Bennett v. Saint Stephen Terrace Apartments

211 B.R. 265, 1997 U.S. Dist. LEXIS 11864, 1997 WL 453572
CourtDistrict Court, N.D. Illinois
DecidedAugust 6, 1997
DocketNo. 96 C 8125
StatusPublished

This text of 211 B.R. 265 (Bennett v. Saint Stephen Terrace Apartments) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bennett v. Saint Stephen Terrace Apartments, 211 B.R. 265, 1997 U.S. Dist. LEXIS 11864, 1997 WL 453572 (N.D. Ill. 1997).

Opinion

REVISED MEMORANDUM OPINION AND ORDER1

GETTLEMAN, District Judge.

Appellant Shirley Ann Bennett has filed a notice of appeal from a final order issued by the bankruptcy court granting relief to appellee St. Stephen Terrace Apartments from the automatic stay, pursuant to 11 U.S.C. § 362. There is no stay pending appeal. For the reasons set forth below, the bankruptcy court’s decision is reversed and the case is remanded to the bankruptcy court for determination consistent with this opinion.

BACKGROUND

For the past eight years, appellant has been a resident in a townhouse located at 319 South Western Avenue, Chicago, Illinois (“the Premises”). Her written lease with appellee was automatically renewed at the beginning of every month unless terminated for cause. Appellant’s tenancy was subsidized by the United States Department of Housing and Urban Development (“HUD”) through its Section 8 Loan Management Set-Aside Program. Through that program, appellant paid a portion of the market rent to appellee and the balance was paid to appellee by HUD.

Appellant’s portion of the rent payment for May 1996 was due on May 1, 1996, in the amount of $335. On May 6, 1996, after appellant did not pay the rent due, appellee served appellant with a written demand for payment within five days. Appellant did not comply with this demand. On May 20, 1996, -appellee filed a forcible entry and detainer action in the Circuit Court of Cook County against appellant, demanding possession of the Premises and $335 in rent. It is unclear from the parties’ briefs whether appellant continues to live at the Premises during this appeal.

On August 18, 1996 — prior to the entry of a judgment in the forcible entry and detainer action — appellant filed a petition for Chapter 13 bankruptcy relief under 11 U.S.C. § 1321. Pursuant to 11 U.S.C. § 362, the automatic stay provisions of the Bankruptcy Code bar a landlord’s commencement or continuation of state eviction proceedings against a tenant that was or could have been filed pre-petition. Subsequently, on September 5, 1996, appellee filed a motion for relief from the automatic stay, which was barring the continuation of the eviction action. On October 28, 1996, Bankruptcy Judge Ronald Barliant issued a written order granting appellee relief from the automatic stay, and consolidated the instant action with a similar case before him, In re Williams, 201 B.R. 948 (1996) (“Williams I”).

In Williams I, Judge Barliant held that the debtor’s lease terminated upon expiration of the notice period or, at the latest, it terminated when the landlord filed the forcible entry and detainer complaint. Id. at 953. In either situation, the court held that she had no interest in the lease that could be assumed under § 365 of the Bankruptcy Code. Further, Judge Barliant stated that the court’s equitable powers under § 105 of the Bankruptcy Code may not be used to override explicit mandates of other sections of the Code, such as § 365, which requires a lease to be unexpired for a trustee to assume it. Id. at fn. 6.

Appellant asks this court to reverse Judge Barliant’s decision, as Judge Conlon recently did on appeal of Williams I (Williams v. Chicago Housing Authority, 207 B.R. 874 (N.D.Ill.1997) (“Williams II”)). Appellant argues that her lease does not terminate until a judgment of possession in the forcible action is entered and claims that her trustee [267]*267has the option of assuming the lease pursuant to 11 U.S.C. § 1322(b)(7). That provision provides that the debtor’s plan may “provide for the assumption ... of any executory contract or unexpired lease of the debtor.” This court agrees that the lease had not expired prior to the Chapter 13 bankruptcy filing, and appellant’s trustee may therefore assume it. Accordingly, the bankruptcy court’s ruling giving appellee relief from the automatic stay is reversed and appellant’s trustee may assume the lease.

STANDARD OF REVIEW

This appeal is from a final order of the bankruptcy court granting relief from the automatic stay. This court has jurisdiction pursuant to 28 U.S.C. § 158(a). The bankruptcy court’s findings of fact should not be set aside unless clearly erroneous. Fed. R.Civ.P. 52(a); Fed. R. Bankr.P. 8013. The court’s conclusions of law, however, are reviewed de novo. Matter of U.N.R. Industries, Inc., 986 F.2d 207 (7th Cir.1993). Since there were no factual disputes before the court in this case, the standard of review is de novo.

DISCUSSION

Appellant argues that her lease may be assumed by the bankruptcy trustee under 11 U.S.C. § 365(a), which states that “the trustee ... may assume or reject any executory contract or unexpired lease of the debtor.” When a debtor files for bankruptcy, her possible interest in such an unexpired lease is protected by the automatic stay under 11 U.S.C. § 362. Robinson v. Chicago Housing Authority, 54 F.3d 316 (7th Cir.1995). This stay prevents a landlord from initiating or pursuing claims against the debtor that were or could have been filed pre-petition, including state eviction proceedings. Id. at 317. A landlord may file for relief from the stay, however, if the debtor did not have a valid interest in the leasehold prior to filing. Id. Thus, if a tenant’s lease is not terminated prior to the day on which she files her bankruptcy petition, the landlord may not pursue eviction proceedings and the lease can be assumed by the bankruptcy trustee.

The critical question before the court, therefore, is whether appellant’s lease terminated prior to the filing of her petition in bankruptcy. The Illinois Forcible Entry and Detainer statute, 735 ILCS 5/9-208, provides:

Demand for rent — Action for possession. A landlord or his or her agent may, any time after rent is due, demand payment thereof and notify the tenant, in writing, that unless payment is made within a time mentioned in such notice, not less than 5 days after service thereof, the lease will be terminated. If the tenant does not within the time mentioned in such notice, pay the rent due, the landlord may consider the lease ended, and sue for the possession under the statute in relation to forcible entry and detainer, or maintain ejectment without further notice or demand.

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Related

Williams v. Chicago Housing Authority
207 B.R. 874 (N.D. Illinois, 1997)
Chart House, Inc. v. Maxwell (In Re Maxwell)
40 B.R. 231 (N.D. Illinois, 1984)
Cunningham v. Lifelink Corp.
159 B.R. 230 (N.D. Illinois, 1993)
In Re Williams
201 B.R. 948 (N.D. Illinois, 1996)
Elliott v. L R S L Enterprises, Inc.
589 N.E.2d 1074 (Appellate Court of Illinois, 1992)
Drew v. Mosbarger
104 Ill. App. 635 (Appellate Court of Illinois, 1902)
Jefferys v. Hart
197 Ill. App. 514 (Appellate Court of Illinois, 1916)
Bolen v. Central Illinois Public Service Co.
237 Ill. App. 226 (Appellate Court of Illinois, 1925)

Cite This Page — Counsel Stack

Bluebook (online)
211 B.R. 265, 1997 U.S. Dist. LEXIS 11864, 1997 WL 453572, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bennett-v-saint-stephen-terrace-apartments-ilnd-1997.