FOR THE NORTHERN DISTRICT OF CALIFORNIA
DAVID and LINDA PEKONEN, No. 91-11663
RAYMOND CAREY, Trustee,
v. A.P. No. 92-1334
Memorandum of Decision
Prior to bankruptcy, the debtors operated an automobile parts store on premises leased from
defendant Alex McLean. The debtors ceased business on October 14, 1990, and began to return
or sell inventory and fixtures. On October 28, 1990, while the debtors were in the process of
moving out, McLean had the locks changed. Since the debtors had removed most items of
value, they did nothing thereafter. McLean invited a few persons who might be interested to
examine the fixtures and parts left on the premises. Failing to get an offer, he took a few
fixtures for use in his own business and had the rest hauled to the dump.
By this adversary proceeding, the Trustee seeks a judgment against McLean for $60,000.00,
the alleged value of the property left on the premises when McLean changed the locks. He
alleges that the seizure of possession by McLean was unlawful, and the property was
There is no doubt that McLean acted illegally in changing the locks. He claims that the
debtors had abandoned the premises, but the evidence does not support that claim.
Abandonment occurs when the tenant leaves the premises vacant and expresses the intention
not to be bound by the lease. Kassen v. Stout
, 9 Cal.3d 39, 43 (1973). In this case, the debtors
had only stopped doing business; they had not left, the premises were not vacant, and they had
not repudiated the lease.
McLean argues that he left the premises untouched for thirty days, during which time the
debtors could have gained entry by a side door, which did not have its lock changed. However,
the debtors had no way of knowing that they still had access. As far as they knew, based on
McLean's actions, they had been permanently excluded from the premises on October 28.
McLean cannot contend that the debtors abandoned the property when they stayed away as a
result of his unilateral act.
It is not surprising that the debtors did nothing in the face of MeLean's seizure of the
premises; they were burned out from the failure of their business, and they had already removed
most property having any value. Although the retail cost of the property left on the premises
may have been $60,000.00, as the Trustee alleges, its actual value at the time McLean seized
the premises was very low. However, it was not zero, as McLean alleges. Even his own expert
witness testified that at least some of the shelving had value, and McLean found some of the
items useful in his own business. From the evidence presented, the court finds that the value
of the property converted by McLean was $5,000.00.
McLean alleges that he is entitled to a setoff for the unpaid rent the debtors owed him.
However, this setoff has not been pleaded and it does not appear that McLean has filed a proof
of claim. In any event, setoffs are stayed by section 362(a)(7) of the Bankruptcy Code and
there has been no request to modify that stay.
For the foregoing reasons, the Trustee shall have judgment against McLean in the amount
of $5,000.00, together with interest at the legal rate from and after October 28, 1990. The
Trustee shall recover any costs of suit.
This memorandum constitutes the court's findings and conclusions pursuant to FRCP 52(a)
and FRBP 7052. Counsel for the Trustee shall submit an appropriate form of judgment
Dated: June 9, 1993 _______________________