In re Young, Bankruptcy No. 4-92-0871

• Decision Date: 17 December 1992
• Docket Number: Adv. No. 4-92-157.,Bankruptcy No. 4-92-0871
• Citation: 148 BR 886
• Parties: In re Bruce YOUNG and Nancy Young, Debtors. Julia A. CHRISTIANS, Trustee, Plaintiff v. CRYSTAL EVANGELICAL FREE CHURCH, Defendant.
• Court: U.S. Bankruptcy Court — District of Minnesota

148 B.R. 886 (1992)

In re Bruce YOUNG and Nancy Young, Debtors Julia A. CHRISTIANS, Trustee, Plaintiff v. CRYSTAL EVANGELICAL FREE CHURCH, Defendant.

Bankruptcy No. 4-92-0871, Adv. No. 4-92-157.

United States Bankruptcy Court, D. Minnesota.

December 17, 1992.

Julia A. Christians, Lapp, Laurie, Libra, Abramson & Thomson, Chartered, Minneapolis, Minn., for plaintiff.

Tony Mannella, Babcock, Locher, Neilson & Mannella, Anoka, Minn., for defendant.

ROBERT J. KRESSEL, Chief Judge.

This adversary proceeding came on for hearing on October 7, 1992, on the parties' cross-motions for summary judgment. Julia A. Christians, the plaintiff, appeared in propria persona and F. Anthony Mannella appeared on behalf of the defendant. This court has jurisdiction pursuant to 28 U.S.C. §§ 1134 and 157(a) and Local Rule 201. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2)(H).

UNDISPUTED FACTS

The parties have stipulated to certain facts for purposes of this motion. On February 3, 1992, Bruce Young and Nancy Young filed a joint chapter 7 petition. The plaintiff is the trustee in their case. In the year immediately preceding the debtors' filing, the debtors made contributions to Crystal Evangelical Free Church. These contributions totaled $13,450 and were made while the debtors were insolvent.¹

The debtors were active church members. As a supplement to their tithing, the debtors held numerous positions in the church and had served as officers of the day. The debtors regularly attended church services, actively participated in the church's programs and were welcomed on the premises at any time. These accommodations where available to the debtors whether they financially supported the church or not. At no time did the church require the debtors to pay any membership or attendance fee. However, the church does teach that people should offer regular contributions to the church. The debtors respected those teachings and made several purely voluntary contributions. However, the debtors did not receive money or tangible property in exchange for their contributions.

The plaintiff brought this adversary proceeding seeking to avoid the contributions pursuant to 11 U.S.C. § 548(a)(2) and recover them pursuant to 11 U.S.C. § 550(a). The plaintiff and the defendant both moved for summary judgment.

ISSUE

The issue is whether contributions, made by a insolvent debtor to their church during the year preceding the filing of a chapter 7 petition, are avoidable under § 548(a)(2)²? I conclude that they are.

DISCUSSION

I. The Standard For Summary Judgment³

Summary judgment plays a very important role allowing the judge to "pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Advisory Committee Notes to Rule 56. The importance of summary judgment cannot be overemphasized. Indeed, "summary judgment ... is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986) (quoting Rule 1 of the Federal Rules of Civil Procedure). "The motion for summary judgment can be a tool of great utility in removing factually insubstantial cases from crowded dockets, freeing courts' trial time for those cases that really do raise genuine issues of material fact." City of Mt. Pleasant, Iowa v. Associated Elec. Co-Op., Inc., 838 F.2d 268, 273 (8th Cir.1988); see Catrett v. Johns-Manville Sales Corp., 756 F.2d 181, 189-90 (D.C.Cir. 1985) (Bork, J., dissenting).⁴

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).⁵ "The plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322, 106 S.Ct. at 2552.

A. The Burdens

1. The Moving Party

Initially, the burden is on the party seeking summary judgment. It is the moving party's job to inform the court of the basis for the motion, and identify those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. Simply stated, the moving party must show the court that there is an absence of evidence to substantiate the non-moving party's case. Id. at 325, 106 S.Ct. at 2554. To that end, the movant discharges its burden by asserting that the record does not contain a triable issue and identifying that part of the record which supports the moving party's assertion. See Id. at 323, 106 S.Ct. at 2552; City of Mt. Pleasant, 838 F.2d at 273.

2. The Non-moving Party

Once the movant has made its showing, the burden of production shifts to the non-moving party. The non-moving party must "go beyond the pleadings and by its ... own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,'" establish that there is specific and genuine issues of material fact warranting a trial. Celotex, 477 U.S. at 324, 106 S.Ct. at 2553 (quoting Fed.R.Civ.P. 56(c)). The non-moving party cannot cast some metaphysical doubt on the moving party's assertion. Matsushita Elec. Indust. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355, 89 L.Ed.2d 538 (1986). The non-moving party must present specific significant probative evidence supporting its case, Johnson v. Enron Corp., 906 F.2d 1234, 1237 (8th Cir.1990) sufficient enough "to require a ... judge to resolve the parties' differing versions of the truth at trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986) (quoting First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 288-89, 88 S.Ct. 1575, 1592, 20 L.Ed.2d 569 (1968)). Any affidavits must "be made on personal knowledge, must set forth such facts as would be admissible in evidence, and shall affirmatively show that the affiant is competent to testify to the matters stated therein." Fed.R.Civ.P. 56(e) (emphasis added). If, however, the evidence tendered is "merely colorable," or is "not significantly probative," the non-moving party has not carried its burden and the court must grant summary judgment to the moving party. Id. 477 U.S. at 249-50, 106 S.Ct. at 2511.

Here, however, the parties have stipulated to all the genuine issues of material fact and have not proffered any additional evidence. Accordingly, judgment may be entered as a matter of law.

II. Church Contributions as Avoidable Transfers

The trustee asserts that the contributions to the church were avoidable transfers within 11 U.S.C. § 548(a)(2). Section 548, in relevant part, provides:

Fraudulent transfers and obligations.

(a) The trustee may avoid any transfer of an interest of the debtor in property ... that was made ... on or within one year before the date of the filing of the petition, if the debtor voluntarily or involuntarily —

. . . . .

(2)(A) received less than a reasonably equivalent value in exchange for such transfer or obligation; and

(B)(i) was insolvent on the date that such transfer was made ... or became insolvent as a result of such transfer

. . . . .

11 U.S.C. § 548. Thus, to avoid the transfer, the trustee must prove that:

(1) there was a transfer of the debtors\' interest in property;

(2) made on or within a year preceding the filing of the petition;

(3) while the debtors were insolvent; and

(4) the debtors received less than reasonably equivalent value in exchange for the transfer.

First Nat'l Bank in Anoka v. Minnesota Utility Contracting, Inc. (In re Minnesota Utility Contracting, Inc.), 110 B.R. 414, 417 (D.Minn.1990) aff'g 101 B.R. 72 (Bankr. D.Minn.1989). The parties have stipulated to the first three elements. Thus these motions boil down to one question: Did the debtors receive reasonably equivalent value in exchange for their contributions? The question really has two parts.⁶ First, did the debtors receive value from the church? Second, if the debtors did receive value was it in exchange for their contributions?

A. Did the Debtors Receive Value?

The task of resolving the dispute over the meaning of "value" begins with the language of the statute itself. Pennsylvania Dept. of Public Welfare v. Davenport, 495 U.S. 552, 557-58, 110 S.Ct. 2126, 2130, 109 L.Ed.2d 588 (1990) ("the fundamental canon of statutory interpretation begins with the language of the statute itself."); U.S. v. Ron Pair Enters., Inc., 489 U.S. 235, 240, 109 S.Ct. 1026, 1030, 103 L.Ed.2d 290 (1989). "My sole function ... is to enforce the statute according to its terms." Id., 489 U.S. at 241, 109 S.Ct. at 1030 (citing Caminetti v. U.S., 242 U.S. 470, 485, 37 S.Ct. 192, 194, 61 L.Ed. 442 (1917)). Defining the terms of the statute, I must "presume that a legislature says in a statute what it means and means in a statute what it says ..." Connecticut Nat'l Bank v. Germain, ___ U.S. ___, ___, 112 S.Ct. 1146, 1149, 117 L.Ed.2d 391 (1992) giving effect to the Code's plain meaning. See, e.g., Patterson v. Shumate, ___ U.S. ___, ___ - ___, 112 S.Ct. 2242, 2248-51, 119 L.Ed.2d 519 (1992); Germain, ___ U.S. at ___ - ___, 112 S.Ct. at 1149-50; U.S. v. Nordic Village, Inc., ___ U.S. ___, ___, 112 S.Ct. 1011, 1015, 117 L.Ed.2d 181 (1992); Union Bank v. Wolas, ___ U.S. ___, ___, 112 S.Ct. 527, 530, ...