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UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ALASKA

In re: Case No. A90-00500 )
)
ALASKA CAB COMPANY, INC., )
Debtor.          )
_______________________________________)
ALASKA CAB COMPANY, INC., ) Adversary No. A90-00500-00l
) Chapter 11
Plaintiff,          )
v. )
)
ROBERT VAUGHN, ROBERT SYMPSON )
and MARY SYMPSON, )
)
Defendants.          )
_______________________________________)


ORDER



            At Anchorage in said district this 25th day of July, 1990.


            This case was tried on July 11th, 12th and 17th, 1990. It involves unusual leasing arrangements whereby taxicab permits from the Municipality of Anchorage are "leased" from permit holders to third parties. In this instance, Defendant Robert F. Vaughn (Vaughn) leased seven permits to Alaska Cab Co., Inc. (Alaska Cab). Defendants Roger Sympson and Mary Sympson leased two permits to Plaintiff Alaska Cab. The purpose of this adversary action is to determine whether or not the leases were validly terminated pre-petition by the Lessors. Through oversight, a notice of termination attached to Plaintiff's complaint as Exhibit "H" was not admitted into evidence. Through the stipulation of the parties, the exhibit is now admitted into evidence as Plaintiff's Exhibit "H".

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            The issues involved with the two Sympson leases are easily resolved. Paragraph 6 of each lease states:
    This Lease may be canceled by either party with a Thirty (30) day written notice, through mutual agreement, or in the event of default of any item herein. This Lease expires 31 December 1992.
    On May 24th, 1990, Mr. and Mrs. Sympson decided to cancel their lease agreements in accordance with paragraph six. They sent a notice which gave Plaintiff more than 30 days notice of termination and complied with paragraph 6 of the lease.


            Although the Sympsons have attempted to bootstrap themselves into somehow making their 30 day notice an immediate termination, such a position is highly illogical and directly contrary to the terms of their notice. 11 U.S.C. § 362 stays the notice of termination. Under the circumstances of this case, the Plaintiff retained an interest in the Sympson leases after the filing of its bankruptcy petition on June 1, 1990. The Plaintiff may now move for acceptance or rejection of the leases in accordance with 11. U.S.C. § 365(a).

            Similarly, the Sympsons may move the Court for an order directing Plaintiff, within a specified period of time, to accept or reject the leases under 11 U.S.C. § 365(d)(2). Any acceptance, under 11 U.S.C. § 365(b) (1) is conditioned upon curing all defaults and providing adequate assurance of future performance. 11 U.S.C. § 108(b) does not apply to the Sympson pre-petition notice as a lease or executory contract is involved. In Re High Adventure Center. Inc., 7 Mont. B.R. 179 (Bankr. Mont. 1989). In Re Gomes   TOP      1 ABR 39  Ranch, 85 B.R. 558, 5 Mont. B.R. 198 (Bankr. Mont. 1987). Finally, if their leases are accepted, the Sympsons may utilize their 30 day notice and again terminate the leases at a later date.


            The issues regarding the Vaughn leases are not nearly as clear. There were wide disparities in the testimony given, reflecting the fact that witnesses on either side have not been candid with the Court.

            The seven permit lease agreements executed by Vaughn and the Plaintiff are virtually identical, except for the date of execution. Six are dated October 1, 1989 and one is dated September 1, 1989. They each provide, in "Item 3", for the lease of a taxicab permit and payment of $700.00 per month to the lessor on the 1st of each month during the term of the lease. The leases have a default provision, paragraph 9, which states:

    Failure, or default: In the event the LESSOR shall fail to pay the permit fee in a timely manner, the LESSEE may pay the said fee and deduct the cost of same from the next payment due the LESSOR. In the event the LESSEE shall fail to fulfill the term of ITEM 7, or ITEM 9 or ITEM 3, listed above, within ten (10) days after the first day of the month, the LESSOR may deem this lease in default and therefore, null and void.

            After the execution of the leases Plaintiff's President, Joe Inderbitzen, alleges that he and Defendant Vaughn orally altered the terms of payment contained in "Item 3". Inderbitzen maintains the amended agreement allowed payments to be made any time during the month. Vaughn disagrees. He states that he gave Alaska Cab a ten day extension so that all payments were due on the   TOP      1 ABR 40  10th of each month. The parties' conduct is consistent with Vaughn's version of the facts. Paragraph 9 of the Agreements contains a ten day grace period and nearly all checks made to Vaughn are dated between the 10th and 20th of the month. I find that the lease agreements were amended to provide for payments on the 10th of each month.


            Vaughn did not receive the May payment from Plaintiff in a timely manner. On May 21, 1990 Defendant Vaughn made an agreement with Robert Kobs to lease Kobs the same permits that were leased to Alaska Cab. The lease with Kobs was to begin July 1, 1990 and would have paid Vaughn an additional $350.00 per month in total. Vaughn prepared a written notice to Alaska Cab dated May
    28, 1990 stating:

    Effective May 31, 1990, 12:01 a.m., midnight, the permit lease agreement between Robert F. Vaughn, dba Midnite Sun Leasing and Joe Inderbitzen, dba Alaska Cab Co., Inc., for Anchorage Municipal Taxicab Permit numbers 12, 49, 94, 95, 130, 132, and 139 will be terminated per item numbers 3, 5, and 9 of the previously signed permit lease agreements dated September 1, 1989 for permit number 132 and October 1, 1989 for permit numbers 12, 49, 94, 95, 130, and 139.

            Prior to his receipt of the May payment, Vaughn had the full right to "deem the lease in default and therefore, null and void" in accordance with paragraph 9 of the lease. Instead, Vaughn obtained a check from Alaska Cab on May 31st and cashed it by 10:00 a.m. that morning. By so doing Vaughn permitted Alaska Cab to cure its breach. His notice to Alaska Cab stated that the lease would   TOP      1 ABR 41  not be terminated until midnight that evening. The notice was not served on Alaska Cab until after Vaughn received payment the morning of May 31, 1990.


            Vaughn waived his right to declare the default by obtaining and negotiating the May check prior to serving the notice of default on Plaintiff.

    [I]t is well-established that if parties to a contract adopt by conduct a mode of performance differing from its strict terms, neither party can assert a breach because the contract was not fulfilled according to its letter.   Quin Blair Enterprises. Inc. v. Julien Construction Co., 597 P.2d 945, 951 n. 6 (Wyo. 1979). A waiver may be accomplished explicitly or implicitly, the latter arising "where the course of conduct pursued evidences an intention to waive a right, or is inconsistent with any other intention than a waiver, or where neglect to insist upon the right results in prejudice to another party". Milne v. Anderson, 576 P.2d 109, 112 (Alaska 1978). . .


    [H] is failure to voice contemporaneous objections to the bank's failure to collect interest at the time of sale precludes him from relying upon this as a defense now, for it amounted to "direct, unequivocal conduct indicating a purpose to abandon or waive the legal right," Milne, 576 P.2d at 112, if any, which Jackson may have held under the contract to require collection of accrued interest on each lot sale. Therefore, we find no error in the superior court's rejection of this defense.


    Jackson v. Nagle, 677 P.2d 242, 249 (Alaska 1984).

            Similarly, Vaughn cannot have it both ways here. His conduct in negotiating and accepting the check on May 31, 1990 was direct unequivocal conduct indicating a purpose to waive his legal   TOP      1 ABR 42  right of enforcing an immediate default. He waived his right to enforce a default under the leases by accepting a check from Plaintiff before alleging a default. Vaughn's other factual allegations of default have no merit.


            Plaintiff's complaint contains a prayer for attorneys' fees. Pursuant to the "American Rule" attorneys' fees are not ordinarily recoverable absent an agreement or specific statutory authority. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612 (1975). However, "[W]hen state law and not federal bankruptcy law provides the rule of decision in a contested matter, the bankruptcy court will award fees to the same extent allowed under the governing state law." In the Matter of Holiday Mobile Home Resorts, 803 F.2d 977, 979 (9th Cir. 1986); In the Matter of Sparkman, 703 F.2d 1097, 1099 (9th Cir. 1983). Alaska state law determines whether or not there has been a valid termination of a personal property lease. Accordingly, the Plaintiff is entitled to attorneys' fees under Rule 82 of the Alaska Rules of Civil Procedure. Plaintiff's prayer for attorneys' fees is granted.



            Therefore, IT IS ORDERED, ADJUDGED and DECREED:


            1.    The two leases of the Plaintiff with the Defendants Robert Sympson and Mary Sympson were not validly terminated pre-petition; the leases became property of the estate and are subject to acceptance or rejection in accordance with 11 U.S.C. § 365;
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            2.    The seven leases of the Plaintiff with Robert Vaughn were not validly terminated pre-petition; all of the leases became property of the estate and are subject to acceptance or rejection in accordance with 11 U.S.C. § 365;

            3.    Costs and attorneys' fees pursuant to Rule 82(a) (2) of the Alaska Rules of Civil Procedure are awarded to the Plaintiff. Plaintiff shall file a motion for award of attorneys' fees along with an itemized statement of such fees and a costs bill concurrent with the motion within ten (10) days of the date of this order.


                  DONALD MacDONALD IV
                  United States Bankruptcy Judge


    Serve: W. Pace
    K. Legacki
    Municipality of Anchorage