Kennedy v. Philadelphia Electric Co. (In re Kennedy)

45 B.R. 624, 1985 Bankr. LEXIS 6961
CourtUnited States Bankruptcy Court, E.D. Pennsylvania
DecidedJanuary 9, 1985
DocketBankruptcy No. 84-01602K; Adv. No. 84-0741K
StatusPublished

This text of 45 B.R. 624 (Kennedy v. Philadelphia Electric Co. (In re Kennedy)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kennedy v. Philadelphia Electric Co. (In re Kennedy), 45 B.R. 624, 1985 Bankr. LEXIS 6961 (Pa. 1985).

Opinion

OPINION

WILLIAM A. KING, Jr., Bankruptcy Judge.

The debtor commenced the instant adversary action to recover an alleged preferen[625]*625tial payment from Philadelphia Electric Company (“PECO”). Cross-motions for summary judgment have been filed by both the debtor and PECO. Upon due consideration of the memoranda of law filed by the parties, we find that triable issues of fact exist with regard to the establishment of a preference. Therefore, summary judgment will be denied.

The facts of the controversy are as follows:

In April 1984, Joan Kennedy (“debtor”) applied for a fuel assistance grant from the Department of Public Welfare (“DPW”) of the Commonwealth of Pennsylvania under the Low Income Energy Assistance Program (“LIEAP”). The program is designed to assist low-income households with energy costs.1 In Pennsylvania, a low-income resident may apply for assistance with fuel bills during the heating season. Upon a determination that certain eligibility requirements have been met, the DPW makes one annual payment to the utility company in a designated amount on behalf of that household.

In this case, the DPW found the debtor eligible for a $246.00 LIEAP grant and made the payment directly to PECO on May 2, 1984. PECO applied the payment toward the pre-petition debt owed by the debtor.

On May 18, 1984, the debtor filed a voluntary petition under Chapter 7 of the Bankruptcy Code (“Code”). The $246.00 payment to PECO was listed as an asset on Schedule B-2 and was claimed as exempt on Schedule B-4, pursuant to 11 U.S.C. § 522(d)(5).2 Upon the filing of the bankruptcy petition, PECO assigned a new account number to the debtor.

The debtor commenced this action on July 10, 1984 to recover the $246.00 payment from PECO as a preferential transfer under section 547 of the Code. The debtor argues that PECO’s application of her LIEAP grant to her pre-petition debt constitutes a preference under section 547 and, furthermore, that the LIEAP grant should be applied instead to her post-petition account with PECO. In PECO’s answer to the complaint, PECO claims that LIEAP grants paid to utilities on behalf of eligible households are not part of a debtor’s estate and should not be listed as assets on Schedule B-2. Thus, PECO argues, its application of the debtor’s LIEAP grant toward the satisfaction of her pre-petition debt does not constitute a preference under section 547 and may not be exempted under 11 U.S.C. § 522(d)(5).

Section 547(b) of the Code permits the trustee to avoid any transfer of property of the debtor if the following five (5) requirements are established:

(1) the transfer was to or for the benefit of a creditor;
(2) the transfer was for or on account of an antecedent debt owed by the debtor before such transfer was made;
(3) the transfer was made while the debt- or was insolvent;
(4) the transfer was made
(A) on or within 90 days before the date of the filing of the petition; or
(B) between 90 days and one year before the date of the filing of the petition, if such creditor, at the time of such transfer—
(i) was an insider; and
[626]*626(ii) had reasonable cause to believe the debtor was insolvent at the time of such transfer; and
(5) the transfer enables the 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.

11 U.S.C. § 547(b).

Section 522(h) of the Code allows the debtor to avoid a transfer of property of the debtor ... to the extent that the debtor could have exempted such property under subsection (g)(1) of section 522 if the trustee had avoided such transfer, if

(1) such transfer is avoidable by the trustee under section ... 547 ... and (2) the trustee does not attempt to avoid such transfer.

11 U.S.C. § 522(h).

Fed.R.Civ.P. 56, made applicable to this proceeding through Bankruptcy Rule 7056, governs requests for summary judgment. Pursuant to Fed.R.Civ.P. 56(c), summary judgment should be granted if the pleadings, depositions, answers to interrogatories, admissions and affidavits indicate that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.

On a motion for summary judgment, it is the function of the Court to determine whether a triable issue exists, rather than to resolve the issue. Lockhart v. Hoenstine, 411 F.2d 455 (3d Cir.1969), cert. denied, 396 U.S. 941, 90 S.Ct. 378, 24 L.Ed.2d 244 (1969). The fact that cross-motions for summary judgment are presented does not change the standard and does not warrant the granting of summary judgment unless one of the moving parties is entitled to judgment as a matter of law on facts that are not generally disputed. Manetas v. International Petroleum Carriers, Inc., 541 F.2d 408 (3d Cir.1976), citing Rains v. Cascade Industries, Inc., 402 F.2d 241 (3d Cir.1968); F.A.R. Liquidating Corp. v. Brownell, 209 F.2d 375 (3d Cir.1954).

The instant action by the debtor to recover a preferential payment from PECO is premised on the inclusion of fuel assistance grants such as the one received by the debtor in this case within the definition of property of the estate under 11 U.S.C. § 547(b). At the time of the filing of the cross-motions for summary judgment, the issue of whether a LIEAP grant to an eligible person is includible within that person’s bankruptcy estate for the purposes of title 11 was on appeal in the case of In re Morris, 32 B.R. 635 (Bankr.E.D.Pa.1983). PECO moved for summary judgment and dismissal of the debtor's complaint on the basis that the debtor's LIEAP grant was not includible within her bankruptcy estate and thus could not be recovered as a preference.

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Related

F.A.R. Liquidating Corp. v. Brownell, Atty. Gen
209 F.2d 375 (Third Circuit, 1954)
John K. Rains v. Cascade Industries, Inc
402 F.2d 241 (Third Circuit, 1968)
Morris v. Philadelphia Electric Co. (In Re Morris)
32 B.R. 635 (E.D. Pennsylvania, 1983)
Morris v. Philadelphia Electric Co.
45 B.R. 350 (E.D. Pennsylvania, 1984)
Manetas v. International Petroleum Carriers, Inc.
541 F.2d 408 (Third Circuit, 1976)
Lockhart v. Hoenstine
396 U.S. 941 (Supreme Court, 1969)

Cite This Page — Counsel Stack

Bluebook (online)
45 B.R. 624, 1985 Bankr. LEXIS 6961, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kennedy-v-philadelphia-electric-co-in-re-kennedy-paeb-1985.