- Wiscovitch-Rentas v. Sur CSM Plaza, Inc., (In re PMC Marketing Corp.), BAP No. PR15-023, --- B.R. --- (1st Cir. BAP Jan. 19, 2016)
- In a decision not for publication, the BAP reversed the Bankruptcy Court’s order granting summary judgment to the defendant on the Trustee’s single claim under 11 U.S.C. § 547 seeking to recover a preferential transfer. The BAP further concluded that the Bankruptcy Court erred in denying the Trustee’s cross-motion for summary judgment and remanded the matter for entry of judgment in favor of the Trustee. The BAP rejected the Defendant’s ordinary course of business defense on the basis that the Defendant failed to properly compare the Debtor’s chronically late payments during the preference and pre-preference period and analyze the parties’ payment practices to support the ordinary course defense. With respect to the cross-motion, the BAP found that the Trustee alleged the existence of all necessary elements under Section 547 and because the Defendant failed to oppose the Amended Cross-motion, the Defendant failed to raise a genuine, triable issue of fact with respect to the Trustee’s claim.
- Procedural context:
- The Trustee appealed from the Bankruptcy Court’s sua sponte decision reversing its prior order denying the Defendant’s motion for summary judgment. According to the Bankruptcy Court, the Defendant’s 35-page tenant ledger sufficiently established the defense under 11 U.S.C. § 547, applying its decision in a related adversary proceeding. The Bankruptcy Court’s sua sponte opinion did not mention the Trustee’s Amended Cross-Motion and entered summary judgment in favor of the Defendant. The Trustee appealed. The BAP determined that even though the Trustee appealed from the Order granting the motion for summary judgment, both the Trustee and the Defendant briefed the issues concerning the denial of the Amended Cross-Motion and the BAP considered it within its scope of review.
- Following conversion of the Debtor’s Chapter 11 case, the Chapter 7 Trustee filed a single-count complaint against the Defendant (Sur CSM Plaza, Inc.), the debtor’s landlord. The Trustee’s complaint sought the turnover of $32,171.90 from the Defendant for alleged preferential transfers. The Defendant filed a motion for summary judgment admitting the debtor’s second payment of $16,085.95 fell within the 90 day preference period, but asserted several affirmative defenses, including an ordinary course defense under 11 U.S.C. § 547(c)(2). The Trustee opposed the motion and challenged the ordinary course defense on the basis that there was no set payment pattern between the parties which could qualify as ordinary course. Prior to the Court’s decision on the motions, the Trustee filed an Amended Cross-Motion, instead focusing her intention on the contention that the challenged transfer was not part of the ordinary course. The Trustee analyzed the payment history and presented it to the Court demonstrating that the average lateness of the rental payments. The Defendant did not respond to the Amended Cross-Motion. Without hearing, the Bankruptcy Court denied the Defendant’s motion for summary judgment on the basis that the Defendant did not establish the ordinary course defense and set a trial date. Five days before the trial, the Court sua sponte reversed its decision and granted summary judgment in favor of the Trustee. The Bankruptcy Court order did not explicitly dispose of the Amended Cross-Motion.
- Feeney, Deasy, Cary
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