In re Freeny, Bankruptcy No. 95-00006-W. Adv. No. 95-0166-W.
| Decision Date | 10 October 1995 |
| Docket Number | Bankruptcy No. 95-00006-W. Adv. No. 95-0166-W. |
| Citation | 187 BR 711 |
| Parties | In re Roy Corbin FREENY and Donna L. Freeny, Debtors. Scott P. KIRTLEY, Trustee, Plaintiff, v. CONSOLIDATED NUTRITION, L.C., formerly AGP, L.P. d/b/a Supersweet Feeds, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Oklahoma |
COPYRIGHT MATERIAL OMITTED
Scott P. Kirtley and Karen Carden Walsh, Tulsa, OK, for Plaintiff.
Mark D. Walz, Des Moines, Iowa, for Defendant.
ORDER GRANTING "PLAINTIFF'S MOTIONS FOR SUMMARY JUDGMENT . . . "
Now before the Court is a motion for summary judgment and brief in support filed by the plaintiff, and several documents in opposition thereto filed by the defendant. Upon consideration thereof, and of the record herein, this Court determines, concludes and orders as follows.
On January 3, 1995, debtors Roy Corbin and Donna L. Freeny ("the Freenys") filed their voluntary petition for relief under 11 U.S.C. Chapter 7 ("Ch. 7") in this Court. Scott P. Kirtley was appointed and continues to serve as Trustee ("the Trustee") of the Freenys' Ch. 7 bankruptcy estate.
On May 12, 1995, the Trustee filed his "Complaint" commencing this adversary proceeding against Consolidated Nutrition, L.C. d/b/a Supersweet Feeds ("Supersweet"). The Trustee alleged that, on or about October 18, 1994, the Freenys paid $14,729.45 by personal check to Supersweet; and that this payment constituted a preferential transfer, avoidable under 11 U.S.C. § 547(b) (). On May 30, 1995, Supersweet filed its "Answer," admitting payment on or about October 14, 1995 in the amount alleged; but denying all other elements of a voidable preferential transfer; and asserting as an affirmative defense that the transfer was made in the ordinary course of business under 11 U.S.C. § 547(c)(2).
This is a core proceeding, 28 U.S.C. § 157(b)(2)(F), complaint ¶ 3, answer ¶ 3.
On September 5, 1995, the Trustee filed his ". . . Motion for Summary Judgment and Brief in Support." On September 18, 1995, the Trustee filed a ". . . Supplemental Motion for Summary Judgment and Brief in Support." These documents are referred to conjointly as "the motion (for summary judgment)."
In his motion, the Trustee recites at length ". . . Material Facts Which are Not in Dispute," substantially as follows.
The Freenys were farmers, who began doing business with Supersweet in 1993. During 1993 and 1994, the Freenys engaged in three major series of transactions with Supersweet.
On April 20, 1993, the Freenys executed a Feeder Finance Credit Application and Agreement, hereinafter referred to as "the April 20, 1993 Agreement." Pursuant thereto, Supersweet gave the Freenys a line of credit in the sum of $15,500.00 to buy feed. This agreement provided that each credit purchase must be evidenced by a delivery invoice and/or promissory note. Repayment was due on November 1, 1993. Seven separate credit purchases, each evidenced by its promissory note, were made under the April 20, 1993 Agreement. As agreed, on November 1, 1993 the Freenys paid $15,515.57 to Supersweet in full satisfaction of all outstanding promissory notes. These facts are evidenced by copies of the April 20, 1993 Agreement itself, of the promissory notes thereunder, and of a receipt showing payment of the same, all appended to the motion for summary judgment.
On November 10, 1993, the Freenys executed a second Feeder Finance Credit Application and Agreement, hereinafter referred to as "the November 10, 1993 Agreement." Pursuant thereto, Supersweet gave the Freenys a line of credit in the sum of $19,500.00 to buy feed. This agreement also provided that each credit purchase must be evidenced by a delivery invoice and/or promissory note. Four separate credit purchases, each evidenced by its promissory note, were made under the November 10, 1993 Agreement, as follows:
for a total of $19,499.85. All of these notes were due on June 10, 1994. These facts are evidenced by copies of the November 10, 1993 Agreement itself, and of the promissory notes thereunder, all appended to the motion for summary judgment.
On March 15, 1994, before the due date of the notes under the November 10, 1993 Agreement, the Freenys executed a third "Feeder Finance Credit Application and Agreement," hereinafter referred to as "the March 15, 1994 Agreement." Pursuant thereto, Supersweet gave the Freenys a line of credit in the sum of $20,000.00 to buy feed. This agreement also provided that each credit purchase must be evidenced by a delivery invoice and/or promissory note. Three separate credit purchases, each evidenced by its promissory note, were made under the March 15, 1994 Agreement, as follows:
for a total of $9,856.07. All of these notes were due on October 10, 1994. These facts are evidenced by copies of the March 15, 1994 Agreement itself, and of the promissory notes thereunder, all appended to the motion for summary judgment.
The Freenys made no payments on June 10, 1994 pursuant to the November 10, 1993 Agreement. They also made no payments on October 10, 1994 pursuant to the March 15, 1994 Agreement. This is conceded by Supersweet, and further appears from certain evidence discussed below.
According to the Trustee, at about this time the Freenys, because of financial difficulties, liquidated their entire herd of cattle, and paid the net proceeds to Supersweet, as described below. The evidentiary basis of these allegations does not appear, although it may be surmised that debtors so testified at their meeting of creditors under 11 U.S.C. § 341 or at an examination under F.R.B.P. 2004.
On October 18, 1994, the Freenys issued their personal check for $14,729.45 to Supersweet. This check cleared the Freenys' bank account on October 24, 1994. Appended to the motion for summary judgment are Supersweet's own statements, dated 5/31/94 (exhibit "W"), 9/30/94 (exhibit "X"), 9/30/94, 10/31/94 (exhibit "Y"), 9/30/94 (exhibit "Z") and 10/31/94 (exhibit "A-1"). These show that the "remittance" of $14,729.45 was applied against the balance then due of $20,455.01 on the notes attributable to the November 10, 1993 Agreement; and that none of this "remittance" was applied against the balance then due of $10,170.60 on the notes attributable to the March 15, 1994 Agreement.
The Freenys made their "remittance" 136 days after the due date of June 10, 1994 pursuant to the November 10, 1993 Agreement; and 77 days before they filed their Ch. 7 petition in this Court.
With their Ch. 7 petition, the Freenys also filed schedules and statements reporting assets valued at $216,687.00, liabilities of $285,890.34, income of $0.00, and expenses of $13,137.79 per month. The Court takes judicial notice of these documents, which are part of the record in the bankruptcy case. According to these schedules, most of the Freenys' property is claimed exempt, or subject to security interests, or both. The Trustee offers a copy of his own ". . . Interim Status Report" filed in the case on March 8, 1995, which shows the abandonment of substantially all property of the estate, with zero value received by the estate, save the estate's preference claim against Supersweet. As the Trustee points out, "the only asset of this Bankruptcy Estate available to unsecured creditors is the preferential transfer to Supersweet . . ." Unsecured priority claims are listed at $232.76; unsecured nonpriority claims are listed at $197,017.42; to these must be added secured-deficiency claims under 11 U.S.C. § 506(a) and the like, which the Freenys themselves estimate at $42,230.16. This indicates total unsecured claims of some $239,480.34. According to dates given on the Freenys' Schedule F, most of their unsecured claims were owing months before the Freenys paid Supersweet in October 1994.
On September 20, 1995, Supersweet filed a document entitled "Resistance to Motion for Summary Judgment," and two days later a "Statement of Disputed Material Facts . . ." and a "Memorandum Brief . . ." in support thereof.
The "Resistance . . ." and "Statement of Disputed Material Facts . . ." are curious documents. In the manner of an answer to a complaint, they purport to "admit" or "deny" each of the facts which the Trustee lists as undisputed. Sometimes the denials are bare and unexplained, e.g. ¶ 4. Sometimes the Trustee's stated facts are "denied for lack of information," e.g. ¶¶ 6, 8. Sometimes the Trustee's stated facts are contradicted by simple conclusory assertions, e.g. ¶¶ 9-13. The drift of these denials and contradictions is that the Freenys were solvent on October 18, 1994; that on that date they paid, not part of the balance due under the November 10, 1993 Agreement, but part of the balance due under the March 15, 1994 Agreement; and that such payment was in the ordinary course of business. No evidence is offered, in rebuttal of any of the Trustee's evidence, or in support of Supersweet's bare denials and conclusory assertions, save copies of the three notes under the March 15, 1994 Agreement.
A prima facie case for an avoidable preference under 11 U.S.C. § 547(b) is made by showing the following: (1) a transfer, (2) of an interest of the debtor in property, (3) to or for the benefit of a creditor, (4) for or on account of an antecedent debt owed by the debtor before such transfer was made, (5) made while the debtor was insolvent, (6) if the creditor was not an insider, made on or within 90 days before the date of the filing of the...
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