Opposition Brief — City of Long Beach v. Southwest Aircraft Services, Inc., 108 S. Ct. 2848 (1988) (No. 87-1787)

Supreme Coutt, US,

FILED

() | wav 26 1908

Meal

No. 87-1787 woeuiear "eae:

In the Supreme Court

OF THE

United States

OcTOBER TERM, 1987

City oF LONG BEACH,

“= Petitioner,

VS.

SOUTHWEST AIRCRAFT SERVICES, INC.,

Respondent.

OPPOSITION TO PETITION FOR WRIT OF CERTI-

ORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

RICHARD K. DIAMOND*

DANNING, GILL, GOULD, DIAMOND

& SPECTOR

1800 Century Park East,

7th Floor

Los Angeles, California 90067

(213) 277-0077

Attorneys for Respondent

* Counsel of Record

Bowne of Los Angeles, Inc., Law Printers + (213) 742-6600

i

TABLE OF CONTENTS

Page

TE GO SAREE ioc ce sec cncsesecccceses 1

SUMMARY OF ARGUMENT ................... 4

pd , PEPE STE PENT TET TTEE LEP UTOE TELE 6

A. This Petition Raises No Special And Impor-

tant Reasons For The Court To Exercise Its

Discretion To Grant Certiorari............. 6

B. The Decision Below Raises No Conflict

Between The Circuit Courts Of Appeal...... 10

C. The Decision Below Does Not Decide An

Important Question Of Federal Law In A Man-

ner Conflicting With The Prior Decisions Of

po Rr ere ee eee re 11

D. Rather Than Disrupt The Bankruptcy System,

The Decision Of The Lower Court Will Pro-

mote Administration Of Cases Consistent

With Congressional Intent................. 18

a | ee eeey eee eer ee rT er eee 20

ii

TABLE OF AUTHORITIES

Cases

Page

Bethesda Hosp. Ass’n v. Bowen, 108 S.Ct. 1255, 1259

CHORD 6.6 04nd dn ca\ edn ven whee eee as 13

Burns Fabricating Co., In re, 61 Bankr. 955 (Bankr. _

BR es Dk cu cow dncdcacimaseueeeees 17

By-Rite Distributing, Inc., In re, 55 Bankr. 740

CE WR: Be ob dane nccsArewerecuneens 10, 16, 17

Calhoon v. Harvey, 379 U.S. 134 (1964) .......... 11

Cleveland Board of Education v. La Fluer, 414 U.S.

GER, GOUGE Oi COO hs hak caakceccantsesus 11

Church of the Holy Trinity v. United States, 143 U.S.

457, 460 CIGGR) ..0..0kcnccucs Siem bawe eer oaks 14

INS v. Cardoza-Fonseca, 107 S.Ct. 1207, 1213 n.12

fs ere ee ot ee NAY Ok 13

Musikahn Corp., In re, 57 Bankr. 938 (Bankr.

| iS | rer ee et pp aie 15, 16

Perry v. Commerce Loan _Co., 383 U.S. 392, 400

(TOES) oi on cn ceed ccacds Oba eee eee eas 15

Rector, Etc., of Holy Trinity Church v. U.S., 143

Uw. GBT, Ge Cee xa h beaches coe 14, 15

Rice v. Sioux City Memorial Park Cemetery, Inc., 349

ie Se Fe | ey ere ee Oe eel eee 7

Tigr Restaurant, Inc. v. Rouse 8.I. Shopping Center,

Inc., 79 Bankr. 954 (E.D. N.Y. 1987) ........... 10, 1

Train v. Colorado Public Interest Research -:roup,

GG U.. 1 CRP sd a 4s weeks ten ee ksi 12,13

Unit Portions of Delaware, Inc., In re, 53 Bankr.

SB Ciba. TDD. WET. Biles ohc 6 sa wncisa scence 15,17

United States v. James, 106 S.Ct. 3116, 3121 (1986) 13

iii

TABLE OF AUTHORITIES

CASES

Page

U.S. v. American Trucking Assns., 310 U.S. 534, 542

a Tr ER RS rags a8 A a a 15

Victoria Station, Inc., In re, 840 F.2d 682 (9th Cir.

ee ee an Pee ie ics b ok bdee sees 10

Ward v. Illinois, 431 U.S. 767, 770-771 (1977) .... = 11

Watt v. Alaska, 451 U.S. 259 (1981) ............. 13, 14

Statutes

Nok esc eked eeesesease 5

EE 19

ee kaa c ks eases adc eekeevaes 19

i SE) rer 4,5, 10, 15, 18

Cee Te ee ey kan eeu wane wu de ee ¥s 19

Bankruptcy Reform Act of 1978 ................ 19

Bankruptcy Amendments and Federal Judgeship

oS 2 | a ee CO AEA fae ea 19

Rules

Rules of the Supreme Court, Rule 17............ 4,7,8

Miscellaneous

130 Cong. Rec. S-8894-95 (remarks of Senator

Hatch) reprinted in U.S. Code Cong. & Admin.

ue al. es aw 6 wh 04 Ose Ow kA 16

No. 87-1787

In The Supreme Court

OF THE

United States

October Term, 1987

City oF LONG BEACH,

Petitioner,

vs.

SOUTHWEST AIRCRAFT SERVICES, INC.,

Respondent.

OPPOSITION TO PETITION FOR WRIT OF

CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

STATEMENT OF CASE

On June 1, 1971, the City of Long Beach (‘Petitioner’)

and Bob’s entered into a lease (hereinafter the “lease’’)

whereby Bob’s Aircraft and Industrial Cleaning Co., Inc.

(‘‘Bob’s’’) leased certain business premises located at the

Long Beach Airport for a period of twenty-five (25)

years. At this time, the lease term has approximately

eight (8) years remaining. In compliance with the lease’s

requirements, Bob’s improved the premises with a con-

erete and asphalt-covered washrack facility for washing,

stripping paint from, painting, cleaning and maintaining

aircraft.

2

On January 31, 1976, Bob’s assigned its interest in the

lease to Southwest Aircraft Services, Inc. (“Respon-

dent’’). By the assignment, Respondent agreed to assume

Bob’s obligations under the lease. Petitioner consented to

the assignment but did not release Bob’s from its obliga-

tions under the lease.

Respondent’s normal business activities require the

spraying of various chemicals on airplanes which cannot

be accomplished without some overspray travelling onto

adjoining property. From 1971, when the lease was first

entered into, until 1982, the adjoining property was va-

cant or used for purposes which would not result in injury

by the overspray. In 1982, the City leased the adjoining

properties to Aerolease-Long Beach and thereafter, by

sublease, to Atlantic Aviation Corporation (‘Atlantic’)

for the purpose of developing a new jet facility at the

airport.

The new jet facility’s operation is entirely inconsistent

with the continued operation of respondent’s business

because of the inevitable overspray. As a result, Atlantic

commenced an action seeking to enjoin Respondent from

spraying airplanes on its premises and Respondent com-

menced two actions against Petitioner seeking damages

for inverse condemnation. Not only has the change in use

of the adjoining property made Respondent’s business

inconsistent with its new neighbors, it has also made

Respondent’s leasehold more valuable and the termina-

tion of the lease of significant interest to Petitioner. The

termination of the lease will permit the further develop-

ment of the jet facility onto Respondent’s present prem-

ises. Thus, the effect of an order rejecting the lease and

deeming it terminated would be to grant a considerable

windfall to Petitioner which, given Respondent’s contin-

ued willingness to pay all of the accrued rent under the

3

lease, Petitioner would not be entitled to receive but for

the effect of such an order.

On April 18, 1985, Respondent commenced its Chapter

11 case by filing a voluntary petition for relief. Prior to

the commencement of its Chapter 11 case, Respondent

had paid the monthly rental due under the lease for the

periods through and including the month of February

1985 and had tendered checks in payment of the March

and April rent. However, after the commencement of the

Chapter 11 case, the checks for the March and April rent

were returned to Petitioner not honored because the

account upon which they were issued was closed at the

commencement of the case and all the funds were trans-

ferred to new accounts established in the name of the

Chapter 11 estate. Respondent did not make any pay-

ments to Petitioner after the commencement of the Chap-

ter 11 case as a result of a misunderstanding as to its

obligation in this regard.

On June 14, 1985, Respondent filed its Motion to

Extend Time to Assume or Reject Executory Contracts

and Unexpired Leases (“Motion to Extend Time’)

whereby it sought to extend the time within which it could

assume or reject the lease for a period of 180 days after

June 17, 1985, the sixtieth day following the filing of the

Chapter 11 case. A hearing on the motion was held on

July 17, 1985. At that hearing, both Bob’s and Respon-

dent tendered payment of all outstanding rental pay-

ments then due under the lease. However, the City

rejected these tenders. The bankruptcy court ruled that it

lacked authority to grant the Motion to Extend Time

after sixty days from the commencement of the Chapter

1] case even though the motion seeking such relief had

been filed within that sixty day period. The Bankruptcy

Appellate Panel for the Ninth Circuit affirmed this deci-

4

sion. However, the Ninth Cireuit Court of Appeals

reversed.

The Ninth Circuit Court of Appeals held that if cause to

extend the time to assume or reject a lease arises within

the sixty day period and a motion is made within that

period, the bankruptcy court may grant the extension

even after the sixty days has expired. It is this decision

which Petitioner seeks to have reviewed by the grant of

the present Petition for Writ of Certiorari (the

Petition”).

SUMMARY OF ARGUMENT

The Petition notably fails to cite Rule 17 of the Rules of

the Supreme Court. A review of the Petition makes the

reason for this omission clear; none of the special and

important reasons required by the Rule for granting the

petition exist in this case. The decision of the Ninth

Cireuit Court of Appeals determined the purely procedu-

ral issue of whether a timely filed Chapter 11 trustee’s or

debtor-in-possession’s motion to extend the time to as-

sume or reject a lease of nonresidential real estate must

be determined by the court within sixty days after the

commencement of the case or, as the lower court decided,

such a motion could be ruled upon by the Court, if filed

within the sixty days and establishing cause for an exten-

sion arising within that time, although heard thereafter.’

'Seetion 365(d) (4) provides as follows:

“Notwithstanding paragraphs (1) and (2), in a case under any

chapter of this title, if the trustee does not assume or reject an

unexpired lease of nonresidential real property under which the

debtor is the lessee within 60 days after the date of the order for

relief, or within such additional time as the court, for cause,

within such 60-day period, fixes, then such lease is deemed

5

The Ninth Circuit Court of Appeals decided the case as

a matter of first impression and is the only Court of

Appeals to have considered the issue. Thus there is no

conflict between the circuits. Moreover, the only other

appellate decisions interpreting the code section, which

are district court decisions, are consistent with the deci-

sion below. Thus, there is not even a conflict of any

appellate law at issue.

The only grounds for granting the Petition asserted by

petitioner are that the Ninth Cireuit Court of Appeals

allegedly failed to adhere to this Court’s prior decisions

concerning the proper method to interpret statutes and

that the circuit’s new method of construction, if applied to

eliminate other time frames in the Bankruptcy Code, 11

U.S.C. § 101 et seq., will disrupt the administration of

bankruptcy cases.

The Petitioner is wrong in these assertions. The Ninth

Circuit Court of Appeals followed well established prece-

dent in interpreting Section 365(d) (4) of the Bankruptcy

Code, 11 U.S.C. § 365(d) (4). Petitioner believes that the

statutory language required: no interpretation and that,

therefore, to resort to legislative history was inappropri-

ate. However, the rule of strict construction it espouses is

erroneous for several reasons. First, the statutory lan-

guage is ambiguous and susceptible to various interpreta-

tions thus requiring resort to extrinsic sources to

determine congressional intent. Second, even in the ab-

sence of any ambiguities this Court’s prior precedents,

both those cited by Petitioner and others, permit a court

to examine legislative history as well as other sources to

ascértain if the statutory language reflects the legislative

purpose and intent. Finally, the legislative history, in-

rejected, and the trustee shall immediately surrender such non-

residential real property to the lessor.

6

eluding that to which Petitioner points, establishes that

the purpose of the statute, to provide certainty to land--

lords while protecting the bankruptcy estate’s need to

investigate and preserve its assets, is carried into effect

by the rule adopted below but would be frustrated by

Petitioner’s interpretation. The Ninth Circuit’s recogni-

tion of the requirement that a motion to extend the time

to assume or reject a lease must be filed and served within

the sixty day period after the commencement of the case

insures that the landlord will have the prompt notice of

the trustee’s or debtor’s intent. Thus, the certainty which

Congress desired, as evidenced by the legislative history,

is accomplished by the interpretation of the statute

adopted by the decision below.

Petitioner’s attempt to broaden the scope of the deci-

sion below to effect other time limits in the Bankruptcy

Cede is a thinly disguised effort to make the decision of

greater moment than is merited by the facts of the case,

the language of the decision or the court’s holdings. This

slippery slope argument ignores the actual holding and

the court’s analysis as well as the obvious distinctions

between the different statutes, circumstances, legislative

histories and congressional purposes involved. The deci-

sion does not in any way impact on the other statutes

cited and none of the issues thus raised would be before

this Court on review.

ARGUMENT

A. This Petition Raises No Special And Important

Reasons For Thé Court To Exercise Its Discretion

To Grant Certiorari.

Review of the decision in this matter by writ of certio-

rari is a matter solely within the Supreme Court’s discre-

E

7

tion and a petition for writ of certiorari should be granted

only upon a showing of a need for the Court to exercise its

role as the ultimate arbiter of the nation’s laws. Thus,

certiorari should be granted only when the petition raises

issues the resolution of which are of significant impor-

tance to the public as distinct from the parties. Rice v.

Sioux City Memorial Park Cemetery, Inc., 349 U.S. 70

(1955). As the court explained in the Rice opinion,

“A federal question raised by a petitioner may be ‘of

substance’ in the sense that, abstractly considered, it

may present an intellectually interesting and solid

problem. But this Court does not sit to satisfy a

scholarly interest in such issues. Nor does it sit for

the benefit of the particular litigants...

‘Special and important reasons’ imply a reach to a

problem beyond the academic or the episodic.”

Id. at 74 (citations omitted).

The court in Rice concluded its opinion with the follow-

ing quote from Judge Taft:

“TI]t is very important that we be consistent in not

granting the writ of certiorari except in cases involv-

ing principles the settlement of which is of impor-

tance to the public, as distinguished from that cf the

parties, and in cases where there is a real and

embarrassing conflict of opinion and authority be-

tween the Circuit Courts of Appeals. Layne & Bowler

Corp. v. Western Well Works, Inc., 261 U.S. 387, 393,

43 S.Ct. 422, 423, 67 L.Ed. 712.”

Id. at 79.

These considerations are embodied in the Rules of the

Supreme Court, Rule 17. That rule provides as follows:

8

“Rule 17. Considerations Governing Review on

Certiorari

.1. A review on writ of certiorari is not a matter of

right, but of judicial discretion, and will be granted

only when there are special and important reasons

therefor. The following, while neither controlling nor

fully measuring the Court’s discretion, indicate the

character of reasons that will be considered.

(a) When a federal court of appeals has rendered

a decision in conflict with the decision of another

federal court of appeals on the same matter; or has

decided a federal question in a way in conflict with a

state court of last resort; or has so far departed from

the accepted and usual course of judicial proceed-

ings, or so far sanctioned such a departure by a lower

court, as to call for an exercise of this Court’s power

of supervision.

(b) When a state court of last resort has decided

a federal question in a way in conflict with the

decision of another state court of last resort or of a

federal court of appeals.

(ec) When a state court or a federal court of

appeals has decided an important question of federal

law which has not been, but should be, settled by this

Court, or has decided a federal qvestion in a way in

conflict with applicable decisions of this Court.

.2. The same general considerations outlined above

will control in respect of petitions for writs of certio-

rari to review judgments of the United States Court

of Appeals for the Federal Circuit, the United States

Court of Military Appeals, and of any other court

whose judgments are reviewable by law on writ of

certiorari.”

EE

9

The language of this rule governing the circumstances

under which review by certiorari is appropriate has re-

mained essentially unchanged for over 60 years. The

principles which are embodied in it have guided the

Court’s exercise of its discretionary power of review in

order to shape the body of Supreme Court decisions

around those issues which impact on the development of

national law and involve principles of significant public

interest. Yet the Petitioner in this case has neither cited

the rule nor pointed to a single “special and important

reason” for granting certiorari, whether of the kind illus-

trated in the rule or otherwise. The reason for this

omission is obvious; while the Ninth Circuit Court of

Appeals’ decision is of significant importance to Peti-

tioner in that it prevents it from reaping the windfall

described hereinabove, no issue of national importance is

raised in that decision. The decision determines the man-

ner of application of a time deadline to a minor procedu-

ral issue in federal bankruptcy practice. Simply put, the

Court of Appeals has decided that a motion seeking an

extension of time must be filed and cause for the exten-

sion must exist by a date certain but the bankruptcy court

can decide the motion, within its normal procedures for

controlling its calendar, after that date. Notwithstanding

Petitioner’s protestations, neither the consistent adminis-

tration of federal bankruptcy law nor the foundations of

statutory interpretation have been threatened by this

result. Rather, the Ninth Circuit Court of Appeals

adopted a rule of sufficient certainty to provide consistent

administration of the law through an exercise of statutory

construction well within the precedents of this court.

10

B. The Decision Below Raises No Conflict Between

The Circuit Courts Of Appeal.

The decision below is the only decision yet issued by

any of the Circuit Courts of Appeal on the issue of the

interpretation of the provisions of 11 U.S.C. § 365(d) (4)

concerning the time limitation for the filing and determi-

nation of a motion to extend the time to assume or reject

a lease. Indeed, the Ninth Circuit Court of Appeals is also

the only Circuit to address the closely related issue of the

effect of the section on a motion to assume filed within

sixty days but decided after the time limit. In re Victoria

Station, Inc., 840 F.2d 682 (9th Cir. 1988). Thus, there

exists no conflict between the Circuits which would pre-

sent a need for resolution by this Court in order to insure

a uniform application of federal law.

Moreover, the only decision by any courts acting in an

appellate capacity are consistent with the decision below.

In In re By-Rite Distributing, Inc., 55 Bankr. 740 (D. Utah

1985) District Judge Jenkins reviewed the holding of the

bankruptcy court previously relied upon by the Bank-

ruptey Court in the present case. The district court’s

decision, which is consistent with In re Victoria Station,

Inc., supra, held that 11 U.S.C. §365(d)(4) did not

require approval of a motion to assume a lease within

sixty days from the commencement of the case if the

motion was filed within that time. Similarly, in Tigr

Restaurant, Inc., v. Rouse S8.I. Shopping Center, Inc., 79

Bankr. 954 (E.D. N.Y. 1987). District Judge Dearie

acting in an appellate capacity, reversed the bankruptcy

court and held that subsequent extensions of the time to

assume or reject were allowed if motions were filed within

the time of earlier, properly granted extensions.

Thus, every appellate court considering the section in

question has interpreted it consistently with the decision

11

below to require a motion which is filed within sixty days

to be decided by the bankruptcy court after that time. The

only conflicting decisions are at the trial court level and

certainly raise no issue of national importance to be

resolved by this court. See, Cleveland Board of Education

v. La Fluer, 414 U.S. 632, 638-639 n.8 (1974); Ward v.

Illinois, 431 U.S. 767, 770-771; (1977); Calhoon v. Harvey,

379 U.S. 1384 (1964).

C. The Decision Below Does Not Decide An Impor-

tant Question Of Federal Law In A Manner Con-

flicting With The Prior Decisions Of This Court.

The Petitioner does not directly assert either that the

Ninth Cireuit’s holding raises an undecided substantial

issue of federal law which should be determined by this

court or that it is in conflict with prior decisions of this

court. Rather the asserted reasons for granting the Peti-

tion are to correct what Petitioner describes as the formu-

lation of a supposedly new cannon of statutory

construction which if applied to other provisions of the

Bankruptcy Code not here at issue, will have a disruptive

effect. However, neither of Petitioner’s premises is viable.

The Ninth Circuit Court of Appeals followed long

settled legal principles of interpretation in reaching its

decision. The “slippery slope” of disrupted bankruptcy

administration which Petitioner forsees is simply the

untenable misinterpretation and misapplication of the

principles upon which the lower court’s decision was

based.

The only conflict with this Court’s decisions pointed out

by Petitioner is a supposed disregard for the proper

method of statutory construction. Petitioner’s argument

is that Congress’ intent may be determined solely by

reference to the language of the statute itself and that

12

reference to any extrinsic source, including legislative

history, to determine that intent was improper. However,

Petitioner’s position in this regard is erroneous in two

respects.

First, as the decision below points out, the statutory

language is not free from ambiguity. It is susceptible to

multiple meanings as a result of the placement and

punctuation of the modifying clause “within such 60-day

period.” It is unclear simply from the statute’s language

whether the clause modifies the time period during which

cause for extension must exist or the period within which

the court must act, or both. If the first meaning were

intended, it would have better been expresed by omitting

the comma following the word “cause.” If the second

meaning is correct, the phrase would best be placed after

the work “fixes.”” If the phrase was meant to condition

both the existence of cause and the entry of the court’s

order, the word “fixes” would better have been placed

after “court.” In any event, while one can argue which of

the available interpretations is “stronger’’, this is not a

ease where Petitioner’s “plain meaning” rule could apply.

More importantly, this Court’s prior decisions do not

enunciate the strict literalist approach presented by Peti-

tioner. Neither the cases cited ‘n the Petition nor the

balance of the vast body of Supreme Court precedent

addressing statutory construction adopt a rule which

precludes seeking the intent of Congress from sources

other than the language of the specific code section at

issue. Indeed, such a position has been specifically re-

jected by this Court. Train v. Colorado Public Interest

Research Group, 426 U.S. 1 (1976). In that ease the Ninth

Cireuit Court of Appeals, regarding the statutory lan-

13

guage as unambiguous, did not concern itself with legisla-

tive history. This Court reversed stating:

“To the extent that the Court of Appeals excluded

reference to the legislative history of the FWPCA in

discerning its meaning, the court was in error. As we

have noted before: ‘When aid to construction of the

meaning of words, as used in the statute, is available,

there certainly can be no ‘rule of law’ which forbids

its use, however clear the words may appear on

‘superficial examination.’ ”’

Id. at 9.

Indeed, in each of the cases relied upon by Petitioner,

many of which were relied upon by the court below, the

Supreme Court did review sources of legislative intent

beyond the statutory language concluding from those

materials that the congressional purpose was reflected in

the language used. The cases cited do not stand for the

proposition asserted by Petitioner that no such review is

permitted. See, e.g., INS v. Cardoza-Fonseca, 107 S.Ct.

1207, 1213 n.12 (1987); United States v. James, 106 S.Ct.

3116, 3121 (1986); Bethesda Hosp. Ass’n v. Bowen, 108

S.Ct. 1255, 1259. Rather, the proper method of statutory

analysis, which was the course followed by the Ninth

Circuit Court of Appeals in this matter, was explained by

the Court in Watt v. Alaska, 451 U.S. 259 (1981) as

follows:

“We agree with the Secretary that ‘[t]he starting

point in every case involving construction of a statute

is the language itself.’ Blue Chip Stamps v. Manor

Drug Stores, 421 U.S. 723, 756, 95 S.Ct. 1917, 1935,

44 L.Ed.2d 539 (1975) (POWELL, J. concurring).

See, Rubin v. United States, 449 U.S. 424, 1010 S.Ct.

698, 66 L.Ed.2d 633 (1981). But ascertainment of

the meaning apparent on the face of a single statute

14

need not end the inquiry. Train v. Colorado Public

Interest Research Group, 426 U.S. 1, 10, 96 S.Ct. 1938,

1942, 48 L.Ed.2d 434 (1976); United States v. Ameri-

can Trucking Assns., Inc., 310 U.S. 534, 543-544, 60

S.Ct. 1059, 1063-1064, 84 L.Ed. 1345 (1940). This is

because the plain-meaning rule is ‘rather an axiom of

experience than a rule of law, and does not preclude

consideration of persuasive evidence if it exists.’

Boston Sand Co. v. United States, 278 U.S. 41, 48, 49

S.Ct. 52, 54, 73 L.Ed. 170 (1928) (Homes, J.). The

circumstances of the enactment of particular legisla-

tion may persuade a court that Congress did not

intend words of common meaning to have their literal

effect.” E.g., Church of the Holy Trinity v. Umted

States, 143 U.S. 457, 459, 36 L.Ed. 226 (1892); United

States v. Ryan, 284 U.S. 167, 175, 52 S.Ct. 65, 68, 76

L.Ed. 224 (1931).

“Sole reliance on the ‘plain language’ of § 401(a)

would assume the answer to the question at issue.”

Id. at 265. (footnote omitted)

The Supreme Court has held that a court has a duty to

look beyond the language of a statute where a literal

reading would produce absurd, unintended, or manifestly

unjust results. In the case of Rector, Etc., of Holy Trimty

Church v. U.S., 143 U.S. 457, 460 (1892), the Supreme

Court stated as follows:

“Tf a literal construction of the words of a statute be

absurd, the act must be so construed as to avoid the

absurdity.”

The Supreme Court went on to state as follows:

“{A]nother guide to the meaning of a statute is

found in the evil which it is designed to remedy; and

for this the court properly looks at contemporaneous

ls

15

events, the situation as it existed, and as it was

pressed upon the attention of the legislative body.”

143 U.S. at 513.

In the case of U.S. v. American Trucking Assns., 310

U.S. 534, 542 (1940), the Supreme Court expanded upon

the function of a court in construing statutory language

where literal adherence would be absurd, futile, or

unreasonable:

“In the interpretation of statutes, the function of the

courts is...to construe the language so as to give

effect to the intent of Congress.... Often [the]

words [of the statute] are sufficient in and of them-

selves to determine the purpose of the legislation. In

such cases we have followed their plain meaning.

When that meaning has led to absurd or futile re-

sults, however, this Court has looked beyond the

words to the purpose of the act... [EH ]ven when the

plain meaning did not produce absurd results but

merely an unreasonable one ‘plainly at variance with

the policy of the legislation as a whole’ this Court has

followed that purpose rather than the literal words.”

Id. (emphasis in original.)

The Supreme Court reaffirmed the holdings of Holy

Trimty and American Trucking in its decision in Perry v.

Commerce Loan Co., 383 U.S. 392, 400 (1966), and those

decisions have been consistently adhered to by courts

when confronted by statutory language found to produce

absurd, unintended or unreasonable results.

The Ninth Cireuit Court of Appeals construction of 11

U.S.C. § 365(d) (4) in this case is consistent with the

congressional intent in enacting the statute. In re Unit

Portions of Delaware, Inc., 53 Bankr. 83 (Bankr. E.D.N.Y.

1985); In re Musikahn Corp., 57 Bankr. 938 (Bankr.

16

E.D.N.Y., 1986); Tigr Restaurant, Inc. v. Rouse S8.I. Shop-

ping Center, Inc., supra. The legislative history of Section

365 (d) (4) indicates that the problem the section “would

remedy is the long-term vacancy or partial operation of

space by a bankruptcy tenant.” 130 Cong. Rec. S-8894-95

(remarks of Senator Hatch) reprinted in U.S. Code Cong.

& Admin. News 599 (1984). The section was designed to

eliminate the extended period of uncertainty as to the

debtor’s intention which could exist under prior law and

was originally directed at shopping center lease. Although

expanded to all nonresidential leases, the section was not

designed to provide landlords with protection from every

adverse consequence of a tenant’s bankruptcy. See, In re

By-Rite Distributing, Inc., 55 Bankr. 740 (Bankr. D. Utah

1985).

As the bankruptcy court in In re Unit Portions of

Delaware, Inc., supra, stated:

“By requiring the trustee to make a decision concern-

ing the lease within the 60-day period, or show cause

why he needs additional time to do so, the statute

protects adverse parties against delays caused by the

trustee’s failure to investigate whether the lease

should be assumed. No possible statutory purpose is

served by terminating the estate’s interest in the lease

merely because the court could not hear or decide the

issue within the 60-day period.

“A trustee who has requested a hearing for an

extension of time within the prescribed period, and

who makes a prima facie case of his need for the

additional time has done ali he can to obtain the

extension. It would be absurd to deny his request and

cause the estate to forfeit a potentially critical asset

merely because the trustee’s motion was not decided

until after the expiration of the 60-day period. The

—————

17

court finds no evidence in the legislative history or in

the overall statutery scheme to indicate Congress in-

tended such a result.” 53 Bankr. at 85 (emphasis

added, citations omitted).

The conclusion reached by the court in Unit Portions of

Delaware, Inc., supra, was agreed with by the United

States District Court for the District of Utah in its

decision reversing the Bankruptcy Court decision primar-

ily relied upon by the City, and the Bankruptcy Court in

this ease. The District Court in Jn re By-Rite Distributing,

Inc., supra, held as follows:

“The bankruptcy court’s interpretation of section

365(d) (4) would actually defeat the stated legisla-

tive intent by giving the trustee less than the full

sixty days to make up his mind. If the trustee has to

get court approval within the sixty days, he would

have to decide whether or not to assume the lease

and file his motion for assumption much earlier, to

allow time for the required notice, the filing of any

objections and the required hearing. See Bankruptcy

Rule 6006. In complex cases especially, such a re-

quirement would unduly tax the trustee, who must

also calculate assets and debts, determine creditors

and file schedules soon after the filing of the petition.

The result would likely be that trustees would rou-

tinely file for extensions of the sixty-day period,

leading to the very evil that section 365(d)(4) was

meant to cure — costly delay.” 55 Bankr. at 745

(emphasis in original).

See also, In re Burns Fabricating Co., 61 Bankr. 955

(Bankr. E.D. Mich. 1986). :

While petitioner might wish congressional intent to

have been to provide lessors with every protection con-

18

ceivable, the scope of Section 365(d) (4) is not so broad.

As the court below recognized, the section’s intent was to

provide certainty to the relationship between landlords

and tenants in bankruptcy cases, while preserving the

estate’s ability to demonstrate a need for additional time

to assume valuable leasehold interests which might be

erucial to a reorganization. The decision of the Ninth

Cireuit Court of Appeals properly ascertained and imple-

mented that intent.

D. Rather Than Disrupt The Bankruptcy System, The

Decision Of The Lower Court Will Promote Ad-

ministration Of Cases Consistent With Congres

sional Intent. ,

Petitioner, apparently in an effort to elevate to a level

of national importance a dispute actually concerning the

purely procedural issue of the scheduling of hearings,

raises the specters of increased uncertainty for lessors

and a host of as yet unvisited evils in other areas of

bankruptcy law unrelated to the present case. The peti-

tioner’s arguments in this regard misconstrue the deci-

sion below in order to create uncertainties where none

exist and attribute to the lower courts an unfounded

predilection toward destructiveness not evident in this or

other decisions. The parade of horribles predicted by

petitioner are neither mandated by the holding of the

decision sought to be reviewed nor are they foreseeable

based upon the lower court’s analysis.

With respect to the decision’s actual holding that the

bankruptcy court may determine a motion for an exten-

tion filed within sixty days of the commencement of the

ease after the expiration of that time, petitioner asserts

that the congressional purpose of providing certainty for

landlords is frustrated because “any debtor or trustee

—

19

who misses or miscalculates one of these time limits may

seek to avoid the consequences of its own inaction.”

Petition, p. 18. However, the Ninth Cireuit Court of

Appeals’ holding does not create any such risk. The

opinion requires the motion to be served and filed within

the sixty day period. Thus, the landlord must receive

notice of the debtor’s or trustee’s intention within the

sixty day time frame as Congress envisioned. In the

unlikely event that the hearing on the motion is unduly

delayed by the debtor, the Ninth Cireuit Court of Ap-

peal’s decision, at worst, shifts the obligation to advance

the hearing date to the landlord. However, the notice

procedure adopted is precisely analogous to the legisla-

tive history accompanying the enactment of the section

and to that of prior versions recited at page 14 of the

Petition. The landlord will receive notice within the first

sixty days of the trustee’s or debtor’s intentions.

The supposed impact of the decision on Sections 108,

362 and 1124 of the Bankruptcy Code, 11 U.S.C. $§ 108,

362 and 1124, is simply specious. The decision has no

impact on those sections whatsoever. The statutory lan-

guage, legislative history and related statutory frame-

work are entirely distinct from that considered below.

Those sections were enacted as a part of the original

Bankruptcy Reform Act of 1978, not the Bankruptcy

Amendments and Federal Judgeship Act of 1984 and

reflect entirely distinct statutory language, legislative

purposes and goals. Petitioner's attempt to read the

decision below as affecting these sections is simply an

attempt to distort the decision’s scope beyond any war-

ranted by the pertinent facts, the lower court’s holding or

the language used in order to magnify the decisions

supposed impact and thus the importance of review. This

effort shouid be rejected.

20

CONCLUSION

The petition demonstrates no special and important

reasons for granting review by certiorari in this case. The

issue of the scheduling of hearings on motions to extend

the time to assume or reject leases in bankruptcy cases is

not inherently of national importance and there is no

conflict among the circuits.

Moreover, the Ninth Cireuit Court of Appeals neither

adopted a new method of statutory construction in the

abstract nor did it apply existing precedent erroneously.

Rather, it properly ascertained Congressional intent and

adopted a rule effectuating that intent. The decision

below provides a rule of certainty and fairness which

requires no further review. Therefore, the Petition for

Writ of Certiorari to the United States Court of Appeals

for the Ninth Circuit filed on behalf of the City of Long

Beach should be denied.

DATED: May 26, 1988

Respectfully submitted,

RICHARD K. DIAMOND*

DANNING, GILL, GOULD, DIAMOND

& SPECTOR

By RICHARD K. DIAMOND

Attorneys for Respondent

* Counsel of Reeord.

PROOF OF SERVICE BY MAIL

I am a citizen of the United States and a resident of the

City and County of Los Angeles; I am over the age of

eighteen years and not a party to the within action; my

business address is: 1706 Maple Avenue, Los Angeles,

California.

On May 26, 1988, I served the within Opposition To

Petition for Writ of Certiorari in re: “City of Long Beach

vs. Southwest Aircraft Services, Inc.” in the United

States Supreme Court, October Term 1987, No. 87-1987;

On the Parties in said action, by placing Three copies

thereof enclosed in a sealed envelope with postage fully

prepaid, in the United States post office mail box at Los

Angeles, California, addressed as follows:

John R. Calhoun, City Attorney

Roger P. Freeman, Deputy City Attorney

City of Long Beach

333 West Ocean Boulevard, Suite 1100

Long Beach, California 90802

Robert H. Shutan*

Bruce A. Markell

Jennifer L. Corston

Sidley & Austin

2049 Century Park East, Suite 3500

Los Angeles, California 90067

(213) 553-8100

Thomas A. Freiberg, Jr.

Richards, Watson & Gershon

333 South Hope Street, 38th Floor

Los Angeles, California 90071

Counsel for Petitioner

All parties required to be served-have been served.

I certify, under penalty of perjury, that the foregoing is

true and correct.

Executed on May 26, 1988, at Los Angeles, California