In re Roberson

Case Type:
Case Status:
17-8041 (6th Circuit, May 30,2019) Not Published
In an opinion designated as precedential only to the parties, the Sixth Circuit Bankruptcy Appellate Panel (BAP) affirmed the Bankruptcy Court ruling that a landlord's claim for residential rent after rejection but prior to vacating the property was discharged because rejection of the lease did not terminate it. Thus, the debtors were not holdover tenants under Ohio law. The BAP relied upon Mission Prod. Holdings, Inc. v. Tempnology, LLC, 587 U.S. ___, 2019 WL 2166392 for the proposition that rejection was a breach, not termination of a lease.
Procedural context:
Landlord appealed from a bankruptcy court ruling that post-petition rent accruing after rejection of its lease was discharged, and could not be used to set-off an award of sanctions against the landlord for violation of the automatic stay.
The Robersons entered into a residential lease with GCB Properties III, Ltd. which ran through calendar year 2016. They apparently fell behind on rent and were given a "Notice to Leave Premises" in February, 2016. The Roberson's filed a chapter 7 on April 1, 2016, listed the lease on Schedule G, and indicated they did not intent to assume it. Nor did the trustee assume the lease. The Robersons received a discharge on July 13, 2016. In the meantime, the landlord continued efforts to get the Robersons to vacate the property, resulting in a motion for sanctions for violation of the automatic stay. The Robersons moved from the property by the end of September, 2016, and in November, 2016, the bankruptcy court found a willful violation of the stay and awarded $1,680 in damages/attorney fees. The landlord did not appeal, but informed Roberson's counsel that it was setting off the award against unpaid post-petition rent. The Robersons filed a show cause motion which the bankruptcy court denied as the sanctions ruling did not address the issue of set off. The Robersons then filed a motion to amend the sanctions order, which the bankruptcy court did, holding that the landlord's post-petition claim was discharged, eliminating any potential right of set off.
Buchanan, Dales and Humphrey, opinion by Buchanan

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