Court Opinion

ID: 4255253
Source: CourtListenerOpinion
Date Created: 2018-03-15 21:00:37.714698+00
Date Added: 2024-06-11T14:44:28.942962
License: Public Domain

FILED
                                                             MAR 14 2018
 1                          NOT FOR PUBLICATION
                                                         SUSAN M. SPRAUL, CLERK
                                                           U.S. BKCY. APP. PANEL
 2                                                         OF THE NINTH CIRCUIT

 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
                              OF THE NINTH CIRCUIT
 4
 5   In re:                        )       BAP No. AZ-17-1291-LKuB
                                   )
 6   J & M FOOD SERVICES, LLC,     )       Bk. No. 2:17-bk-01466-DPC
                                   )
 7                  Debtor.        )
     ______________________________)
 8                                 )
     J & M FOOD SERVICES, LLC,     )
 9                                 )
                    Appellant,     )
10                                 )
     v.                            )       M E M O R A N D U M*
11                                 )
     CAMEL INVESTMENT L.L.C.,      )
12                                 )
                    Appellee.      )
13   ______________________________)
14                  Argued and Submitted on February 23, 2018
                               at Phoenix, Arizona
15
                             Filed - March 14, 2018
16
              Appeal from the United States Bankruptcy Court
17                      for the District of Arizona
18    Honorable Daniel P. Collins, Chief Bankruptcy Judge, Presiding
                         _________________________
19
     Appearances:      Jonathan P. Ibsen of Canterbury Law Group, LLP
20                     argued for Appellant; Teresa H. Foster of Brier
                       Irish Hubbard & Erhart, PLC argued for Appellee.
21                          _________________________
22
23   Before: LAFFERTY, KURTZ, and BRAND, Bankruptcy Judges.
24
25
26        *
            This disposition is not appropriate for publication.
27   Although it may be cited for whatever persuasive value it may
     have (see Fed. R. App. P. 32.1), it has no precedential value.
28   See 9th Cir. BAP Rule 8024-1.
 1        Debtor appeals the bankruptcy court’s order denying its
 2   motion to assume lease nunc pro tunc and granting Appellee’s
 3   motion for relief from stay.   We AFFIRM.
 4                                  FACTS
 5        Debtor J&M Food Services, LLC, is an Arizona limited
 6   liability company.   The original members of the Debtor were Jay
 7   Ji-Hoon Chung and Maggie Liao; Ms. Liao is now the sole member of
 8   the Debtor.   Beginning in May 2014, Debtor leased from Appellee
 9   Camel Investment L.L.C. (“Landlord”) commercial real property at
10   Camelback-Miller Plaza in Scottsdale, Arizona (the “Premises”).
11   Debtor operates a restaurant called Sushi J at the Premises.
12        Sometime in 2015, Landlord approached Mr. Chung about
13   relocating Sushi J from the Premises to Landlord’s nearby
14   property in the Camelback-Miller Plaza (“Replacement Premises”).
15   Landlord hired an architect and an interior designer to draw up
16   plans for the Debtor’s relocation into the Replacement Premises,
17   which was a former Arby’s restaurant location.   Ms. Liao and
18   Mr. Chung were apparently willing to relocate Sushi J to this
19   building, but even if they had been unwilling, the lease gave
20   Landlord the right to relocate Debtor’s operation to another
21   location in the shopping center.
22        On July 8, 2016, the Landlord executed a letter of intent
23   providing for an entity called D’Lite to occupy the Premises
24   beginning April 1, 2017.   But rather than relocate the Debtor to
25   the Replacement Premises, Landlord entered into a lease for the
26   Replacement Premises with P&J Food Services, LLC (“P&J”), a
27   limited liability company owned by Pajman Mir Malihi.   Ms. Liao
28   claimed that Mr. Chung was a silent partner with Mr. Malihi in

                                     -2-
 1   P&J, which opened a restaurant named “J’s Kaiyo Sushi & Bar” in
 2   the Replacement Premises.
 3        According to Ms. Liao’s trial testimony, Mr. Chung, her ex-
 4   boyfriend, began diverting funds from J&M and became physically
 5   abusive toward Ms. Liao.    As a result, in June of 2016 she asked
 6   him to move out of the apartment they shared.     Then, in July of
 7   2016, Mr. Chung obtained a protective order against Ms. Liao to
 8   keep her from the restaurant.
 9        In January 2017, Ms. Liao commenced litigation in Arizona
10   Superior Court against Mr. Chung, Landlord, and others, alleging,
11   among other things, that money was being diverted from the Debtor
12   by Mr. Chung and that Mr. Chung had colluded with Landlord to
13   enable Mr. Chung to usurp the Debtor’s opportunity to lease the
14   Replacement Premises.1   The state court appointed a receiver for
15   the Debtor.
16        On February 17, 2017, Landlord sent a letter to the Debtor
17   and to Ms. Liao’s attorney declaring a default under the lease
18   due to the state court’s appointment of a receiver and declaring
19   the Lease immediately terminated.      That night, Richard and Jane
20   Green and Ms. Liao slept in the Premises in hopes of staving off
21   any attempts by the Landlord to shutter the Premises.     The next
22   day, fearing a lockout of the Premises by Landlord, Ms. Liao
23   caused the Debtor to file a chapter 112 bankruptcy petition.
24
          1
            In the bankruptcy case, Debtor filed an adversary
25   proceeding against Landlord, Chung, Mr. Malihi, P&J, and others,
26   seeking, among other things, damages for stay violations and
     fraudulent transfers.
27
          2
              Unless specified otherwise, all chapter and section
28                                                        (continued...)

                                      -3-
 1        On March 1, 2017, Landlord filed its motion for stay relief
 2   (“First Stay Lift Motion”), claiming the lease was not property
 3   of the bankruptcy estate based on its notice of termination.
 4   Debtor opposed the First Stay Lift Motion.   The court denied the
 5   motion after a hearing, finding that the notice of termination
 6   violated the receivership order and was thus ineffective to
 7   terminate the Lease.
 8        It is undisputed that the 120-day deadline under § 365(d)(4)
 9   for the Debtor to assume or reject the lease expired on June 18,
10   2017, and that Debtor neither moved to assume the lease nor
11   requested an extension of the deadline.   On June 23, 2017, the
12   Landlord filed another motion to lift the automatic stay (the
13   “Second Stay Lift Motion”), seeking relief on the ground that
14   because Debtor failed to file a timely motion to assume the
15   Lease, the Lease was deemed rejected and the Premises must be
16   surrendered to the Landlord.   One week later, Debtor filed a
17   motion to assume lease nunc pro tunc (“Assumption Motion”).     In
18   the Assumption Motion, counsel explained that the assumption
19   deadline had been missed due to “chaos” at Debtor’s counsel’s law
20   firm following the sudden death of one of its partners on
21   April 14, 2017.   Debtor requested the court use its equitable
22   powers under § 105(a) to allow assumption of the Lease nunc pro
23   tunc.    Debtor argued that Landlord knew Debtor intended to assume
24   the Lease based on discussions between its counsel and Debtor’s
25
          2
26         (...continued)
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, all
27   “Rule” references are to the Federal Rules of Bankruptcy
     Procedure, and all “Civil Rule” references are to the Federal
28   Rules of Civil Procedure.

                                      -4-
 1   counsel, statements made by Debtor’s counsel at the First Stay
 2   Lift hearing, and the fact that Debtor had paid pre- and
 3   postpetition rent.   Landlord opposed the Assumption Motion, and
 4   the bankruptcy court held a hearing on both motions.   After
 5   hearing argument, the bankruptcy court set the matters for an
 6   evidentiary hearing on whether an oral motion to assume had been
 7   made or whether there had been a de facto assumption of the
 8   Lease.
 9        At the evidentiary hearing, Ms. Liao and Mr. Greene
10   testified on Debtor’s behalf, and Fredrick Touton, an employee of
11   Landlord’s property manager, testified on behalf of Landlord.
12   Ms. Liao testified that since the petition date, she had brought
13   current postpetition rent and common area maintenance (“CAM”)
14   charges, continued to operate the restaurant, performed repairs
15   to the Premises, and protested Jay’s Kaiyo Sushi & Bar’s liquor
16   license application.    Ms. Liao also testified that she had been
17   notified by the City of Scottsdale that the restaurant’s grease
18   traps needed to be replaced, and that she or her attorneys had
19   notified Landlord of this issue.   Mr. Touton testified that he
20   was unaware of any of these actions until shortly before the
21   evidentiary hearing.3
22        At closing arguments, Debtor’s counsel requested production
23   of certain emails between Landlord and D’Lite which Mr. Touton
24   had referred to during cross-examination.   The bankruptcy court
25   stated that the emails were irrelevant to the question before it
26
27
          3
            The trial exhibits were not included in Appellant’s
28   excerpts of record.

                                      -5-
 1   and denied the request.
 2        The bankruptcy court entered written findings and
 3   conclusions in its Under Advisement Order Re Commercial Real
 4   Property Lease.    The bankruptcy court found that the Lease with
 5   Landlord was deemed rejected on June 19, 2017, that Debtor had
 6   not made either an oral or written motion to assume the Lease,
 7   that Landlord had not waived its § 365(d)(4) rights, and that
 8   Landlord’s conduct had not estopped it from enforcing those
 9   rights.    The bankruptcy court also declined to invoke its
10   § 105(a) powers to permit a nunc pro tunc assumption of the
11   Lease.    Thereafter the court entered its order granting
12   Landlord’s Second Stay Lift Motion and denying Debtor’s
13   Assumption Motion.    Debtor timely appealed.
14                                JURISDICTION
15        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
16   §§ 1334 and 157(b)(2)(G) and (M).       We have jurisdiction under
17   28 U.S.C. § 158.
18                                   ISSUES4
19        Whether the bankruptcy court abused its discretion in
20   denying Debtor’s request to order Landlord to produce emails.
21        Whether the bankruptcy court erred in denying Debtor’s
22   Assumption Motion.
23                             STANDARDS OF REVIEW
24        We review the bankruptcy court’s evidentiary rulings for
25   abuse of discretion; we do not reverse unless the error was
26
27
          4
            Debtor did not assign error to the portion of the
28   bankruptcy court’s order granting the Second Stay Lift Motion.

                                       -6-
 1   prejudicial.   Hudson v. Martingale Inv., LLC (In re Hudson),
 2   504 B.R. 569, 573 (9th Cir. BAP 2014).    A bankruptcy court abuses
 3   its discretion if it applies the wrong legal standard, misapplies
 4   the correct legal standard, or if its factual findings are
 5   clearly erroneous.   TrafficSchool.com, Inc. v. Edriver Inc.,
 6   653 F.3d 820, 832 (9th Cir. 2011).
 7        We review the bankruptcy court’s findings of fact for clear
 8   error, and its conclusions of law de novo.   Ariz. Appetito’s
 9   Stores, Inc. v. Paradise Village Inv. Co. (In re Ariz. Appetito’s
10   Stores, Inc.), 893 F.2d 216, 218 (9th Cir. 1990).
11        A court’s factual determination is clearly erroneous if it
12   is illogical, implausible, or without support in the record.
13   United States v. Hinkson, 585 F.3d 1247, 1261–62 & n.21 (9th Cir.
14   2009) (en banc) (quoting Anderson v. City of Bessemer City,
15   470 U.S. 564, 577 (1985)).   Where there are two permissible views
16   of the evidence, the factfinder’s choice between them cannot be
17   clearly erroneous.   Anderson, 470 U.S. at 574; see also Hinkson,
18 585 F.3d at 1260 (recognizing the rule that a trial court’s
19   choice between two permissible views of the weight of evidence is
20   not clearly erroneous where the evidence would support a
21   conclusion either way, citing United States v. Yellow Cab Co.,
22   338 U.S. 338, 342 (1949)).
23                                DISCUSSION
24        Section 365(d)(4) of the Bankruptcy Code governs the
25   assumption or rejection of an unexpired nonresidential lease of
26   real property in a chapter 11 case, providing in relevant part:
27             [A]n unexpired lease of nonresidential real
          property under which the debtor is the lessee shall be
28        deemed rejected, and the trustee shall immediately

                                     -7-
 1          surrender that nonresidential real property to the
            lessor, if the trustee does not assume or reject the
 2          unexpired lease by the earlier of —
 3               (i) the date that is 120 days after the date of
            the order for relief; or
 4
                 (ii) the date of the entry of an order confirming
 5          a plan.
 6          The trustee or debtor-in-possession must timely perform all
 7   postpetition obligations of the debtor under the lease pending
 8   assumption or rejection.    § 365(d)(3).
 9          Lease rejection upon the expiration of the § 365(d)(4)
10   deadline occurs automatically without need for court approval,
11   and once statutory rejection has occurred, that rejection is
12   conclusive.    In re Ariz. Appetito’s Stores, Inc., 893 F.2d at
13   219.    Once the lease is deemed rejected, the debtor must
14   immediately surrender the leased property to the lessor.      Sea
15   Harvest Corp. v. Riviera Land Co., 868 F.2d 1077, 1079 (9th Cir.
16   1989).
17          As noted, the parties do not dispute that Debtor did not
18   file a motion to assume the Lease before the expiration of the
19   § 365(d)(4) deadline.    Accordingly, Debtor may prevail in this
20   appeal only if there is a basis to override the deadline.      The
21   bankruptcy court found none.    Specifically, the bankruptcy court
22   concluded that (i) under applicable Ninth Circuit authority, it
23   had no power to deem the parties’ actions or inactions as an
24   implicit, de facto, or oral motion to assume the lease; and (ii)
25   neither waiver nor estoppel were available to overcome statutory
26   rejection of a lease under § 365, but even if they were, the
27
28

                                      -8-
 1   evidence did not support either theory.5
 2   A.   The bankruptcy court did not abuse its discretion in denying
          Debtor’s oral motion to produce emails.
 3
 4        At the evidentiary hearing, Debtor’s counsel cross-examined
 5   Mr. Touton regarding email communications between Landlord and
 6   D’Lite, the entity with which Landlord had negotiated a lease of
 7   the Premises.   Mr. Touton indicated that he had emailed the
 8   principal of D’Lite several times after the bankruptcy filing to
 9   keep the company abreast of the developments in the bankruptcy.
10   When asked whether he had produced those emails for the
11   evidentiary hearing, Mr. Touton explained that he had not because
12   the “negotiation emails” were requested, which he interpreted as
13   only those emails transmitted before the lease terms had been
14   finalized.
15        After testimony had concluded, Debtor’s counsel requested
16   that those emails be produced because they might contain a
17   statement that the Lease had been assumed.   The bankruptcy court
18   stated that the emails were irrelevant to the question before it
19   and denied the request.   Debtor provides no authority for its
20   assertion that this ruling was an abuse of discretion or that it
21   prejudiced Debtor, stating only: “The lower Court declined to
22   provide Debtor’s counsel the negative inference, thereby
23   validating Landlord’s intentional misconduct to withhold evidence
24
25        5
            The bankruptcy court also ruled that its equitable powers
26   under § 105(a) could not be invoked to save a debtor who failed
     to timely assume an unexpired lease and that mistake or excusable
27   neglect under Civil Rule 60, applicable via Rule 9024, could not
     be invoked to overcome the statutory lease assumption deadline.
28   Debtor has abandoned these issues on appeal.

                                     -9-
 1   supportive of a lease Assumption [sic].   This was error.”     We
 2   find no basis to reverse the bankruptcy court’s evidentiary
 3   ruling.
 4   B.   The bankruptcy court did not err in concluding that the
          parties’ conduct did not constitute an implicit, de facto,
 5        or oral motion to assume.
 6        An oral motion to assume a lease must fit the definition of
 7   a motion.   Sea Harvest Corp., 868 F.2d at 1080.   Rule 6006(a)
 8   provides that “[a] proceeding to assume, reject, or assign an
 9   executory contract or unexpired lease, other than part of a plan,
10   is governed by Rule 9014.”   Rule 9014, in turn, provides that
11   “relief shall be requested by motion, and reasonable notice and
12   opportunity for hearing shall be afforded the party against whom
13   relief is sought.”   Additionally, Rule 9013 requires that a
14   request for an order must be made by written motion unless made
15   during a hearing, and that the motion “shall state with
16   particularity the grounds therefor, and shall set forth the
17   relief or order sought.”
18        In its Under Advisement Order, the bankruptcy court listed
19   the actions of the Debtor and Landlord that Debtor argued
20   constituted an implicit or de facto assumption.    These are
21   (i) Debtor vigorously opposed the First Stay Lift Motion, arguing
22   that without its access to the Premises through the Lease, the
23   Debtor’s contemplated chapter 11 plan would be crippled;
24   (ii) Debtor’s Pre-Confirmation Report noted that Debtor intended
25   to file a plan of reorganization “that will enable it to continue
26   operating the restaurant postconfirmation”; (iii) the
27   Pre-Confirmation Report suggested the possibility of retaining a
28   reputation manager to help regain the restaurant’s online

                                    -10-
 1   presence; (iv) a February 27, 2017 letter from Debtor’s counsel
 2   to Landlord’s counsel noted that the Lease was property of the
 3   Debtor’s bankruptcy estate and referenced Debtor’s intentions
 4   concerning the Lease;6 (v) Debtor objected to the liquor license
 5   application of the competing sushi restaurant slated to occupy
 6   the Replacement Premises because Debtor feared the damage that
 7   competition would cause to the Debtor’s business location;
 8   (vi) postpetition, Debtor paid the 2016 CAM charges assessed by
 9   the Landlord, arguably paid the Landlord for the January 2017
10   rent, and was current on postpetition payments due under the
11   Lease that Landlord demanded and accepted postpetition;
12   (vii) Ms. Liao advanced $20,000 postpetition to keep the Debtor’s
13   restaurant operating at the Premises; (viii) Debtor’s prepetition
14   lawsuit against Landlord and others sought damages arising out of
15   Landlord allowing the Replacement Premises to be occupied by a
16   competing business, which was apparently connected to Chung;
17   (ix) Debtor filed an adversary proceeding in this bankruptcy that
18   evidences its intent to run its sushi business in either the
19   Premises or the Replacement Premises; (x) postpetition emails and
20   other communications between the Landlord and the Debtor’s
21   representatives concerning rent, grease trap repairs, and the
22   Replacement Premises reflect Debtor’s intent to remain in the
23   Premises and that the Landlord knew or should have realized this
24   fact; and (xi) Debtor incurred and paid for several postpetition
25   repair bills at the Premises.
26        Based on the foregoing, the bankruptcy court found that
27
28        6
              This letter was not included in the excerpts of record.

                                     -11-
 1   “Debtor’s filings with the bankruptcy court and oral
 2   representations before this Court were consistent with the
 3   Debtor’s intent to assume the Lease, and . . . the Debtor’s
 4   desire was known (or should have been understood) by the
 5   Landlord.”   But the bankruptcy court rejected the notion that the
 6   parties’ statements and understandings constituted an oral motion
 7   to assume the Lease, noting that at no point did Debtor request
 8   that the court enter an order approving the assumption of the
 9   Lease, nor was the Landlord given reasonable notice and
10   opportunity for hearing.   The evidence supports this finding.7
11        As for implicit or de facto assumption, this Panel has held
12   that a lease may not be assumed by conduct.   Treat Fitness Ctr.,
13   Inc. v. Rainbow Inv. Co. (In re Treat Fitness Ctr., Inc.),
14   60 B.R. 878, 878 (9th Cir. BAP 1986).   In that case, the Panel
15   interpreted § 365 and Rule 6006 to require a formal motion to
16   assume, “thus overruling cases under the former Bankruptcy Act
17   that required courts to judge whether words or deeds, often
18   ambiguous at best, constituted an assumption or rejection of a
19   lease or executory contract.”   Id. at 879.   The bankruptcy court
20   thus concluded that, regardless of its finding that Debtor
21   intended to assume the Lease and the Landlord knew or should have
22   known of this fact, the court could not find a de facto or
23   implicit assumption of the Lease in the absence of a timely
24   motion to assume that complied with applicable Bankruptcy Rules.
25   We find no error in this conclusion.
26
          7
27          Despite Debtor’s argument that statements made by counsel
     at the April 27 hearing constituted an oral motion to assume, no
28   transcript of that hearing was offered into evidence.

                                     -12-
 1        Debtor urges this Panel to follow the reasoning of USPG
 2   Portfolio Two, LLC v. Sportsman Link, Inc. (In re Sportsman’s
 3   Link, Inc.), No. 07-10454, 2007 WL 7023835 (Bankr. S.D. Ga.
 4   Oct. 31, 2007).   In that case, the bankruptcy court found that
 5   the debtor had timely requested the court’s permission to assume
 6   a nonresidential real property lease.   In so finding, the court
 7   interpreted debtor’s requests for permission to sublease the
 8   premises as an oral motion to assume because such a request
 9   necessarily presupposed that the debtor would assume the lease.
10   Id. at *4.   But we are not bound by this opinion, which is
11   directly contradictory to applicable Ninth Circuit authority.
12   Sea Harvest Corp., 868 F.2d at 1080.
13        Debtor also contends that the bankruptcy court erred in
14   concluding that there was no de facto assumption of the Lease,
15   citing the fact that the Landlord accepted prepetition rent and
16   CAM charges postpetition.8   But under In re Treat Fitness Center,
17   which establishes a bright line rule that an assumption be
18   accomplished by formal motion, the acceptance of prepetition
19   obligations is irrelevant to whether there was a de facto or
20   implicit assumption.
21   C.   The bankruptcy court did not err in concluding that the
          Landlord’s position was not barred by the doctrines of
22        waiver and estoppel.
23        We have found no controlling authority in the Ninth Circuit
24   regarding whether the doctrines of waiver and estoppel are
25
          8
26          As discussed below, the parties disputed whether the CAM
     charges were pre- or postpetition obligations; the bankruptcy
27   court found that they were prepetition obligations, relying on
     In re Ames Dept. Stores, Inc., 136 B.R. 353, 356 (Bankr. S.D.N.Y.
28   1992).

                                    -13-
 1   available to bar a lessor from asserting that a lease has been
 2   deemed rejected under § 365(d)(4).      Bankruptcy courts in this
 3   circuit are divided on the issue.      See, e.g., In re Sjoquist,
 4   484 B.R. 207 (Bankr. C.D. Cal. 2012) (waiver and estoppel
 5   defeated landlord’s claim of rejection); In re VMS Nat’l Props.,
 6   148 B.R. 942 (Bankr. C.D. Cal. 1992) (lessor waived rights under
 7   § 365(d)(4) by accepting prepetition rents); In re Chandel
 8   Enters., Inc., 64 B.R. 607 (Bankr. C.D. Cal. 1986) (concluding
 9   that waiver and estoppel are not available in the context of
10   § 365(d)(4)).
11        In George v. Morro Bay (In re George), 177 F.3d 885 (9th
12   Cir. 1999), the Ninth Circuit Court of Appeals examined whether a
13   lessor that had demanded and accepted rent from the debtors after
14   the expiration of the § 365(d)(4) assumption deadline could be
15   barred by the doctrines of waiver or estoppel from asserting that
16   the lease had been rejected.    The Court of Appeals declined to
17   decide whether those doctrines were available at all in the
18   context of § 365(d)(4), instead concluding that the lessor’s
19   conduct did not constitute a waiver or justify application of
20   equitable estoppel.
21        Here, the bankruptcy court concluded that waiver and
22   estoppel are not available to contravene the requirements of
23   § 365(d)(4).    The court found persuasive In re Chandel
24   Enterprises and rejected the reasoning of In re VMS Nat’l
25   Properties, a case relied upon by Debtor.
26        In In re Chandel Enterprises, the bankruptcy court
27   interpreted this Panel’s decision in In re Treat Fitness and the
28   Ninth Circuit’s decision in Lovitt v. Appleatchee Riders Ass’n

                                     -14-
 1   (In re Lovitt), 757 F.2d 1035 (9th Cir. 1985), as precluding the
 2   application of waiver or estoppel in the § 365(d)(4) context.        In
 3   In re Lovitt, the Court of Appeals held that once an executory
 4   contract is deemed rejected it is no longer property of the
 5   bankruptcy estate. 757 F.2d at 1041.9    The bankruptcy court in
 6   Chandel concluded that finding an assumption based on a
 7   landlord’s alleged waiver would defeat the purpose of and the
 8   result required by § 365(d)(4). 64 B.R. at 610.      As for
 9   estoppel, the court found that failure to assume the lease
10   properly resulted in automatic rejection and extinguished any and
11   all interest of the debtor in the leasehold such that the court
12   had no jurisdiction to resurrect it.      Id.   The bankruptcy court
13   further concluded that Treat Fitness’s holding that assumption
14   may only be accomplished by a timely formal motion necessarily
15   precluded using waiver or estoppel to accomplish an assumption.
16   Id.   “If either waiver or estoppel were applicable, the
17   Congressional intent in enacting the 1984 amendments, eliminating
18   uncertainty regarding the status of nonresidential leases and
19   requiring the debtor-in-possession to take affirmative action to
20   assume the lease would be circumvented.”        Id. (citation omitted).
21         In In re VMS National Properties, the bankruptcy court ruled
22   that a lessor waived the assumption deadline under § 365(d)(4) by
23   accepting a partial prepetition cure and postpetition payments
24   after the expiration of that deadline.      The bankruptcy court in
25
           9
26          Although Lovitt was decided under the Bankruptcy Act,
     subsequent cases decided under the Bankruptcy Code also hold that
27   the rejection of an unexpired lease removes the lease from the
     bankruptcy estate. In re Onecast Media, Inc., 439 F.3d 558, 563
28   (9th Cir. 2006).

                                    -15-
 1   VMS did not consider In re Treat Fitness or In re Chandel, and
 2   instead cited bankruptcy cases from outside the Ninth Circuit for
 3   the proposition that waiver and estoppel are available in the
 4   § 365(d)(4) context.10
 5        We find it unnecessary to determine whether, as a matter of
 6   law, waiver or estoppel may be applied in the context of
 7   § 365(d)(4) because we agree with the bankruptcy court that even
 8   if those doctrines are available, they do not apply in this
 9   instance.
10        1.     Waiver
11        To determine that a waiver has occurred, the bankruptcy
12   court would need to find “(1) the existence at the time of the
13   waiver of a right, privilege, advantage or benefit; (2) the
14   actual or constructive notice thereof; and (3) the intention to
15   relinquish such right, privilege, advantage or benefit.”   In re
16   George, 177 F.3d at 889.
17        It is undisputed that the first two elements are met.
18   Debtor focuses its arguments on the Landlord’s intent to
19   relinquish its rights under § 365(d)(4), relying on the conduct
20   listed in section B above.   But here, unlike the lessor in In re
21   VMS Nat’l Properties, Landlord took no action post-rejection that
22   was inconsistent with rejection.   Landlord filed its Second Stay
23   Lift Motion four days after the lease was deemed rejected.
24
25        10
            In re Car–Gill, Inc., 125 B.R. 133 (Bankr. E.D. Pa.
26   1991); In re Austin, 102 B.R. 897 (Bankr. S.D. Ga. 1989);
     In re T.F.P. Resources, Inc., 56 B.R. 112 (Bankr. S.D.N.Y. 1985);
27   In re By–Rite Distrib., Inc., 47 B.R. 660, 670, n.16 (Bankr. D.
     Utah 1985), rev’d on other grounds sub nom, By–Rite Distrib.,
28   Inc. v. Brierley, 55 B.R. 740 (D. Utah 1985).

                                    -16-
 1   Moreover, per § 365(d)(3), the Landlord’s acceptance of
 2   postpetition rents could not have been a waiver, as that
 3   subsection provides that acceptance of performance of
 4   postpetition lease obligations does not constitute a waiver or
 5   relinquishment of lessor’s rights under the lease.   As for the
 6   acceptance of prepetition amounts due, the evidence is unclear as
 7   to whether or when the January 2017 rent was paid, and, based on
 8   Mr. Touton’s testimony, the Landlord believed that the 2016 CAM
 9   charges were postpetition obligations.
10        2.   Estoppel
11        A finding of inequitable conduct is necessary to estop a
12   landlord from asserting its § 365(d)(4) rights.   Id. at 889-90.
13   Here, the court found that Landlord did not act inequitably
14   postpetition in dealing with the Debtor and its representatives.
15   The bankruptcy court acknowledged that other conclusions might be
16   drawn based on Landlord’s prepetition conduct relative to the
17   Relocation Premises, but that conduct was not relevant to a
18   determination of whether Landlord should be equitably estopped
19   from asserting its rights under § 365(d)(4); instead it could be
20   addressed in the pending adversary proceeding or state court
21   action.
22        Debtor contends that the bankruptcy court clearly erred in
23   finding that the Landlord did not engage in inequitable conduct,
24   pointing out that the evidence at trial showed that Landlord’s
25   representative stated to Ms. Liao that she “took over the lease”
26   and thus had to pay the prepetition rent and CAM charges.
27   Ms. Liao testified that in April 2017 she went to the Landlord’s
28   office to pay the May rent and was told by a man she described as

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 1   “a skinny guy and like 40 something years old” that she had to
 2   pay the 2016 CAM charges “because this summer you ran it only by
 3   yourself.   You took over the lease.   You have to pay for this.”
 4   Debtor interprets the statement “you took over the lease” as
 5   evidence that Landlord thought Debtor had assumed the lease, but
 6   it is also plausible that the statement referred to the fact
 7   that, prepetition, Ms. Liao had taken over managing the business
 8   in place of Mr. Chung.   The parties did not elicit testimony to
 9   clarify that point, and the bankruptcy court made no finding.
10   Accordingly, the cited testimony, without more, is inadequate to
11   support a finding of inequitable conduct.   Thus the bankruptcy
12   court did not err in finding no basis to apply equitable
13   estoppel.
14        3.     Whether the CAM charges arose pre-or postpetition is
                 irrelevant to the analysis of whether Landlord waived
15               or should be estopped from asserting its rights under
                 § 365(d)(4).
16
17        The bankruptcy court concluded that the 2016 CAM charges
18   were prepetition claims pursuant to In re Ames Dept. Stores,
19 136 B.R. at 356 (amounts charged to a debtor for common area
20   maintenance expenses and real estate taxes were unmatured,
21   prepetition obligations, not postpetition obligations subject to
22   immediate payment).   Seizing on this conclusion, Debtor argues
23   that Ames Department Stores supports its argument that the
24   Landlord demanded payment of prepetition amounts.    Landlord
25   points to the conflicting decision of In re R.H. Macy & Co, Inc.,
26   152 B.R. 869 (Bankr. S.D.N.Y. 1993), in which the bankruptcy
27   court found that even if such a debt arose prepetition, there was
28   no obligation for the Debtor to perform prepetition.    Landlord

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 1   argues that under R.H. Macy, Debtor’s obligation to reimburse
 2   Landlord for the CAM charges did not arise until Landlord
 3   presented the CAM reconciliation to Debtor postpetition.
 4        Regardless of whether the CAM charges are deemed pre- or
 5   postpetition obligations, there is no evidence to support the
 6   conclusion that acceptance of payment for those charges amounted
 7   to a waiver or constituted grounds for estoppel.   There is no
 8   evidence in the record that the personnel who demanded payment of
 9   the CAM charges did so knowing that those charges were
10   prepetition claims.   In fact, at the evidentiary hearing,
11   Mr. Touton testified that he did not believe the 2016 CAM charges
12   represented prepetition charges because they did not come due
13   until March 20, 2017.   This testimony negates any inference that
14   Landlord intentionally relinquished its rights under § 365(d)(4)
15   or acted inequitably in demanding payment.
16        Accordingly, whether the CAM charges are deemed to be pre-
17   or postpetition does not impact the outcome of this appeal.
18                               CONCLUSION
19        For the reasons explained above, we AFFIRM.
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