In re Abdemur

587 B.R. 167
CourtUnited States Bankruptcy Court, S.D. Florida.
DecidedJune 12, 2018
DocketCase No.: 17-16875-LMI
StatusPublished
Cited by3 cases

This text of 587 B.R. 167 (In re Abdemur) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Florida. primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Abdemur, 587 B.R. 167 (Fla. 2018).

Opinion

Laurel M. Isicoff, Chief United States Bankruptcy Judge

THIS CAUSE came before me on February 14, 2018, on Motion of Toyota Lease Trust ("Toyota") for an Order Confirming the Automatic Stay is not in Effect Pursuant to 11 U.S.C. § 365(p)(2)(B) (ECF # 49) ("Toyota's Motion"). Because of issues that arose between Abraham Abdemur (the "Debtor") and Toyota during the course of crafting what was supposed to be an agreed order, I am now required to resolve whether the safeguards contained within 11 U.S.C. § 524 must be satisfied when a debtor assumes a lease pursuant to subsection 365(p) in order for a debtor's personal liability under the assumed lease to survive the debtor's discharge. Having *169considered the pleadings,1 having heard argument of counsel and having considered the applicable case law, for the reasons set forth below, I find that (1) assumption of a lease under subsection 365(p) does not require, indeed does not even contemplate, court approval;2 (2) the reaffirmation procedures of section 524 do not apply to a lease assumption under subsection 365(p); and (3) if a debtor rejects an assumed lease, whether any personal liability arising from the rejection of the assumed lease is discharged depends on when the rejection occurs. Accordingly, Toyota's Motion is GRANTED.

FACTS3

The Debtor filed the instant case on May 31, 2017 (ECF # 1). The Debtor's Schedule A/B lists a 2016 Lexus IS350, Vin No.: JTHBE1D23G5025076 (the "Vehicle"), and the Statement of Intention reflects that the Debtor will retain the Vehicle and enter into a Reaffirmation Agreement. The Debtor leased the Vehicle pursuant to a Motor Vehicle Lease Agreement dated December 28, 2015, between the Debtor and, presumably, Toyota or its predecessor in interest (the "Lease").

The Debtor and Toyota entered into an assumption agreement on or about July 7, 2017, pursuant to which the Debtor assumed the Lease. The assumption agreement was not approved by the Court nor was it placed on the docket at the time of assumption.

At some point, the Debtor determined that he could not maintain his obligations under the Lease and he turned over the Vehicle to Toyota. Sometime after November 24, 2017, the Debtor, through counsel, received a document from Toyota titled Rights of Defaulting Parties-Lease (the "Rights Letter"), dated November 24, 2017. The Rights Letter indicated that the unpaid lease balance on the Vehicle was $36,518.64, with repossession costs of $225.00, and transportation expenses of $179.27, for a total of $36,922.91 (the "in personam liability claim").

On December 27, 2017, the Debtor filed a Notice of Rescission of Lease Assumption (ECF # 47). The Debtor has indicated that he has no objection to an Order confirming that Toyota has in rem stay relief with regard to the Vehicle nor does the Debtor have any objection to the waiver of the 14-day stay, as Toyota is in possession of the Vehicle. However, the Debtor argues that the Debtor has no in personam liability under the Lease because the Debtor did not reaffirm his obligations under the Lease in accordance with subsection 524(c) and thus the in personam liability claim under the Lease will be discharged when the Debtor receives his discharge. Alternatively, the Debtor argues, because he "rescinded assumption" prior to discharge, the in personam liability will be discharged.4 Toyota argues that assumption *170included the Debtor's personal liability under the Lease and subsequent rejection or discharge does not alter that in personam liability.

ANALYSIS

Subsection 365(p) was enacted as part of BAPCPA.5 Prior to BAPCPA, a chapter 7 debtor could not assume a lease of personal property prior to discharge. In fact, the enacting title of subsection 365(p) is "Giving Debtors the Ability to Keep Leased Personal Property by Assumption."6

Almost immediately after the passage of BAPCPA, courts faced the issue of whether, in the absence of adherence to the reaffirmation provisions of subsection 524(c), assumption of a lease pursuant to subsection 365(p) creates in personam liability under the assumed lease which in personam liability survives discharge.

There are courts that hold that, in order to avoid discharge of in personam liability for an assumed lease, the lease assumption agreement must conform to the requirements of a reaffirmation agreement under subsection 524(c). See Thompson v. Credit Union Fin. Grp. , 453 B.R. 823, 825 (W.D. Mich. 2011) ("[A] debtor's unapproved assumption under section 365(p) does not eliminate the discharge protection that flows from the Trustee's rejection of the lease. To set aside the discharge protection, a lessor must obtain not only the [d]ebtor's assumption but also Bankruptcy Court approval under the reaffirmation provisions of section 524(c)"); In re Eader , 426 B.R. 164 (Bankr. D. Md. 2010) (holding an individual chapter 7 debtor may assume personal liability for an unexpired lease of personal property, and such assumption does not require any approval by the Bankruptcy Court, but debtor's personal obligation under the assumed lease is subject to discharge, unless the debtor reaffirms his or her indebtedness under the lease in accordance with subsection 524(c) ); and In re Creighton , 427 B.R. 24 (Bankr. D. Mass. 2007) (holding stipulations between a chapter 7 debtor and a lessor under unexpired pre-petition personal property leases, through which the debtor personally assumes these unexpired leases, were in the nature of reaffirmation agreements, such that assumption required compliance, not only with requirements set forth in the newly enacted subsection *171356(p), but with requirements for reaffirmation agreements as well).

Conversely, other courts have held that lease assumptions and reaffirmation agreements are separate and distinct, and the statutory provisions authorizing each have different procedures and trigger different rights between the parties to the respective agreements. Indeed, these courts have found, not only is court approval unnecessary to assume a lease, but it is inappropriate to seek court approval. Those courts hold that assumption binds the debtor to all of the terms of the lease irrespective of the bankruptcy discharge. See In re Bailly , 522 B.R. 711, 715 (Bankr.

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Bluebook (online)
587 B.R. 167, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-abdemur-flsb-2018.