Middlebrook Tech, LLC v. Moore

DEBORAH S. EYLER, J. The Circuit Court for Montgomery County granted summary judgment in favor of Roger H. Moore, the appellee, in a breach of guaranty action brought against him by Middle-brook Tech, LLC (“Middlebrook”), the appellant. On appeal, Middlebrook presents three questions for review, which can be distilled into the single question of whether the circuit court’s decision to grant summary judgment was legally incorrect. 1 ⁴⁶ For the following reasons, we shall reverse the circuit court’s decision and remand the case to that court for further proceedings. FACTS AND PROCEEDINGS In 1980, Moore founded Optim Electronics Corporation (“Optim”), a Maryland corporation with its principal place of business in Germantown, Montgomery County. Optim was in the business of manufacturing electronic measuring systems for use in industry.

At Optim’s inception, Moore was its president and sole stockholder. At a time not specified in the record, but prior to 1992, Moore sold all of his stock in Optim to Bowthorpe, LLC, a British company. He remained as president of Optim, under an employment contract. On April 30, 1992, Optim entered into a Lease Agreement (“Lease”) with Brooke Venture Limited Partnership (“Brooke”), the predecessor-in-interest to Middlebrook.

Pursuant to the Lease, Optim rented from Brooke commercial office space on the second floor of a building located at 12401 Middlebrook Road, in Germantown (“the Leased Premises”). The Lease was for a five-year term, ending on April 30, 1997. It established an annual rent, payable in monthly installments. As pertinent to this case, section 15 of the Lease, entitled “Default Provisions,” stated, inter alia, that the tenant would be in default for failure to pay rent ten days after the time it was due.

The Lease also contained, as section 26, a “Holding Over” clause, stating that, if the tenant should hold possession ⁴⁷ of the Leased Premises after the end of the term, the tenant would be deemed to be occupying the Leased Premises as a Tenant from month to month, at double the Rent, adjusted to a monthly basis, and subject to all the other conditions, provisions, and obligations of this Lease insofar as the same are applicable, or as the same shall be adjusted, to a month-to-month tenancy. Finally, also as relevant to this case, the Lease contained the following “Bankruptcy Termination Provision,” at section 16: This Lease shall automatically terminate and expire, without the performance of any act or the giving of any notice by Landlord, upon the occurrence of any of the following events: (1) Tenant’s admitting in writing its inability to pay its debts generally as they become due, or (2) the commencement by Tenant of a voluntary case under the federal bankruptcy laws ... or any other applicable federal or state bankruptcy, insolvency or other similar law, or (3) the entry of a decree or order for relief by a court having jurisdiction in the premises in respect of Tenant in an involuntary case under the federal bankruptcy laws ... or any other applicable federal or state bankruptcy, insolvency or other similar law, and the continuance of any such decree or order unstayed and in effect for a period of 30 consecutive days, or (4) Tenant’s making an assignment of all or a substantial part of its property for the benefit of its creditors, or (5) Tenant’s seeking or consenting to or acquiescing in the appointment of, or taking possession by, a receiver, trustee, or custodian for all or a substantial part of its property, or (6) the entry of a court order without Tenant’s consent, which order shall not be vacated, set aside or stayed within 30 days from the date of entry, appointing a receiver, trustee or custodian for all or a substantial part of its property. The provisions of this Section 16 shall be construed with due recognition for the provisions of the federal bankruptcy laws, where applicable, but shall be interpreted in a manner which results in a termination of this Lease in ⁴⁸ each and every instance, and to the fullest extent and at the earliest moment that such termination is permitted under the federal bankruptcy laws, it being of prime importance to the Landlord to deal only with Tenants who have, and continue to have, a strong degree of financial strength and financial stability. In 1993, Brooke conveyed its interest in the Leased Premises to a life insurance company, which in 1996 reconveyed that interest to First Amsterdam Realty, LLC (“First Amsterdam”).

On February 25, 1997, Optim and First Amsterdam entered into an Amendment to the Lease (“Amendment”) that, among other things, extended the Lease term for five years, from May 1, 1997, to April 30, 2002 (“the Extended Term”). In addition, the Amendment gave Optim an option to renew the Lease term for an additional five years, from May 1, 2002, to April 30, 2007 (“the Renewal Term”). Section 2(b) of the Amendment stated: Provided that Tenant is not then in default of any of the terms and conditions of this Lease, Tenant shall have the right to renew this Lease for one (1) additional term of five (5) years commencing on May 1, 2002 and terminating on April 30, 2007 ... provided that for Tenant to validly exercise the option for the Renewal Term, Tenant shall give Landlord written notice at least one (1) year prior to the expiration of the Extended Term, and provided that there shall be no further right of renewal. Sometime thereafter, but before December 7, 1999, First Amsterdam conveyed its interest in the Leased Premises to Middlebrook.

On December 7, 1999, Moore executed an “Unconditional Guaranty of Lease Agreement” (“Guaranty”). The Guaranty was given in connection with Bowthorpe’s sale of all of Optim’s stock to Trident Analytical, Inc., a wholly owned subsidiary of Trident Overseas Limited (collectively “Trident”), also a British Company. The Guaranty states: ⁴⁹ In consideration of and as a material inducement of [Middle-brook] ... to consent to the transfer of all or part of the capital stock of [Optim] from [Bowthorpe to Trident], which consent is required pursuant to [the Lease and Amendment] ... [Moore] hereby unconditionally and absolutely guarantees unto [Middlebrook] . .., the full, prompt and complete payment of any amounts of rent, minimum rent, additional rent, or any additional payment, as these terms may be provided for and used in the [Lease] to be paid by [Optim], and the complete and prompt observance and performance by [Optim] of all the terms, covenants and conditions of the Lease on [Optim’s] part to be performed or observed. Two days later, on December 9, 1999, Trident entered into a loan agreement with the Bank of Scotland (“BOS”).

At the same time, Trident, Optim, and the BOS entered into a Security Agreement, by which Trident pledged what amounted to all of Optim’s assets as security for the BOS loan. A Financing Statement was recorded, granting BOS a first priority security interest in all of Optim’s personal property. About a year and a half later, on April 20, 2001, Moore, in his capacity as President of Optim, sent Middlebrook a letter stating that it was Optim’s intent to renew the Lease for the five year Renewal Term (May 1, 2002 to April 30, 2007) (“the Renewal Letter”). Ultimately, Trident defaulted on the BOS loan.

On August 30, 2001, Trident was forced by the BOS into an “administrative receivership” in the United Kingdom, under a debenture held by the BOS. Two accountants with the firm of Arthur Andersen in Great Britain were appointed “Joint Administrative Receivers” of Trident. On December 31, 2001, Moore’s employment contract with Optim expired and was not renewed. Optim continued operating for the first two weeks of January 2002, but its employees were not paid.

On February 8, 2002, Optim’s employees and Moore filed a petition, in the United States Bankruptcy Court for the District of Maryland (“Bankruptcy Court”), seeking to place Optim in involuntary bankruptcy under Chapter 7 of the ⁵⁰ federal bankruptcy code. On March 13, 2002, the Bankruptcy Court issued an order granting that relief. Thereafter, in April 2002, the Bankruptcy Court appointed Michael Wolff, Esquire, as Trustee for Optim. Beginning in March 2002, Optim ceased making any rent payments under the Lease.

On May 13, 2002, in the bankruptcy case, Middlebrook filed a motion for relief from the automatic stay imposed by section 362(a) of the bankruptcy code. It argued that the Lease term ended on April 30, 2002, and that, from May 1, 2002 on, Optim was occupying the Leased Premises as a holdover tenant, under section 26 of the Lease. Its argument that the Lease was not renewed was twofold: that, as of the date of the Renewal Term (May 1, 2002), Optim was in default, for nonpayment of rent, and therefore could not exercise the renewal option; and that the Renewal Letter was ineffective because it was not sent by registered or certified mail, as required under a notice provision of the Lease. Middlebrook further argued that, in any event, even if the lease were renewed, it was deemed rejected by the Trustee, as of May 12, 2002, under Section 365(d)(4) of the bankruptcy code, and therefore Middlebrook was entitled to immediate possession of the Leased Premises.

On June 7, 2002, the Bankruptcy Court entered an order granting Middlebrook’s motion for relief from the automatic stay. The court ordered that the Lease was deemed rejected on May 13, 2002, pursuant to section 365(d)(4). It further ordered that the automatic stay ... be and hereby is terminated as to [Middlebrook], and that [Middlebrook] may exercise all of its contractual and/or State law rights and remedies under its Lease ..., and Trustee shall consent to such State Court relief; however, [Middlebrook] shall forbear from execution on its judgment until the earlier of July 26, 2002 or 11 days after final order approving sale of collateral in the Leased Premises; and it is further ORDERED, that [Middlebrook] shall have access to the Leased Premises with prior notice to Trustee; and Trustee ⁵¹ shall provide keys and alarm code for this purpose to show Leased Premises to prospective tenants; and Trustee shall maintain insurance on Leased Premises as required by Lease; and it is further ORDERED!,] that [Middlebrook] shall have an administrative claim for rent until the Leased Premises are vacated. On February 4, 2003, in the Circuit Court for Montgomery County, Middlebrook filed a complaint for breach of guaranty against Moore.

Middlebrook alleged that Optim had renewed the Lease for the Renewal Term (May 1, 2002 to April 30, 2007), but had breached the Lease by failing to pay rent from March 2002 forward. It sought recovery from Moore, on his Guaranty, of approximately $210,000 in unpaid rent and late fees allegedly owed by Optim, through January 2003, plus 18% interest. Middlebrook attached copies of the Lease, Amendment, Guaranty, and April 20, 2001 renewal letter to its complaint. Middlebrook’s complaint was filed with an accompanying motion for summary judgment and request for hearing.

The motion was supported by an affidavit by an officer of Middle-brook attesting that the allegations in the complaint were true and the documents attached to the complaint were authentic. Middlebrook did not file a memorandum of law in support of its motion for summary judgment. Moore filed an answer to the complaint, an opposition to Middlebrook’s motion for summary judgment, and a cross-motion for summary judgment. Moore advanced numerous, alternative arguments in opposition to Middlebrook’s motion for summary judgment.

First, he argued that the Lease was not renewed, for four reasons: 1) a written renewal amendment was not signed and the Renewal Letter was not in and of itself effective to extend the Lease for the Renewal Term; 2) the Renewal Letter could not satisfy the statute of frauds; 3) Optim could not renew the Lease because at the inception of the Renewal Term it was in default for failure to pay rent; and 4) at the inception of the Renewal Term, Optim lacked the capacity to renew the Lease because it was in involuntary bankruptcy and only could act ⁵² through its Trustee (who did not renew the Lease and indeed was deemed by the Bankruptcy Court to have rejected it). Moore further argued that, because the Lease was not renewed, Optim was a month-to-month tenant until it vacated the premises in July 2002, and any liability of Optim on the Lease ended at that time. Because Middlebrook received administrative rent in the bankruptcy case covering that period, nothing was owed by Optim and therefore nothing was owed by Moore on the Guaranty. Second, Moore argued that, under section 16 of the Lease, the Lease automatically terminated before the Renewal Term, by either one of two triggering events.

Under section 16(4), the Lease terminated on December 9, 1999, when the Security Agreement was signed, because, by pledging its assets as collateral for the BOS loan to Trident, Optim “mad[e] an assignment of all or a substantial part of its property for the benefit of its creditors.” Alternatively, under section 16(6), the Lease automatically terminated on August 30, 2001, when the Joint Administrative Receivers were appointed. 2 Moore took the position that automatic termination of the Lease meant that Moore ceased to have any liability under the Guaranty because the obligations he was guaranteeing no longer existed, and to extend his Guaranty to cover a holdover tenancy not covered by the Lease for an insolvent business would be to impose on him a new and entirely different obligation from that which he had agreed to. ⁵³ Third, Moore argued that Optim’s involuntary bankruptcy was a “supervening impracticality” that discharged Optim’s duty of performance under the Lease. Fourth, he argued that Optim’s insolvency “completely frustrated the purpose” of the Lease, so its original purpose could not be achieved, thus permitting it to be terminated by Optim. Fifth, Moore argued that Middlebrook failed to mitigate its damages by limiting its claim against Optim to the administrative rent, of approximately $78,000, that it received in the bankruptcy case, when there were adequate funds in the bankruptcy estate to pay Middlebrook’s full claim. Finally, Moore argued that Optim had no liability under the Lease after July 2002 because Middlebrook insisted that Optim vacate the premises as of that time and Optim did so.

Moore maintained that, under all of these scenarios, Optim had no obligations to Middlebrook under the Lease and therefore he had no liability under the Guaranty. In support of his cross-motion for summary judgment, Moore reasserted that he was obligated under the Guaranty only if the Lease was in effect and Optim was bound by it. When the Lease automatically terminated, by one of two triggering events under section 16, as Moore argued was the case, Optim’s obligation under the Lease terminated and his Guaranty terminated as well. If Optim was released from its duty of performance under the Lease, either due to the “supervening impracticality” of its involuntary bankruptcy or due to frustration of purpose of the Lease, Moore’s obligation under the Guaranty likewise ceased.

If that was not the case but the Lease was not renewed, his obligation only was for the holdover period, for which Middlebrook already was compensated. If the Lease was renewed, his Guaranty did not apply, because he only had agreed to guarantee the obligations of Optim as a financially sound going concern, not as an insolvent company. Moore also argued that the Guaranty was not enforceable because it was not supported by consideration. Middlebrook filed an opposition to Moore’s cross-motion for summary judgment, addressing the points raised.

It argued ⁵⁴ that the Renewal Letter was all that was required to effectively extend the Lease and that the statute of frauds was satisfied by the Lease itself. It further argued that Optim was not in default or in bankruptcy when the Lease term was extended by the Renewal Letter, and therefore Optim satisfied the preconditions and had the capacity to renew the Lease and extend the Lease term; it only went into default after the Lease term was extended. Therefore, the Lease was in effect for the remainder of the Renewal Term, that is, through April 2007. Middlebrook asserted that Optim’s insolvency did not discharge Moore from his obligation under the Guaranty.

In response to the arguments advanced by Moore under section 16 of the Lease, Middlebrook asserted that the entire section was invalid as an “ipso facto clause,” prohibited by section 365(3)(1) of the federal bankruptcy code. Middlebrook further argued that even if section 16 were effective and operated to terminate the Lease, or if Optim’s bankruptcy terminated its obligations under the Lease, as guarantor, Moore would step into Optim’s shoes, and become liable under the Lease in any event. Middlebrook further asserted that the doctrines of “supervening impracticability” and “frustration of purpose” were inapplicable, and would not eliminate Moore’s liability under the Guaranty in any event, and that Middlebrook did not limit the sum it could recover against Moore under the Guaranty by accepting approximately $78,000 in administrative rent in the bankruptcy case. Although the date is not discernible from the record, it appears that sometime not long before the scheduled hearing on the summary judgment motions, which had been postponed, counsel for the parties obtained copies of the motion for relief from automatic stay filed by Middlebrook in the bankruptcy case and the Bankruptcy Court’s June 7, 2002 order granting that relief.

The case came on for a hearing before the circuit court on May 21, 2003. 3 Middlebrook argued that, notwithstanding ⁵⁵ Optim’s bankruptcy, Moore remained fully liable on his Guaranty of the obligations in the Lease; indeed, the purpose of the Guaranty was to protect Middlebrook in the event of insolvency of Optim. Middlebrook’s counsel acknowledged having argued in the bankruptcy case that Optim had not renewed the Lease for the Renewal Term. He maintained, however, that the Bankruptcy Court did not decide the renewal issue and, in any event, the bankruptcy case did not involve Moore. He asserted that the undisputed facts established that the Lease had been renewed, that rent had not been paid from March 2002 forward, and that Moore was liable, on his Guaranty, for the sums owed in rent under the Lease that were not paid and had not been reimbursed by administrative rent in the bankruptcy case.

Counsel for Moore focused her argument on section 16 of the Lease, asserting that the Lease had terminated automatically either on December 9, 1999, when Optim entered into the Security Agreement, or in August 2001, when the Joint Administrative Receivers were appointed. She maintained that, from the date the Lease had terminated forward, Optim was occupying the premises as a month-to-month holdover tenant, ⁵⁶ not under the Lease, because it no longer existed, but by law. Because the Lease had terminated, Moore no longer had any liability on his Guaranty, because the obligations that he had guaranteed no longer existed. Moore’s counsel further argued that, even if the Lease did not expire before the involuntary bankruptcy petition was filed, Optim did not effectively exercise the option to renew the Lease for the Renewal Term, because a condition precedent to renewal was that Optim not be in default at the time of the Renewal Term (that is, as of May 1, 2002), and that condition was not satisfied, because Optim had failed to pay rent for March and April 2002.

Therefore, the Lease expired on April 30, 2002. 4 In that regard, Moore’s counsel advanced an argument not made in his memorandum in support of cross-motion for summary judgment, and therefore not briefed for the court: that by advocating before the Bankruptcy Court, in support of the motion to stay, that the Lease had not been renewed, Middlebrook was judicially estopped to argue in the breach of guaranty case against Moore that the Lease had been renewed. Counsel asserted that, on the basis of the non-renewal position it took in the bankruptcy ease, Middle-brook was granted relief from the automatic stay, and was able to retake possession of the Lease Premises. At the conclusion of the hearing, the circuit court ruled: [Middlebrook] had previously taken the position in the bankruptcy matter ... that Section 16 of the lease governed and resulted in termination of the lease. I am inclined to agree with the position that [Middle-brook] took in the bankruptcy court, with regard to Section 16 of the lease, for the reasons stated by Middlebrook and the additional reasons set forth today. ⁵⁷ It seems to me that by operation of the lease, that the lease itself was terminated; and I think that the position that [Middlebrook] take[s] in this matter is not only inconsistent with the position [it] has previously taken, but I think it is inconsistent with the facts which appear undisputed with regard to the triggering events; but also find that— it seems to me that the doctrine of judicial estoppel was created to prevent the very thing that [Middlebrook] is doing here, and that is, asserting a contrary position in another case concerning essentially the same subject matter and asserting those inconsistent positions when it is depending upon whether it is to its benefit or detriment to assert the position taken.

I am going to grant—I do find there is no genuine dispute as to material fact. I am going to grant [Moore’s] motion for summary judgment and deny [Middlebrook’s] motion for summary judgment.... On May 28, 2008, the circuit court entered an order denying Middlebrook’s motion for summary judgment and granting Moore’s cross-motion for summary judgment. Within ten days, Middlebrook filed a motion for reconsideration, which was denied in a brief order, without a hearing.

Middlebrook then filed a timely notice of appeal. DISCUSSION Standard of Review of Grant of Motion for Summary Judgment Under Rule 2-501, a circuit court may grant summary judgment upon a finding that the material facts are not in genuine dispute and the moving party is entitled to judgment in its favor as a matter of law. Beyer v. Morgan State Univ., 369 Md. 335, 359-60 , 800 A.2d 707 (2002); Schmerling v. Injured Workers’ Ins. Fund, 368 Md. 434, 443 , 795 A.2d 715 (2002); Lippert v. Jung, 366 Md. 221, 227 , 783 A.2d 206 (2001).

The court’s decision on both issues is a legal decision. Maryland Dept. of the Environment v. Underwood, 368 Md. 160, 171 , 792 A.2d 1130 (2002); Philadelphia Indem. Ins. Co. v. ⁵⁸ Maryland Yacht Club, Inc., 129 Md.App. 455, 465 , 742 A.2d 79 (1999).

Accordingly, we review the grant of summary judgment de novo. Beyer, supra, 369 Md. at 359-360 ; Schmerling, supra, 368 Md. at 443, 795 A.2d 715 ; Fister v. Allstate Life Ins. Co., 366 Md. 201, 210 , 783 A.2d 194 (2001). If the moving party offers more than one basis for its summary judgment argument, and the court rules on one basis, we review the court’s decision on that issue.

We do not review the issues that did not form the basis for the court’s ruling, unless the court would have had no discretion but to grant summary judgment on one of those bases. Maryland Rule 8-131(a); Sadler v. Dimensions Healthcare Corp., 378 Md. 509, 537 , 836 A.2d 655 (2003); Blades v. Woods, 338 Md. 475, 478, 659 A.2d 872 (1995)(quoting Gross v. Sussex Inc., 332 Md. 247 , 254 n. 3, 630 A.2d 1156 (1993)); Orkin v. Holy Cross Hosp. of Silver Spring, Inc., 318 Md. 429, 435 , 569 A.2d 207 (1990). Analysis Before addressing Middlebrook’s contentions, it will be helpful to give an overview of some of the pertinent Maryland law respecting third party contractual obligors and the relevant federal law respecting the effect of bankruptcy proceedings on executory contracts and leases of the debtor. In Maryland, there are two types of third-party contractual obligors: guarantors and sureties.

Mercy Medical Center, Inc. v. United Healthcare of the Mid-Atlantic, Inc., 149 Md.App. 336, 357 , 815 A.2d 886 (2003). A suretyship contract is a tripartite agreement among a principal obligor, his obligee, and a surety. This contract is a direct and original undertaking under which the surety is primarily liable with the principal obligor and therefore is responsible at once if the principal obligor fails to perform. General Motors Acceptance Corp. v. Daniels, 303 Md. 254, 259 , 492 A.2d 1306 (1985).

See also Atl. Contracting & Material Co. v. Ulico, 380 Md. 285 , 844 A.2d 460 (2004), . “The liability of a surety is coextensive with that of the principal. ⁵⁹ The surety is primarily or jointly liable with the principal and, therefore, is immediately responsible if the principal fails to perform.” Ulico, swpra, 380 Md. 285 , 844 A.2d 460 (citing Gen. Builders Supply Co. v. MacArthur, 228 Md. 320, 326 , 179 A.2d 868 (1962)). “Ultimate liability rests upon the principal obligor rather than the surety, but the obligee has a remedy against both. The surety, however, becomes subrogated to the rights of the obligee when the surety pays the debt for the principal obligor.” General Motors, supra, 303 Md. at 259 , 492 A.2d 1306 .

A guaranty is a form of commercial obligation in which the guarantor promises to perform if his principal does not. Mercy Medical Center, supra, 149 Md.App. at 361 , 815 A.2d 886 (quoting General Motors, supra, 303 Md. at 260 , 492 A.2d 1306 , and Walton v. Washington County Hosp. Ass’n, 178 Md. 446, 450 , 13 A.2d 627 (1940)). As distinguished from a contract of suretyship, a contract of guaranty is collateral to and independent of the principal contract that is guaranteed and, as a result, the guarantor is not a party to the principal obligation.

A guarantor is therefore secondarily liable to the creditor on his contract and his promise to answer for the debt, default, or miscarriage of another becomes absolute upon default of the principal debtor and the satisfaction of the conditions precedent to liability. General Motors, supra, 303 Md. at 260 , 492 A.2d 1306 . “Because ‘[t]he liability of a ... guarantor is created entirely by his contract, it is strictly confined and limited to his contract.’ ” Mercy Medical Center, supra, at 361-62, 815 A.2d 886 (quoting Plunkett v. Davis Sewing-Mach. Co., 84 Md. 529, 533 , 36 A. 115 (1897)). For that reason, no change can be made to the guaranty without the guarantor’s consent.

Plunkett, supra, 84 Md. at 533 , 36 A. 115 . As Moore acknowledges in his brief and the papers he filed below, the contractual obligation he gave in the Guaranty was in the nature of a surety agreement, because it guaran ⁶⁰ teed performance of the obligations of Optim under the Lease, not performance by Optim of those obligations. The federal bankruptcy laws are codified in 11 U.S.C. sections 361 , et seq. Section 365, entitled “Executory contracts and unexpired leases,” provides, inter alia, that, with certain exceptions and subject to the Bankruptcy Court’s approval, the trustee of a debtor may assume or reject an unexpired lease of the debtor. § 365(a).

See also In re Alongi, 272 B.R. 148, 152-53 (Bankr.D.Md.2001). In a case under Chapter 7 of the Bankruptcy law, if within 60 days of the granting of relief by the bankruptcy court, the trustee does not assume or reject an unexpired lease of non-residential real property under which the debtor is the lessee, the lease is deemed rejected, and the trustee shall immediately surrender the real property to the lessor. Section 365(d)(1); In re Alongi, supra, 272 B.R. at 153 . Rejection of the unexpired lease does not terminate the lease.

Rather, it means that the debtor’s estate will not become a party to the lease and that the lease is not part of the bankruptcy estate and is not under the jurisdiction of the Bankruptcy Court. In re Alongi, supra, 272 B.R. at 153 . The rejection of the lease constitutes a breach by the debtor that is considered to have occurred immediately prior to the filing of the bankruptcy petition. Section 365(g); RCC Tech.

Corp. v. Sunterra Corp., 287 B.R. 864 , 866 n. 3 (D.Md.2003), rev’d on other grounds, In re Sunterra Corp., No. 03-1193, 361 F.3d 257 , 2004 WL 527832 (4th Cir.) (Md. Mar. 18, 2004); In re Alongi, supra, 272 B.R. at 154 . The breach of the unexpired lease by the debtor lessee entitles the non-debtor lessor to regain possession of the leased premises. Section 365(d)(4); In re Park, 275 B.R. 253, 257 (Bankr.E.D.Va.2002). It further entitles the non-debtor lessor to file what is treated as a prepetition, unsecured claim for damages against the debtor.

Section 365(g)(1); In re Park, supra, 275 B.R. at 256 ; In re Milstead, 197 B.R. 33, 36 (Bankr.E.D.Va., 1996). The claim is subject to a statutory cap under section 502(b)(6). When the trustee rejects an unex ⁶¹ pired lease of non-residential real property, the trustee must pay rent that has accrued from the date of the filing of the petition to the date the lease is rejected. Section 503; In re Standard Furniture, Co., 3 B.R. 527, 530 (Bankr.S.D.Cal.1980).

A lease that terminated before the debtor’s bankruptcy petition was filed, and therefore has no unexpired term, is not an unexpired lease for purposes of section 365. See In re Pagoda Intern., Inc., 26 B.R. 18, 21 (Bankr.D.Md.1982) (observing that a bankruptcy court cannot act to resurrect a lease that was terminated before the filing of bankruptcy petition). See also In re Greenfield Dry Cleaning & Laundry, Inc., 249 B.R. 634, 641 (Bankr.E.D.Pa.2000). In deciding whether a lease in fact was terminated prior to the bankruptcy petition’s being