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Landlord denied access and does not believe he is violating automatic stay!

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    Landlord denied access and does not believe he is violating automatic stay!

    I have been following this forum for 2 years now, since it became apparent that a BK was in my future. I truly have to say the level of education I got here has been irreplaceable.

    Basically, I started my publishing business 15 yrs ago with extreme success. Online news outlets and diminishing economy made it really hard for small printing concerns to keep up. I amassed considerable debt keeping my business afloat, and the last five years proved to be very difficult. Despite everything, I still thought that I could avoid BK as no one really was pursuing me aggressively. Had it not been for my condo association beating me with a FC auction unexpectedly while I arranged a short sale, I might not have filed at all. In any event, I did file pro se this Monday (the day before the auction!), although I did have the advice of the attorney I half paid two years ago, and also hired a form processor (I know, I should’ve used the attorney!). Given that it’s a no asset Ch7 BK, and all debts included in BK are basically CC’s that I have been discharged for at least 2-3 yrs, this is pretty much a clean case. The only concern I had was with my current commercial landlord.

    The lease expired May 31st, and since then I have been on a month to month. I am also in arrears since the lease expired, although had all intentions of catching as they have been very lax. Since the beginning, I have always paid every other month for both months, without any penalties or even a word objecting. And they experienced a lot of turnover the last six months so I never got a lease renewal that I could sign.

    Their new GM started about a month ago and she asked me for a signed lease renewal. I requested the paperwork and she took her sweet time to issue one with an increased rate. We discussed and she agreed to respect the old amount, and then took her sweet time to issue the correct paperwork. When she finally produced it, it was the day I learned that condo was being auctioned. Exactly one week before I decided to go ahead with the BK.

    Under counsel, I was advised to not sign anything further and include them in the BK anyways, which I struggled with until the end.

    IN any event, the day after the filing I notified the GM by email about the filing, as I wanted to let them know myself, and let them know that I was planning to start paying again come September as I would like to keep leasing with them. And that if they wished to terminate relationship I would understand. She was very nice and stated that she needed to notify her bosses abut that we will work something out.

    To my surprise, come next morning and I find out they have changed the lock of the office. I confronted the GM and she said that since I filed my BK they felt that I had been stringing them along with that they felt that they needed the office belongings as collateral until either I paid in full or engaged on a payment plan. I told the GM that that was a violation of automatic stay. She said she has consulted with their attorney and they would need full payment or a payment plan in order to grant me access to the office. Again, I mentioned the automatic stay but she stated she was merely a messenger, and that they felt the stay did not apply to them as my contract with them had expired.

    Called my attorney and agreed that it was a violation of automatic stay as the lease is in the name of my dba, a sole proprietorship. I asked him to represent me on this one, and he agreed to call them but nothing more. Have not heard from him since then. Called another attorney today, and again agreed that it is a violation, however, need to hire him for the complete BK. Court might recognize fees but only to a certain extent and I need to pay upfront. NO way, I can continue pro se.

    In any event, my question to the very knowledgeable members of this forum is, does their counsel know something I don’t know? How can their attorney advise them to break an automatic stay so blatantly? Can they really argue that contract is expired even though they were still billing me monthly? A month to month constitutes an expired contract? I thought the automatic stay applied to all creditors, and that the only way of disposing of it was to file a motion to lift stay, and then show up to the 341 if they felt they could prove fraud.

    My plan is to file an adversary action and an emergency motion for turnover on monday, and ask for immediate access to premises, fines and expense and damage reimbursement.

    Can I ask for damages for the week I have not been able to access my files, loss of income because I don’t have access to my database, computer with advertising contracts waiting to be signed, documents of reference etc. But most importantly, my old bank statements, income tax returns my CA has been waiting for to elaborate my tax returns from the last five years that I need prior to 341 to complete BK.

    What can I expect from this proceedings? What kind of legal argument can they have that a judge or trustee would not see this as a violation? And if things do go my way, can I legally use the premises until end of august or even September? How soon can I expect them to provide access? And if not, what other recourse would I have? Negotiate a payment plan? Now I am upset at them, and want to make them pay.

    I apologize if this is a long email but I wanted to squeeze in as many facts as possible. I look forward to members’ comments and to keep everybody abreast of developments.
    Last edited by AngelinaCat; 08-10-2012, 08:06 PM. Reason: To make a very long post easire to read. OP, please help with this in future posts.

    #2
    This is probably a technical violation of the bankruptcy stay. What did you list on your Statement of Intentions with respect to this lease? I suppose that it is officially expired anyhow, so you do not have an active lease. It's a tricky spot but I think that it may be a technical violation of the stay to change the locks. Of course, this has to be combined with your local tenancy laws -- for commercial property -- in your State/City/County. Additionally, whether you are in a month-to-month lease will depend on the language in your lease and what the default treatment is for an otherwise "expired" commercial lease is in your county in Florida. (For example, if the lease terminates and states that it does not continue month-to-month, then your lease is expired and what you have is an "expired" executory contract.)

    I can't tell what's in their minds, but they may argue that your lease was expired. You could argue that you ARE a "debtor in possession" (DIP) and that the landlord should have proceeded in local courts, obtained a order of eviction, and then had a writ of eviction executed. However, since you're a DIP, they were bound by the automatic stay.

    Trust me when I say this... corporate attorneys make mistakes very often when it comes to bankruptcies! I had a similar DIP issue -- not with my bank but a utility -- where the corporate attorneys advised them to do something that was a violation of the stay. It happens more often than you think. They are probably resting on the fact that you were in arrears, but you are in possession (DIP) and the stay applies.

    Now, as to the remedy, it will be interesting. I guess at best you may be able to get your contents back, unless there is some sort of lien on that, but that's really getting into the technical weeds. The changing of the locks was wrong. You need to file an EMERGENCY Motion for Violation of the Automatic Stay and for Sanctions. Unfortunately, you need to understand the procedural requirements of emergency motions for your District/Judge and how to draft one. You'll need to know how to schedule an emergency hearing as well.

    The reason why the attorneys won't take it on contingency is because judges are sometimes lenient on first time offenders of the automatic stay. However, this one seems particularly egregious (and make sure you use that word in your motion). Personally, I may not want to do this by Adversary Proceeding (AP) because the complaint process is VERY VERY procedural and the trials can take a long time before they are actually "heard" (with initial "scheduling" conference scheduled about 60 days after the complaint is filed! It may be procedurally better to do this as a contested matter by motion where you can get a hearing quicker and with must less procedure (although the FRCP, FREv. and FRBP still apply in both).

    I would think that they will lose on the motion for sanctions, but they may win on a motion for relief from the automatic stay (RFS). The RFS would allow them to proceed under State (Florida) non-bankruptcy law for any eviction.

    There was a similar case on BKForum where a landlord went and "cut" all the power in a leased premises under the similar circumstances. That emergency motion was granted and the landlord "restored" the services. As I think I stated in the previous (commercial) landlord stay violation issues, the smart landlord will move with an RFS immediately. They will need to restore your access. They will be allowed to proceed under State non-bankruptcy law.

    In the end, if you want to actually stay in the property, you will need to come up with some payment plan that is agreeable and you would need to ASSUME the lease if it's not technically "expired". Otherwise, the smart landlord would get their RFS judgment in the BK court, get a judgment for eviction and then deal with your "payments" and/or issue a new lease. The problem is that you can't "assume" an expired lease in a Bankruptcy.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

    Comment


      #3
      Looking at this from another standpoint, the landlord/tenant relationship:

      If you have the keys, if you have your belongings in the property, and if you have possession (which it appears that you do), your landlord has done an involuntary eviction on you, which is a big no-no. Forget about the bankruptcy stay for a minute and concentrate on the involuntary eviction.

      You need to check with an attorney (not necessarily your bk attorney) who is familiar with landlord/tenant law and you may have a very nice little case here with this. The court systems frown upon self-help evictions that do not follow the due process of law. While the bk stay is good, the bk system takes time, and this situation may be considered an emergency in the local court system.
      All information contained in this post is for informational and amusement purposes only.
      Bankruptcy is a process, not an event.......

      Comment


        #4
        You have good answers on both the bk and the landlord-tenant fronts.

        I would chime in with my 2 cents worth, that I saw a similar situation on one of the tv judge shows (I know, don't laugh) where a landlord had locked a tenant out without due process of eviction, and that landlord was dealt with, very sternly -- because it's a landlord's business to know the law.

        It's not your business to know the law, but you've had your livelihood, your business threatened by this illegal action. Everyone knows a landlord has to go thru the eviction channels, he can't just lock the door!
        You have a very good case on the landlord-tenant front, I would believe.

        Comment


          #5
          Although this still sounds like a wrongful eviction...keep in mind, it looks like we are dealing with a "commercial" lease, not a residential lease, so the rules are different and generally more relaxed regarding the tenant's rights.

          There are special rules when it comes to the automatic stay and property leases. I already wrote this up in some other thread, but if the eviction had already started, the landlord gets to finish it regardless of the auto stay (or something like that), but that doesn't sound like the issue here.

          However, this sounds more like a state court issue than a BK stay violation issue. At least to achieve the result of getting your stuff back, that is going to be state court that will authorize it.

          Comment


            #6
            Thanks to all of you for your valuable input. Information is power and do I feel empowered now!
            In regards of my business lease being expired, it appears that might not the case. The language on the lease states that after the period of the lease ends, it automatically turns into a month to month. And it was a definitely a willful month to month. In any event, without a doubt they executed a self-help eviction, and upon my research this morning, I should easily be entitled to compensation, three months rent and attorneys fees. On an interesting turn of events, just as I was writing to an eviction lawyer, the GM emailed me (I had sent her a cease & decease email friday) and informed me that their counsel had reviewed my case again, and that were granting me access monday however, since there is no lease in place, they are requiring me to vacate immediately.
            Despite what Justbroke explained, I am still shocked that they being one of the top office solution companies in South Florida, their councel would still advise them to continue pressuring me to leave without an eviction, and not to mention the continuous violation to the automatic stay!

            Anyhow, the way I see it now, I will advise the GM that in additon to the suit for violation of stay, I am plannning to sue for damages for self-help eviction of last week. I will refrain from moving forward with full force in light of recent developments. However, I will not voluntarily be vacating the lease until september (or even later, and of course I will be paying rent) as I need the time to regroup, find another space and frankly catch up from last weeks' losses. If they want me out they can reach the courts for a lift of stay, and then pursue an eviction. A process that can result costly and could easily take a good month or so. If they dont peacefully agree to that I will move forward with the unlawful eviction suit and maybe even get some damages money. I am thinking that they could still show up to my 341, and claim fraud. It would be hard to prove but why risk it. I just dont think its time to build further bad faith at this time. Is there anything I am missing? Should I just go ahead and hire an attorney to protect me in case they insisit on the self help eviction? I just want to get back to work and concentrate on my business and the smooth sailings of the BK...

            Comment


              #7
              This should be very interesting. Please keep us up to date on what's going on.
              Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
              Status: (Auto) Discharged and Closed! 5/10
              Visit My BKForum Blog: justbroke's Blog

              Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

              Comment

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