RentalAccess, LLC v. Johnson (In re Johnson)

587 B.R. 195
CourtUnited States Bankruptcy Court, M.D. Georgia
DecidedJune 13, 2018
DocketCase No. 17–40105–JTL
StatusPublished

This text of 587 B.R. 195 (RentalAccess, LLC v. Johnson (In re Johnson)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, M.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
RentalAccess, LLC v. Johnson (In re Johnson), 587 B.R. 195 (Ga. 2018).

Opinion

Having carefully considered the parties' arguments and applicable law, the Court finds the parties entered into a lease agreement, which the Bankruptcy Code requires a debtor to timely reject or assume. Therefore, subject to the limitations set forth in the accompanying order, the Court GRANTS the Motion.

FACTUAL FINDINGS

Prior to filing this case, the Debtor entered into an agreement regarding the use of a portable storage shed. At a location in Phenix City Alabama, the Debtor signed a document titled "Rental Purchase Agreement and Disclosure" dated December 5, 2016 (the "Agreement"). Although the Debtor believed she interacted with an agent of Premier Portable Buildings, the Agreement listed RentalAccess LLC as the lessor and owner of the building and directed the Debtor to remit payment to the Movant at a particular Post Office Box.1 Since purchasing the shed, the Debtor has used it exclusively to store household items.

The Agreement described the transaction as lease throughout the document. In particularly relevant parts, it provided:

D. The term of this agreement is one month.
E. Renter may renew this agreement for consecutive terms of one month by making rental payments in advance for additional month Renter wishes to rent the property.
F. The Rental Payment $ 86.13 plus $7.61 sales tax, Total $95.84 per month and is due on the 5th day of each succeeding month.... If [the Debtor] renews this agreement forty-eight (48) consecutive months, on time for a total cost of $4,600.32... and otherwise complies with this agreement, then [she] will acquire ownership of the rented property. At any time after [the Debtor] has made the first rental payment, [the Debtor] may aquire [sic] ownership of the rented property by tendering 60% of the difference between the total of scheduled payments and the total amount paid on the account....

Movant's Ex. A. ¶¶ D.-F.

On February 7, 2017, the Debtor filed a Chapter 13 Petition. Pet. (Doc. No. 1). The *198Debtor also filed a Chapter 13 Plan (the "Plan") on the same day. Chapter 13 Plan (Doc No. 2). The Plan contained a provision for payment to Premier Portable Buildings to satisfy a claim secured by an "8 x 12 Portable Utility Building." See Id. ¶ (e). In accordance with the procedures of this Court, the Bankruptcy Notification Center served the plan on all creditors on the creditor matrix created by the Debtor. Notice of Service of Plan (Doc. No. 9). Among other creditors served, the Plan was sent to Premier Portable Buildings at 120 Brett Chase Suite C, Paducah, Kentucky 42003-5766. Id. No interested party opposed confirmation and on May 11, 2017 the Court confirmed the Plan as originally filed. Order Confirming Chapter 13 Plan (Doc. No. 12).

CONCULSIONS OF LAW

Almost one year after confirmation of the plan, the Movant filed the Motion. The Movant argues that it is entitled to relief from the Automatic Stay because the contract between it and the Debtor was a lease. Because the Debtor's plan did not provide for the assumption of the Agreement, it is presumed the lease is rejected. See 11 U.S.C. §§ 365(d)(2), 1322(b)(7). Rejection of a lease results in abandonment and removes the lease from the bankruptcy estate. In re Rodall , 165 B.R. 506, 508 (Bankr. M.D. Fla. 1994). Such consequences create cause for granting the Movant relief from the automatic stay, as the Movant's interest in the leased property is no longer adequately protected by the creation of a bankruptcy estate and by payments through the Plan.

Before addressing whether the agreement creates a lease or a security agreement, the Court must address two threshold issues. First, the Court must determine whether the confirmation of the Plan binds the Movant. Second, the Court must determine which state's law governs the interpretation of the Agreement. After addressing these issues, the Court addresses whether the agreement creates a lease or a security interest.

A. The Plan's Confirmation Does not Prohibit the Movant from Seeking Relief from the Automatic Stay

In general, the confirmation of a Chapter 13 plan binds all parties to the provisions contained within the plan. 11 U.S.C. § 1327 ; see also , United Student Aid Funds, Inc. v. Espinosa , 559 U.S. 260, 276, 130 S.Ct. 1367, 176 L.Ed.2d 158 (2010). The res judicata effect of the plan's confirmation prevents a creditor from later asserting the confirmed plan did not correctly treat its claim, including a challenge regarding whether the agreement between the parties was a lease or a security interest. See, e.g. , In re Durham , 260 B.R. 383, 387 (Bankr. S.C. 2001) ; HPSC, Inc. Wakefield (In re Wakefield) , 217 B.R. 967 (Bankr. M.D. Ga. 1998).

A creditor is only bound to the terms of the confirmed plan, however, when the creditor has notice of its proposed treatment in the plan. In re Calvert , 907 F.2d 1069, 1070 (11th Cir. 1990) (holding confirmation did not prevent a creditor from challenging the plan's valuation of a claim where the creditor was not on notice that the court could value the collateral at the confirmation hearing). Where a party does not have sufficient information to "alert" it of the possibility that plan's confirmation may impede its rights, the confirmation order does not bind that party. Id. ; see also , Hope v. First Family Financial Services of Georgia, Inc. (In re Harrison) , 259 B.R. 794, 797-98 (Bankr. M.D. Ga. 2011) (holding the confirmation of a Chapter 13 plan did not prevent the trustee from pursuing an avoidance action not listed in the plan where the trustee had *199

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Related

United Student Aid Funds, Inc. v. Espinosa
559 U.S. 260 (Supreme Court, 2010)
Rando v. Government Employees Insurance
556 F.3d 1173 (Eleventh Circuit, 2009)
CS-Lakeview at Gwinnett, Inc. v. Simon Property Group, Inc.
659 S.E.2d 359 (Supreme Court of Georgia, 2008)
HPSC, Inc. v. Wakefield (In Re Wakefield)
217 B.R. 967 (M.D. Georgia, 1998)
Central Rents, Inc. v. Johnson (In Re Johnson)
203 B.R. 498 (S.D. Georgia, 1996)
In Re Rodall
165 B.R. 506 (M.D. Florida, 1994)
In Re Durham
260 B.R. 383 (D. South Carolina, 2001)
Bunker Hill International, Ltd. v. Nationsbuilder Insurance Services, Inc.
710 S.E.2d 662 (Court of Appeals of Georgia, 2011)

Cite This Page — Counsel Stack

Bluebook (online)
587 B.R. 195, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rentalaccess-llc-v-johnson-in-re-johnson-gamb-2018.