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In re Kupfer

United States District Court, N.D. California

August 26, 2014

In re KUPFER; KUPFER, et al., Appellants,
v.
SALMA, et al., Appellees

Page 813

For Konstantin Kupfer, Debtor, Margarita Kupfer, Debtor, Appellants: Iain A. Macdonald, LEAD ATTORNEY, Macdonald | Fernandez LLP, San Francisco, CA; Matthew Jon Olson, Macdonald Fernandez LLP, San Francisco, CA; Merle Cooper Meyers, Meyers Law Group, PC, San Francisco, CA; Reno F.R. Fernandez, III, Macdonald Fernandez, San Francisco, CA United State.

For Karim Salma, Creditor, Roberta Salma, Creditor: as Trustees of the Salma Family Trust, Lindsey S. Bruel, Creditor, Riyad R. Salma, Creditor, Miscellaneous: Merle Cooper Meyers, LEAD ATTORNEY, Meyers Law Group, PC, San Francisco, CA; Michele Thompson, LEAD ATTORNEY, Meyers Law Group, P.C., San Francisco, CA; Philip Sochet Keith, LEAD ATTORNEY, Attorney at Law, San Francisco, CA.

For Laith K. Salma, Creditor, Miscellaneous: Merle Cooper Meyers, Meyers Law Group, PC, San Francisco, CA.

Judge Dennis Montali, Miscellaneous, Pro se, San Francisco, CA.

USBC Manager-San Francisco, Miscellaneous, Pro se, San Francisco, CA.

Page 814

ORDER AFFIRMING BANKRUPTCY COURT'S ORDER

Re: Dkt. No. 1

WILLIAM H. ORRICK, United States District Judge.

INTRODUCTION

This bankruptcy appeal raises the question of the extent to which attorney's fees and costs awarded against the Debtors, Konstantin and Margarita Kupfer, in a pre-petition arbitration proceeding that established the Debtors' obligation to Creditors for the breach of two leases are subject to the Bankruptcy Code's cap on claims by creditors for damages resulting from the termination of a lease.[1] The Hon. Dennis Montali of the United States Bankruptcy Court determined that the fees and costs are not capped. I agree -- the fees and costs are collateral damages. The order of the Bankruptcy Court is AFFIRMED.

BACKGROUND

The facts of this case are not in dispute. The Debtors were tenants of the Creditors under two separate commercial leases for property located at 1375-1395 Burlingame Avenue, Burlingame, California. Excerpts of Record (" E.R." ), Dkt. No. 7-1, 35. The Debtors defaulted on each lease at different times prior to their bankruptcy petition. E.R. 39-41.

I. PRE-PETITION

A. Suite 106

The Debtors--at that time, the tenants--entered a 10-year lease for Suite 106 in March 2008. E.R. 35. They took possession on May 20, 2008. Id. In September 2009, they stopped paying the minimum

Page 815

rent due, thereby breaching the lease. E.R. 40. However, the Debtors continued to occupy the property. Id. The Creditors--at that time, the landlords--commenced an action for unlawful detainer on March 14, 2011. E.R. 36. The Debtors then filed counterclaims for breach of contract, constructive eviction, negligent interference with contract, nuisance, and other causes of action. Id. The parties later stipulated to a move-out date of May 2, 2011, and brought their disputes to arbitration under the lease's binding arbitration procedure. E.R. 36, 83-85.

In arbitration, the Creditors were awarded $241,893 for unpaid rent and late fees from September 2009 until the stipulated move-out date of May 2, 2011; $140,768.65 for rent and interest from the move-out date until the arbitration began on October 15, 2012; and $495,805 for the remainder of rent due under the lease term, ending June 30, 2019, after ...


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