Adelphia Bus. Solutions, Inc. v. Abnos, No. 05-6622 (2d Cir. 2007)

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05-6622-bk Adelphia Bus. Solutions, Inc. v. Abnos 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 4 August Term 2006 5 (Argued: October 11, 2006 6 Decided: April 13, 2007) Docket No. 05-6622-bk 7 -------------------------------------------------------x 8 ADELPHIA BUSINESS SOLUTIONS, INC., 9 Debtor-Appellee, 10 11 -- v. -NICHOLAS ABNOS, 12 Appellant. 13 -------------------------------------------------------x 14 15 16 B e f o r e : 17 JACOBS, Chief Judge, WALKER, Circuit Judge, and O CONNOR,* Associate Justice Retired. Appeal from a judgment of the United States District Court 18 for the Southern District of New York (Alvin K. Hellerstein, 19 Judge), affirming the bankruptcy court s retroactive approval of 20 the decision of debtor-appellee Adelphia Business Solutions, Inc. 21 to reject under 11 U.S.C. § 365(a) an unexpired, nonresidential 22 lease with lessor Nicholas Abnos. * On appeal, Abnos argues that The Honorable Sandra Day O Connor, Associate Justice (Retired) of Supreme Court of the United States, sitting by designation. -1- 1 the bankruptcy court lacked equitable authority to make its 2 rejection order retroactive or, should we find that it had that 3 power, abused its discretion in doing so. 4 AFFIRMED. 5 6 7 MICHAEL P. RICHMAN, Foley & Lardner LLP, New York, New York, for Appellant. 8 9 10 JUDY G.Z. LIU, Weil, Gotshal & Manges LLP, New York, New York, for Debtor-Appellee. 11 12 JOHN M. WALKER, JR., Circuit Judge: In this appeal from a November 15, 2005 judgment of the 13 United States District Court for the Southern District of New 14 York (Alvin K. Hellerstein, Judge), a bankruptcy court granted a 15 debtor s motion to reject an unexpired commercial lease pursuant 16 to 11 U.S.C. § 365(a) nunc pro tunc to a date nearly three years 17 earlier when it first told the parties of its intention to make 18 the order retroactive. 19 hold that the bankruptcy court acted within its discretion. Under the circumstances of this case, we 20 BACKGROUND 21 Nicholas Abnos owns the Historic Firestone Building, 22 located in Kansas City, Missouri. On September 18, 2001, 23 Adelphia Business Solutions, Inc. ( Adelphia ) entered into two 24 companion leases for the Firestone Building. 25 to two floors of the Firestone Building (the Building Lease ); 26 the other, to an annex of the same property (the Annex Lease ). 27 On March 27, 2002, Adelphia commenced voluntary proceedings under -2- One lease pertained 1 Chapter 11 of the Bankruptcy Code. 2 filed two motions: one seeking authorization to reject certain 3 unexpired leases of nonresidential real property pursuant to 11 4 U.S.C. § 365(a), and the other seeking an extension of the 5 deadline for assuming or rejecting other unexpired leases of 6 nonresidential real property pursuant to 11 U.S.C. § 365(d)(4). 7 In the motions, Adelphia only identified the address of the 8 Firestone Building, leaving unclear whether it was referring to 9 the Building Lease or Annex Lease. 10 On May 15, 2002, Adelphia On May 29, 2002, a hearing was held before the bankruptcy 11 court (Robert E. Gerber, Bankruptcy Judge). At around the same 12 time, Adelphia vacated the premises covered by the Building 13 Lease. 14 reject the Building Lease and (2) extend the time for rejection 15 or assumption of the Annex Lease. 16 the Building Lease and Annex Lease were actually a single lease 17 that had to be treated as a whole. 18 declining to authorize the rejection of the Building Lease at 19 that time, decided to review the lease agreements and pleadings 20 to determine whether it could rule on the issue of whether the 21 two leases had to be treated as one for rejection purposes 22 without a further evidentiary hearing. 23 authorized the rejection of all the other leases listed in the 24 motion. At the hearing, Adelphia explained that it sought (1) to -3- Abnos objected, arguing that The bankruptcy court, The bankruptcy court 1 During the hearing, the bankruptcy judge made oral 2 statements indicating that if he approved the rejection of the 3 Building Lease, his approval would be effective as of that 4 hearing date. 5 . . . justice would say that their clock should stop today 6 because they at least tried to reject today. 7 said: 8 9 10 11 12 13 14 15 16 17 18 19 20 The bankruptcy judge said, If [Adelphia is] right The judge also What I am of a mind to do is to deal with this as quickly as I can . . . and if the Debtor is right, I will tell you now I will stop their postpetition clock today, and if they re wrong, then you can collect from them for the postpetition rent until we can get this thing sorted out . . . . That s what I m inclined to do to balance your needs for procedural due process and to give [Adelphia] what it tried to achieve, which is that if [Adelphia] is right . . . to stop their postpetition rent clock on the [Building Lease] starting today. The bankruptcy court relieved Adelphia from its rent 21 obligation on the Building Lease pending its decision. 22 bankruptcy judge also said, I will try to give you folks a 23 decision as quickly as possible. 24 if it should keep the Building Lease rent in escrow, the judge 25 responded, [I]f I get you the answer in a couple of weeks or 26 less, you don t need that in escrow, do you? 27 The When Adelphia s counsel asked Regrettably, the pending motion to reject languished for the 28 next two years. On November 26, 2003, Abnos filed a claim with 29 Adelphia for administrative expenses for postpetition rent but 30 did not notify the bankruptcy court. -4- Neither party took any 1 action on the pending rejection motion until June 2004, when 2 Abnos raised its status with the bankruptcy court. 3 2004, the bankruptcy court requested, and one month later 4 received, supplemental memoranda on the issue of whether the 5 Building Lease and Annex Lease constituted a single lease. 6 January 2005, Abnos again asked the bankruptcy court about the 7 status of the motion. 8 9 On July 1, In Finally, on March 10, 2005 - more than thirty-three months after the May 29, 2002 hearing - the bankruptcy court entered an 10 order that found that the Building Lease and Annex Lease were 11 separate contracts and authorized Adelphia to reject the former 12 and assume the latter. 13 retroactive effect. 14 The order did not specify whether it had On April 11, 2005, after the time for appeal of the order 15 had elapsed, Abnos moved for an order directing Adelphia to pay 16 $676,918.16 in administrative expenses under § 365(d)(3), 17 consisting of the unpaid rent under the Building Lease up to the 18 bankruptcy court s approval of rejection on March 10, 2005. 19 bankruptcy court noted that Abnos had been justified in filing 20 the objection to the rejection motion because whether the two 21 leases constituted a single lease was fairly debatable. 22 29, 2005, however, the bankruptcy court ruled that its March 10, 23 2005 decision to grant the motion to reject was retroactive to 24 May 29, 2002. The bankruptcy judge acknowledged that the -5- The On May 1 rejection motion fell off [his] radar screen, as it apparently 2 fell off the radar screens of the two sides in this dispute as 3 well. 4 determination on May 29, 2002 that if he ruled in Adelphia s 5 favor, the Building Lease rejection would be retroactive to that 6 date and that nothing had transpired since then to justify its 7 alteration. 8 several undisputed facts: It notified the parties on May 29, 2002 9 of its final determination on retroactivity; Abnos did not He concluded, however, that he had issued a final The bankruptcy court reached this decision based on 10 object to that ruling; Adelphia surrendered the premises on or 11 about the date of the hearing; while neither party acted on the 12 pending motion, Abnos made no effort to alert the bankruptcy 13 court of the pendency of the rejection motion until June 2004 or 14 raise concerns about the timing of the approval until April 2005; 15 and, finally, Abnos did not attempt to relet the vacant premises 16 despite little risk that [Adelphia] would have objected, 17 little chance that Abnos would have thereby waived his 18 objection to rejection, and no chance whatever of any 19 forfeiture of rights if he had explained his needs and concerns 20 to the Court. 21 On November 8, 2005, the District Court for the Southern 22 District of New York found no abuse of discretion and affirmed 23 the bankruptcy court s decision. 24 neither party at fault for the delay. 25 bankruptcy court s view that the May 29, 2002 retroactivity -6- The district court found Implicitly rejecting the 1 pronouncement was a final determination, the district court 2 nonetheless held that those statements put Abnos on clear notice 3 that the bankruptcy judge, if he decided against Abnos, would 4 more likely than not, and maybe certainly, use the May 29 day for 5 stopping the clock. 6 debtor had quit the premises, the district court concluded that 7 the risk should fall on the landlord because it was more 8 incumbent on the landlord to seek out a new tenant or to obtain 9 permission to rent to a new tenant. 10 With that in mind and noting that the Abnos timely appealed. DISCUSSION 11 12 Abnos advances two principal arguments. First, he argues 13 that a bankruptcy court lacks equitable authority to make 14 retroactive its order approving a debtor s rejection of an 15 unexpired nonresidential lease. 16 if the bankruptcy court has this power, its exercise was an abuse 17 of discretion in this case. 18 mechanics behind lease rejection under 11 U.S.C. § 365, we will 19 address each argument in turn. Second, he contends that, even After initially reviewing the 20 I. Rejection of Leases Under § 365 of the Bankruptcy Code 21 During a Chapter 11 reorganization, 11 U.S.C. § 365(a) 22 provides that the trustee, subject to the court s approval, may 23 assume or reject any executory contract or unexpired lease of the 24 debtor. As a debtor in possession, Adelphia has essentially the -7- 1 same rights, powers, and duties as a trustee. 2 1107(a), 1108; see also Smart World Techs., LLC v. Juno Online 3 Servs., Inc. (In re Smart World Techs., LLC), 423 F.3d 166, 174 4 n.10 (2d Cir. 2005). 5 6 See 11 U.S.C. §§ Before rejection or assumption, the debtor in possession has certain obligations. Section 365(d)(3) states: 7 8 9 10 11 12 13 14 11 U.S.C. § 365(d)(3) (emphasis added). 15 therefore requires continued performance under a lease until it 16 is assumed or rejected. 17 Assocs.), 804 F.2d 193, 199 (2d Cir. 1986); Authentic Hansom 18 Cabs, Ltd. v. Nisselson (In re Fayolle), 300 B.R. 843, 849 n.4 19 (Bankr. S.D.N.Y. 2003). 20 The trustee shall timely perform all the obligations of the debtor, except those specified in section 365(b)(2), arising from and after the order for relief under any unexpired lease of nonresidential real property, until such lease is assumed or rejected, notwithstanding section 503(b)(1) of this title. This subsection Liona Corp. v. PCH Assocs. (In re PCH The Bankruptcy Code imposes a time limit on the debtor in 21 possession s ability to assume an unexpired lease. 22 365(d)(4)(A) states: 23 24 25 26 27 28 29 30 31 32 33 Section Subject to subparagraph (B), an unexpired lease of nonresidential real property under which the debtor is the lessee shall be deemed rejected, and the trustee shall immediately surrender that nonresidential real property to the lessor, if the trustee does not assume or reject the unexpired lease by the earlier of-(i) the date that is 120 days after the date of the order for relief; or (ii) the date of the entry of an order confirming a plan. -8- 1 11 U.S.C. § 365(d)(4)(A). 2 time limit under certain conditions. 3 365(d)(4)(B). 4 The bankruptcy court may extend the See 11 U.S.C. § Assumption of an unexpired lease by a debtor entitles the 5 lessor to assert its claims on a priority basis. 6 v. LTV Steel Co. (In re Chateaugay Corp.), 10 F.3d 944, 955 (2d 7 Cir. 1993). 8 is treated as a breach of the lease, see § 365(g)(1); Stoltz v. 9 Brattleboro Hous. Auth. (In re Stoltz), 315 F.3d 80, 86 (2d Cir. 10 2002); Med. Malpractice Ins. Ass n v. Hirsch (In re Lavigne), 114 11 F.3d 379, 387 (2d Cir. 1997), allowing the lessor to seek damages 12 as a pre-petition claim. 13 case, the lessor may seek allowance of its claim under 11 U.S.C. 14 § 502(g) with the same priority as a general unsecured creditor. 15 See 11 U.S.C. §§ 365(g), 502(g); N.L.R.B. v. Bildisco & Bildisco, 16 465 U.S. 513, 531 (1984) ( Damages on the contract that result 17 from the rejection of an executory contract . . . must be 18 administered through bankruptcy and receive the priority provided 19 general unsecured creditors. ). 20 Frito-Lay, Inc. Rejection of an unexpired lease, on the other hand, Lavigne, 114 F.3d at 387. In such a From the foregoing, the importance of the lease rejection s 21 effective date to the parties is obvious. 22 Abnos is entitled to full administrative rent on a priority 23 basis; after that date, Abnos can only seek rent as an unsecured 24 creditor through a subordinated claim for damages, with the -9- Prior to that date, 1 attendant risk that he will receive only a fraction of the rent 2 due under the lease. 3 II. The Bankruptcy Court s Equitable Authority 4 Abnos contends that the bankruptcy court lacked equitable 5 authority to make retroactive its approval of rejection under 11 6 U.S.C. § 365(a). 7 authority would contravene Congress s intent behind § 365(d)(3): 8 to assure landlords of post-petition, pre-rejection rent until 9 court-approved rejection. Abnos first argues that such equitable He further argues that this sort of 10 equitable power has no statutory authorization and is not within 11 the equitable authority conferred on the courts by the Judiciary 12 Act of 1789, 1 Stat. 73 (1789). 13 relies upon Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond 14 Fund, Inc., 527 U.S. 308 (1999), in which the Supreme Court held 15 that a preliminary injunction issued under Fed. R. Civ. P. 65 had 16 to be within the district court s equitable authority under the 17 Judiciary Act of 1789, which conveyed only an authority to 18 administer in equity suits the principles of the system of 19 judicial remedies which had been devised and was being 20 administered by the English Court of Chancery at the time of 21 separation of the two countries. 22 quotation marks omitted). 23 For the latter point, Abnos Id. at 318-19 (internal We have not ruled on the existence or scope of a bankruptcy 24 court s equitable authority to order retroactive approval of 25 rejection under § 365, and there is no need for us to do so here. -10- 1 The parties litigated this case in the district court on the 2 assumption that such authority existed: Abnos did not raise this 3 issue below in his brief and conceded at oral argument before the 4 district court that the bankruptcy court possessed the relevant 5 equitable power. 6 from passing on issues not raised below. 7 Life Accident Ins. Co., 449 F.3d 435, 446 (2d Cir. 2006). 8 more likely to exercise our discretion to consider such issues 9 when, as here, they are purely legal and require no additional In general, a federal appellate court refrains See Pease v. Hartford We are 10 fact finding. 11 Color Tile, Inc. v. Coopers & Lybrand, LLP, 322 F.3d 147, 159 (2d 12 Cir. 2003); Baker v. Dorfman, 239 F.3d 415, 420 (2d Cir. 2000). 13 However, we decline to exercise our discretion; Abnos 14 affirmatively conceded the issue in the district court, and his 15 failure to raise the issue in the bankruptcy court deprived that 16 court of the opportunity to fashion relief such that no court 17 would have to decide the question in this dispute. 18 will assume, without deciding, that the bankruptcy court had 19 equitable authority to make its order retroactive.1 1 See Official Comm. of the Unsecured Creditors of Therefore, we We note that two of our sister circuits have held that the bankruptcy courts have this equitable authority, though without considering Grupo Mexicano, see Pacific Shores Dev., LLC v. At Home Corp. (In re At Home Corp.), 392 F.3d 1064, 1071 (9th Cir. 2004); Thinking Machs. Corp. v. Mellon Fin. Servs. Corp. (In re Thinking Machs. Corp.), 67 F.3d 1021, 1028 (1st Cir. 1995), and another has suggested that bankruptcy courts have this power, see EOP-Colonnade of Dallas Ltd. P ship v. Faulkner (In re Stronebridge Techs., Inc.), 430 F.3d 260, 273 (5th Cir. 2005). The Southern District of New York has held that a bankruptcy -11- 1 III. Whether the Bankruptcy Court Abused Its Discretion 2 In an appeal from a district court s review of a bankruptcy 3 court s decision, we review the decision of the bankruptcy court 4 independently, accepting its factual findings unless they are 5 clearly erroneous and reviewing its conclusions of law de novo. 6 See Ball v. A.O. Smith Corp., 451 F.3d 66, 69 (2d Cir. 2006). 7 Assuming that the bankruptcy court had equitable authority to 8 make its approval of rejection retroactive, we review the 9 exercise of that equitable authority only for abuse of 10 discretion. See Abrahamson v. Bd. of Educ., 374 F.3d 66, 76 (2d 11 Cir. 2004) ( We review a district court s fashioning of equitable 12 relief for abuse of discretion. ); cf. Cushman & Wakefield of 13 Conn., Inc. v. Keren Ltd. P ship (In re Keren Ltd. P ship), 189 14 F.3d 86, 87-88 (2d Cir. 1999) (per curiam) (reviewing nunc pro 15 tunc approval of professionals seeking to render services to a 16 bankruptcy estate under 11 U.S.C. § 327(a) for abuse of 17 discretion). 18 review these retroactivity decisions for abuse of discretion. 19 See At Home, 392 F.3d at 1072; Thinking Machs., 67 F.3d at 1028. 20 The procedural posture of this case presents us with an 21 unusual situation: While we do not decide whether the bankruptcy 22 court has equitable authority to make its approval of the lease We thus follow our sister circuits, which also court may give retroactive effect to its approval of rejection under § 365 at least where there is unnecessary delay caused by the creditor. See Constant Ltd. P ship v. Jamesway Corp. (In re Jamesway Corp.), 179 B.R. 33, 39 (S.D.N.Y. 1995). -12- 1 rejection retroactive, we still must determine if the bankruptcy 2 court abused its discretion in exercising a power that may not 3 exist. 4 of a power that may be unfounded. 5 guidance in future decisions, we explore the contours of this 6 purported power based upon the decisions of other courts that 7 have found it to exist or assumed its existence. We hesitate to fashion general rules guiding the exercise Nonetheless, to provide A2 8 9 The fault for the 33-month delay in deciding the rejection 10 motion principally rested with the bankruptcy court (as it 11 candidly conceded). 12 They remained quiescent even though they knew that the premises 13 were vacant and the losses were accruing for someone. 14 assigning the risk of loss as an equitable matter, the bankruptcy 15 court properly considered how the parties conducted themselves in 16 the circumstances of this case. 17 fault than the other for the delay in deciding the rejection 18 motion, we do not believe that the bankruptcy court abused its 19 discretion in finding that the equities tipped in favor of the 20 May 29, 2002 effective date. 21 22 However, the parties were not blameless: In While neither party was more at Under the assumption that it could make its order retroactive, the bankruptcy court s pronouncement at the May 29, 2 Chief Judge Jacobs deems that the grounds discussed in Section III.A are sufficient for affirmance and does not subscribe to Section III.B. -13- 1 2002 hearing put Abnos on clear notice of the possibility that an 2 order approving rejection would be retroactive to the hearing 3 date. 4 May 29, 2002 pronouncement somehow bound Abnos; at the very 5 least, it notified Abnos of the proposed effective date and of 6 the consequent risk to him a risk that increased as time passed 7 without any decision on the rejection motion. We need not resolve the parties dispute over whether the B 8 9 The bankruptcy court also properly considered that Adelphia 10 had vacated the premises and thereby provided Abnos with the 11 opportunity to lease the premises to another tenant, which he did 12 not try to do. 13 of which he was on notice.3 3 By reletting, Abnos could have mitigated the risk This factor weighs in favor of We also note that if the bankruptcy court has equitable authority to make its approval of rejection retroactive, the landlord s opportunity to relet arguably furthers § 365(d) s goal of, inter alia, preventing needless vacancies of real property. The duties imposed by § 365(d)(3) (requiring the debtor to perform his contractual obligations until rejection) and § 365(d)(4) (setting time limits on the debtor s ability to assume or reject) arose from the Shopping Center Bankruptcy Amendments of the Bankruptcy Amendments and Federal Judgeship Act of 1984, Pub. L. No. 98-353, 98 Stat. 333 (1984). Through these amendments, Congress sought to remedy the long-term vacancy or partial operation of space by a bankrupt tenant. At Home, 392 F.3d at 1068 (citing 130 Cong. Rec. S8891 (1984) (statement of Sen. Hatch), reprinted in 1984 U.S.C.C.A.N. at 598). Congress wanted to mitigate the problems faced by landlords and other tenants in debtors buildings under the prior scheme: Landlords lost money because they could not evict the debtors but had to provide them with the properties and related services, and debtors co-tenants lost money through decreased traffic and were required to subsidize the debtors shares of common area charges. Id. (citing 130 Cong. Rec. S8891 (1984) (statement of Sen. Hatch), reprinted in 1984 U.S.C.C.A.N. 590, 598-99). The -14- 1 granting retroactive relief here. See At Home, 392 F.3d at 1074 2 (holding that a bankruptcy court did not abuse its discretion in 3 considering that the tenant vacated the leased premises). 4 Compare In re Fleming Cos., 304 B.R. 85, 96 (Bankr. D. Del. 2003) 5 (permitting retroactivity where premises were surrendered), and 6 In re Amber s Stores, 193 B.R. 819, 827 (Bankr. N.D. Tex. 1996) 7 (same), with In re Chi-Chi s, Inc., 305 B.R. 396, 399 (Bankr. D. 8 Del. 2004) (declining to order retroactivity when the premises 9 were not surrendered), and In re Cafeteria Operators, L.P., 299 10 B.R. 384, 394 (Bankr. N.D. Tex. 2003) (ordering retroactive 11 rejection of leases of vacated premises but not for occupied 12 premises). 13 Abnos argues that he could not control when the bankruptcy 14 court would issue its ruling and that he was barred from 15 unilaterally reletting the premises because 11 U.S.C. § 362(a)(3) 16 provides an automatic stay of any act to obtain possession of 17 the property of the estate or of property from the estate. 18 also Smart World Techs., 423 F.3d at 174; Roslyn Savings Bank v. 19 Comcoach Corp. (In re Comcoach Corp.), 698 F.2d 571, 573 (2d Cir. 20 1983). 21 court-ordered relief from the stay. See However, Abnos very likely could have relet by requesting See 3 Collier on Bankruptcy amendments required that the debtor promptly determine what to do with the unexpired lease. Id. at 1069. A bankruptcy court might further § 365 s legislative purpose by using the spur of retroactivity to motivate landlords to relet. -15- 1 ¶ 365.09[4] (proposing that bankruptcy courts grant relief from 2 the automatic stay to allow a landlord to proceed in state court 3 to regain possession of the premises); cf. In re Ames Dep t 4 Stores, Inc., 306 B.R. 43, 52-53 (Bankr. S.D.N.Y. 2004) (stating 5 in dicta that if a debtor continued occupancy after rejection, 6 the landlord might be entitled to relief from the stay to 7 complete eviction). 8 Abnos also argues that reletting would have been 9 inconsistent with his opposition to the rejection motion. But 10 Abnos never presented this dilemma (if it is a dilemma) to the 11 bankruptcy court, which could have fashioned relief pending the 12 delay or issued its ruling more promptly. 13 We reject Abnos argument that the debtor must bear the risk 14 of delay in prosecuting its motion for approval of rejection 15 unless the landlord was at fault for the delay or acted in bad 16 faith. 17 unnecessarily rigid rules when exercising the undoubtedly broad 18 administrative power granted him under the Code, but rather 19 must have substantial freedom to tailor his orders to meet 20 differing circumstances. 21 Corp. (In re Lionel Corp.), 722 F.2d 1063, 1069 (2d Cir. 1983); 22 see also At Home, 392 F.3d at 1075 ( We likewise eschew any 23 attempt to limit the factors a bankruptcy court may consider when 24 balancing the equities in a particular case. ). 25 grants broad equitable power to the bankruptcy courts to carry -16- A bankruptcy judge must not be shackled with Comm. of Equity Sec. Holders v. Lionel Section 105(a) 1 out the provisions of the Bankruptcy Code so long as that power 2 is exercised within the confines of the Bankruptcy Code. 3 U.S.C. § 105(a); Smart World Techs., 423 F.3d at 183-84. 4 Assuming that the bankruptcy courts have the authority to issue 5 orders like the one at issue, we must give them generous latitude 6 to shape equitable relief under § 365, and see no reason to make 7 landlord culpability a requirement for retroactivity. 8 that numerous lower court decisions have made orders retroactive 9 without considering whether the landlord acted in bad faith. See 11 We note 10 See, e.g., Stonebriar Mall Ltd. P ship v. CCI Wireless, LLC (In 11 re CCI Wireless, LLC), 297 B.R. 133, 140 (D. Colo. 2003) (holding 12 that although the lessor did not cause delay, the bankruptcy 13 court did not abuse its discretion in ordering retroactive relief 14 where the debtor had not been in possession of leased premises 15 since before filing for Chapter 11 protection); Amber s Stores, 16 193 B.R. at 827. 17 We are also unpersuaded by the proposition that because 18 Abnos had no duty to mitigate his losses from breach of the lease 19 under Missouri law, see JCBC, LLC v. Rollstock, Inc., 22 S.W.3d 20 197, 200-01 (Mo. Ct. App. 2000) which we assume governs the 21 lease the bankruptcy court should not have considered whether 22 he could relet. 23 damages, and under Missouri law he may be entitled to damages 24 from the breach occasioned by the rejection without any penalty 25 for not mitigating his losses. Abnos was certainly free not to mitigate his This rule of contract law, -17- 1 however, is beside the point; it does not affect the bankruptcy 2 court s equitable consideration of the practical effect of Abnos 3 ability to protect himself by reletting the premises. 4 Home, 392 F.3d at 1074 ( Nothing in the statute, in the 5 precedents, or in logic precludes the bankruptcy court from 6 considering the practical effects of a tenant s lack of occupancy 7 when balancing the equities in the context of § 365(d)(3). ). See At 8 CONCLUSION 9 For the foregoing reasons, the judgment of the district 10 court is AFFIRMED. -18-

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