Southeast Landco, LLC v. 150 Beachview Holdings, LLC, 2006 U.S. Dist. LEXIS 73098 (S.D. Ga. September 21, 2006) (Alaimo).
A lawsuit was filed in federal court alleging breach of a real estate contract. The basis for federal jurisdiction, the plaintiff argued, was that an individual who had a leasehold interest in the real property** at issue was a debtor in a Chapter 7 case. However, in the bankruptcy case, the Chapter 7 trustee had rejected the lease and entered a no-asset report.
The court granted the motion to dismiss. Although the plaintiff argued that the lease was rejected, but not terminated, the distinction was not relevant. The rejection of the lease was irrevocable and removed the lease as property of the estate. Therefore, a dispute between two non-debtors over the lease could not be "related to" the bankruptcy case, and federal jurisdiction did not exist.
** The property interest at issue was an "estate for years" under Georgia law, and could be passed as real property. O.C.G.A. 44-6-100.