Luedtke v. Fuzzy Thurston's Left Guard of Eau Claire, Inc. (In re Fuzzy Thurston's Left Guard of Eau Claire, Inc.)

6 B.R. 955, 1980 Bankr. LEXIS 4078
CourtDistrict Court, W.D. Wisconsin
DecidedNovember 20, 1980
DocketAdv. Proceeding No. 80-0141
StatusPublished
Cited by2 cases

This text of 6 B.R. 955 (Luedtke v. Fuzzy Thurston's Left Guard of Eau Claire, Inc. (In re Fuzzy Thurston's Left Guard of Eau Claire, Inc.)) is published on Counsel Stack Legal Research, covering District Court, W.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Luedtke v. Fuzzy Thurston's Left Guard of Eau Claire, Inc. (In re Fuzzy Thurston's Left Guard of Eau Claire, Inc.), 6 B.R. 955, 1980 Bankr. LEXIS 4078 (W.D. Wis. 1980).

Opinion

OPINION AND ORDER

ROBERT D. MARTIN, Bankruptcy Judge.

The debtor leases and operates a restaurant and lounge in a portion of a motel complex owned and operated by the plaintiff, Midway. The original lease was dated September 27,1977. On November 1,1979, the debtor filed a petition for reorganization under Chapter 11 of the Bankruptcy Code. Various disputes between the parties preceded plaintiff’s January 31, 1980, application to lift the § 362 stay in order to pursue an eviction action in state court. On April 14, 1980, the stay was lifted by order of this court. The debtor sought rehearing and dissolution of the order lifting the stay and on June 11, 1980, a day prior to a scheduled eviction action, a stipulation between the parties was entered into in open court and became part of the prior lease. The stipulation required that the debtor pay agreed rentals and make specified improvements to the premises within stated times. The improvements included: (1) new carpeting and a new sign were to be on site within 60 days and installed within 90 days (lien waivers for both purchase and installation costs for these items were to be exhibited to plaintiff but no time limit was set); (2) a list of 30 items were to be cleaned and/or repaired within 90 days; and (3) the restaurant was to be kept professionally cleaned to plaintiff’s satisfaction. If a default of the stipulation’s terms was claimed, the parties limited defenses to “the truth of any of our allegations as to default, except the subjective judgments as to cleanliness, repairs, etc.” No mention was made in the stipulation of factors beyond the parties’ control, such as an act of God, except the limitation on defenses set out above.

On July 15,1980, before the expiration of the time periods established in the stipulation, a severe wind and rain storm struck the Eau Claire area. The storm extensively damaged the roofs of both plaintiff and debtor’s premises, broke panels out of signs, and interrupted gas and electrical service. Debtor’s entire fresh and frozen food inventory was lost due to lack of electricity. The restaurant was closed 2Vz days and reopened thereafter on a limited basis due to periodic loss of utility service and reduction of food inventory. Full service resumed after approximately 10 days. During the closing and limited operations, debtor lost considerable general and banquet business and lost the substantial revenues that business would have produced.

By the stipulation debtor agreed to make timely payment of rent due under the lease and to make additional payments to cure its defaults in prior rent. A monthly rental of $10,262.75 was due to Midway from the debtor in August, 1980. At the time the August rent was due, Midway in turn owed the Left Guard 2V2 days’ rent abatement for the storm period in July and the amount received by Midway for the food charges included on motel room bills during the prior month. The food charges on room bills had been handled in various ways at previous times and there is no evidence that an agreed procedure for making that credit existed at the time the August rent was due.

All payments except the August rent were timely made by the debtor. The debt- or sought but was denied by plaintiff a delay in the obligation to pay the August rent. Thereafter debtor separately tendered checks of $890 and $4,232.85 in payment of the August rent and account obligations less credits for rent abatement and room charges, each of which was refused by Midway. The room charges then outstanding were approximately $5,811.00 and the lease rental on a daily basis was approximately $260.00. Thus, although the credits [957]*957claimed had not been agreed to, the $4,232.85 tender represented an amount slightly greater than the net figure reached by subtracting room charges and 2V2 days rent from the August lease payment. Debtor contends that its failure to pay timely the gross rent and await future repayment of the existing credits due was a result of both uncertainty of the credit procedure and necessity created by reduced cash flow for the period immediately following the storm.

Prior to the storm, minimal efforts were made by the debtor to purchase and install a new sign. After the storm, a new temporary sign was installed and a new permanent sign was ordered. It was not yet installed at time of trial.

Prior to the storm only minimal efforts were made by the debtor to purchase and install new carpeting. Immediately after the storm the debtor had water damage in the restaurant. Roof repairs were made promptly by plaintiff’s agents, but minor water leakage continued to trouble the debtor intermittently until 2 weeks prior to trial. The debtor stated this leakage was partially responsible for the carpeting not being installed within the stipulation’s time period. New carpeting was ordered in August, on site September 29, and completely installed October 6. No lien waivers for the purchase and installation of the carpet or sign have been exhibited to plaintiff, Midway.

The plaintiff claims that the premises were not repaired or cleaned to their satisfaction as required by the stipulation. Various parties, at a variety of times, worked on the stipulation’s list of required cleaning and repairs. Debtor hired a cleaning service in June which it immediately found to be inadequate, but which it failed to replace until the eve of trial. The storm put a premium on cleaning services in Eau Claire, and was therefore, at least indirectly, related to the debtor’s failure to clean or repair the premises within the time stipulated. The cleanliness of the restaurant at the time of trial was as good as most restaurants in Eau Claire. However, it did not meet standards acceptable to Midway.

On August 12, one day after the first stipulated deadline, the plaintiff notified the debtor of the failure to timely complete the terms of the stipulation. Plaintiff filed a petition for turnover of the premises on September 3, 1980. The debtor does not dispute plaintiff’s contention that the stipulated times for performance were not met. Rather it claims that the work was all completed within a reasonable time after the storm which made strict timeliness impossible. Plaintiff contends that whatever effect the storm may have had on debtor’s business and the availability of services in Eau Claire, debtor’s admitted and demonstrated lack of cash throughout the period was the principal reason for debtor’s failure to perform as the stipulation required. Debtor in turn contends that the absence of cash was a direct result of the proven loss of business due to the storm and, therefore, supports its claim that performance was made impossible primarily, if not solely, by dint of the weather.

Historically, impossibility did not excuse performance of a contract unless it was so provided in the contract. This rule has been eroded by exceptions. In order to decide which party will bear the loss in cases of objective supervening impossibility,1 courts have attempted to determine what risks were contemplated and assumed by each of the contracting parties. As the doctrine has evolved, objective supervening impossibility has enabled discharge of a promisor’s performance in a variety of factual contexts. Examples include the death of a necessary party and destruction of necessary equipment or goods. The traditional view did not include acts of God in the same category, but that has changed. A detailed A.L.R. comment suggests:

[958]

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Bluebook (online)
6 B.R. 955, 1980 Bankr. LEXIS 4078, Counsel Stack Legal Research, https://law.counselstack.com/opinion/luedtke-v-fuzzy-thurstons-left-guard-of-eau-claire-inc-in-re-fuzzy-wiwd-1980.