Charter v. Kearney (In re Colen)

516 B.R. 618
CourtUnited States Bankruptcy Court, D. Oregon
DecidedAugust 26, 2014
DocketBankruptcy No. 13-60563-tmr7; Adversary No. 13-6109-tmr
StatusPublished

This text of 516 B.R. 618 (Charter v. Kearney (In re Colen)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Charter v. Kearney (In re Colen), 516 B.R. 618 (Or. 2014).

Opinion

MEMORANDUM OPINION

THOMAS M. RENN, Bankruptcy Judge.

This matter comes before the Court on Defendants’ motion for partial summary judgment.

Procedural History:

Gerald and Paula Colen (Debtors) filed a Chapter 7 petition on February 27, 2013. Trustee Joseph Charter filed the instant adversary proceeding on August 20, 2013. After an unopposed motion, and order entered thereon, he filed an Amended Complaint against Kearney Holdings, LLC (Holdings) and Ken Kearney (Kearney). The Amended Complaint asserts three (3) Claims for Relief. The First Claim is to avoid the transfer of a 1999 Avion 5th Wheel trailer as actually and constructively fraudulent under 11 USC §§ 548 and 550. The Second Claim is to recover a $5,000 “non-refundable move in fee” under the Oregon Residential Landlord and Tenant Act (ORLTA). The Third Claim is for a declaration that, except for the unenforceable fee provision, a ten (10) year lease of a 1998 Fleetwood manufactured home (the Fleetwood) between Debtors and Defendants, is valid and enforceable.

Defendants answered, denying the material allegations and alleging nine (9) affirmative defenses. They also filed a Counterclaim for attorney fees incurred in defending against the Second and Third Claims. Plaintiff replied to the Counterclaim denying the material allegations.

[621]*621At a January 30, 2014, pre-trial conference, the parties agreed the Court has jurisdiction and may enter a final judgment on all claims herein. There was a colloquy as to whether Plaintiff needed to join Debtors as defendants on his Third Claim. The parties were given twenty-one (21) days to submit a stipulation or some other document regarding case status.

On February 28, 2014, a stipulated order was entered, wherein the parties consented to the Court entering a final judgment on all claims. The stipulated order contains a “core” finding. It dismisses the Third Claim, and in light thereof, provides that Defendants’ fourth [sic] affirmative defense is rendered moot.1

After a failed settlement conference, Defendants filed the instant motion, seeking summary judgment on Plaintiffs Second Claim and on their Counterclaim. The motion is supported by a memorandum, concise statement of material facts, and a Declaration by Ken Kearney, with attached exhibits.2 Plaintiff responded to the motion.3 Defendants replied. No party has requested oral argument. The motion is ripe for decision.

Facts:

Kearney is Holding’s sole member and manager. On March 16, 2012, Debtors signed at least two documents. One was a lease of the Fleetwood, with Holdings as landlord and Debtors as tenants (Lease). The other was a “Lease to Purchase Option Agreement” (Option).

The Lease was for a ten (10) year term beginning April 1, 2012. It provided under the heading “Rent”:4

The total lease due for the term hereof is the sum of 120 consecutive monthly timely lease installments of $200.00 DOLLARS ($24,000.00) plus a $5,000.000 nonrefundable move in fee payable on signing, for a total lease amount of ($29,000.00) payable on the 1st day of each month of the term after receiving the nonrefundable move in fee of $5,000.00, [i]n equal consecutive monthly lease installments of $200.00 DOLLARS per month, first installments [sic] to be paid upon execution of this Agreement, the second installment to be paid on May [ ] 1st., 2012.

Ex. D-2 at p. 3 (underlined emphasis in original; bolded emphasis added). The Lease did not otherwise describe the “nonrefundable move in fee.” It contained an integration clause. Ex. D-2 at p. 9. It also included an attorney fee clause. Ex. D-2 at p. 8. Under the heading “ADDITIONAL PROVISIONS; DISCLOSURES,” it listed various documents, including the Option. Ex. D-2 at p. 10.

The Option allowed Debtors to purchase the Fleetwood at the end of the lease term (between March 1, 2022 and April 30, 2022) for $12,500. Ex. D-3 at pp. 1-2. The consideration for the option to purchase [622]*622was described as “a non-refundable fee of $5,000.00” Ex. D-3 at p. 1 (emphasis added). If Debtors timely exercised the option, they would be entitled to a credit of $62.50 for every timely lease payment (120 x $62.50=$7,500) plus the $5,000 move-in fee, against the $12,500 purchase price.5 The Option further provided that if Debtors accept the Option and “pay[ ] all lease/ rent payments on the first of the month due and no late fees are assessed ... [they] shall pay a total lease of $29,000.00,” and that if Debtors accept by signing the Option, they agree to pay the $29,000.00 by first making a “$5,000.00 nonrefundable move in fee payment” and then the 120 monthly $200 payments. Ex. D-3 at p. 2 (emphasis added). It provided that upon default, Holdings may terminate the Option, and, if terminated, Debtors “shall lose entitlement to any refund of the [monthly] installments or nonrefundable move in fee.” Ex. D-3 at p. 3. Like the Lease, it contained an integration clause. Ex. D-3 at p. 4.

Debtors paid the $5,000 to Holdings by check on March 30, 2012, indicating “move in fee” on the check’s memo line. Kear-ney, on behalf of Holdings, then accepted the terms of the Lease and Option. In and around April 1, 2012, Debtors moved into the Fleetwood.

As noted above, on February 27, 2013, Debtors filed their Chapter 7 petition. On their § 521 statement of intention, they listed the Lease and indicated an intent to assume it under § 365(p)(2). On Schedule G, they listed a “10 year lease with option to buy.” On Schedule B, they listed a “deposit” with “Kearney Holdings LLC,” owned jointly with a value of $5,000. On Schedule C, Debtor Gerald Colen claimed $2,250 and Debtor Paula Colen claimed $2,750 of the deposit exempt under ORS 18.395 (the Oregon homestead exemption). On April 10, 2013, Debtors amended Schedule C to exempt a “security deposit” of $2,500 each, again under the Oregon homestead exemption (emphasis added). No party in interest objected to either the original or amended exemption claims.

Debtors timely paid their $200 monthly lease payments until they moved out of the Fleetwood on March 21, 2014.

Summary Judgment Standards:

On a motion for summary judgment, the moving party has the burden to show “that there is no genuine dispute as to any material fact and ... [he] is entitled to judgment as a matter of law.” FRCP 56(a) (made applicable by FRBP 7056). The substantive law governing a claim or defense determines whether a fact is material. T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 (9th Cir.1987). Material facts are such facts as might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). “A dispute about a material fact is genuine only ‘if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.’ ” Freecycle-Sunnyvale v. Freecycle Network,

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Cite This Page — Counsel Stack

Bluebook (online)
516 B.R. 618, Counsel Stack Legal Research, https://law.counselstack.com/opinion/charter-v-kearney-in-re-colen-orb-2014.