	the 	tenants’ 	respective 	expense 	bases, 	which 	he 	would 	not
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normally track anyway, there was virtually nothing in the rent roll on Heritage
Plaza’s larger tenants that Sossaman did not already have.
101. 	Stewart 	complains 	that 	Feil 	benefitted 	from 	the 	confidential
information in the rent roll in making its outreach to Carr Riggs and Audubon
Engineering. 	The 	evidence 	shows 	otherwise. 	The 	Court 	credits 	Sossaman’s
uncontested 	testimony 	that 	Carr 	Riggs’ 	broker 	initially 	approached 	Sossaman
unsolicited in 2020, four years before its Heritage Plaza lease was due to expire. As
it was too early then to negotiate toward a 2024 lease, Sossaman put the discussions
on hold, renewing them in 2022. He then put together a proposal that included
Lakeway’s standard rental rate, making little to no use of Heritage Plaza’s rent roll.
After a series of proposals and counterproposals, Carr Riggs reached an agreement
with Lakeway on a lease that commenced in the spring of 2024. Significantly, Stewart
offered no evidence of any of its own negotiations with Carr Riggs—indeed, Carr
Riggs’ approach to Sossaman in 2020 suggests Carr Riggs had decided years ago to
leave Heritage Plaza upon the expiration of its lease.
102. 	Sossaman’s testimony on this score is corroborated by records presented
at trial. In an email from Sossaman to Siegel dated May 26, 2022 (approximately two
weeks after Corporate Realty received the rent roll), Sossaman reported on his
discussion with Carr Riggs, noting that he had spoken to Carr Riggs’ broker and they
were “agreeable to starting process in about 90 days.” Sossaman further noted that
he was “[w]aiting for feedback on size, in 2020 they were 20k [rentable square foot],
curious to see how big now.” Sossaman’s reference to the size of Carr Riggs’ office
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footprint 	in 	2020 	supports 	Sossaman’s 	assertion 	that 	he 	already 	possessed
information about Carr Riggs and, more importantly, that he was already in
discussions with Carr Riggs’ broker in 2020.
103. 	Moreover, in a memorandum to the Feils dated September 7, 2022,
proposing lease terms for Carr Riggs to move to Lakeway III, Sossaman noted that
Carr Riggs is “located at Heritage Plaza, expiring March 31, 2024, we toured them a
year ago, but their expiration date was too far out.” 211 Going by the date of the
memorandum, the Carr Riggs tour of Lakeway III would have occurred likely in 2021,
which is before Sossaman received the Heritage Plaza rent roll. This memorandum
supports Sossaman’s testimony that he had been attempting to lure Carr Riggs to the
Feil properties long before the Feils tasked him to do so in 2022.
104. 	Furthermore, Audubon’s broker, Martin Miller, contacted Sossaman
prior to May 2022, telling Sossaman that he would be sending an RFP (request for
proposal) when Audubon’s lease expiration date approached. Miller sent Sossaman
an email on March 13, 2023 seeking information about the availability of 35,000
square feet of office space, noting that Audubon’s lease was expiring in October 2024.
In response, Sossaman prepared a proposal, again using Lakeway’s standard rental
rate and using no information from the rent rolls. This time however, the negotiations
were not successful, with Audubon opting to renew at Heritage Plaza. Stewart fails
to show how, if at all, Sossaman used Heritage Plaza’s rent roll in its discussions with
211 111 Vets Exh. 33.
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Audubon, much less connect how Sossaman’s acquisition of the rent roll resulted in
Stewart’s decision to offer Audubon a discount in order to keep its tenant.
105. 	Stewart nonetheless contends that the emails between and among Feil
and Corporate Realty tell the true story of the value of the rent roll. Efforts to keep
the rent roll “confidential,” emails pressuring “King Siegel” to use the rent roll to
Feil’s advantage, and discussions of using the rent roll to “steal” a client all paint a
picture of Feil using unfair tactics to lure Stewart’s tenants. The value of the rent roll
information was corroborated by testimony of Sterbcow and Stone, describing the
rent roll as the “holy grail of information.”
106. 	To be sure, Feil’s conduct—sharing the rent roll and then placing
unyielding pressure on its brokers to use the rent roll to steal Stewart’s tenants—is
deserving of criticism. Competitor or not, Feil sought to exploit nonpublic information
that it obtained through Stewart’s good-faith attempt to sell the Building to Feil. Feil
betrayed Stewart in an effort to gain an upper hand in Metairie’s hard-nosed
commercial real estate market.
107. 	But a LUTPA violation is not triggered every time a company behaves
badly towards a competitor—or more to the point, every time a company attempts to
take advantage of a competitor through alleged deceptive practices. To recover under
LUTPA, a plaintiff must show an “ascertainable loss” that is a “result of the use or
employment” of the unfair or deceptive practice. LA. STAT. ANN . § 51:1409 (emphasis
added). If the plaintiff cannot show that the unfair practice impacted the plaintiff and
caused a loss, the LUTPA claim cannot succeed. See Redmellon, L.L.C v. Halum, No.
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2:23-CV-5754, 2025 WL 932397, at *16 (E.D. La. Mar. 27, 2025) (Guidry, J.), appeal
dismissed sub nom. Redmellon, L.L.C. v. 1001 Canal, L.L.C., No. 25-30256, 2025 WL
3002989 (5th Cir. June 6, 2025) (“When the conduct does not cause a loss of money or
property, there is no LUTPA claim.”); CheckPoint Fluidic Sys. Int’l, Ltd. v. Guccione,
No. CIV.A. 10-4505, 2011 WL 3268386, at *10 (E.D. La. July 28, 2011) (Vance, J.)
(dismissing LUTPA claims when plaintiffs fail to show the alleged improper conduct
resulted in actual loss of business or other identifiable damage).
108. 	As shown by the evidence, Feil’s aggressive attempts to steal Heritage
Plaza tenants for its own buildings were not unusual in the Metairie commercial real
estate market. Sossaman, an experienced broker, possessed the key information from
the rent roll before receiving it. Stewart presented no evidence that Corporate Realty
successfully used rent roll information to gain advantage over Heritage Plaza in the
leasing of its space. Legitimate competition for tenants, particularly Carr Riggs and
Audubon, is not evidence of a LUTPA violation.
109. 	Stewart points out that the timing of Feil’s decision to share the rent roll
is “damning,” considering it occurred at a time when Feil and Stewart were in
discussions for Feil to purchase Heritage Plaza. 212 It is clear that Feil sought to
squeeze Stewart by stealing Stewart’s tenants, driving up Stewart’s operating and
insurance costs, and making it difficult for Stewart to refinance its mortgage, all in
hopes of defaulting Stewart or, at worst, purchasing Heritage Plaza at a discount.
212 ECF No. 100 at 8.
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110. 	Regardless of its motivations, the Feil Organization did not breach the
lease when it defaulted Stewart. Stewart was in fact in violation of the lease for
failing to secure AOP coverage consistent with its obligations under Section 3(g). 111
Veterans was within its authority, under the terms of the lease, to default Stewart.
And while Feil violated its confidentiality agreement with Stewart by forwarding
Stewart’s rent roll to its brokers, Stewart has not shown that the rent roll caused
Stewart’s loss of Carr Riggs as a tenant or resulted in Stewart providing Audubon a
discount. For these reasons, Stewart has failed to prove its LUTPA claim by a
preponderance of the evidence.213
IV. 	CONCLUSION
The Federal Declaratory Judgment Act, 28 U.S.C. § 2201 and 28 U.S.C. § 2202,
permits a federal court, where jurisdiction exists over an actual controversy, to
“declare the rights and other legal relations of any interested party seeking such
declaration, whether or not further relief is or could be sought. Any such declaration
shall have the force and effect of a final judgment or decree and shall be reviewable
as such.”
The Court finds that Stewart is not entitled to the following declaratory
judgments as requested in its complaint:214
213 While this verdict does not call for the awarding of damages, the Court nonetheless finds
that treble damages would not have applied because the alleged unfair or deceptive practices outlined
in Stewart’s complaint, filed on June 15, 2023, occurred before 111 Veterans was put on notice by the
Attorney General via June 27, 2023 letter.
214 ECF No. 1.
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a. 	That the amount of insurance demanded by Ground Lessor is not
reasonably obtainable;
b. 	That 	the 	previous 	limits 	of 	insurance 	obtained 	by 	Stewart 	were
reasonably obtainable and did not result in a breach of the Ground Lease
because Stewart acted in good faith, obtained insurance that was
reasonably 	obtainable 	and 	economically 	sustainable 	and 	which
protected the interest of Ground Lessor;
c. 	That the failure to obtain the limits of insurance demanded by Ground
Lessor were not a breach and such limits were not enforceable and thus
as long as the prior limits are in place, Ground Lessor can take no action
to dissolve the Ground Lease, or evict or take other adverse action
against Stewart with regard to the insurance limits in Section 3(g) of
the Ground Lease;
d. 	By accepting the lower limits obtained by Stewart and not objecting for
several years, Ground Lessor is estopped from or has waived any
objection to the insurance limits obtained by Stewart and through its
course of conduct in not objecting as modified the Ground Lease;
e. 	That the added coverage acquired by Ground Lessee was unnecessary
and Stewart can terminate the policy at will and not be forced to
continue or to renew such added coverage in the future.
The Court finds that 111 Veterans is entitled to the following modified
declaratory judgments:
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a. 	The coverage limits of both the property policy that was in place as of
March 16, 2023 and the renewal (captive cell) policy that went into effect
on May 29, 2023 fail to provide loss limits for all-other-perils coverage
at the level required by Section 3(g) of the Fourth Amendment of Ground
Lease;
b. 	The Stewart Development Protected Cell policy put in place on May 29,
2023 does not remedy the coverage shortfalls of the primary policy
because it is a form of self-insurance and not coverage provided by a
financially sound and reputable insurer;
c. 	Even if the coverage limits and deductible cap required by Section 3(g)
of the Fourth Amendment of Ground Lease for non-flood property
insurance are conditioned by the phrase ‘if reasonably obtainable,’ such
coverage for all other perils was available on March 16, 2023 and May
29, 2023.
The Court finds that 111 Veterans is not entitled to the following declaratory
judgments as requested in its Answer and Counterclaim:
a. 	The coverage limits and deductible cap required by Section 3(g) of the
Fourth Amendment of Ground Lease for non-flood property insurance
are not conditioned or otherwise qualified by the phrase “if reasonably
available,” which applies only to Stewart’s obligations under Section 3(g)
with respect to flood insurance.
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Moreover, because Stewart has failed to establish by a preponderance of the
evidence that 111 Veterans committed a breach of contract or a LUTPA violation, the
Court finds that 111 Veterans is not liable to Stewart. Accordingly, the Court renders
judgment in favor of 111 Veterans.
New Orleans, Louisiana, this 31st day of March, 2026.
BRANDON S. LONG
UNITED STATES DISTRICT JUDGE
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