2014 BNH 004 Note: This is an unreported opinion. Refer to LBR 1050-1 regarding citation. 

_____________________________________________________________________________________ 

 UNITED STATES BANKRUPTCY COURT

 DISTRICT OF NEW HAMPSHIRE

In re: Bk. No. 13-11823-BAH 

Chapter 11 

In re Lakes Region Donuts, LLC, 

Debtor 

Brian Barrington, Esq. 

The Coolidge Law Firm, PLLC 

Somersworth, New Hampshire 

Attorney for Debtor 

Patrick O. Collins, Esq. 

Hoefle, Phoenix, Gormley & Roberts, P.A. 

Portsmouth, New Hampshire 

Attorney for Creditor Farmington Donuts, LLC

MEMORANDUM OPINION

I. INTRODUCTION 

 Before the Court is the Motion for Relief from Stay (Doc. No. 17) (the “Motion”) filed 

by Creditor Farmington Donuts, LLC (“Farmington”). Debtor Lakes Region Donuts, LLC (the 

“Debtor”) leased commercial property from Farmington. Prepetition, the Debtor defaulted 

under the terms of a lease between the parties by failing to pay rent. Farmington initiated a 

possessory action against the Debtor under state law, and a writ of possession issued. Prior to 

the Debtor vacating the property, the Debtor filed bankruptcy. Farmington seeks relief from the 

automatic stay in order to enforce the writ of possession and evict the Debtor under New 

Hampshire law. 

 The Court has authority to exercise jurisdiction over the subject matter and the parties 

pursuant to 28 U.S.C. §§ 1334, 157(a), and U.S. District Court for the District of New 

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Hampshire Local Rule 77.4(a). This is a core proceeding in accordance with 28 U.S.C. § 

157(b). 

II. FACTS1

 AND PROCEDURAL HISTORY 

On January 5, 2010, the Debtor entered into an agreement with Farmington to acquire a 

Honey Dew Donut franchise, including all of the restaurant equipment, for $260,000.00. On 

the same date, the Debtor and Farmington executed a commercial lease for an initial term 

starting February 2, 2010, and ending November 9, 2014 (the “Lease”). Agreed Partial 

Statement of Facts ¶¶ 1-2 (hereinafter “Stmt. of Facts”); see also Exs. 101 & 102. The Debtor 

had the option to extend the Lease term for up to three additional five-year terms. Lease, Ex. 

102 § 2.1.

 The Lease provides that the premises will be used only as a donut and coffee shop and 

that the monthly rent is $3,500.00. Id. §§ 3, 6 & Sched. A. Under the terms of the Lease, 

Farmington is obligated to provide the use of the premises during the lease term; to provide the 

quiet enjoyment of the premises; to maintain and repair the exterior of the building and the 

underground utility, water, and sewer pipes outside the exterior walls; to restore the premises to a 

condition suitable to their intended use within one hundred days of a fire, casualty, or taking; and 

to refrain from construction that would interfere with the use of the outside space and parking 

lot. Id. §§ 1, 14, 19, 26. The terms of the Lease provide that the Debtor is obligated to pay 

minimum base rent timely, with a grace period of fifteen days; to pay for all expenses associated 

 

1

 The following facts were agreed upon by the parties and are taken directly from the stipulated record 

and exhibits submitted to the Court as part of the record of the evidentiary hearing conducted October 10, 

2013. 

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with the premises including taxes, building and business insurance, all utilities, and other fees; to 

allow Farmington access to the property at reasonable times; to remediate hazardous material 

issues; to indemnify and hold harmless Farmington; to purchase and maintain public liability 

insurance; to vacate and surrender the property at the expiration or other termination of the 

Lease; to maintain the premises during the Lease term; and to complete the Honey Dew 

franchisee corporate training program. Id. §§ 3, 4, 5, 7, 10, 11, 12, 13, 18, 26. 

 The Lease provides that if there is any default in the payment of rent, and the default is 

not cured within a fifteen day grace period, or if there is any default in the performance of any 

other duty of the Debtor under the Lease not corrected within thirty days, then Farmington has 

the right “to reenter and take complete possession of the leased premises, to declare the term of 

this Lease ended, and all rights of the LESSEE under this Lease shall cease . . . .” Id. § 15. It 

continues: 

In the event of any breach or threatened breach by LESSEE of any of the agreements, 

terms, covenants or conditions contained in this Lease, LESSOR shall be entitled to 

enjoin such breach or threatened breach and shall have the right to invoke any right or 

remedy allowed at law or in equity or by statute or otherwise as though reentry, 

summary proceedings, and other remedies were not provided for in this Lease. 

The LESSOR shall have the right thereafter, while such default continues, to re-enter 

and take complete possession of the Leased Premises, to declare the terms of this lease 

ended, and remove the LESSEE’S effects, without prejudice to any remedies which 

might be otherwise used for arrears of rent or other default. All past and future rent 

shall accelerate and become immediately due and payable, and the LESSEE shall 

indemnify the LESSOR against all loss of rent and other payments which the 

LESSOR may incur by reason of such termination during the residue of the term. . . . 

Each right and remedy of LESSOR provided for in this Lease shall be cumulative and 

shall be in addition to every other right or remedy provided for in this Lease not now 

or hereafter existing at law or in equity or by statute or otherwise, and the exercise or 

beginning of the exercise by LESSOR of any one or more of the rights or remedies 

provided for in this Lease or now or hereafter existing at law or in equity or by statute 

or otherwise shall not preclude the simultaneous or later exercise by LESSOR of any 

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or all other rights or remedies provided for in this Lease or now or hereafter existing at 

law or in equity or by statute or otherwise. 

Id. The Lease’s terms provide that it is to be governed by and interpreted in accordance with 

the laws of New Hampshire. Id. § 23. 

On October 11, 2012, Farmington served the Debtor with a Demand for Rent and an 

Eviction Notice for failure to pay the full rental amount due. Stmt. of Facts ¶ 4; Exs. 103 & 

104. The Demand for Rent states that “[d]emand is hereby made for payment of overdue 

rent . . . . The amount of said overdue rent to date is $12,714.51 and the amount of unpaid late 

fees is $500.00, for a total amount owed of $13,214.51.” Ex. 103. The Eviction Notice states: 

Pursuant to the provisions of NH RSA 540:2 you are hereby given notice to quit, 

on or before October 19, 2012 the premises and appurtenances owned by 

Farmington Donuts LLC and identified as 471 NH Route 11, Farmington, New 

Hampshire which premises are now occupied by you. . . . You are hereby notified 

of your right to avoid this eviction by payment, prior to the expiration date of this 

eviction notice [October 19, 2012], of all the arrearages plus fifteen dollars 

($15.00) as liquidated damages, in accordance with NH RSA 540:9. However, a 

tenant may not defeat an eviction for non-payment of rent by use of NH RSA 540:9 

more than three (3) times in a 12-month period. 

Ex. 104. The Debtor failed to “avoid this eviction” by making payment prior to the 

expiration date in the Eviction Notice. Ex. 105. 

 Thereafter, Farmington filed an eviction action in state court in the 7th Circuit District 

Division – Rochester (the “Circuit Court”) seeking possession of the property and monetary 

damages, and the Circuit Court held a hearing on the merits on January 30, 2013. Stmt. of 

Facts ¶ 5; Ex. 105. On January 31, 2013, the Circuit Court rendered judgment in favor of 

Farmington (the “Judgment”). Stmt. of Facts ¶ 6; Ex. 105. The Judgment recites that 

Farmington “duly served the [Debtor] with a Demand for Rent [$13,214.51] and an Eviction 

Notice on October 11, 2012 with a ‘payment due date’ of October 19, 2012,” that the “demand 

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was not paid on or before the ‘payment due date,’” and that the Debtor presented no valid 

defense. Ex. 105 (brackets in original). The Judgment awarded Farmington the amount of 

$1,500.00 (the maximum amount available under Rule 5.8 of the Circuit Court’s Rules and RSA 

540:13(III)), and further ordered that a writ of possession was to issue on the eighth calendar day 

from the date of the written notice of the decision. Id. 

On February 6, 2013, the Circuit Court denied the Debtor’s motion to reconsider the 

Judgment. Stmt. of Facts ¶¶ 10, 11; Ex. 109. The Debtor then appealed the Judgment to the 

New Hampshire Supreme Court, which declined to hear the appeal on May 9, 2013. Stmt. of 

Facts ¶¶ 7, 12; Exs. 106 & 110. On June 6, 2013, the Supreme Court denied the Debtor’s 

motion for reconsideration of that declination, as well. Stmt. of Facts ¶ 12; Exs. 111 & 112. 

 The Circuit Court issued a Writ of Possession on June 11, 2013. Stmt. of Facts ¶ 13; 

Ex. 113. On the morning of July 19, 2013, a Strafford County deputy sheriff served the Writ of 

Possession on the Debtor’s manager. Stmt. of Facts ¶ 14; Ex. 114. The Strafford County 

Sheriff’s Office has a practice of serving a writ of possession and allowing the tenant forty-eight 

hours to voluntarily vacate the premises before being forcibly evicted. Stmt. of Facts ¶ 15; Ex. 

115. Hours after the deputy sheriff served the Writ of Possession, the Debtor filed a petition for 

chapter 11 relief. Doc. No. 1. The Debtor remains in possession of the premises. 

Farmington filed its Motion for Relief seeking to enforce the Writ of Possession and evict 

the Debtor from the premises. Farmington contends that the exception set forth in 11 U.S.C. § 

362(b)(10) applies, and therefore it need not obtain relief from the automatic stay of 11 U.S.C. § 

362(a). In Farmington’s view, the Debtor’s interest in the Lease is not property of the estate 

under 11 U.S.C. § 541(b)(2), and the Lease is not capable of being assumed by virtue of 11 

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U.S.C. § 365(c)(3). In the Motion, Farmington argues that once the Circuit Court entered the 

Judgment against the Debtor and the Debtor exhausted its appellate rights, the Lease, and any 

rights of the Debtor with respect to the Lease, terminated on June 11, 2013, when the Writ of 

Possession issued. Mot. ¶ 15. The Debtor objects, arguing that its tenancy has not been 

terminated because it filed a chapter 11 petition before the “completion of the eviction process 

under RSA 540:14.” Obj. ¶ 2. The Debtor also contends that the Court should rule 

consistently with In re Beeman, 235 B.R. 519 (Bankr. D.N.H. 1999), and use “its general 

equitable powers” to find that an eviction for “a minor violation of a 20-year lease” is 

inequitable. Id. ¶¶ 4-5. 

The Court held an evidentiary hearing on October 10, 2013. At the hearing, the parties 

submitted the Agreed Partial Statement of Facts and Exhibits. The Court heard testimony from 

John Leach, the Debtor’s principal, and Christine Oldberg, the Debtor’s manager who was 

present at the time the deputy sheriff served the Writ of Possession. At the hearing, the Court 

took the Motion under advisement and ordered the parties to file supplemental memoranda of 

law on (1) when a lease effectively terminates under New Hampshire law, and (2) whether the 

Lease in this case effectively terminated prepetition. In its supplemental memorandum of law, 

Farmington contends that the Debtor’s “tenancy” and the Lease were actually terminated on 

October 19, 2012 (not June 11, 2013), when the Debtor failed to timely cure and voluntarily 

vacate the premises, thereby losing its right to possession. Doc. No. 53 ¶ 9. In its 

supplemental memorandum of law, the Debtor contends that neither the tenancy nor the Lease 

have terminated as the Debtor has not been physically removed from the premises, no provision 

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of state law has terminated the Lease, and Farmington has not taken steps to terminate in 

accordance with § 15 of the Lease. Doc. No. 51. 

 

III. DISCUSSION

 Several sections of the Bankruptcy Code “evidence Congress’ intent that lessors of 

nonresidential real property are entitled to significant safeguards” of their interests. In re 

Memphis-Friday’s Assocs., 88 B.R. 830, 833-34 (Bankr. W.D. Tenn. 1988). Courts have 

identified §§ 362(b)(10), 541(b)(2), and 365(c)(3)—all of which were added by the 1984 

amendments to the Bankruptcy Code—as specifically protecting the interests of commercial 

lessors. 

Section 362(a) generally provides an automatic stay of actions against the debtor. 

However, § 362(b)(10) specifically excludes from the stay “any act by a lessor to the debtor 

under a lease of nonresidential real property that has terminated by the expiration of the stated 

term of the lease before the commencement of or during a case under this title to obtain 

possession of such property.” 11 U.S.C. § 362(b)(10); see In re T.A.C. Grp., 294 B.R. 199, 202 

(Bankr. D. Mass. 2003) (“[T]he debtor’s interest in a terminated lease is not protected by the 

automatic stay”); In re Neville, 118 B.R. 14, 18 (Bankr. E.D.N.Y. 1990) (“The language of 

Section 362(b)(10) clearly indicates that it is not necessary for a landlord to move in the 

Bankruptcy Court to vacate the automatic stay when the Debtor is operating under a lease of 

non-residential real property that has terminated by the expiration of the stated term of the lease 

before the commencement of or during a case under this title.”). Courts have interpreted the 

“terminated by the expiration of the stated term” language in § 362(b)(10) as not being limited 

simply to instances where the calendar date specified as the end of the lease term has passed. 

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Rather, the exception has been held to apply in instances where a lease has been effectively 

terminated under applicable nonbankruptcy law prior to the expiration of its stated term. See In 

re Policy Realty Corp., 242 B.R. 121, 127-28 (S.D.N.Y. 1999) (holding that even where 

landlords have accelerated the lease term, the § 362(b)(10) exception to the automatic stay 

prevented the stay from applying); see also Robinson v. Chicago Hous. Auth., 54 F.3d 316, 320 

(7th Cir. 1995) (explaining that the Bankruptcy Code “draw[s] no meaningful distinction 

between ‘unexpired’ and ‘terminated’” in context of § 365). 

Section 541 establishes what constitutes the property of the debtor’s estate. All of the 

debtor’s property and interests in property at the time of filing the petition become part of the 

estate, with specific exceptions. One exception is “any interest of the debtor as a lessee under a 

lease of nonresidential real property that has terminated at the expiration of the stated term of 

such lease before the commencement of the case under this title, and ceases to include any 

interest of the debtor as a lessee under a lease of nonresidential real property that has terminated 

at the expiration of the stated term of such lease during the case.” 11 U.S.C. § 541(b)(2); see In 

re T.A.C. Grp., 295 B.R. at 202 (“A lease that has been terminated prior to the filing of a 

bankruptcy petition is not property of the estate . . . .”). 

Section 365 provides that the debtor may assume an unexpired lease. However, § 

365(c)(3) prohibits the assumption by the debtor if “such lease is of nonresidential real property 

and has been terminated under applicable nonbankruptcy law prior to the order for relief.” 11 

U.S.C. § 365(c)(3). Once a lease has been terminated, the bankruptcy court cannot revive it, 

even by its equitable powers, despite the debtor’s present ability to cure any default. Neville, 

118 B.R. at 18. Concomitantly, where a debtor is unable to assume a lease pursuant to § 

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365(a), there is cause for relief from the automatic stay. See C.O.P. Coal Dev. Co. v. C.W. 

Mining Co. (In re C.W. Mining Co.), 422 B.R. 746, 758-59 (B.A.P. 10th Cir. 2010); 

Rich-Taubman Assocs. v. Masterworks, Inc. (In re Masterworks, Inc.), 94 B.R. 262, 265 (Bankr. 

D. Conn. 1988) (stating that the debtor has the burden of proof to show that it could assume the 

lease); see also Memphis-Friday’s, 88 B.R. at 843. If the debtor cannot cure the default under 

the lease because the lease has been terminated, the lease cannot be assumed by the debtor. As 

one court commented, “[a]lthough the reasoning . . . is not always explicit, courts appear to focus 

on a debtor’s existing contractual right to cure and revive the contract, thus making termination 

incomplete and giving the debtor a sufficient interest in the contract to assume. It follows that 

if there is an assumable lease under § 365 which is property of the estate, it is subject to the 

automatic stay provisions of § 362(a).” C.W. Mining Co., 422 B.R. at 758-59 (footnote 

omitted). 

The common inquiry to all three sections is whether the commercial lease was terminated 

prepetition under applicable nonbankruptcy law, i.e., the state law under which the lease is to be 

interpreted. Robinson, 54 F.3d at 320 and n.1 (citing Butner v. U.S., 440 U.S. 48, 55 (1979)); 

see also C.W. Mining, 422 B.R. at 755 (looking to Utah law to interpret the terms of the 

contract); Pyramid Operating Auth., Inc. v. Memphis (In re Pyramid Operating Auth., Inc.), 144 

B.R. 795, 809 (Bankr. W.D. Tenn. 1992) (looking to Tennessee contract law); 

Memphis-Friday’s, 88 B.R. at 834 (same); Air Vectors Assocs. v. New York Dept. of Transp. (In 

re Air Vectors Assocs.), 53 B.R. 668, 685 (Bankr. S.D.N.Y 1985) (looking at New York contract 

law); accord In re Southcoast Express, Inc., 337 B.R. 739, 743 (Bankr. D. Mass. 2006) (“The 

cases from this circuit . . . favor looking to state law to determine when the lease was terminated 

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as opposed to looking at the end date of the lease.”) (looking to Massachusetts contract law). In 

determining whether a lease was in effect as of the petition date, courts look to the terms of the 

lease itself, as interpreted by the governing state’s law. In re Gateway Investors, Ltd., 113 B.R. 

564, 567 (Bankr. D.N.D. 1990) (finding that the lease agreements “provide the circumstances 

and proper procedure for termination”). 

Accordingly, to rule on the Motion, the Court must determine whether, under the terms of 

the Lease as interpreted under New Hampshire law, the Lease was terminated by the time the 

Debtor’s petition was filed. If the Lease terminated prepetition, then § 362(b)(10) is implicated 

and the automatic stay would not apply. Further, if the lease were terminated prepetition, the 

Debtor cannot revive its interests in the Lease in bankruptcy and assume it pursuant to § 

365(c)(3); therefore, relief from the automatic stay, to the extent applicable, would be 

appropriate. The Court turns to New Hampshire landlord-tenant law to determine the status of 

the Lease as of the petition date. 

A. Termination of the Tenancy 

In New Hampshire, RSA 540 provides a statutory framework for actions against tenants. 

RSA 540:2 is titled “Termination of Tenancy” and provides that “[t]he lessor or owner of 

nonrestricted [i.e., commercial] property may terminate any tenancy by giving to the tenant or 

occupant a notice in writing to quit the premises in accordance with RSA 540:3 and 5.” RSA 

540:2(I). RSA 540:5 sets forth the service requirements for any demand for rent or eviction 

notice.2

 RSA 540:3 describes the requirements of an eviction notice and provides that “[i]f the 

 

2 The terms “notice to quit” and “eviction notice” appear to be used interchangeably in the statutes. 

See RSA 540:3(V) (“For the purpose of interpreting or enforcing any lease or rental agreement for 

residential tenants in effect on July 1, 2006, a notice to quit shall be deemed an eviction notice under this 

section.”); Darbouze v. Champney, 160 N.H. 695, 697 (2010) (explaining that several statutes were 

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eviction notice is based on nonpayment of rent, then notice shall inform the tenant of his or her 

right, if any, to avoid the eviction by payment of the arrearages and liquidated damages in 

accordance with RSA 540:9.” RSA 540:3(IV). RSA 540:9 permits a tenant to cure the 

nonpayment of rent if, before the expiration period stated in the notice to quit, the tenant “pays or 

tenders all arrearages plus $15.00 as liquidated damages . . . .” RSA 540:9. Absent such a 

cure, landlords may pursue a summary possessory action against the tenant in state court in order 

to recover possession of the real estate. 

The New Hampshire Supreme Court has affirmed that the purpose of the summary 

possessory proceedings is to “permit the landlord to recover possession on termination of a lease 

without suffering the delay, loss and expense to which he may be subjected under a traditional 

common-law action.” Matte v. Shippee Auto, Inc., 152 N.H. 216, 218 (2005) (quoting Ossen v. 

Wanat, 585 A.2d 685, 687 (Conn. 1991), cert. denied, 502 U.S. 816 (1991)). RSA 540:12 is 

titled “Possessory Action” and provides that “[t]he owner, lessor, or purchaser at a mortgage 

foreclosure sale of any tenement or real estate may recover possession thereof from a lessee, 

occupant, mortgagor, or other person in possession, holding it without right, after notice in 

writing to quit the same as herein prescribed.” RSA 540:12 (emphasis added). To commence 

a summary possessory action, a summons is issued, returnable to the state court. RSA 

540:13(I). Within ten days of a tenant’s appearance, the state court must conduct a hearing on 

the merits. RSA 540:13(V); see Flo-Pro Inc. v. 10 Iron Horse Drive, LLC, No. 11-CV-158-JL, 

2011 WL 4527416 (D.N.H. Sept. 28, 2011). If the landlord is successful in its possessory 

action, judgment enters against the tenant. RSA 540:14(I). The judgment will provide that the 

 

amended in 2006 to replace the term “notice to quit” with “eviction notice” but noting that the statute 

does not require use of the term “eviction notice”). 

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landlord may recover possession of the premises. Id. In addition, “[i]n cases based on 

nonpayment of rent, the court shall state the actual amount of the tenant’s current weekly rent . . . 

which must be paid into the court if an appeal is taken. . . .” Id. A writ of possession will also 

issue. Id. The landlord has the discretion to enforce the judgment by directing the sheriff to 

serve the writ of possession or by seeking judicial relief for contempt. Id. “A writ of 

possession shall authorize the sheriff to remove the defendant from the premises.” Id.

Under New Hampshire landlord-tenant law, as set forth in RSA 540, a landlord may 

terminate a tenant’s tenancy by serving the tenant with an eviction notice. The statutory 

process contemplates that by the time that the cure period under a properly served eviction notice 

has expired, the lessee is holding the premises “without right,” a predicate to commencement of 

a possessory action under the terms of RSA 540:12. Therefore, the commencement and 

completion of the eviction notice procedure under RSA 540 terminates the lessee’s tenancy, and 

the lessee has no right to possess the leased premises upon the expiration of the cure period 

stated in the eviction notice. See Dover v. B C P Realty, 112 N.H. 238, 239-40 (1972) 

(indicating that the notice to quit terminated the existing tenancy at will effective the date by 

which the sheriff notified the tenant to vacate the premises). The New Hampshire Supreme 

Court has explained that “a tenancy at will becomes a tenancy at sufferance on the effective date 

of a notice to quit.” Hill v. Dobrowolski, 125 N.H. 572, 576 (1984). 

In this case, the Eviction Notice issued on October 11, 2012, and provided that the Debtor 

must quit the premises by October 19, 2012, unless the Debtor cured the rent arrearage by that 

date. When that period elapsed, and the Debtor failed to cure the arrearage, the Debtor no 

longer had a right to cure the arrearage and maintain possession of the property. Accordingly, 

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the Court finds that, under applicable New Hampshire law, the Debtor’s tenancy terminated 

effective October 19, 2012. After that date, a tenancy at sufferance followed. See id. (“[A] 

tenancy at sufferance can follow the termination of a conventional leasehold relationship. A 

‘tenant who, without any agreement, holds over after his term has expired, is a tenant at 

sufferance.’”) (citations omitted). 

B. Termination of the Lease 

While the Debtor’s tenancy terminated pursuant to New Hampshire law effective October 

19, 2012, the Court must next consider whether termination of the tenancy necessarily means the 

termination of the Lease within the meanings of §§ 362(b)(10), 541(b)(2) and 365(c)(3) of the 

Bankruptcy Code. During the evidentiary hearing, there was some argument as to whether 

termination of the Debtor’s tenancy was synonymous or contemporaneous with termination of 

the Lease. Farmington has argued that the Lease is merely the “vehicle pursuant to which the 

terms of the ‘tenancy’ are stated.” Doc. No. 53. The Debtor has argued that termination of the 

Lease is separate from termination of the tenancy. Doc. No. 51. 

The Court must examine the terms of the Lease itself with respect to its termination 

provisions. Leases governed by New Hampshire law may be terminated by their terms, as 

construed by New Hampshire contract law. See J.G.M.C.J. Corp. v. Sears, Roebuck & Co., 391 

F.3d 364, 368 (1st Cir. 2004). Lease provisions should be given their plain meaning, unless 

there is ambiguity, in which case the meaning is a question of law for the courts to determine. 

Id. (citing N.A.P.P. Realty Trust v. CC Enters., 147 N.H. 137 (2001); Echo Consulting Servs., 

Inc. v. N. Conway Bank, 140 N.H. 566 (1995)); Hampton Beach Casino, Inc. v. Town of 

Hampton, 140 N.H. 785, 788-89 (1996). In interpreting a contract, the Court should give the 

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contract the interpretation which best reflects its reasonable meaning and the parties’ intention 

when they executed the contract. Echo Consulting, 140 N.H. at 569; see also Tommy Hilfiger 

Retail, Inc. v. N. Conway Outlets LLC, No. CIV. 99-C-147-B, 2000 WL 1480450, at *3 (D.N.H. 

Feb. 14, 2000); South Willow Props., LLC v. Burlington Coat Factory of New Hampshire, LLC, 

159 N.H. 494, 501 (2009); accord Buber & Brideau v. Blais, 79 N.H. 516, 517 (1920) 

(“Although a demand was necessary at common law to terminate a lease for nonpayment of rent, 

that is not true when, as in this case, the lease provides that no demand shall be necessary.”) 

(citing McQuesten v. Morgan, 34 N.H. 400, 405 (1857)). 

Looking at the terms of the Lease, it provides that, where there is a default, Farmington 

as the lessor has the right “to declare the term of this Lease ended.” Thus, the Lease requires 

Farmington, as lessor, to “declare” the term of the Lease ended. Farmington did not make any 

express statement that the Lease was terminated. Instead, Farmington contends that it 

implicitly declared the Lease ended by serving the Debtor with a Demand for Rent and an 

Eviction Notice on October 11, 2012, and proceeding with a summary possessory action 

pursuant to RSA 540. 

A “declaration” is “[a] formal statement, proclamation, or announcement, esp. one 

embodied in an instrument.” Black’s Law Dictionary 467 (9th ed. 2009). Farmington failed 

to make any “formal statement, proclamation or announcement” that the Lease was being 

terminated pursuant to § 15 of the Lease; it did not reduce any intent to terminate the Lease to 

writing. For that reason, the Court finds that the Lease did not terminate in accordance with its 

written terms. 

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While Farmington did not follow the contractual provisions of the Lease with respect to 

termination, this is not the sole way the Lease could be terminated. The Lease could also have 

terminated as a matter of law. It is undisputed that Farmington followed RSA 540, which was 

enacted to “simplify and facilitate an owner’s recovery of possession.” Greelish v. Wood, 154 

N.H. 521, 525 (2006) (referencing the predecessor to RSA 540). Farmington followed the 

process, outlined earlier in this opinion, all the way to the New Hampshire Supreme Court. 

Farmington served the Debtor with an Eviction Notice in October 2012. After the Debtor failed 

to cure the rent arrearage and vacate the premises, Farmington filed an eviction action in the 

Circuit Court. After a hearing, the Circuit Court rendered the Judgment ruling that Farmington 

could recover possession of the property. Prior to issuance of the writ of possession, the Debtor 

appealed the Judgment to the New Hampshire Supreme Court, which declined to hear the appeal. 

On June 11, 2013, the Circuit Court issued a Writ of Possession, which was served on the 

Debtor’s manager on July 19, 2014. At the time the Debtor filed its chapter 11 bankruptcy 

petition, the Debtor’s tenancy in the property had been terminated. The Debtor remained in 

possession of the property “without right.” The Debtor was simply a tenant at sufferance who 

lacked any right to possession of the property. See Hill, 125 N.H. at 576 (“A tenancy at 

sufferance has been described generally as ‘an interest in land which exists when a person who 

had a possessory interest in land by virtue of an effective conveyance, wrongfully continues in 

the possession of the land after the termination of such interest, but without asserting a claim to a 

superior title.’”) (citations and quotations omitted). Because the Debtor lacked any interest in 

the property under the Lease in accordance with state law, and Farmington no longer had any 

obligations under the Lease, the Lease effectively terminated. By following the process 

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outlined in RSA 540, the Lease terminated as a matter of law prior to the commencement of this 

case. 

C. Lease as Executory Contract 

Because the Lease was terminated at the time the Debtor filed bankruptcy, the Lease was 

not an executory contract capable of being assumed under the Bankruptcy Code. An executory 

contract is “[a] contract under which the obligation of both the bankrupt and the other party to 

the contract are so far unperformed that the failure of either to complete performance would 

constitute a material breach excusing performance of the other.” King et al., Collier on

Bankruptcy ¶ 365.02[1] (15th rev. ed.1998) (quoting Countryman, Executory Contracts in

Bankruptcy, 57 Minn. L. Rev. 439, 446 (1973)). Under New Hampshire law, a material breach 

of contract must go to the root or essence of the agreement between the parties, and a breach is 

material if when “a party fails to perform a substantial part of the contract or one or more of its 

essential terms or conditions, the breach substantially defeats the contract’s purpose, or the 

breach is such that upon a reasonable interpretation of the contract, the parties considered the 

breach as vital to the existence of the contract.” Ellis v. Candia Trailers & Snow Equip., Inc., 

164 N.H. 457 (2012) (quoting 23 Williston on Contracts § 63:3, at 438-39 (4th ed.) (emphasis 

omitted). 

Giving the terms of the Lease their plain meaning, as required by New Hampshire 

contract law, the Debtor’s material obligations under the Lease were that the Debtor would pay 

rent to Farmington on a timely basis, pay all expenses, maintain insurance on the property, and 

maintain the property. The material obligations of Farmington under the Lease were that 

Farmington would provide use and quiet enjoyment of the premises during the lease term. The 

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Debtor’s breach of the Lease, and Farmington’s exercise of its remedies under RSA 540, set in 

motion a process that effectively terminated the ongoing obligations of the parties to each other 

under the Lease. Accordingly, under the material breach test, the Lease is not an executory 

contract, and cannot be assumed by the Debtor in bankruptcy. 

In arguing that Farmington’s Motion should be denied, the Debtor invited the Court to 

extend the rationale in In re Beeman, 235 B.R. 519 (Bankr. D.N.H. 1999), to this case. In 

Beeman, chapter 13 debtors filed a bankruptcy petition after a foreclosure auction of their 

principal residence had concluded but before the foreclosure deed was recorded. The Beeman

court held that the debtors still had a right to cure and reinstate their home mortgage pursuant to 

11 U.S.C. § 1322(c)(1) following the foreclosure auction but before the foreclosure sale was 

completed by recording the foreclosure deed. The court explained that § 1322(c)(1) was added 

by the Bankruptcy Reform Act of 1994 and statutorily reversed the holding of In re Hazleton, 

137 B.R. 560 (Bankr. D.N.H. 1992) (which had held that debtors no longer had any interest in 

property after a foreclosure auction), as applied to chapter 13 debtors. The court concluded that 

chapter 13 debtors have a federal interest in their principal residences up until the completion of 

the foreclosure process. The Debtor requests that the rationale of Beeman be extended to this 

case because, like the incomplete foreclosure process in Beeman, the eviction process has not 

been completed in this case and will not be completed until the Debtor is actually removed from 

the property by the sheriff. 

The Court cannot extend the Beeman decision for two reasons. First, the Beeman

decision rests on a statutory provision in chapter 13 that is not applicable in this chapter 11 case; 

the Debtor has not identified any federal interest, like that under § 1322(c)(1), that would allow 

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the Debtor to cure any defaults under the Lease in bankruptcy. Second, the Beeman decision 

was criticized in a recent appellate decision, and therefore its precedential value may be limited. 

TD Bank, N.A. v. LaPointe (In re LaPointe), BAP No. 13-029, 2014 WL 702035, (B.A.P. 1st 

Cir. Feb. 24, 2014) (concluding that the debtor did not have any legal or equitable interest in 

property after a foreclosure auction was held even though the foreclosure deed had not been 

recorded prepetition). 

 

IV. CONCLUSION

For the reasons outlined above, the Court concludes that the Lease terminated—within 

the meaning of §§ 541(b)(2), 362(b)(10), and 365(c)(3)—under state law before the Debtor filed 

its chapter 11 bankruptcy petition on July 19, 2013. Therefore any interest of the Debtor as 

lessee under the Lease did not become part of the Debtor’s bankruptcy estate, and the automatic 

stay does not prohibit any act by Farmington to obtain possession of the property. In addition, 

the Debtor has no ability to assume the Lease as it was terminated under applicable 

nonbankruptcy law prior to the order for relief. Accordingly, the Court will grant the Motion, 

to the extent necessary, so that Farmington may conclude the process of evicting the Debtor from 

its property. 

This opinion constitutes the Court=s findings of fact and conclusions of law in accordance 

with Federal Rule of Bankruptcy Procedure 7052. The Court will issue a separate order 

consistent with this opinion. 

 ENTERED at Manchester, New Hampshire. 

Date: March 27, 2014 /s/ Bruce A. Harwood

 Bruce A. Harwood 

 Chief Bankruptcy Judge 

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