Terrabella Studios, LLC
24-40268
Bankr. D. Kan.May 5, 2025Background
- Terrabella Studios, LLC (“Terrabella”) leased commercial space from Lindemuth Inc. (later assigned to 29th Street Partners, LLC) in 2017 to operate a Sola Salon in Topeka.
- A dispute arose over alleged defaults and termination notices; Terrabella filed a declaratory action in Kansas state court after receiving a default and termination notice from 29th Street.
- The State Court granted partial summary judgment in January 2024, holding Terrabella breached the lease and granting 29th Street’s eviction claim; Terrabella’s request for stay was conditioned on posting a bond.
- Terrabella did not post the required appeal bond before the deadline; the stay lapsed, and shortly after, Terrabella filed for bankruptcy.
- In bankruptcy, Terrabella’s plan attempted to assume the lease as an essential part of reorganization, while 29th Street sought a ruling that the lease had already terminated prepetition (and for relief from the automatic stay).
Issues
| Issue | Terrabella's Argument | 29th Street's Argument | Held |
|---|---|---|---|
| Was the lease terminated before bankruptcy? | No; state order on eviction was procedural, not substantive; lease remains in effect. | Yes; state order was substantive, terminated the lease and granted eviction. | Lease was terminated prepetition; no lease to assume. |
| Does the automatic stay protect the lease? | Yes; because the lease was not terminated, stay applies. | No; stay does not apply because lease was terminated prepetition. | No stay applies; lease terminated prior to bankruptcy. |
| Can the Bankruptcy Court revisit state court findings? | Yes; unresolved affirmative defenses and claim issues remain. | No; Rooker-Feldman doctrine bars relitigating state court decisions. | State court order stands; Rooker-Feldman prevents review. |
| Should 29th Street receive stay relief if lease exists? | No; bankruptcy court is forum for allowance of claims and lease issues. | Yes; state court is proper venue; Curtis factors support stay relief. | Moot; since lease terminated prepetition. |
Key Cases Cited
No official reporter citations with proper syntax provided in the opinion’s text. All key cases cited (Wichita Hoops, Caisson Lab'ys, Curtis, etc.) are referenced by WL or not by full citation, so none are formatted as hyperlinks per instructions.