Liquidating Trustee of the App Fuels Creditors Trust v. Bingham Greenbaum Doll LLp (In re Appalachian Fuels, LLC)

Summarized by J. Debbeler , Bricker Graydon LLP
12 years 1 month ago

Citation:

BAP No. 13-8023

Tag(s):

Ruling:

The Panel reverses the bankruptcy court’s order granting summary judgment. Although the court did not err in finding that Bingham Greenebaum adequately supported its renewed motion for summary judgment, the issue before the Panel is whether there is a genuine issue for trial and a genuine dispute of material fact exists concerning Bingham Greenebaum’s constructive knowledge that cannot be resolved on summary judgment.

Procedural context:

The complaint alleges that Paonia received a fraudulent transfer in the amount of $4,740,220 from the Debtor Appalachian Fuels, LLC (“AppFuels”). Of this amount, the Liquidating Trustee seeks to recover a $223,000 payment made by Sentinel Energy, LLC (“Sentinel”) to Bingham Greenebaum for legal fees. Recovery is sought from Bingham Greenebaum as a mediate transferee. Bingham Greenebaum filed a motion for summary judgment asserting the good faith transferee defense provided in 11 U.S.C. § 550(b)(1). The bankruptcy court granted summary judgment in Bingham Greenebaum’s favor, and the Liquidating Trustee appealed the bankruptcy court’s order.

Facts:

Bingham Greenebaum received fees of $223,000.00 from Sentinel allocated to pay legal fees related to work done on Paonia matters ("Greenebaum Transfer"). An adversary complaint was filed to recover the Greenebaum Transfer. The parties agreed for the purposes of the summary judgment motion that the Greenebaum Transfer was a fraudulent transfer, Bingham Greenebaum is a mediate transferee with the burden of showing the good faith transferee defense applies, and that Bingham Greenebaum took the Greenebaum Transfer for value in good faith. The only issue under 550(b)(1) for the court to determine was whether a genuine issue of material fact existed as to whether the Greenebaum Transfer was received by Bingham Greenebaum without knowledge of the voidability of the transfer and whether Bingham Greenebaum was entitled to judgment as a matter of law.

Judge(s):

Harris, Humphrey and Preston

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