Esq. Communications, Inc. and Associated Radio Inc

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Case 1:05-bk-16685 Doci127 Filed 10/14/05 Entered 10/14/05 15:08:34 Desc Main
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This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southem District of Ohio.

psd Ladnser—

, rl4.2 Burton Perlman
Dated: October 14, 2005 United States Bankruptcy Judge

IT SS SO ORDERED.

UN TED STATES BANKRUPTCY COURT
SOUTHERN Di STRICr OF OFFO
VESTERN DIVISION

In Re Case No. 05- 16685

Esq. Conmunications, Inc. Chapter 11

Ne a wa SS aS

Debt or Judge Burton Perl man

GRANIT NG MOITON FOR RELI EF FROM STAY

The debtor naned in the caption, Esg. Conmunications, Inc.,
is one of several debtors which have filed Chapter 11 bankruptcy
cases, Whose cases are being jointly administered. The present
notion, however, is directed only at the captioned debtor
because it relates to premses occupied by Esg. Communi cations,
Inc., premses for which the debtor had originally taken

occupancy pursuant to a lease. The lessor in the lease

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agreement was the City of Youngstown, Ohio. The premises in
question are located at 34 Federal Plaza West, Suite 1200, in
Youngstown, Ohio (“premises”). The record owner of the
building in which the premises are located, Youngstown Wick
Building Real Estate Partners, (hereafter, “Wick”) here moves
for relief from the automatic stay of 11 U.S.C. §362(a) so that
it may proceed with a forcible entry and detainer action in
state court.
The following facts are uncontroverted. The City of
Youngstown at the time that the lease was entered into was the
owner of the building in which the premises are located. Percy
Squire, a principal of the debtor, believed that he had an
understanding with the City of Youngstown to purchase the
building. When the City refused to honor the understanding, and
refused to sell the building to Squire he brought suit against
the City for alleged breach of contract. The Plaintiff in the
suit was Percy Squire Co. LLC. Squire is an attorney and
conducts his law practice in that name. Percy Squire Co. LLC is
not a debtor in this court. The purpose of the litigation which
was filed in the Mahoning County Court of Common Pleas, was to
seek relief for alleged breach of the agreement between Squire
and the City of Youngstown. The Common Pleas court dismissed
the action on February 14, 2005. Squire then filed a notice of
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appeal on March 2, 2005, and the appeal is pending. No stay
pending appeal was obtained. The City of Youngstown then on May
15, 2005 conveyed title to movant. Debtor has made no payments
of rent for the premises since the time the movant took title.
Debtor opposes the motion on the ground of lis pendens.
Movant contends that the doctrine is inapplicable here, and
argues further that it is entitled to relief because the lease
had terminated by its own terms.
Essentially, under the application of lis pendens, the
Debtor argues that Wick was unable to obtain good title to the
property on May 20, 2005 due to Percy Squire Co. LLC’s appeal of
its state court action against the City of Youngstown. Because
of the appeal Debtor contends that the state court litigation
was still in progress when movant took title, and thus movant’s
title is defective under the doctrine of lis pendens.
The doctrine of lis pendens is governed by O.R.C. §2703.26
which states:
When summons has been served or publication made, the
action is pending so as to charge third persons with
notice of its pendency. While pending, no interest can
be acquired by third persons in the subject of the
action, as against the plaintiff's title. (2005).
The purpose of lis pendens is to protect a plaintiff’s
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1See Percy Squire Co., LLC v. City of Youngstown, 04 CV
4284, (Mahoning County Common Pleas Court, Feb. 14,
2005)(finding that no implied contract for the sale of the
building existed between the parties).
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interest in property that is the subject of litigation against
a third party who attempts to take an interest in the property
while the litigation is still pending. Martin, Rochford & Durr
v. Lawyer’s Title Ins. Co., 619 N.E. 2d 1130, 1131 (Ohio App.
1993). Thus, if a third party takes an interest in property
while a lawsuit is pending, the third party takes the property
subject to the outcome of the litigation. Id. In addition, the
doctrine of lis pendens does not in and of itself grant a
plaintiff greater rights in property than a third party who
obtained their rights during the pendency of the suit. Katz v.
Banning, 617 N.E. 2d 729, 733 (Ohio App. 1992).
The doctrine of lis pendens, even if it was a valid defense
to a motion for relief from stay, simply does not apply to the
Debtor. This is because the Debtor is not a party to the state
court litigation. The doctrine only operates to protect a
plaintiff’s interest in property that is the subject of a
lawsuit. Percy Squire Co., LLC, a non-debtor entity, was the
sole plaintiff in the state court litigation with the city of
Youngstown regarding the property.1 As a result, the Debtor may
not assert the doctrine of lis pendens as a defense to movant’s
motion for relief.
Movant asserts that it is entitled to succeed in its motion
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because by the terms of the written lease between the Debtor and
the City of Youngstown expired on March 31, 2001. The Debtor
remained in the building as a holdover tenant, and in accordance
with the provisions of the lease, the Debtor was treated as
having a month to month lease thereafter. The Debtor has failed
to make any lease payments since sometime prior to May 15, 2005.
Bankruptcy courts do not have the authority to reinstate a
lease that was terminated in accordance with state law prior to
the bankruptcy filing. In re Nasir, 217 B.R. 995, 997 (Bankr.
E.D. Va. 1997), citing In re Lady Liberty Tavern Corp, 94 B.R.
812 (S.D.N.Y. 1988); In re Caldwell, 174 B.R. 650 (Bankr. N.D.
Ga. 1994); In re Smith, 105 B.R. 50 (Bankr. C.D. Cal. 1989).
The automatic stay under 11 U.S.C. §362 does not apply where a
lease has terminated. Id., citing In re A. Bus. and Community
Dev. Corp., 901 F. 2d 325 (3d. Cir. 1990); In re Fairview
Estates, 94 B.R. 938 (Bankr. W.D. Mich. 1989); In re 163rd St.
Med. Corp., 67 B.R. 799 (S.D. Fla. 1986); In re Trang, 58 B.R.
183 (Bankr. S.D. Tex. 1985).
The automatic stay does not afford a debtor the opportunity
to revive a lease that was properly terminated by the lessor
prior to the filing. Caldwell, supra at 652. Thus, a lessor’s
desire to evict a debtor based upon a lease that was terminated
pre-petition provides sufficient cause under 11 U.S.C.
§362(d)(1) to grant relief from stay. Id.
In the instant case, the lease provided that the landlord
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may terminate the lease for non-payment of rent after a ten day
period expired. Due to the fact that the Debtor has failed to
make rent payments to the lessor since sometime prior to May 15,
2005, it is clear that the lease terminated prior to the filing
of bankruptcy. After the termination of the lease, the Debtor
was left with no further contractual right to occupy the
building at the time of filing. In accordance with the holding
in Caldwell, this Court also, finding that the lease had
terminated, holds that this provides sufficient ground to grant
relief from the automatic stay under 11 U.S.C. §362(d)(1). As
a result, Wick’s motion for relief from the automatic stay is
granted.
IT IS SO ORDERED.
Copies to:
Neal J. Weill, Esq. P o l l y J . H a r r i s ,
Esq.
office of the United States Trustee Porter Wright Morris &
36 East Seventh Street, Suite 2030 Arthur
Cincinnati, OH 45202 41 South High Street
31ST Floor
Andrew M. Malek Columbus, OH 43215
Dept. of Justice
U.S. Attorney Office Jody M. Oster, Esq.
303 Marconi Blvd, Suite 200 41 South High Street
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Columbus, OH 43215 Fifth Floor
Columbus, OH 43215
Bradley E. Scher
Ocean Ridge Capital Advisors, LLC T h o m a s R . A l l e n ,
Esq.
56 Harrison Street, Suite 203A 21 West Broad Street
New Rochelle, NY 10801 Columbus, OH 43215-4100
Kenneth C. Johnson Kristen E. Richner, Esq.
Justin W. Ristau, Esq. Keith Shumate, Esq.
100 South Third Street 1300 Huntington Center
Columbus, OH 43215-4290 41 S. High Street
Columbus, OH 43215
Timothy A. Riedel, Esq. John Robert Weiss, Esq.
10 West Broad St., Suite 2100 525 W Monroe Street
Columbus, OH 43215 Chicago, IL 60661
Michael L. Cook, Esq. George L. White, IV, Esq
David M. Hillman, Esq. 34 Federal Plaza West
919 Third Avenue Suite 600
New York, NY 10022 Youngstown, OH 44503
Nathan L. Swehla, Esq. Terra Serena, Esq.
P.O. Box 5480 312 Elm Street
Cincinnati, OH 45201-5480 Suite 2300
Cincinnati, OH 45202
Erica Ann Probst, Esq.
88 West Mound Street
Columbus, OH 43215
Daniel King, III, Esq.
1200 Bath Avenue
Kelley Galloway Bldg., Suite 120
P. O. Box 1856
Ashland, KY 41105-1856
Matthew T. Schaeffer, Esq.
10 West Broad Street, Suite 2100
Columbus, OH 43215
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