Davis v. Clarklift-West, Inc. (In re Quebecor World (USA), Inc.)

518 B.R. 757, 2014 Bankr. LEXIS 4506, 60 Bankr. Ct. Dec. (CRR) 35
CourtUnited States Bankruptcy Court, S.D. New York
DecidedOctober 14, 2014
DocketCase No. 08-10152 (JMP) (Jointly Administered); Adv. Pro. No. 10-1568 (SHL)
StatusPublished
Cited by3 cases

This text of 518 B.R. 757 (Davis v. Clarklift-West, Inc. (In re Quebecor World (USA), Inc.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Davis v. Clarklift-West, Inc. (In re Quebecor World (USA), Inc.), 518 B.R. 757, 2014 Bankr. LEXIS 4506, 60 Bankr. Ct. Dec. (CRR) 35 (N.Y. 2014).

Opinion

Chapter 11

MEMORANDUM OF DECISION GRANTING MOTION FOR SUMMARY JUDGMENT

SEAN H. LANE, UNITED STATES BANKRUPTCY JUDGE

Before the Court is a motion for summary judgment filed by Plaintiff Eugene I. Davis, Litigation Trustee for the Quebecor World Litigation Trust (the “Trustee”). The Trustee asserts that ten transfers totaling $69,207.60 by the debtors to the defendant Clarklift-West, Inc. (“Clarklift”), shortly before the filing of the bankruptcy case, are preferences under Section 547(b) of the Bankruptcy Code (the “Code”). After accounting for undisputed defenses, the Trustee seeks the return of $35,865.58 in preference payments [760]*760to the estate. Clarklift does not dispute that these transfers are preferences but it asserts the “ordinary course of business” defense under Section 547(c)(2) to exempt these transfers from recovery by the Trustee. For the reasons set forth below, the Court rejects Clarklift’s ordinary course of business defense and grants the Trustee’s motion for summary judgment.1

BACKGROUND

There are no disputed material facts. On January 21, 2008 (the “Petition Date”), the Debtor filed for protection under Chapter 11 of the Code. On May 18, 2009, the Debtor filed its Third Amended Joint Plan of Reorganization of Quebecor World (USA), Inc. and Certain Affiliated Debtors and Debtors-In-Possession (the “Plan”). In June of 2009, the Plan was confirmed. Pursuant to the Plan, a litigation trust administered by the Trustee was created to pursue certain claims as defined under the terms of the Plan.

The Debtor and the Defendant have a history of business dealings reaching back to at least 2005. Davis Decl. ¶¶ 18-19; Ex. E [ECF No. 41]. The Defendant was in the business of heavy equipment sales, rental, and service. Davis Decl. ¶¶ 18-19; Ex. I. During the 90 days before the Petition Date (the “Preference Period”),2 the Debtors made — and the Defendant received — ten (10) transfers totaling $69,207.60 (the “Transfers”). Davis Decl. ¶ 7; Ex. A, Ex. B, Ex. C. These Transfers were made by check from the Debtors’ corporate bank account. Id. at ¶ 8, Ex. B. At the time the Transfers were made, the Defendant was a creditor of the Debtors and all payments were made on account of antecedent debts. Def.’s Resp. to Statement of Undisputed Facts ¶¶ 16-17. By receiving full payment for these debts, Clarklift acknowledges that it recovered more than it would have in a hypothetical Chapter 7 liquidation because the Plan calls for general unsecured creditors to receive less than 100 cents on the dollar. Id. at ¶¶ 19-20. Pursuant to Section 547(f), the Debtors are presumed to have been insolvent during the Preference Period.

The Trustee concedes that $30,514.18 of these Transfers is not subject to avoidance under the “new value exception” of Section 547(c)(4) of the Code. See Hr’g Tr. 16:10-[761]*76119, Feb. 20, 2014 [ECF No. 50]. The Trustee also concedes that another $3,372 qualifies under the ordinary course of business exception of Section 547(c)(2). Id. at 17:2-5. After accounting for these reductions, the Trustee seeks the return of $35,321.23 as preference payments, along with pre-judgment interest. Id. at 22.

DISCUSSION

I. Summary Judgment Standard

It is appropriate for the Court to grant summary judgment “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.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); see Fed.R.Civ.P. 56(c) (made applicable to the adversary proceeding by Fed. R. Bankr.P. 7056). A genuine dispute of material fact exists when “the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 244, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The moving party bears the burden of demonstrating the absence of any genuine dispute of material fact, and all inferences to be drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255-57, 106 S.Ct. 2505; Ames Dep’t Stores, Inc. v. Wertheim Schroder & Co., Inc. (In re Ames Dep’t Stores, Inc.), 161 B.R. 87, 89 (Bankr.S.D.N.Y.1993). Thus, the moving party bears the initial burden of identifying those portions of the pleadings, discovery, and affidavits that demonstrate the absence of a genuine dispute of material fact. See Celotex, 477 U.S. at 323, 106 S.Ct. 2548. Once the moving party meets this initial burden, 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” to demonstrate a genuine issue of fact. Id. at 324, 106 S.Ct. 2548. A court should grant the motion if “the record, taken as a whole, could not lead a rational trier of fact to find for the non-moving party.” Bundy Am. Corp. v. Blankfort (In re Blankfort), 217 B.R. 138, 143 (Bankr.S.D.N.Y.1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)).

II. Preferential Transfers and the Ordinary Course of Business Defense

To avoid a transfer as preferential under Section 547(b), the Trustee must establish five elements. The transfer must have been made:

(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed by the debtor before such Transfers were made;
(3) made while the debtor was insolvent;
(4) on or within ninety (90) days before the date of filing of the petition; and
(5) enable the benefited creditor to receive more than such creditor would have received had the case been a chapter 7 liquidation and the creditor not received the transfer.

11 U.S.C. § 547(b).

Clarklift concedes that all five elements have been satisfied here and, therefore, the Transfers qualify as preferential. See Def.’s Resp. to Statement of Undisputed Material Facts ¶¶ 13-20 [ECF No. 5045]. Clarklift nonetheless asserts that the $35,321.23 sought by the Trustee is not avoidable because it is exempted under the ordinary course of business defense of Sec[762]*762tion 547(c)(2). That section provides that a transfer shall not be avoided:

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518 B.R. 757, 2014 Bankr. LEXIS 4506, 60 Bankr. Ct. Dec. (CRR) 35, Counsel Stack Legal Research, https://law.counselstack.com/opinion/davis-v-clarklift-west-inc-in-re-quebecor-world-usa-inc-nysb-2014.