French v. State Farm Mutual Automobile Insurance (In re LaRotonda)

436 B.R. 491, 2010 Bankr. LEXIS 3241
CourtUnited States Bankruptcy Court, N.D. Ohio
DecidedAugust 27, 2010
DocketNos. 10-3072, 09-37897
StatusPublished
Cited by4 cases

This text of 436 B.R. 491 (French v. State Farm Mutual Automobile Insurance (In re LaRotonda)) 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
French v. State Farm Mutual Automobile Insurance (In re LaRotonda), 436 B.R. 491, 2010 Bankr. LEXIS 3241 (Ohio 2010).

Opinion

DECISION AND ORDER

RICHARD L. SPEER, Bankruptcy Judge.

This cause comes before the Court on the Motion of the Plaintiff/Trustee, Bruce French, for Summary Judgment. (Doc. No. 12). Said motion is brought on the Plaintiffs complaint to avoid, as a preferential transfer, any liens held against estate property by the Defendant, State Farm Mutual Automobile Insurance Company. (Doc. No. 1). Against the Plaintiffs Motion for Summary Judgment, the Defendant filed a Response, objecting to the relief sought by the Plaintiff. In support of their respective positions, each of the Parties submitted written arguments. The Court has now had the opportunity to review all of the arguments of counsel and exhibits, as well as the entire record of the case. Based upon that review, and for the following reasons, the Court finds that the Plaintiffs Motion for Summary Judgment should be Granted.

FACTS

On April 4, 2006, the Defendant, State Farm Mutual Automobile Insurance Company (hereinafter the “Defendant”) obtained a judgment against the Debtor, Evelyn Marie LaRotonda. The judgment was for the sum of $60,000.00, plus interest. On September 14, 2009, the Defendant filed a certificate of its judgment in the office of the clerk of courts for the common pleas court in Allen County, Ohio. Pursuant to O.R.C. § 2329.02, the filing by the Defendant of its certificate of judgment gave rise to a lien upon all interests in “lands and tenements” held by the Debtor within the county.

On November 12, 2009, less than 90 days after the Defendant filed its certificate of judgment, the Debtor filed a petition in this Court for relief under Chapter 7 of the United States Bankruptcy Code. At the time she filed for bankruptcy relief, the Debtor held an undivided interest with her husband in two parcels of real property. These properties, one of which included her residence, were disclosed to have an aggregate value of $179,000.00 and, inclusive of the Defendant’s interest, were reported to be encumbered by secured claims in the amount of $128,057.07.

After filing for bankruptcy relief, the Plaintiff, Bruce C. French, was appointed the trustee of the Debtor’s bankruptcy case. 11 U.S.C. § 701. As Trustee, the Plaintiff commenced the action now before the Court to avoid, as a preferential transfer pursuant to 11 U.S.C. § 547, any judgment liens held by the Defendant against estate property.

DISCUSSION

Before this Court is the Trustee’s Complaint to avoid, as a preferential transfer, any judgment liens held by the Defendant against estate property. Proceedings to determine, avoid, or recover preferences are deemed to be core proceedings pursuant to 28 U.S.C. § 157(b)(2)(F). Accordingly, as a core proceeding, this Court has jurisdiction to enter final orders and judgments in this matter. 28 U.S.C. § 157(b)(1).

Procedurally, the determination of the Trustee’s action to avoid the Defendant’s judgment lien as a preferential transfer is before this Court on the Plaintiffs Motion for Summary Judgment. Federal Rule of Civil Procedure 56(c), which is made applicable to this proceeding by Bankruptcy Rule 7056, sets forth the standard for a summary judgment motion and provides, in part: A party will prevail on a motion [494]*494for summary judgment when “[t]he pleadings, depositions, answers to interrogatories, and admission 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, 2552, 91 L.Ed.2d 265 (1986). With respect to this standard, the movant must demonstrate all the elements of his cause of action. R.E. Cruise Inc. v. Bruggeman, 508 F.2d 415, 416 (6th Cir.1975). In making this determination, the Court is directed to view all the facts in a light most favorable to the party opposing the motion. Matsushita v. Zenith Radio Corp., 475 U.S. 574, 586-88, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).

A prime policy goal of the Bankruptcy Code is to effectuate an equitable distribution of a debtor’s nonexempt assets among similarly situated creditors. In re Shelton Harrison Chevrolet, Inc., 202 F.3d 834, 837 (6th Cir.2000). Creditors who improve their position in the time period immediately preceding the commencement of a debtor’s bankruptcy case potentially frustrate this goal. To address this situation, the Bankruptcy Code empowers a bankruptcy trustee to avoid certain types of prepetition transfers made of a debtor’s interest in property when the transfer occurs within 90 days of the commencement of the case (or within one year if the transferee qualifies as an “insider”) and when the transfer has the effect of preferring one creditor over a debtor’s other creditors. 11 U.S.C. § 547.

In order for a transfer to qualify as preferential, subjecting the transfer to avoidance within the meaning of the Bankruptcy Code, the transfer must satisfy the statutory elements of § 547. These elements, five in number, are set forth in paragraphs (1) through (5) of § 547(b), with this provision providing:

(b) Except as provided in subsections (c) and (i) of this section, the trustee may avoid any transfer of an interest of the debtor in property—
(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed by the debtor before such transfer was made;
(3) made while the debtor was insolvent;
(4) made—
(A) on or within 90 days before the date of the filing of the petition; or
(B) between ninety days and one year before the date of the filing of the petition, if such creditor at the time of such transfer was an insider; and
(5) that enables such creditor to receive more than such creditor would receive if—
(A) the case were a case under chapter 7 of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided by the provisions of this title.

The Trustee bears the burden of proving, by at least a preponderance of the evidence, the existence of each of these elements. In re Southern Air Transport, Inc.,

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Cite This Page — Counsel Stack

Bluebook (online)
436 B.R. 491, 2010 Bankr. LEXIS 3241, Counsel Stack Legal Research, https://law.counselstack.com/opinion/french-v-state-farm-mutual-automobile-insurance-in-re-larotonda-ohnb-2010.