223 F.3d 1064 (9th Cir. 2000), 98-16539, In re In Re: Greene

Docket Nº:98-16539
Citation:223 F.3d 1064
Party Name:In re: THOMAS A. GREENE, aka Radiator Service, Inc., and BOBBY JEAN GREENE, Debtors. MBNA AMERICA, Appellant, v. JEFFRY G. LOCKE, Trustee, Appellee.
Case Date:July 12, 2000
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 1064

223 F.3d 1064 (9th Cir. 2000)

In re: THOMAS A. GREENE, aka Radiator Service, Inc., and BOBBY JEAN GREENE, Debtors.

MBNA AMERICA, Appellant,

v.

JEFFRY G. LOCKE, Trustee, Appellee.

No. 98-16539

Office of the Circuit Executive

United States Court of Appeals, Ninth Circuit

July 12, 2000

Submitted December 8, 19991

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[Copyrighted Material Omitted]

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Fred S. Hjelmeset, Law Offices of Reidun Stromsheim, San Francisco, California, for the appellee.

Appeal from the United States District Court for the Northern District of California, D.C. No. CV-98-01970-SBA; Saundra B. Armstrong, District Judge, Presiding

Before: Diarmuid F. O'Scannlain, Michael Daly Hawkins, and Kim McLane Wardlaw,2 Circuit Judges. COUNSEL: Dennis Winters, Winters Law Firm, Santa Ana, California; Gilbert B. Weisman, William J. Becket, Becket & Lee, Malvern, Pennsylvania, for the appellant.

O'SCANNLAIN, Circuit Judge:

How do we count the time within which a preferential transfer in bankruptcy occurs when the 90th day before the filing date of the petition falls on a Saturday?

I

On February 29, 1996, Thomas A. Greene and Bobby Jean Greene (collectively, "the Greenes") tendered a check for $21,998.71 to MBNA America ("MBNA"). The check cleared the Greenes' bank on March 8, 1996, which was a Friday. On June 7, 1996, the Greenes filed a petition for relief under Chapter 7 of the Bankruptcy Code. On August 29, 1996, Jeffry G. Locke, trustee of the Greenes' bankruptcy estate ("the Trustee"), filed a complaint against MBNA in bankruptcy court, seeking to recover the Greenes' payment to MBNA as a preferential transfer capable of being avoided by the Trustee under 11 U.S.C. S 547(b). MBNA moved for summary judgment, arguing that the transfer could not be avoided because it fell outside the 90-day preference period of S 547(b). The bankruptcy court granted MBNA's motion.

The Trustee appealed to the district court. In determining whether the Greenes' payment to MBNA fell within the 90day preference period, the district court counted backward from June 7, 1996, and concluded that the 90th day was March 9, 1996, a Saturday. Because the 90th day fell on a non-business day, the district court counted back to the previous

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business day, March 8. Because the transfer to MBNA took place on that day, when the check cleared the Greenes' bank,3 the district court held that the transfer fell within the preference period and was avoidable under S 547(b). The district court therefore reversed the bankruptcy court's grant of summary judgment to MBNA. Although the Trustee had not so moved, the district court also granted summary judgment in the Trustee's favor.

MBNA filed this timely appeal4.

II

This case requires us to answer two closely related questions. First, we must determine whether Federal Rule of Bankruptcy Procedure 9006(a) -which extends an applicable period to include the next business day where the last day falls on a Saturday, Sunday, or legal holiday -by its terms applies to the 90-day period for avoidance of a preferential transfer under 11 U.S.C. S 547(b)(4)(A). Second, we must decide whether such application would be permissible under the Rules Enabling Act, 28 U.S.C. S 2075.

A

We begin our analysis, as we must, with the governing provisions of the Bankruptcy Code and Rules. Section 547 of the Bankruptcy Code provides, subject to exceptions not relevant here, as follows:

(b) [T]he trustee may avoid [i.e., rescind and recover for the bankruptcy estate] any transfer of an interest of the debtor in property --

(1) to or for the benefit of a creditor;

(2) for or on account of an antecedent debt owed by the debtor before such transfer was made;

(3) made while the debtor was insolvent;

(4) made --

(A) on or within 90 days before the filing date of the petition . . .

(5) that enables such creditor to receive more than such creditor would receive if --

(A) the case were a case under chapter 7 of this title;

(B) the transfer had not been made; and

(C) such creditor received payment of such debt to the extent provided by the provisions of this title.

11 U.S.C. S 547 (emphasis added).5 The crucial provision for purposes of this case is S 547(b)(4)(A), which requires that a transfer, in order to be avoidable as a preference, must have been made on the date the bankruptcy petition was filed or "within 90 days before the filing date of the petition." As the statutory text quoted above indicates, the timing of the transfer is one of several elements that must be satisfied before a transfer can be recovered as a preference.

As the Supreme Court made clear in Rake v. Wade, 508 U.S. 464 (1993), with respect to interpretation of the Bankruptcy Code, "[w]here the statutory language is clear, our `sole function . . . is to enforce it according to its terms'." Id. at 471 (citation omitted); see also Gardenhire v. United States Internal Revenue Service (In re Gardenhire ), 209 F.3d 1145, 1148 (9th Cir. 2000) ("Close adherence to the text of the relevant statutory provisions and rules is especially appropriate

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in a highly statutory area such as bankruptcy."). The language of S 547(b)(4)(A) is clear, and it applies in straightforward fashion. The bankruptcy petition in the Greenes' case was filed on June 7, 1996. Assuming satisfaction of the other statutory requirements, a transfer that took place on June 7, 1996, would have been avoidable as a transfer made "on . . . the filing date of the petition." A similar transfer that took place on June 6, 1996, would have been avoidable as having been made "within [one day] before the filing date." Extrapolating backward, an otherwise avoidable transfer that took place on March 9, 1996, would have been avoidable as having been made "within ninety days before the filing date of the petition." The transfer sought to be avoided by the Trustee was made on March 8, 1996, ninety-one days before the petition in the Greenes' case was filed. Accordingly, it is not avoidable as a preferential transfer under S 547(b).

B

The Trustee attempts to avoid the plain language of the preference statute by invoking Federal Rule of Bankruptcy Procedure 9006(a). Rule 9006(a), which essentially applies Federal Rule of Civil Procedure 6(a) in the bankruptcy context,6 provides as follows:

In computing any period of time prescribed or allowed by these rules . . . or by any applicable statute, the day of the act, event, or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included, unless it is a Saturday, a Sunday, or a legal holiday . . . in which event the period runs until the end of the next day which is not one of the aforementioned days.

Fed. R. Bankr. P. 9006(a) (emphasis added). The Trustee argues that because the ninetieth day before the filing of the petition, March 9, 1996, was a Saturday, Rule 9006(a) applies to make the last day of the preference period Friday, March 8, 1996. According to the Trustee, because the transfer to MBNA took place on March 8, it can be recoverable as a preferential transfer.

To evaluate the Trustee's argument, we must determine whether S 547(b)(4)(A), in providing for a 90-day preference period, constitutes an "applicable statute" within the meaning of Rule 9006(a).7 In making this determination, we draw guidance from the following discussion of a leading treatise:

In determining what statutes are "applicable" and, hence, to be construed in light of Rule 9006(a), it is necessary to consider the scope of the rules themselves. Rule 1001 provides that the Bankruptcy Rules "govern procedure in cases under title 11 of the United States Code." . . . . It follows, then, that Rule 9006(a) does not provide a general rule of statutory construction which the courts are bound to apply to all time periods mentioned in any statute that

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may come before the court, nor does the rule apply to time periods mentioned in other documents, such as contracts.

10 Collier on Bankruptcy P 9006.03 (Lawrence P. King ed., 15th ed. rev. 2000). We also take note of the Advisory Committee Notes to Rule 9006, which explain that Rule 9006(a) "governs the time for acts to be done and proceedings to be had in cases under...

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