Bankruptcy Appellate Panel for the Ninth Circuit
2006 WL 6810985 (2006)
Samey Jawad (debtor) entered a finance lease with Michael R. White and Associates (White) (creditor) to lease a modular office. Under the finance lease, White would purchase the office from a third-party vendor in two installments: $17,000 once the lease was signed, and $19,805 once the vendor delivered the modular office to Jawad. Jawad would then make monthly payments to White over a 60-month period, totaling nearly $79,000. The lease stated that Jawad would assume the risk of loss upon delivery. However, the lease had an addendum that deemed the office accepted upon execution of the lease, rather than upon delivery. The lease was signed, and White paid the initial $17,000 to the vendor. However, the vendor never delivered the modular office to Jawad. Through a series of events, Jawad recovered some money for White, paid some money to White, and ended up filing for bankruptcy twice. By the second bankruptcy proceeding, White had already received almost $24,000. Still, White made a claim against Jawad for the remaining unpaid lease money, interest, and attorneys’ fees. If White received the entire amount of its latest claim, White would receive a total of nearly $49,000 for its initial advance of $17,000. Jawad objected to White’s claim, arguing that enforcement of the lease would be unconscionable. White argued that the risk of loss for non-delivery fell on Jawad, not on White. The bankruptcy court disallowed White’s claim, finding that it was unconscionable. White appealed.
Rule of Law
Holding and Reasoning (Russell, J.)
Dissent (Montali, J.)
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