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| _______________________________x | ||
| In re | Case No. F89-00101-HAR | |
| In Chapter 11 | ||
| DENNIS B. WISE, | ||
| Debtor(s) | ||
| _______________________________x | ||
| ALASKA TEAMSTER-EMPLOYER | PENSION TRUST, | |
| Plaintiff(s), | ||
| v. | Adv. No. F89-00101-003-HAR | |
| DENNIS B. WISE, | ||
| Defendant(s). | MEMORANDUM DENYING MOTION FOR RECONSIDERATION | |
| _______________________________x | ||
The defendant, debtor Denis B. Wise, asked me to
reconsider the Memorandum Regarding Cross Motions for Summary
Judgment dated September 27, 1990.(1) Wise feels that I have
overlooked the portion of § 507(a)(6) of the Bankruptcy Code
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(11 U.S.C. § 506(a)(6)) to which the emphasis has been added as
follows:
(6) Sixth, allowed unsecured claims of individuals, to the extent of $ 900 for each such individual, arising from the deposit, before the commencement of the case, of money in connection with the purchase, lease, or rental of property, or the purchase of services, for the personal, family, or household use of such individuals, that were not delivered or provided.
My conclusion was that, when Nabalaska foreclosed, both Wise's ownership and the tenants' tenancy were terminated by the foreclosure statute. AS 34.20.
Upon termination of his ownership, Wise was bound by the Alaska Residential Landlord and Tenant Act to refund the security deposit unless he complied with the offset procedure and notice. Naturally he did not because he never received any deposits from Wespac. Although he did not even have the tenants' money, he was liable for their deposits under the statutory language of the Alaska Residential Landlord and Tenant Act.
The fallacy in Wise's reasoning is that he did not provide continued occupancy for the tenants after Nabalaska foreclosed. The Teamster Trust entered new rental agreements with the tenants. In lieu of collecting its own security deposits from the "new" tenants, the Teamster Trust took an assignment of the tenants rights against Wise to a refund of their security deposit for which Wise was, by statute, liable. Wise could have used the same procedure when he foreclosed against Wespac without causing a mass exodus of tenants.
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The cases cited by Wise to establish that security
deposits should not be given priority under § 507(a)(6) are not
persuasive. In re Club Associates, 107 B.R. 385, 408
(Bankr.N.D.Ga. 1989) does not discuss the issue, but merely notes
that the case involved no § 507(a)(6) claims. The conclusion in In
re Cimaglia, 50 B.R. 9, 10 (Bankr.S.D.Fla. 1985) that a
noncommercial tenant's rent deposits does not fall within
§ 507(a)(6) is contrary to the plain wording of the statute.
| DATED: October 16, 1990 | |
| _______________ | |
| HERBERT A. ROSS | |
| Bankruptcy Judge |
| Serve: | |
| Rebecca Copeland, Esq., for Plaintiff | |
| David Bundy, Esq., for Defendant | |
| Peggy Gingras, Adversary Case Mgr. (tickle 10/22/90) | H3189 |
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1. There is no order yet, let alone a "final order," so the appeal time has not begun to run. It was the intent of the court that the parties provide the court with the figure for the rent deposits, if they can agree, and I would incorporate these into my order. See the "Conclusion" of my memorandum opinion.