What began as a landlord/tenant case with the landlord enforcing the terms of a residential lease that contained an early termination liquidated damage charge, ended up in bankruptcy court. The initial claim was that a few thousand dollars were owed because the tenant ‘walked out’ before the end of the lease. Tenant represented herself in the collections case filed in the district court. Both sides filed cross motions for summary judgment which were denied by the trial court requiring a trial. A bench trial was conducted and the court ruled in favor of landlord on the compensatory damage claim that was only a portion of the liquidated damages claimed and further denied recovery of interest or attorneys’ fees. Fee recovery was demanded under KRS 383.660 and the tenant’s willful breach of the lease. The inconsistent ruling was appealed to the circuit court. The Opinion and Order on appeal (entered November 5, 2012) resulted in the reversal of the trial courts ruling denying the interest claim and the fee recovery. The ruling resulted in the judgment going from a couple of thousand dollars to over ten thousand dollars. As a result, the tenant filed personal bankruptcy seeking to discharge the debt. Because the Landlord had filed a Notice of Judgment lien, Landlord was a secured creditor in the bankruptcy and this led to a effort to strip off the lien by the debtor to so that the debt would be discharged and the lien against the real property removed. After an evidentiary hearing before the bankruptcy court including expert appraiser testimony to determine whether there was equity in the real property and whether the debtor’s claimed exemption was impaired under bankruptcy law, the bankruptcy court determined that the lien would remain attached to the real property to the extent of $10,000. See Bankruptcy Court’s Order entered November 22, 2013, in case 13-50290 USBC EDKy.
Landlord/tenant/willful breach/attorneys fees/bankruptcy/impair exemption/liquidated damages
