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Fitz & Pal, Inc. v. International Pipe Fabrication, L.L.C.

Other Lower Courts

July 12, 2001

Fitz & Pal, Inc., Petitioner,
v.
International Pipe Fabrication, L. L. C., Respondent.

COUNSEL

Minerva & D'Agostino, P. C., Valley Stream, for petitioner.

Lester & Fontanetta, P. C., Garden City, for respondent.

Page 688

OPINION

Susan T. Kluewer, J.

This summary holdover proceeding (see RPAPL art 7) presents facts which require that I make a determination not squarely made before, that is, whether an exception to the automatic-stay provisions of the United States Bankruptcy Code (see 11 U.S.C. § 362 et seq.) applies in a commercial lease setting where the bankruptcy petition is filed before any court has declared that the landlord-tenant relationship is over. Because the lease establishing the relationship in this case terminated by the expiration of its stated term, I conclude that this proceeding to regain possession of the leased premises comes within an exception to the automatic-stay rule (see 11 U.S.C. § 362 [b] [10]) and may therefore proceed. I also conclude, however, that petitioner's request for " use and occupancy" that accompanies its claim for recovery of possession must be determined in or on referral by the Bankruptcy Court.

The Underlying Facts

By written agreement signed December 4, 2000, the parties entered into a lease of commercial premises located on Royal Avenue in Oceanside, Nassau County, New York. The term of the lease was for only three months commencing December 2001. The rent was $17,500 for the first month, and $8,500 for each of the next two months. By the lease, the tenant had the exclusive, nonassignable option to extend the term " to and including April 30, 2001," conditioned upon its giving timely written notice and making timely payment of rent for the month of March 2001 in the amount of $6,000. Rent for April 2001 was fixed at $6,000 as well. Respondent paid its rent, and effectively exercised its option to extend the term to and including April 30, 2001, or, as the parties by their conduct deemed the term, to and including May 4, 2001.

Respondent did not vacate the premises at the end of its extended term. According to petitioner's witness, petitioner, by telephone, and by letter dated May 7, 2001 that it " faxed," sent by regular mail, and sent by certified mail which respondent declined to claim, demanded that respondent vacate the premises and surrender the keys. Respondent has not done so. Petitioner thus commenced this holdover summary proceeding.

The Procedural Facts

Service of process on respondent was effectuated June 5, 2001. The proceeding was first returnable June 12, 2001, and the file reflects that respondent appeared by its president on

Page 689

that date to request an adjournment to retain an attorney.P etitioner was granted leave (Kaiman, J.) to orally amend its petition to include a request for " use and occupancy" for May and June 2001 totaling $17,000, and the matter was adjourned to June 21, 2001. On that date, the matter was adjourned to June 26, 2001 " on consent," but it was marked " Final" against respondent.

On June 26, 2001, 14 days after the proceeding was originally returnable and some 43 days after expiration of the lease term, counsel for both sides appeared at the calendar call. They advised that, earlier that morning, respondent had filed a petition under " Chapter 11" of the Bankruptcy Code (11 U.S.C. § 1101 et seq.). Respondent thus claimed that this proceeding was automatically stayed (see 11 U.S.C. § 362 [a]). Petitioner urged that this matter comes within an exception to the automatic stay contained in the Bankruptcy Code (see 11 U.S.C. § 362 [b] [10]), and submitted a memorandum to support its contention. Respondent asked for time to submit an opposing memorandum. I granted that request and the matter was adjourned to June 28, 2001 for trial. On that date, respondent submitted its opposing memorandum, asserting again that the automatic stay applied, even as it admitted that the commercial lease by which it acquired possession had expired on May 4, 2001. Respondent also made an unpersuasive attempt, via an accompanying affidavit, to create an inference that a month-to-month tenancy arose after the May 4, 2001 expiration of the lease by virtue of vaguely alluded-to ...


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