Justia Landlord - Tenant Opinion Summaries
Articles Posted in Bankruptcy
Lariat Companies, Inc. v. Wigley
The Eighth Circuit affirmed the bankruptcy appellate panel's decision affirming the bankruptcy court's determination that debtor's debt to Lariat is excepted from discharge because it was obtained by actual fraud. The court explained that, although Lariat's claim was partially disallowed against debtor's bankruptcy estate under 11 U.S.C. 502(b)(6), the landlord cap does not foreclose Lariat's argument that the claim should be excepted from discharge under section 523(a)(2)(A). Therefore, Lariat's claim is excepted from discharge under section 523(a)(2)(A) to the extent that it was obtained by actual fraud. In this case, the bankruptcy court did not clearly err in finding that debtor had received a fraudulent transfer from her husband, and the record supports the bankruptcy court's finding that debtor participated in the scheme with the requisite wrongful intent. View "Lariat Companies, Inc. v. Wigley" on Justia Law
Revel AC Inc v. IDEA Boardwalk, LLC
When Revel entered Chapter 11 bankruptcy, its tenant, IDEA, continued to operate nightclubs and a beach club on Revel's Atlantic City casino premises. IDEA sought to protect its right to continue operating by filing an adversary proceeding. Polo became the defendant in the proceeding (and IDEA’s landlord) when the court approved a Purchase Agreement. The Sale Order authorized Polo’s purchase of Revel’s assets “free and clear of all liens, claims, encumbrances and other interests of any kind” under 11 U.S.C. 363(f). The Order contained carve-out provisions that expressly preserved certain rights relating to IDEA’s continued use of the casino premises under the Lease. After entering the Order, the Bankruptcy Court granted Revel’s long-pending motion to reject the Lease retroactively. IDEA filed a notice of its election to retain its rights as a tenant under section 365(h), as expressly allowed by the Sale Order. In an omnibus order, the Bankruptcy Court clarified major aspects of the post-petition landlord–tenant relationship between IDEA and Polo. The Third Circuit affirmed the Bankruptcy Court and the district court. IDEA is permitted to reduce its rental obligations under a tenant-protective provision, 11 U.S.C. 365(h), the Lease, and the doctrine of equitable recoupment, regardless whether its rights arose before or after Revel filed for bankruptcy and regardless whether they arose before or after Revel rejected the Lease. View "Revel AC Inc v. IDEA Boardwalk, LLC" on Justia Law
In re: Lansaw
The Lansaws operated a daycare in space leased from Zokaites. After they entered into a new lease with a different landlord, but before they moved, Zokaites served them with a Notice for Distraint, claiming a lien against personal property for unpaid rent. The following day, the Lansaws filed for bankruptcy, triggering the automatic stay, 11 U.S.C. 362(a). Zokaites’s attorney was notified of the filing on August 17, 2006. On August 21, Zokaites and his attorney entered the daycare during business hours, by following a parent, and photographed the Lansaws’ personal property. On August 27, Zokaites entered after business hours, using his key, then padlocked the doors, leaving a note stating that Zokaites would not unchain the doors unless Mrs. Lansaw’s mother agreed that she had not been assaulted by Zokaites, the Lansaws reaffirmed their lease with Zokaites, and the Lansaws ceased removing property from the daycare. The Lansaws removed the chains and slept in the building. Zokaites locked the door from the outside and left with the Lansaws’ keys. The Lansaws called the police. Meanwhile, Zokaites attorney communicated by phone and letter with the new landlord, stating that, if the new lease was not terminated, Zokaites would sue the new landlord. In an adversary proceeding, the Bankruptcy Court awarded the Lansaws attorney fees ($2,600), emotional-distress damages ($7,500) and punitive damages ($40,000) under 11 U.S.C. 362(k)(1). The district court and Third Circuit affirmed. Section 362(k)(1) authorizes the award of emotional-distress damages; the Lansaws presented sufficient evidence to support the award. View "In re: Lansaw" on Justia Law
Liebzeit v. Intercity State Bank, FSB
The Blanchards agreed to sell Marathon County property to the Hoffmans, who paid $30,000 up front. The land contract balance was due in 2015, with an option to close early by paying off the Blanchards’ new $142,000 mortgage, obtained as part of the agreement. The parties signed a separate “rental agreement,” under which the Hoffmans paid $500 per month. The land contract was not recorded. The lender obtained an Assignment of Leases and Rents as collateral, but did not obtain an Assignment of Land Contract. The bank recorded its mortgage and the Assignment. In 2014, the Blanchards filed a bankruptcy petition. The trustee filed an adversary proceeding against the lender under 11 U.S.C. 544(a)(3), which grants him the position of a bona fide purchaser of property as of the date of the bankruptcy, to step ahead of the mortgage and use the Blanchards’ interest in the land contract for the benefit of unsecured creditors. The trustee argued that a mortgage can attach a lien only to real property and that the Blanchards' interest under the land contract was personal property. The district court affirmed summary judgment in favor of the bank. The Seventh Circuit affirmed. A mortgage can attach a lien to a vendor’s interest in a land contract under Wisconsin law; this lender perfected its lien by recording in county land records rather than under UCC Article 9. View "Liebzeit v. Intercity State Bank, FSB" on Justia Law
In re: Great Lakes Quick Lube, LP
Great Lakes, which automotive service stores throughout the Midwest, filed for Chapter 11 bankruptcy. The unsecured creditors’ committee filed an adversary action against T.D., which had leased two oil-change stores to Great Lakes. Great Lakes had negotiated the termination of the leases 52 days before it declared bankruptcy, and the creditors’ committee contends that the termination was either a preferential (11U.S.C. 547(b)) or a fraudulent (11 U.S.C. 548(A)(1)) transfer of the leases to T.D. The bankruptcy judge rejected that claim. The Seventh Circuit reversed and remanded for determination of the value of Great Lakes’ transfer to T.D. and whether T.D. has any defenses to the creditors’ claims. View "In re: Great Lakes Quick Lube, LP" on Justia Law
In re: Revel AC Inc
Revel opened an Atlantic City resort-casino, costing $2.4 billion. Revel entered into a 10-year lease with IDEA to run two nightclubs and a beach club. IDEA contributed $16 million of the projected cost of construction in addition to monthly rental payments. The Casino did not turn a profit. Revel filed a “Chapter 22” bankruptcy, seeking permission to sell its assets free of all liens and interests (including leases). The Bankruptcy Court approved and set an auction date. IDEA, concerned that the proposed sale would eliminate the value of its lease notwithstanding its $16 million investment, filed objections. No qualified buyer appeared. The court postponed the auction. A month later, Revel closed the Casino’s doors and barred tenants, IDEA gave notice that it intended to continue operating its beach club and nightclub and expected Revel to honor its obligations to provide uninterrupted utility service. In the meantime Polo agreed to buy the Casino for $90 million. Days before the sale hearing, Revel replied to IDEA’s objections. IDEA appealed an unfavorable order and sought a stay pending appeal, noting that, if the decision were not stayed, its appeal would be moot under 11 U.S.C. 363(m) once the sale closed. The district court denied the motion. The Third Circuit reversed, staying that part of the order that allowed Revel to sell the Casino free of IDEA’s lease. View "In re: Revel AC Inc" on Justia Law
Santiago-Monteverde v. Pereira
Debtor, a New York City tenant, filed for Chapter 7 bankruptcy and listed the value of her apartment lease on Schedule B as personal property exempt from the bankruptcy estate as a "local public assistance benefit." At issue was whether the value inherent in debtor's rent-stabilized lease as a consequence of the protections afforded by New York's Rent Stabilization Code, N.Y. Comp. Code R. & Regs. tit. 9, 2520.1, made the lease, or some portion of its value, exempt from debtor's bankruptcy estate as a "local public assistance benefit" within the meaning of New York Debtor and Creditor Law 282(2). The court certified this unsettled issue to the New York Court of Appeals, which held that a rent‐stabilized lease qualified as a local public assistance benefit. Rejecting the Trustee’s argument that “benefits” should be limited to cash payments, the court noted that the rent‐stabilization program had “all of the characteristics of a local 10 public assistance benefit” under the statute and that an exemption was consistent with the purpose of protecting a debtor’s essential needs, including housing. The Second Circuit then reversed and remanded to allow Debtor to claim the exemption from her bankruptcy estate. View "Santiago-Monteverde v. Pereira" on Justia Law
Getty Props. Corp. v. ATKR, LLC
Getty Properties Corp. leased certain properties to Getty Petroleum Marketing, Inc. by way of a master lease. Getty Marketing sublet the properties to Green Valley Oil, LLC. Thereafter, Green Valley entered into an individual sub-sublease with each Defendant, the owners of retail gasoline stations. Getty Properties subsequently terminated the master lease. Getty Marketing then filed for bankruptcy. The bankruptcy court rejected the master lease and ordered that Getty Marketing relinquish possession of the properties to Getty Properties. Getty Properties and NECG Holdings Corp. served Defendants with notices to quit, but Defendants refused to vacate the properties. Plaintiffs subsequently commenced summary process actions against Defendants. The trial court rendered judgment of immediate possession for Plaintiffs. The Supreme Court affirmed, holding that the trial court did not err in (1) determining that Plaintiffs’ notices to quit were valid; (2) admitting into evidence the lease between Getty Properties and Getty Marketing, as well as the sublease between Getty Marketing and Green Valley; (3) interpreting the various pleadings in Getty Marketing’s bankruptcy case as terminating the lease and the sublease; (4) finding that Plaintiffs proved a prima facie case for summary process; and (5) failing to dismiss the summary process action as premature. View "Getty Props. Corp. v. ATKR, LLC" on Justia Law
Santiago-Monteverde v. Pereira
Debtor, a New York City tenant, filed for Chapter 7 bankruptcy and listed the value of her apartment lease on Schedule B as personal property exempt from the bankruptcy estate as a "local public assistance benefit." At issue was whether the value inherent in debtor's rent-stabilized lease as a consequence of the protections afforded by New York's Rent Stabilization Code, N.Y. Comp. Code R. & Regs. tit. 9, 2520.1 et seq., made the lease, or some portion of its value, exempt from debtor's bankruptcy estate as a "local public assistance benefit" within the meaning of New York Debtor and Creditor Law 282(2). The court certified this unsettled issue to the New York Court of Appeals. View "Santiago-Monteverde v. Pereira" on Justia Law
Harrison Kishwaukee, LLC v. Rockford Acquisition, LLC
The Debtor leased a building and, during liquidation in bankruptcy, assumed the lease, 11 U.S.C. 365, and sold the leasehold interest (and other assets) to Tenant. The bankruptcy judge approved the transaction in 2007, after Landlord did not object to the Debtor’s assertion that Landlord did not have any outstanding claim against the Debtor. The approval barred any claims based on pre‐sale events. The lease requires Tenant to maintain the roof. In 2010 the Landlord sued Tenant in state court, based on that obligation. By motion in the closed bankruptcy proceeding, Tenant asked the bankruptcy court to interpret the 2007 order as blocking the claim. The bankruptcy judge concluded that the order did not affect continuing obligations such as the duty to keep leased premises in good repair; Landlord requested a prospective remedy, not damages. The district court disagreed, ruling that Landlord can enforce the good‐repair clause only to the extent that defects in the roof first occurred after the lease’s assumption in bankruptcy. The Sixth Circuit dismissed an appeal for lack of jurisdiction, because the district court did not enter an injunction. The court expressed hope that the bankruptcy judge or the district judge will attend to several issues inherent in both opinions. View "Harrison Kishwaukee, LLC v. Rockford Acquisition, LLC" on Justia Law