The Ninth Circuit Provides Guidance Regarding the Scope of “Cap” on Landlord’s Rejection Claim Damag
Bankruptcy Courts have reached different results regarding the scope of the “Cap” on a landlord’s lease rejection claim. The Ninth Circuit, in the case of Kupfer v. Salma (In re Kupfer), 852 F.3d 853 (9th Cir. 2016), provided guidance on this issue.
In Kupfer, the Ninth Circuit held that the statutory cap of 11 U.S.C. Section 502(b)(6) on a landlord’s lease rejection damage claim applies only to claims that result directly from the actual termination of the lease. The Ninth Circuit held that the “Cap” does not apply to damage claims that would exist even if the lease had not been terminated. In other words, damages that are separate from damages resulting from the lease termination are not subject to the “Cap”. In Kupfer, the court held that attorneys’ fees for litigating claims for future rent were subject to the “cap” because they would not have existed but for the lease termination. The court also held that fees for litigating claims for past rent would exist independent of the lease termination, and therefore were not subject to the “Cap”.