Opinion ID: 503091
Heading Depth: 3
Heading Rank: 2

Heading: Defaults Under the Lease

Text: 37 At the time the bankruptcy court authorized the trustee to assume the lease, rent and other monetary defaults, including the failure to maintain insurance on the leased premises, remained uncured. Vanderpark argues that there also were additional uncured nonmonetary defaults consisting of failure to make repairs, abandonment of the lease, and an improper attempt to assign the lease. 38 As to the monetary defaults, the evidence before the bankruptcy court established that the trustee tendered a check to Vanderpark in satisfaction of these defaults, including reimbursement to Vanderpark of the costs of insuring the property. There is nothing in the record to suggest the check was not a sufficient tender to cure the defaults, yet Vanderpark refused to accept it. 39 When a party makes an unconditional offer to perform, coupled with the present ability to perform, and the party to whom the tender is made refuses to accept the tender, the [t]ender gives a right to performance from the other party. Guy F. Atkinson Co. of California & Subsidiaries v. Commissioner, 814 F.2d 1388, 1393 (9th Cir.1987). By analogy to these general principles of contract law, when a trustee having the ability to perform, tenders payment of outstanding monetary defaults so that he may assume a lease, the lessor cannot prevent the assumption by refusing to accept the tender. 40 As to the claimed nonmonetary defaults, the Bankruptcy Code provides that a trustee may not assume a lease under which the debtor is in default, unless, at the time of the assumption, the trustee 41 (A) cures, or provides adequate assurance that the trustee will promptly cure, such default; 42 (B) compensates, or provides adequate assurance that the trustee will promptly compensate, a party other than the debtor to such ... lease, for any actual pecuniary loss to such party resulting from such default; and 43 (C) provides adequate assurance of future performance under such ... lease. 44 11 U.S.C. Sec. 365(b)(1). 45 Buchbinder's original motion to assume the lease was made on behalf of WFL # 1, the entity he believed to be the lessee of the property. Vanderpark contested the assumption on two grounds; first it argued that WFL # 1 was not the lessee under the lease, and second, Vanderpark asserted the existence of the monetary defaults. After Buchbinder filed WFI's Chapter 7 petition and moved to assume the lease, the bankruptcy court permitted the assumption conditioned on the trustee's cure of all existing monetary defaults. Only when the trustee moved to sell the lease did Vanderpark belatedly raise its claim of nonmonetary defaults. As we read the record, the bankruptcy court found the alleged nonmonetary defaults were not of sufficient substance to preclude assumption of the lease. This finding is not clearly erroneous. Moreover, when the court approved the sale of the lease, it conditioned its approval upon the assurance of the assignee's future performance of all lease covenants. 46 We conclude that under these circumstances, the alleged monetary and nonmonetary defaults did not preclude the trustee's assumption of the lease.