SOURCE: Phoenix Associates Land Syndicate

September 18, 2007 03:00 ET

Phoenix Associates Updates on Appeal Court Case

Decision Relates to the Company's Lease of the Pearl River, Louisiana Sand & Gravel Mine Property; Phoenix to Apply for Re-Hearing; Issue to Be Resolved in the Court of Appeal or Thereafter in the Supreme Court of Louisiana

MADISONVILLE, LA--(Marketwire - September 18, 2007) - Phoenix Associates Land Syndicate (Phoenix) (PINKSHEETS: PBLS) announced today that it was surprised by the unexpected and extremely fast decision rendered by the First Circuit Court of Appeal on September 14, 2007, which upheld the trial court's summary judgment (that is, without trial) that declared the Operation Agreement between Phoenix and Pontchartrain Materials Corporation in 2004 was a sub-lease. A sub-lease, which if it was a sub-lease, was not permitted in the lease between Phoenix, as the lessee, and E.H. Mitchell & Co., L.L.C., as the lessor. Since the Operating Agreement was declared a sub-lease, the trial court ruled that it violated the lease and terminated the lease immediately.

The decision of the First Circuit Court of Appeal as to the sub-lease relied on many facts which were not factually correct and/or which were not admitted into evidence for the Court to consider in rendering its decision. The court of appeal also did not consider the statements made by counsel for E. H. Mitchell & Co., L.L.C. in prior proceedings before the trial court that the Operating Agreement are "inherently and internally inconsistent." The Louisiana Supreme Court, in its 1981 case of Dixie Campers, Inc. vs. Vesely Co., 398 So.2d 1087, held that parole evidence at a trial should be considered in an internally inconsistent contract to determine the subjective intention of the parties at the inception of the contract and the actual business practices under the agreement and that summary judgment is unavailable on this issue. The court of appeal did not consider the Supreme Court case in making its decision.

However, most importantly, the Court reserves only one sentence in the last paragraph at the end of its decision, to declare that the sub-lease terminated the entire lease. The Court cited no cases or state statutes to support this conclusion. The Court of Appeal did not consider its own decision rendered in 1995 in the case of I P Timberlands Operating Co., Ltd. vs. Denmiss Corp. So.2d 282, which prohibited the trial court from rendering a summary judgment regarding the termination of a lease, without oral testimony, which the court did in this case. The Court must conduct a multi-factor analysis in cases seeking lease termination. As reflected in both the record before the trial court and the one sentence in the last paragraph of the decision of the Court of Appeal, neither the trial court nor the appeal court conducted this analysis.

Paul Alonzo, President and CEO of Phoenix, stated, "Our attorney has recommended that we apply to the Court of Appeal for a re-hearing, citing the factual discrepancies and request them to consider the I P Timberlands and Dixie Campers cases before terminating the entire lease. We are following their advice. While we are disappointed in the decision, we remain confident that our position is supported by the law and that Phoenix will prevail in the long run, keeping in mind that Phoenix instituted this law suit in June 2003 for damages against E. H. Mitchell & Co., L.L.C. for contract interference and harassment and this is only a part of the skirmish between Phoenix and E. H. Mitchell & Co., L.L.C."

Mr. Alonzo added, "The issues between our Company and E. H. Mitchell & Co., L.L.C. will still be tried before a jury after this issue is resolved in the Court of Appeal or thereafter in the Supreme Court."

About Phoenix Associates

Phoenix Associates Land Syndicate is a holding company with assets in aviation, sand & gravel, soil products, land development, oil and natural gas, commodity brokering, plumbing, trucking, contract hauling, construction, swimming pool construction and construction related industries.

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