Memorandum of Decision Re: Conversion

FOR THE NORTHERN DISTRICT OF CALIFORNIA In re DAVID and LINDA PEKONEN,                                       No. 91-11663      Debtor. ___________________________/ RAYMOND CAREY, Trustee,      Plaintiff,    v.                                                                               A.P. No. 92-1334 ALEX McLEAN,      Defendant. ______________________________/
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 accordingly converted.      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 forthwith.
Dated: June 9, 1993                                                                               _______________________                                                                                                                      Alan Jaroslovsky                                                                                                                      U.S. Bankruptcy