Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

In re Cresta Technology Corp.

United States Bankruptcy Appellate Panel of the Ninth Circuit

April 6, 2018

In re: CRESTA TECHNOLOGY CORPORATION, Debtor.
v.
DORIS A. KAELIN, Chapter 7 Trustee, Appellee. MATTHEW LEWIS, Appellant, Adv. No. 17-05030-MEH

          Submitted Without Argument on January 25, 2018

          Appeal 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

          Gregg S. Kleiner of Rincon Law LLP on brief for appellee, Doris A. Kaelin, Chapter 7 Trustee.

          Before: BRAND, SPRAKER and TAYLOR, Bankruptcy Judges.

          OPINION

          BRAND, BANKRUPTCY JUDGE.

         This case brings to mind the adage: "No good deed goes unpunished." Appellant Matthew Lewis appeals a judgment under §§ 549(a)[1] 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.

         This is an issue of first impression before any appellate court in the Ninth Circuit since Barnhill. We agree with the bankruptcy court, and we AFFIRM.

         I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

         A. The check

         On 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.

         On 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 reimburse Lewis.

         On 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.

         The Check cleared Cresta's bank account on March 22, 2016, four days after the petition date.

         B. The adversary proceeding against Lewis

         Trustee 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 § 550(a)(1).

         On 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).[2] 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).

         After a 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 ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.