Cohen v. KDC Financial Services, Inc. (In re Miller Mining, Inc.)

219 B.R. 219, 1998 Bankr. LEXIS 422
CourtUnited States Bankruptcy Court, N.D. Ohio
DecidedMarch 25, 1998
DocketBankruptcy No. 97-61705; Adversary No. 97-6160
StatusPublished
Cited by4 cases

This text of 219 B.R. 219 (Cohen v. KDC Financial Services, Inc. (In re Miller Mining, Inc.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cohen v. KDC Financial Services, Inc. (In re Miller Mining, Inc.), 219 B.R. 219, 1998 Bankr. LEXIS 422 (Ohio 1998).

Opinion

MEMORANDUM OF DECISION

JAMES H. WILLIAMS, Bankruptcy Judge.

Pending before the Court is the motion for summary judgment filed by the Plaintiff, Robert L. Cohen, the Chapter 11 Trustee (Trustee) of Miller Mining, Inc. (Debtor’), in his action to recover, pursuant to 11 U.S.C. § 549, an alleged unauthorized postpetition payment of $17,753.67 to the Defendant, KDC Financial Services, Inc. (KDC). KDC has filed a memorandum in opposition to the trustee’s motion and the Trustee has responded. The Court comes now to render its decision on the motion.

FACTS

The Debtor filed a petition for relief under Chapter 11 of Title 11 of the United States Code on June 4, 1997. On July 23, 1997, the Court directed the appointment of a Trustee to oversee the Debtor’s bankruptcy estate and operate the Debtor’s business. On August 5,1997, Robert L. Cohen was confirmed by this Court as Trustee for the Debtor.

On October 23, 1996, the Debtor had entered into a security agreement-conditional sales contract with Columbus Equipment Co. for a Komatsu Dozer. This contract was subsequently assigned to KDC. On June 25, 1997, the Debtor made a postpetition payment to KDC in the amount of $17,753.67. Both parties stipulate that the payment was not made pursuant to an order of this Court.

On August 1,1997, the Debtor commenced this adversary proceeding by filing a complaint seeking to have KDC return this post-petition payment'to the Debtor’s bankruptcy estate pursuant to 11 U.S.C. § 542. The complaint was later amended by the Trustee on October 28, 1997, to assert a claim under 11 U.S.C. § 549. On November 17, 1997, KDC filed its answer admitting that the pay[221]*221ment by the Debtor was made postpetition and was not authorized by court order. KDC, however, alleges that the payment is exempt from avoidance as a payment made in the ordinary course of the Debtor’s business pursuant to 11 U.S.C. § 1108 and § 363(c)(1) KDC also alleges that the payment by the Debtor was, in fact, an adequate protection payment to reimburse it for the depreciation of the collateral which was being used by the Debtor in its postpetition operations.

The Trustee has filed a motion for summary judgment asserting that there are no genuine issues of material fact. KDC responds to the contrary.

DISCUSSION

The Court has jurisdiction in this adversary proceeding by virtue of Section 1334(b) of Title 28 of the United States Code and General Order No. 84 entered in this district on July 16, 1984. This is a core proceeding under Section 157(b)(2)(A) and (0) of Title 28 of the United States Code. This Memorandum of Decision constitutes the Court’s findings of fact and conclusions of law pursuant' to Rule 7052 of the Federal Rules of Bankruptcy Procedure.

Standards on summary judgment under Rule 56 of the Federal Rules of Civil Procedure are made applicable to bankruptcy proceedings by Rule 7056 of the Federal Rules of Bankruptcy Procedure. Rule 56(c) provides for a grant of summary judgment as follows:

The judgment sought shall be rendered forthwith 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.

The party seeking summary judgment bears the initial burden of asserting that the pleadings, depositions, answers to interrogatories, admissions and affidavits establish the absence of a genuine issue of material fact. Celotex Corp. n Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479 (6th Cir.1989). The ultimate burden of demonstrating the existence of a genuine issue of material fact, however, lies with the nonmoving party. Celotex Corp., 477 U.S. at 324, 106 S.Ct. at 2553. See also, First National Bank v. Cities. Service Co., 391 U.S. 253, 288-89, 88 S.Ct. 1575, 1592-93, 20 L.Ed.2d 569 (1968).

When the moving party has carried its burden under Rule 56(e), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.... In the language of the Rule, the nonmoving party must come forward with “specific facts showing that there is a genuine issue for trial.” F.R.Civ.Proc. 56(e) (emphasis added)____where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no “genuine issue for trial.”.

Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (citations and footnotes omitted).

The Elements of 11 U.S.C. § 549

The Trustee seeks to recover the unauthorized postpetition transfer of property of the Debtor’s bankruptcy estate in the amount of $17,753.67 to KDC pursuant to 11 U.S.C. § 549 which reads, in pertinent part:

Except as provided in subsection (b) or (e) of this section, the trustee may avoid a transfer of property of the estate—
(1) made after the commencement of the case; and
(2)(A) that is authorized only under section 303(f) or 542(c) of this title; or
(B) that is not authorized under this title or by the court.

11 U.S.C. § 549(a).

The Trustee must therefore, prove four elements to avoid a transfer of property from the Debtor’s bankruptcy estate pursuant to 11 U.S.C. § 549. First, the unauthorized transfer must occur after the commencement of the case.

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Bluebook (online)
219 B.R. 219, 1998 Bankr. LEXIS 422, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cohen-v-kdc-financial-services-inc-in-re-miller-mining-inc-ohnb-1998.