Stanley Station Associates, L.P. v. Fleming Companies, Inc. (In re Stanley Station Associates, L.P.)

179 B.R. 682, 33 Collier Bankr. Cas. 2d 323, 1995 Bankr. LEXIS 399
CourtUnited States Bankruptcy Court, D. Kansas
DecidedMarch 29, 1995
DocketBankruptcy No. 90-40324-11; Adv. No. 90-7227
StatusPublished

This text of 179 B.R. 682 (Stanley Station Associates, L.P. v. Fleming Companies, Inc. (In re Stanley Station Associates, L.P.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Stanley Station Associates, L.P. v. Fleming Companies, Inc. (In re Stanley Station Associates, L.P.), 179 B.R. 682, 33 Collier Bankr. Cas. 2d 323, 1995 Bankr. LEXIS 399 (Kan. 1995).

Opinion

ORDER GRANTING MOTION FOR SUMMARY JUDGMENT OF DEFENDANT FLEMING COMPANIES, INC. 1

JOHN T. FLANNAGAN, Bankruptcy Judge.

If a trustee2 rejects an unexpired lease, the lessee “may remain in possession of the leasehold” for the balance of the lease term, or longer depending on nonbankruptcy law, according to § 365(h)(1) of the Bankruptcy Code.3 The question here is whether a lessee that subleased the property before the [683]*683debtor-lessor filed bankruptcy can remain in possession after the trustee rejects the lease. The Court answers in the affirmative.

The debtor, a limited partnership, owns a strip shopping center called Stanley Station located in the city of Stanley, Johnson County, Kansas. On November 13, 1978, debtor, as lessor, entered into a 20-year “build and lease” agreement with the lessee, Fleming Companies, Inc. (“Fleming”), covering premises within Stanley Station. Just prior to the filing of the bankruptcy petition on February 16, 1990, Fleming sublet the premises to Mark A. Dobbels and Albert J. Dobbels (collectively, “the Dobbels”).

After the Chapter 11 order for relief, debt- or filed an adversary complaint to reject the lease and regain possession of the leasehold property, joining Fleming and the Dobbels as defendants.4 Fleming and the Dobbels answered that the lease should not be rejected, but if it was, as lessee and sublessee, respectively, they were entitled to remain in possession of the leased property under 11 U.S.C. § 365(h)(1). Debtor filed a motion for partial summary judgment to which Fleming responded with its own summary judgment motion. Following oral arguments on the motions, the Court took the matter under advisement.5

Federal Rule of Civil Procedure 56, governing summary judgment, is made applicable to bankruptcy proceedings through Fed. R.Bankr.P. 7056. The Court must grant summary judgment “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). The Court must view the evidence and draw any inferences in a light most favorable to the party opposing summary judgment. Eaton v. Jarvis Product Corp., 965 F.2d 922, 925 (10th Cir.1992). The moving party has the burden of showing that it is entitled to summary judgment as a matter of law. Oklahoma Radio Associates v. F.D.I.C., 987 F.2d 685, 690 (10th Cir.1993).

The Court adopts the uncontroverted statements of fact set out.in debtor’s memorandum in support of its motion for partial summary judgment:6

1. On February 16, 1990, Stanley Station filed a voluntary petition commencing this case under Chapter 11 of the United States Code. (Complaint to Reject Lease and Determine Rights of Possession (“Complaint”), Par. 1; Conceded at Answer, Par. 1).
2. Plaintiff is the owner of real estate located in Johnson County, Kansas, more particularly described in the attached Exhibit A and commonly known as “Stanley Station.” (Complaint, Par. 5; Conceded at Answer, Par. 1.)
3. Plaintiff, as Lessor, entered into a Lease dated November 13, 1978, with Defendant Fleming Companies, Inc. (“Flem-1 ing”), as Lessee. The Lease covered certain described premises in Stanley Sta-tion_ (Complaint, Par. 6; Conceded at Answer, Par. 3.)
4. Fleming denies having used the leased premises for a grocery store operation. (Answer, Par. 3.)
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6. After Stanley Station moved to reject Fleming’s lease, Fleming subleased the premises to defendants Dobbels. Any [684]*684rights of defendant [sic] Dobbels in the space are subject to Stanley Station’s rights and remedies under 11 U.S.C. § 365 to reject Fleming’s Lease. (Complaint, Par. 8; Conceded at Answer, Par. 1.)
7.On the date that Stanley Station filed its voluntary petition commencing this case, neither Fleming nor Dobbels was operating a retail operation at the premises. (Affidavit, Par. 4) After the commencement of this case, Dobbels opened a hardware store in the space formerly possessed by Fleming (Aff., Par. 5).7

Further, the Court adopts the uncontro-verted statements of fact contained in defendant Fleming’s brief in support of its motion for summary judgment:8

1. Stanley owns and operates a strip shopping center at the junction of Highway 169 and 151st Street in Stanley, Kansas. On November 13, 1978, Stanley, as lessor, and Fleming, as lessee, entered into a Build and Lease Agreement (“Lease ”). Fleming thereby agreed to lease approximately 15,000 square feet at the shopping center for an initial term of twenty years. Fleming has options to extend the initial term for three additional terms of five years each. Lease (¶¶ 4 and 5).
2. The Lease (¶ 6) requires Fleming to pay rent in an amount equal to $4,500 per month or 1.25% of annual gross sales, whichever is greater; common area maintenance expenses; insurance; maintenance; and repairs. Fleming has paid all rent and performed all of its other obligations under the Lease. Affidavit of Donald Boos (¶ 8).
3. The Lease (¶ 18) gives Fleming an absolute right to assign and sublease without Stanley’s consent.
4. The Lease (¶ 26) specifically acknowledges that Fleming “... is presently involved in numerous other activities at other locations.” The Lease does not limit or restrict Fleming’s right to engage in these activities at any location.
5.The Lease (¶ 24) gives Stanley the right to terminate Fleming’s possessory rights, with or without a termination of the Lease, only upon Fleming’s failure to pay rent or Fleming’s failure to perform its other obligations under the Lease.
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Jegen’s United Super, Inc.
7. Fleming sublet the premises to Je-gen’s United Super, Inc. (“Jegen’s”). Je-gen’s operated a grocery store on the premises from January 1980 to 1988. Fleming and Jegen’s terminated the sublease on January 25, 1990. Affidavit of Donald Boos (¶ 3).
8. The premises were idle from 1988 to January 25, 1990.9 With no income of any kind from the premises, Fleming paid rent (approximately $100,000) to Stanley and performed all of its other obligations under the Lease. Stanley accepted Fleming’s rent payments and performance of Fleming’s other obligations.

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Bluebook (online)
179 B.R. 682, 33 Collier Bankr. Cas. 2d 323, 1995 Bankr. LEXIS 399, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stanley-station-associates-lp-v-fleming-companies-inc-in-re-stanley-ksb-1995.