Cruickshank v. George R. Roberts Co. (In re Bos. Grand Prix, LLC), Case No. 16-12574-MSH
| Decision Date | 10 May 2019 |
| Docket Number | Adv. P. No. 17-1115-JNF,Case No. 16-12574-MSH |
| Citation | 599 B.R. 448 (Mem) |
| Parties | IN RE BOSTON GRAND PRIX, LLC, Debtor Gary W. Cruickshank, Chapter 7 Trustee, Plaintiff v. George R. Roberts Company, Defendant |
| Court | U.S. Bankruptcy Court — District of Massachusetts |
Kathleen R. Cruickshank, Murphy & King P.C., Boston, MA, for Plaintiff.
Robert J. Keach, Patrick Marass, Adam Prescott, Bernstein, Shur, Sawyer & Nelson P.A., Portland, ME, for Defendant.
AMENDED MEMORANDUM
The matter before the Court is the Complaint filed Gary W. Cruickshank, the Chapter 7 Trustee (the "Plaintiff" or the "Trustee") of Boston Grand Prix, LLC (the "Debtor" or "BGP"), against the Defendant, George R. Roberts Company (the "Defendant," "GRRC," or "Roberts"), to avoid two allegedly preferential transfers made by checks payable to GRRC in the total amount of $ 278,326.63. Specifically, the Trustee commenced this Adversary Proceeding against GRRC by filing the Complaint on September 13, 2017 seeking to avoid and recover two allegedly preferential transfers made by the Debtor to GRRC in the amounts of $ 128,326.63 (Check No. 1051) and $ 150,000.00 (Check No. 1042), pursuant to 11 U.S.C. §§ 547, 550, and 551. GRRC filed its Answer to the Complaint on October 10, 2017. On May 18, 2018, GRRC moved for partial summary judgment with respect to two defenses it raised in its Answer to the Plaintiff's Complaint. On August 21, 2018, the Court granted in part and denied in part the Defendant's Motion for Partial Summary Judgment, granting judgment to GRRC on its new value defense under 11 U.S.C. § 547(c)(4) in the amount of $ 99,330.00, and denying summary judgment with respect to its ordinary course defense under 11 U.S.C. § 547(c)(2) due to "the discrepancy in the evidence regarding application of Check No. 1051 to Invoice No. 56246 in the amount of $ 136,928.63 or to Invoice No. 56343 in the amount of $ 128,326.63."
Following the Court's August 21, 2018 decision, the parties filed their Joint Pretrial Statement, and the Court scheduled a trial. In addition to the triable issue of GRRC's ordinary course of business defense under 11 U.S.C. § 547(c)(2) pertaining to Check No. 1051 and Check No. 1042, GRRC asserted an affirmative defense under § 547(c)(1), seeking to reduce its preference exposure by $ 73,632.00 as a contemporaneous exchange for new value, and, in addition, it asserted a defense under § 547(c)(4) seeking to reduce its exposure owing to subsequent new value by another $ 10,384.00, in addition to the subsequent new value of $ 99,330.00 which this Court determined GRRC advanced in its August 21, 2018 decision.
The Court conducted the trial on January 28, 2019 and January 29, 2019 at which four witnesses testified and over 49 exhibits were introduced into evidence, as well as 69 exhibits proffered by the Plaintiff that were relied upon by his expert witness. The Court now makes its findings of fact and conclusions of law in accordance with Fed. R. Bankr. P. 7052.
The Court paraphrases the undisputed facts set forth in the Joint Pretrial Statement. The Debtor commenced this case by the filing of a voluntary Chapter 7 petition on July 5, 2016 (the "Petition Date"). The Chapter 7 Trustee was appointed on July 6, 2016.
GRRC is a Maine corporation with a principal place of business at 192 Biddeford Road, Alfred, Maine 04002. GRRC manufactures precast and custom concrete products for residential and commercial customers. Stephen Ray ("Ray") is its president and oversees its day-to-day business operations, which in 2015 and 2016 included its business relationship with the Debtor.
On or about May 18, 2015, BGP entered into an agreement captioned IndyCar® Series 2016-2020 Event Agreement-Street Corner with IndyCar, LLC. On or about May 14, 2015, BGP entered into an Agreement for the Conduct of Professional Automobile Racing in Downtown Boston with the City of Boston. In connection with its agreements with IndyCar, LLC and the City of Boston, the Debtor purchased concrete barriers from GRRC. The Debtor intended the barriers to be used for its construction of the Boston Grand Prix race track.
Pursuant to a Proposal and Purchase Order, the Debtor agreed to purchase, and GRRC agreed to manufacture and deliver, three types of custom-made barriers in the following quantities: 2,200 straight barriers; 100 radius barriers; and 110 pit barriers, and the Debtor agreed to pay to GRRC $ 944.00 for each straight barrier; $ 979.00 for each radius barrier; and $ 675.00 for each pit barrier.
GRRC received Check No. 1005 from BGP in the mail on March 23, 2016, in the amount of $ 44,144.00. GRRC applied Check No. 1005 to Invoice No. 56213, dated March 7, 2016. Invoice No. 56213 was in the same amount as the check. Check No. 1005 was not paid within 90 days of the Petition Date.
GRRC received Check No. 1025 from BGP in the mail on April 2, 2016, in the amount of $ 133,399.00. GRRC applied Check No. 1025 to Invoice No. 56267, dated March 28, 2016. Invoice No. 56267 was in the same amount as the check. Check No. 1025 was not paid within 90 days of the Petition Date.
GRRC received Check No. 1051, dated April 20, 2016, in the mail on April 22, 2016. GRRC deposited Check No. 1051 into its bank account that same day. Check No. 1051 in the amount of $ 128,326.63 cleared the Debtor's bank account on April 25, 2016.
GRRC picked up Check No. 1042, dated April 21, 2016, from BGP's office in Boston, Massachusetts on April 22, 2016 and it deposited it into its bank account that same day. Check No. 1042 in the amount of $ 150,000.00 cleared the Debtor's bank account on April 25, 2016.
Check No. 1051 and Check No. 1042 were issued by the Debtor on or within 90 days of the Petition Date. GRRC applied Check No. 1042 in the amount of $ 150,000.00 to Invoice Nos. 56138, 56148, 56157, 56174 and 56197.
GRRC held claims against BGP at the time that it received Check Nos. 1042 and 1051. GRRC held claims against BGP at the time that Check Nos. 1042 and 1051 cleared BGP's bank account. In addition, Check Nos. 1042 and 1051 were made payable to GRRC and were paid to or for the benefit of GRRC.
The payments can be summarized as follows:
GRRC issued the following fourteen (14) invoices to BGP:
Invoice # Invoice Date Invoice Amount
56138 1/29/2016 $28,084.00
56148 2/5/2016 $42,126.00
56157 2/12/2016 $34,102.00
56174 2/22/2016 $14,042.00
56197 2/26/2016 $78,234.00
56213 3/7/2016 $48,144.00
56231 3/14/2016 $80,240.00
56246 3/19/2016 $136,928.63
56267 3/28/2016 $133,399.00
56290 3/31/2016 $108,275.13
56343 4/13/2016 $128,326.63
56383 4/18/2016 $109,046.50
56434 4/25/2016 $108,324.00
56495 4/30/2016 $56,168.00
The barriers delivered by GRRC were not secured by an otherwise avoidable security interest. The Debtor did not make any otherwise unavoidable transfers to or for the benefit of GRRC on account of any delivered barriers. The Debtor's bank account balances on April 22, 2016 for all three of its accounts totaled at least $ 1,303,048.87. BGP cancelled the Boston Grand Prix race on April 29, 2016.
The Trustee testified that he employed professionals to assist him in performing his duties as trustee, including collecting and reducing to money property of the bankruptcy estate and commencing actions to avoid preferential and fraudulent transfers. He stated that as a result of his efforts to date, he is holding approximately $ 566,000.00. As part of his duties, the Trustee testified that he has reviewed and continues to review the claims register, noting that the total of unsecured claims is approximately $ 9 million and that none of them are objectionable, except one filed by "IndyCar." With respect to administrative expenses, the Trustee testified that, to date, those expenses will exceed $ 600,000.00 and that the Massachusetts Department of Revenue holds a priority claim of $ 3,115.00. With those figures in mind, the Trustee stated "the maximum dividend I would see with no administrative expenses would be slightly less than nine percent." He added: "If the administrative expenses are allowed in amounts as discussed, it's two to three percent."
Ray, the president of GRRC since 2015, testified about his thirty years of experience in the precast cement business and as an employee of GRRC. Having served as an outside sales representative, dispatcher, estimator, and vice-president of operations, he was very familiar with the business operations of GRRC. As president, he testified that he was in charge of "the financial well-being of the company, the sales and estimating, project management and plant ... production, as well as a division called "The Step Guys." He stated that the controller, the plant manager, three project managers, and a general manager reported to him.
Ray testified that, in September of 2015, he communicated with an individual by the name of Tony Cotman ("Cotman") at a company identified as NZR Consulting ("NZR") about bidding on special race barriers. According to Ray, BGP had engaged NZR to acquire all the items necessary to be able to construct the race course. Based upon conversations and meetings with Cotman and others, GRRC...
To continue reading
Request your trial
-
Cruickshank v. Casey (In re Bos. Grand Prix, LLC)
... ... John Casey et al., Defendants Case No. 16-12574-FJB Adversary Proceeding No. 16-1200 United States Bankruptcy ... See Cruickshank v. George R. Roberts Company ( In re Boston Grand Prix, LLC) , 599 B.R. 448, 470 ... ...
-
Kirby v. 21ST Mortg. Corp. (In re Kirby)
... ... BAP NO. EP 18-024 Bankruptcy Case No. 14-20682-PGC Adversary Proceeding No ... Prime Healthcare Servs.Landmark LLC v. United Nurses & Allied Prof'ls, Local 5067 , ... City of Bos. , 398 F.3d 76, 84 (1st Cir. 2005) ("An order ... ...
-
Kennedy v. Estate of Campbell (In re Cambrian Holding Co.)
...(In re PMC Mktg Corp.), 543 B.R. 345, 356-57 (1st Cir. B.A.P. 2016); Cruickshank v. George R. Roberts Co. (In re Boston Grand Prix, LLC), 599 B.R. 448, 472 (Bankr. D. Mass. 2019); Conti v. Sampson-Bladen Oil Co., Inc. (In re Clean Burn Fuels, LLC), No. 11-80562C-7D, 2014 WL 2987330, at *5-6......