MOAC Mall Holdings LLC v. Transform Holdco LLC, et al.

After litigating for four years, including in this Court, on the premise that the Sears lease at Mall of America is a “lease” for purposes of the assumption and assignment provisions of Bankruptcy Code Section 365, respondents did an about-face on remand and argued, for the first time, that the lease was not a “true lease” at all, and that Section 365(d)(4)’s deemed rejection provision for unassumed leases was inapposite. That position was not only irreconcilable with the parties’ years of litigating over the meaning of Section 365(b)(3) but also contrary to the parties’ numerous express stipulations that the lease was a lease subject to the requirements of Section 365(b)(3) and (d)(4). The district court and court of appeals absolved respondents of their repeated waivers because the stipulation that the MOAC lease was a “lease for purposes of Section 365(b)(3)” was more explicit than their stipulation that the lease was a “lease of nonresidential real property” and that Section 365(d)(4)’s deadline to assume or reject such leases applied to it. In so ruling, the court of appeals applied, in effect, a “magic words” standard that is inconsistent with other circuits’ construction of stipulations. Moreover, its ruling assumes that the word “lease” could have different meanings for Sections 365(b)(3) and (d)(4), which other circuits reject. The questions presented are: Whether parties must invoke a particular phrase and explicitly acknowledge all possible consequences for a stipulation to constitute waiver; and Whether the term “lease” means different things in different subsections of Bankruptcy Code Section 365. (I)