Court: United States Bankruptcy Court, S.D. Florida.; October 19, 1981; Us Bankruptcy; United States Bankruptcy Court
Hobart Corporation initiated an adversary proceeding against the debtor, the trustee William Roemelmeyer, and landlord Wilbur Kohn for the turnover of equipment unpaid for by the debtor. Before trial, Hobart's issues were resolved. Landlord Kohn filed a cross-claim against Roemelmeyer for administrative rent covering September 29, 1980, to January 31, 1981, following the conversion of the case from Chapter 11 to Chapter 7 on September 29, 1980. Kohn had entered into a new lease with Entrees, Internationale, Inc. starting February 1, 1981.
The trustee had previously filed a counterclaim against Kohn but was allowed to dismiss it before trial. The trial on the landlord's cross-claim and the trustee's response occurred on July 28, 1981. The debtor had occupied the premises under a lease from November 1973, which was for ten years at $335 per month, despite no formal assignment to Marcella’s Pasta Fresca, Inc. Defaults in rent led to eviction proceedings in June 1979, resolved by a new rental arrangement where the tenant agreed to pay $2,600 per month. However, the tenant failed to meet these payments, prompting Kohn to issue a fifteen-day notice of termination on December 14, 1979. Following this, Kohn notified Marcella’s Pasta Fresca, Inc. that occupancy after December 31, 1979, would incur a weekly rent of $1,200. In January 1980, new officers for the debtor attempted to operate while negotiating rent payments, which fluctuated from $650 to $350 per week based on what the debtor claimed it could afford.
The debtor occupied the premises until filing for Chapter 11 on April 28, 1980, and continued as debtor-in-possession until a trustee, William Roemelmeyer, was appointed on September 29, 1980. On September 6, 1980, Wilbur Kohn and Kevin J. McKeon entered into a “letter of general understanding,” allowing McKeon to use the premises while anticipating a formal lease. McKeon used the premises from September 21, 1980, to January 1981 and paid Kohn $350 per week during this time. The corporation Entrees, Internationale, Inc. was formed by McKeon and entered into a lease on January 20, 1981.
The landlord claims entitlement to administrative rent, arguing that it should be the difference between the rental value of the premises, asserted at $5,000 per month, and the rent collected from McKeon. The trustee contends the rental value should align with the payments made by McKeon. Kohn indicated he sought $3,000 to $4,000 monthly rent but had no other offers. The landlord argued he couldn't re-rent until debtor's equipment was removed, but the court noted that the understanding with McKeon was made while much equipment remained.
The court determined that the rental value from September 29, 1980, to January 31, 1981, was $350 per month, supported by the lease with Entrees. The landlord's claims of higher rental values were undermined by his inability to evict the debtor despite defaults. Additionally, the court rejected the landlord's argument that additional consideration from Entrees should increase the rental value, concluding that the use granted was superior to that of the debtor. Ultimately, the landlord collected over $4,200 from McKeon, and the court imputed $1,400 for the four-month occupancy, concluding that the trustee owes nothing for administrative rent. A final judgment will be entered in accordance with these findings.
