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Joseph Hill v. Raquel King

Summarizing by J Newman

Diatom, LLC v. Committee of Creditors Holding (In re Gentile Family Indust)

Citation:
Ninth Circuit Bankruptcy Appellate Panel, No. CC-13-1563-KiTaD (August 19, 2014)
Tag(s):
Ruling:
Determining the term of a lease at a hearing on a motion to assume the lease, as opposed to requiring a separate adversary proceeding, was harmless error because the parties fully briefed the issue and were given ample time to argue the issue at the hearing.
Procedural context:
Appeal from order granting motion to assume unexpired lease.
Facts:
The Debtor filed a motion pursuant to section 365 to assume a ground lease with Diatom. The Debtor argued that it was in year 7 of a 10 year lease. Diatom objected, arguing that the Debtor never gave written notice of its intent to renew the lease after year 5, so the Debtor was on a month to month. At the hearing on the motion to assume, the bankruptcy court agreed with the Debtor and made a finding that the lease had been extended for the additional 5 year term. Diatom appealed, arguing that a motion to assume is a summary proceeding limited in nature, and that the determination of the lease term had to be made in an unlawful detainer action in state court or an adversary proceeding for declaratory relief. The BAP agreed that determination of the validity of a contract requires an adversary proceeding as opposed to a summary proceeding. Without deciding the issue, the BAP speculated that determining the term of a lease may require an adversary proceeding. However, even if the bankruptcy court erred, the error was harmless, because Diatom received adequate notice that the issue would be raised at the assumption hearing, the parties fully briefed the issue, Diatom was given ample time to argue the issue at the hearing, and the issues in dispute were primarily legal and not factual.
Judge(s):
Kirscher, Taylor and Dunn

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