United States Bankruptcy Appellate Panel of the Ninth Circuit
In re: CRESTA TECHNOLOGY CORPORATION, Debtor.
DORIS A. KAELIN, Chapter 7 Trustee, Appellee. MATTHEW LEWIS, Appellant, Adv. No. 17-05030-MEH
Submitted Without Argument on January 25, 2018
from the United States Bankruptcy Court for the Northern
District of California Honorable M. Elaine Hammond,
Bankruptcy Judge, Presiding
Appellant Matthew Lewis, pro se on brief
S. Kleiner of Rincon Law LLP on brief for appellee, Doris A.
Kaelin, Chapter 7 Trustee.
Before: BRAND, SPRAKER and TAYLOR, Bankruptcy Judges.
case brings to mind the adage: "No good deed goes
unpunished." Appellant Matthew Lewis appeals a judgment
under §§ 549(a) and 550(a)(1) avoiding a postpetition
transfer of $10, 000 as reimbursement for payment of the
debtor's legal fees and ordering recovery of the funds
from Lewis. The issue before the bankruptcy court was whether
an ordinary check delivered to the creditor prepetition, but
honored postpetition, was transferred on the date of delivery
or honor for purposes of § 549(a). Relying on
Barnhill v. Johnson, 503 U.S. 393 (1992), the
bankruptcy court determined that the payment was transferred
when the check was honored by the debtor's bank.
an issue of first impression before any appellate court in
the Ninth Circuit since Barnhill. We agree with the
bankruptcy court, and we AFFIRM.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
March 16, 2016, Lewis, in his role as Chief Financial Officer
of the debtor, Cresta Technology Corp. ("Cresta"),
issued a check from Cresta's bank account to Patrick
Castello, Cresta's bankruptcy attorney, as payment for
representing Cresta in its bankruptcy case. Castello refused
the check in favor of a cashier's check.
March 17, 2016, Lewis delivered to Castello a cashier's
check drawn on Lewis's personal bank account for
Cresta's legal fees, with the agreement that Cresta would
March 18, 2016, Cresta (via Lewis as CFO) issued a check for
$10, 000 ("Check") to Lewis from Cresta's bank
account. Later that same day, Cresta filed its chapter 7
bankruptcy petition, signed by Lewis. Doris Kaelin was
appointed as the chapter 7 trustee.
Check cleared Cresta's bank account on March 22, 2016,
four days after the petition date.
The adversary proceeding against Lewis
filed a complaint against Lewis, seeking to avoid the $10,
000 payment as a postpetition transfer under § 549(a)
and to recover the funds for the benefit of the estate under
summary judgment, Trustee argued that a "transfer"
by an ordinary check for purposes of § 549 occurs when
the check clears the debtor's bank account, not when it
is delivered to the creditor. She relied on
Barnhill, 503 U.S. at 394-95 and Mora v. Vasquez
(In re Mora), 199 F.3d 1024, 1027 (9th Cir.
1999). In contrast, Lewis argued that § 547
applied here, not § 549. In cases of check payments for
purposes of § 547(c)(1), Lewis argued, the "date of
delivery" governs when a transfer occurs. Because he
received the Check prepetition and it was a contemporaneous
exchange of new value between him and Cresta, Lewis asserted
that the Check was not an avoidable postpetition transfer
under § 549(a) but rather a non-avoidable preference
under § 547(c)(1).
hearing, the bankruptcy court granted Trustee summary
judgment, determining that the "transfer" to Lewis
occurred on March 22, 2016 - the date the Check was honored
by Cresta's bank. Therefore, because the Check was
transferred postpetition without authorization from the court
or the Code, it was an avoidable postpetition transfer under
§ 549(a) recoverable by the estate. The court entered ...