In re Home Co., Bankruptcy No. A88-04773-SWC
| Decision Date | 07 December 1989 |
| Docket Number | Adv. No. 89-0063A.,Bankruptcy No. A88-04773-SWC |
| Parties | In re the HOME COMPANY, Debtor. Richard D. ELLENBERG, Trustee, Plaintiff, v. Jackson C. MERCER, Defendant. |
| Court | United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Northern District of Georgia |
Richard D. Ellenberg, Ellenberg & Bryan, P.C., Atlanta, Ga., trustee.
Gerald W. Fudge, Atlanta, Ga., for defendant.
Before the court is plaintiff's motion for summary judgment based upon the complaint, answer, statement of facts not in dispute, accompanying affidavit, and answers to plaintiff's interrogatories. Defendant did not file a response to the motion as required by Local Rules 220-1(b) and 220-5, N.D.Ga. The motion is unopposed, and the facts are deemed admitted. This adversary proceeding is an action to avoid a preference and is a core proceeding under 28 U.S.C. § 157(b)(2)(F). The court makes the following findings of fact and conclusions of law:
FACTS
Defendant, Jackson C. Mercer, entered into a written "compensation agreement" effective January 1, 1987 with debtor, The Home Company, Inc. ("Home"), in which defendant was to receive, in addition to a salary, certain incentives or commissions to be paid semiannually, within thirty (30) days after June 30, 1987 and December 31, 1987. Home paid defendant $22,050.00 by check dated March 4, 1988, which was received and cashed by defendant on March 7, 1988. Of that amount, $17,002.50 represented incentive pay that was due no later than January 30, 1988 according to the terms of the compensation agreement. The remaining $5,047.50 represented payment for a five percent employee discount on a home purchased from Home by defendant for a sale price of $100,950.00. Although neither plaintiff nor defendant states when the five percent discount payment obligation was incurred or was due, the sales contract on which it was based was dated March 1, 1988. Defendant acknowledged that payment of monies he was owed was delayed due to the debtor's financial difficulties.
Debtor filed its Chapter 7 bankruptcy petition on June 3, 1988. Plaintiff filed his complaint on February 9, 1989 and his motion for summary judgment on September 14, 1989, with service on defendant's counsel by mail also on September 14. Although counsel for defendant never filed a response to the motion for summary judgment, counsel for plaintiff and defendant submitted a consolidated pretrial order, entered by the court on October 27, 1989, which acknowledged that plaintiff's motion for summary judgment was pending.
Federal Rule of Civil Procedure 56, made applicable herein pursuant to Bankruptcy Rule 7056, provides for the granting of summary judgment if "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c) The burden of establishing the right of summary judgment is on the moving party. Clark v. Union Mut. Life Ins. Co., 692 F.2d 1370, 1372 (11th Cir.1982); United States Steel Corp. v. Darby, 516 F.2d 961, 963 (5th Cir.1975).
In determining whether there is a genuine issue of any material fact the court must view the evidence in the light most favorable to the party opposing the motion. Rosen v. Biscayne Yacht & Country Club, Inc., 766 F.2d 482, 484 (11th Cir.1985); United States v. Oakley, 744 F.2d 1553, 1555 (11th Cir.1984); BAW Mfg. Co. v. Slaks Fifth Ave., Ltd., 547 F.2d 928, 930 (5th Cir.1977); Gross v. Southern Ry., 414 F.2d 292, 297 (5th Cir.1969). Rule 56(c) does not require the moving party to negate the claims of the nonmovant but requires only that the moving party identify those evidentiary materials listed in Rule 56(c) that establish the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). In cases in which the moving party will bear the burden of persuasion at trial, that party must present credible evidence using the materials described in Rule 56(c) to support its motion. Id. at 324, 106 S.Ct. at 2553. See also Fed.R.Civ.P. 56(e). In addition, the standard of proof that applies to the substantive claim applies on motion for summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); Dominick v. Dixie Nat'l Life Ins. Co., 809 F.2d 1559, 1572 (11th Cir.1987).
Five elements of a preference under 11 U.S.C. § 547(b) must be proven to avoid a transfer. Such transfer of property must: (1) be made to or for the benefit of a creditor; (2) be made for or on account of an antecedent debt; (3) be made while the debtor was insolvent; (4) be made on or within 90 days before the date the petition was filed, or between 90 days and one year before the petition was filed if the creditor was an insider when the transfer was made; and (5) enable the creditor to receive more than he would if the estate were liquidated under Chapter 7 and the transfer had not been made. 11 U.S.C. § 547(b); see also Roemelmeyer v. Walter E. Heller & Co., S.E. (In re Lackow Bros., Inc.), 752 F.2d 1529, 1530 n. 1 (11th Cir.1985); Barash v. Public Fin. Corp., 658 F.2d 504, 507 (7th Cir.1981). The trustee has the burden of proving the avoidability of a preference under subsection (b). 11 U.S.C. § 547(g). Even if all five elements are found, section 547(c) provides certain exceptions or "safe harbors" from avoidance. If a creditor can qualify under any one of the exceptions, he is protected. The creditor has the burden of proving nonavoidability of a transfer under subsection (c). Id.
Since the defendant has not responded to the plaintiff's motion for summary judgment, the matters asserted are unopposed and deemed admitted. See L.R. 220-1(b), 220-5, N.D.Ga. Additionally, from an examination of the record the court finds that plaintiff, utilizing the affidavit of his paralegal, the statement of facts not in dispute, and certain admissions in the answers to plaintiff's complaint and interrogatories, has demonstrated the absence of any issue of material fact and has met his burden of proof for each element of a preference. Thus, there are no material facts in dispute, and plaintiff is entitled to judgment as a matter of law.
The court also notes that a consolidated pretrial order has been entered in which counsel stipulate that plaintiff has established all the elements of a preference except for element (4) relating to the time of the transfer. See 11 U.S.C. § 547(b)(4). Further, counsel stipulate that the only issues to be decided by the court are: (a) whether the transfer occurred within 90 days of the commencement of the case, and if not; (b) whether the transfer occurred within one year of the commencement of the case and defendant was an insider at the time of the transfer. See Pretrial Order ¶ 11, Attachment "E" (Oct. 27, 1989).
The subject payment was made by check dated March 4, 1988 and defendant received and cashed the check on March 7, 1988. Thus, the check was dated 91 days before the filing of the petition, but defendant received and cashed the check 88 days before the filing of the petition. If the date of the transfer is the date the check was dated or delivered to defendant, the court must find that defendant was an insider before the transfer is avoidable as a preference. However, if the date of transfer is the date the check is cashed or honored by the bank, then the transfer occurred within 90 days of the filing of the petition, and nothing further is required to avoid the transfer as a preference. Since there is no factual dispute concerning the dates the check was dated or honored by the bank, the court can address the question of when the transfer occurred as a matter of law.
The rule of law in this circuit is that for purposes of section 547(b)(4) the date of transfer is not the date the check is delivered, but the date the check is honored by the paying bank. Nicholson v. First Inv. Co., 705 F.2d 410, 413 (11th Cir.1983); Bonapfel v. LaSalle-Deitch Co. (In re All American of Ashburn, Inc.), 95 B.R. 251, 252-53 (Bankr.N.D.Ga.1989). Since the check was honored on March 7, 1988, or 88 days before the filing of the petition, the court finds as a matter of law that the transfer was within the 90-day period. Thus, the question of whether defendant was an insider is moot and need not be addressed by the court.
In addition to the judgment and costs, plaintiff also seeks to recover pre-judgment interest on the preference. Prejudgment interest is recoverable in a preference action from the date of demand for its return by the trustee or, if there is no demand, from the date of commencement of the adversary proceeding. Kaufman v. Tredway, 195 U.S. 271, 273, 25 S.Ct. 33, 34, 49 L.Ed. 190 (1904); Palmer v. Radio Corp. of America, 453 F.2d 1133, 1140 (5th Cir.1971).1 In determining the applicable interest rate, most federal courts deciding questions of federal law have applied the federal statutory rate of interest on judgments pursuant to 28 U.S.C. § 1961. See Kilpatrick Marine Piling v. Fireman's Fund Ins. Co., 795 F.2d 940, 947-48 (11th Cir.1986) (); Waldschmidt v. Ranier (In re Fulghum Constr. Corp.), 78 B.R. 146, 153-54 (M.D.Tenn.1987), rev'd on other grounds, 872 F.2d 739 (6th Cir.1989); Parmelee v. Bank of Greensburg (In re L & T Steel Fabrics., Inc.), 102 B.R. 511, 520-21, 521 n. 9 (Bankr.M.D.La.1989); Friedman v. 1000 Brickell, Ltd. (In re Advertising Assoc., Inc.), 95 B.R. 849, 851 (Bankr.S.D. Fla.1989); Rafoth v. Bailey (In re Baker & Getty Fin. Servs., Inc.), 88 B.R. 792, 800 (Bankr.N.D.Ohio 1988); DuVoisin v. Anderson (In re Southern Indus....
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