Deasy v. Dernham Co. (In Re Blondheim Modular Manufacturing, Inc.)

65 B.R. 856, 1986 Bankr. LEXIS 5218
CourtUnited States Bankruptcy Court, D. New Hampshire
DecidedSeptember 30, 1986
Docket19-10211
StatusPublished
Cited by2 cases

This text of 65 B.R. 856 (Deasy v. Dernham Co. (In Re Blondheim Modular Manufacturing, Inc.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. New Hampshire primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Deasy v. Dernham Co. (In Re Blondheim Modular Manufacturing, Inc.), 65 B.R. 856, 1986 Bankr. LEXIS 5218 (N.H. 1986).

Opinion

MEMORANDUM OPINION

JAMES E. YACOS, Bankruptcy Judge.

This matter was tried before the court on the Trustee’s Motion to Determine Claim of Dernham Company and to Order Other Relief, as amended, and Dernham Company’s answer thereto. Subsequently, both the Chapter 11 trustee and the Dernham Company provided this court with memoranda in support of their respective positions and the unsecured creditors’ committee also filed a response. The dispute basically involves damage claims by the debtor’s lessor, Dernham Company, relating to the termination of the lease for nonpayment of rent commencing January 1, 1985. The lessor was subsequently able to close a sale of the property in question, on May 13, 1985, for a purchase price of $1,287,500.00.

As a result of the debtor’s default and the subsequent termination of the Lease, the lessor seeks unpaid rent from the trustee from January 1, 1985 through May 13, 1985, less the amount of the security deposit and any payments made by the purchaser of the property from February 18, 1985 to May 13, 1985. The Creditor also seeks recovery of late charges at the annual rate of 60 percent, interest at the annual rate of 24 percent, and expenses of approximately $55,000.00, including a broker’s commission of $40,000.00 for the sale of the Premises. Finally, the Creditor seeks recovery of attorneys’ fees and expenses in an amount in excess of $23,000.00 for instituting .collection and eviction proceedings.

The trustee concedes an allowable rent claim from January 1, 1985 through February 18, 1985, in the amount of $26,285.65, together with miscellaneous charges and damages relating to the vacation of the premises in the amount of $1,900.98. The trustee disputes any allowance of a broker’s commission, relating to the sale of the premises, and any rent claim beyond February 18, 1985. The trustee then asserts that the total claim of $28,186.63 should be set off against the security deposit held by the lessor in the amount of $32,736.07, leaving a net amount due to the trustee of $4,549.44 from the security deposit. The trustee recognizes that the court may allow reasonable attorney’s fees and expenses to the lessor with regard to instituting the collection and eviction proceedings. Any such allowances could reduce and/or eliminate the amount due the trustee under his contention.

GENERAL FINDINGS

On May 22, 1985 Blondheim Modular Manufacturers, Inc., a New Hampshire corporation (“debtor”) filed with this court an original petition for relief pursuant to Chapter 11 of the United States Bankruptcy Code. On June 6, 1985, this court appointed J. Michael Deasy as trustee over the debtor and all assets of the debtor. Prior to his appointment as trustee, Mr. Deasy was the receiver of the debtor pursuant to an order of the Hillsborough County Superior Court on April 4, 1985.

On November 16,1984, Dernham Company, a New Hampshire general partnership, and Blondheim Modular Manufacturers, Inc., a New Hampshire corporation, entered into a lease for certain real property and buildings situated in Derry and Lon- *858 donderry, Rockingham County, New Hampshire. Pursuant to that lease, as of January 1, 1985 Dernham Company held a security deposit from the debtor in the amount of $32,736.07. On January 2, 1985, Blondheim failed to pay the rent due Dern-ham for the month of January.

Dernham made several demands for payment’of the rent due and on January 16, 1985 took the position that the lease had been terminated by default in payment of rent. Dernham proceeded immediately to telephone several brokers concerning the re-renting or sale of the property. However, no formal listing with any broker was made for sale or rent of the property by these informal contacts. One of the brokers contacted was Codman Company, Inc., a broker who had presented Merrimack Valley Wood Products, Inc. as a potential buyer for the premises in question to the Dernham Company in 1982 and 1983. Dernham proceeded forthwith to negotiate a sale of the property to Merrimack Valley as a result of those telephone contacts. I specifically find on the preponderance of the evidence that Dernham never listed the property for sale or rent with brokers, or if it did so any such effort was short-lived and in no event extended beyond the end of the month of January.

On February 2, 1985 the Dernham Company changed the locks on the premises and denied the debtor access to the premises. On February 4, 1985 Dernham Company negotiated with Merrimack Valley Wood Products, Inc. a sale of the premises and reached an oral agreement for the sale. The premises in question contained 76,000 square feet and covered an eight-acre tract.

On February 18, 1985 Dernham Company agreed in writing to sell the premises to Merrimack Valley Wood Products, Inc. or its nominee, for the sum of $1,287,500.00. On February 18, 1985 Dernham Company and Merrimack Valley Wood Products, Inc. (“M.V.W.P.”) also executed an Occupancy Agreement wherein M.V.W.P. would occupy the entire premises as of February 18, 1985 and pay to Dernham Company all costs associated with ownership of the premises including, but not limited to, real estate taxes, insurance, utilities, and an amount equal to Dernham’s mortgage payments. On or about May 13, 1985, Dern-ham Company received the purchase price for the premises from Merrimack Valley Wood Products, Inc.

Under the terms of the purchase and sale agreement between Dernham Company and M.V.W.P., Dernham Company did not pay a broker’s commission until Dernham Company received the purchase price and transferred title to M.V.W.P. Under the terms of that purchase and sale agreement, Dernham Company could not enter into a lease for the premises after February 18, 1985, i.e., pursuant to its purchase and sale and Occupancy Agreements with M.V. W.P., Dernham Company agreed that it would not re-rent the premises without the agreement of that buyer-lessee.

On or about May 14, 1985 Dernham Company caused certain personal property of the debtor, consisting of “modular home” units, to be removed from the building on the premises and stored outside. This property which was stored outside, sustained water damage in the approximate aggregate amount of $2,000.00.

A comparison of the two “leases” involved in this case shows that the November 16, 1984 lease agreement between the debtor and Dernham Company contained the following terms: According to Article II of the Lease, Dernham agreed to let the premises to Blondheim for an initial term of 30 months. The Blondheim tenant agreed to pay a base rent of $16,000.00 per month during the first year of the lease term (Article III). Pursuant to Articles IV and VII.10, “[i]n order that all rent ... shall be absolutely net to the landlord, tenant ... agrees to pay, as additional rent, taxes, betterment assessments, insurance costs, utilities, and all costs of repair and replacement” including all real estate taxes; betterment assessments and the costs and expenses tenant incurs in proceedings brought to contest same; fire insurance with extended coverage endorsement, comprehensive general liability insurance cov *859 ering both landlord and tenant, Workman’s Compensation Insurance, boiler insurance, Builder’s Risk Insurance, rent continuation insurance; and all water, gas, heat, light, power, telephone, and all other utilities; cleaning and maintenance services and snow removal.

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Cite This Page — Counsel Stack

Bluebook (online)
65 B.R. 856, 1986 Bankr. LEXIS 5218, Counsel Stack Legal Research, https://law.counselstack.com/opinion/deasy-v-dernham-co-in-re-blondheim-modular-manufacturing-inc-nhb-1986.