In re Morgan

• Decision Date: 14 September 1994
• Docket Number: Bankruptcy No. 94-04276-BGC-13.
• Citation: 181 BR 579
• Parties: In re David L. MORGAN, Debtor.
• Court: U.S. Bankruptcy Court — Northern District of Alabama

181 B.R. 579 (1994)

In re David L. MORGAN, Debtor.

Bankruptcy No. 94-04276-BGC-13.

United States Bankruptcy Court, N.D. Alabama, Southern Division.

September 14, 1994.

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Joe Erdberg, Birmingham, AL, for debtor.

G. Hampton Smith, III, Birmingham, AL, for movant.

David Rogers, Trustee.

ORDER DENYING MOTION FOR RELIEF FROM THE AUTOMATIC STAY FILED BY PROPERTY MANAGERS, INC.

BENJAMIN COHEN, Bankruptcy Judge.

This matter is before the Court on a Motion for Relief from Automatic Stay filed by Property Managers, Inc. After notice, a hearing was held on August 15, 1994 at which Mr. David L. Morgan, the Debtor, Mr. Joe S. Erdberg, the attorney for the Debtor, and Mr. G. Hampton Smith, III, the attorney for the Movant appeared.

The Movant is a lessor of an apartment complex. The Debtor is the lessee of a unit in the apartment complex. The Movant has requested relief from the stay to file an unlawful detainer action against the Debtor. The Debtor proposes to pay the back rent owed to the Movant and assume the lease pursuant to 11 U.S.C. § 365 via 11 U.S.C. § 1322(b)(7). Section 1322(b)(7) provides that a Chapter 13 plan may, subject to the requirements of section 365, provide for the assumption of an unexpired lease of the debtor. Section 365(b)(1) provides that, if there has been a default in an unexpired lease of the debtor, the lease may not be assumed unless the lessor is given adequate assurance that the default will be promptly cured and adequate assurance of future performance under the lease. A debtor's Chapter 13 plan is the vehicle through which the default in a lease may be cured.

Under Alabama law, a lessor may terminate a lease for breach or default by giving written notice to the lessee to quit the premises. Ala.Code 1975, § 35-9-6. If no time period is otherwise specified in the lease, the termination of the lease becomes effective 10 days following the delivery of the notice to quit. Id. Upon termination of the tenancy, the lessee has no statutory right except as provided for in the lease instrument, to cure the default or otherwise reinstate the lease. To recover possession of the leasehold from a tenant who refuses to leave following termination of the lease, the lessor must file a suit in state district court for unlawful detainer. Ala.Code 1975, § 6-6-310(2). An unlawful detainer action may not be filed by the lessor, however, until 10 days following service upon the lessee of a written notice to vacate the premises. Id. A complaint for unlawful detainer must be served on the lessee at least 6 days prior to a trial being had on the complaint. Ala.Code 1975, § 6-6-332(b). If the district court finds in favor of the lessor on the complaint, the judge must issue a writ of execution commanding the sheriff to restore possession of the leasehold to the lessor. Ala.Code 1975, § 6-6-337(a). The lessee may appeal the judgement of the district court to the state circuit court within 14 days. Ala.Code 1975, § 6-6-350. Appeal of the unlawful detainer judgement results in a trial de novo in the circuit court. Id. The lessee may obtain a stay of the district court's writ of restitution pending the decision of the circuit court by posting a bond for costs, or in lieu thereof, filing an affidavit of substantial hardship pursuant to Ala.R.Civ.P. 62(dc). Brentwood Park Apts. v. Forbus, 510 So.2d 242 (Ala. 1987).

The term of the lease in this case began on May 3, 1994, and ends on April 30, 1995. The lease contract provides that, in the event the Debtor violates any of the conditions of the lease, the Movant may "upon giving 24 hours written notice to the Lessee annul and terminate this lease." The Debtor has not paid the rent due under the lease for the months of June, July, August and September, 1994, although the Debtor offered to tender the August rent at the hearing regarding this matter. For nonpayment of the June rent, the Movant, on June 30, 1994, notified the Debtor in writing that his lease would be terminated upon the expiration of the ensuing 24 hours. On July 5, 1994, the Movant demanded in writing that the Debtor surrender possession of the leasehold premises within 10 days. The Debtor filed his Chapter 13 petition on July 22, 1994.

I. THE PLAIN MEANING OF THE STATUTE EMPOWERS THE DEBTOR TO ASSUME THE LEASE

The Movant contends that the lease may not be assumed because it was terminated under state law and the terms of the lease prior to bankruptcy. If the lease involved was a lease of nonresidential real property, the Movant's argument would be well received. Section 365(c)(3) specifically prohibits the assumption of an unexpired lease of nonresidential real property that has been terminated under applicable nonbankruptcy law prior to bankruptcy. Conspicuous by its absence is a corresponding prohibition against the assumption of an unexpired lease of residential real property which has been terminated under applicable nonbankruptcy law prior to bankruptcy. The only qualification on the right of a Chapter 13 debtor to assume a residential real property lease, other than prompt cure and adequate assurance of future performance, therefore, is that the lease be "unexpired." If a lease has not expired, it may be assumed upon satisfaction of the conditions contained in section 365(b)(1).

The Movant argues that a lease expires once it has been terminated under state law. If the Movant is correct and the words "expired" and "terminated" are precisely synonymous, then section 365(c)(3) would be unnecessary since by definition a lease "terminated under applicable nonbankruptcy law" could not be an "unexpired lease."¹ For the same reason, the word "expiration" in section 541(b)(2) ("a lease of nonresidential real property that has terminated at the expiration of the stated term of such lease,") and section 362(b)(10) ("a lease of nonresidential real property that has terminated by the expiration of the stated term of the lease,") would be superfluous. The fact is that, while both terms denote an ending or cessation, they otherwise have distinct meanings. To "expire" means "to come to an end," while the word "terminate" means "to bring to an end." Webster's II New Riverside University Dictionary, Pages 454, 1194 (1988). The word expire, including all of its derivatives, is an intransitive verb. As such, it expresses an action or state which is limited to a subject, and does not otherwise require a direct object to complete its meaning. For example, "The lease has not expired," or "The unexpired lease may be assumed." In contrast, the word "terminate" is a transitive verb, which expresses an action between a subject and an object and requires a direct object to complete its meaning. For example, "The notice delivered by the lessor terminated the lease."

When used in reference to a contract or lease, the word "expiration" means "termination by mere lapse of time, as the expiration date of a lease, insurance policy, statute, and the like." Black's Law Dictionary 579 (6th ed. 1990). The word "termination," on the other hand, in the same context, means, "an ending, usually before the end of the lease or contract, which termination may be by mutual agreement or may be by exercise of one party of one of his remedies due to the default of the other party." Black's Law Dictionary 1471 (6th ed. 1990). The Alabama Supreme Court noted the difference in the meanings of the terms in the context of leases in Vizard Inv. Co. v. Mobile Fish & Oyster Co., 197 Ala. 625, 73 So. 328 (1916). Involved in Vizard was a statute which provided that any tenant who forcibly or unlawfully retained possession of a tenancy "after the expiration of his term" or refused to surrender possession on the written demand of the lessor would be liable for double the amount of rent agreed to be paid under the contract. Suit for double rent was brought by the lessor after the lease was terminated for nonpayment of rent but prior to the end of the term of the lease. The trial court dismissed the count in the lessor's complaint for double rent damages. The Alabama Supreme Court affirmed, stating:

By expiration of the term the statute intended the term nominated in the contract of lease and its termination by effluction of time and its own limitation, and not otherwise. It has been so held in respect to similar statutes in other jurisdictions and that, we think is the proper construction of the statute here.

The third count of the complaint as amended shows that the term of the original contract of lease between defendant and plaintiff\'s assignor had not expired when this suit was brought, but that the lease had been terminated by plaintiff\'s declaration of a forfeiture in accordance with a provision of the contract. It follows from this that the court correctly sustained defendant\'s demurrer to the third count on the ground indicated.

73 So. at 329 (citations omitted).

The Supreme Court and Court of Appeals for the Eleventh Circuit have repeatedly admonished that statutory interpretation should begin with the plain meaning of the statute's text, and end there, if the meaning of the statute is truly plain. United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 242, 109 S.Ct. 1026, 1031, 103 L.Ed.2d 290 (1989); In re Hoggle, 12 F.3d 1008, 1010 (11th Cir.1994). The words used in a statute are to be accorded their ordinary and common meanings, unless otherwise specifically indicated or unless ambiguity will thereby result. In re Burns, 887 F.2d 1541, 1552 (11th Cir.1989). In common parlance, and when used as terms of art as well, the word "expired" denotes the natural or inevitable end to a contract or lease by lapse of time, while the word "terminated" denotes the unnatural or premature end to a contract or lease as the result of breach or forfeiture. To hold that the two words are interchangeable would be to embellish the plain meanings of both words, in direct violation of the...