Davis v. R.A. Brooks Trucking, Co. (In re Quebecor World (USA), Inc.)
491 B.R. 379
| Bankr. S.D.N.Y. | 2013Background
- Trustee seeks to avoid and recover ten transfers totaling $117,370.05 (plus $15,191.09 prejudgment interest) to R.A. Brooks within 90 days before petition.
- Plan created a litigation trust; Trustee pursues claims under 11 U.S.C. sections 502, 547, and 550 after dropping 548/549 claims.
- No written contract; terms were 10 days from receipt; payments matched invoices with remittance stubs.
- Parties had an ongoing relationship since 2002; Debtor owed $38,760 for pre-petition services.
- Debtor filed Chapter 11 on Jan. 21, 2008; Plan confirmed May 18–Jul. 2, 2009; preference amount disputed at $156,130.05 with new value defense reducing to $38,760.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Constitutional authority to enter final judgment | Stern allows final adjudication since a related proof of claim exists | (Not explicitly asserted in the record) | Court has authority to issue final judgment under 28 U.S.C. § 157 and § 502(d) |
| Whether transfers are avoidable under 547(b) and subject to 547(c)(2) ordinary course defense | Transfers are preferences unless ordinary course defense applies | Defendant relies on 547(c)(2) to show ordinary course | Not all transfers were ordinary; up to $38,760 deemed ordinary under 547(c)(2)(A), remainder avoidable |
| Appropriate baseline period and method to assess ordinary course | Longer historical baseline (two years) reflects debtor in better health | Shorter baseline (about one year) acceptable | Adopt longer baseline; use average lateness method to compare periods; significant disparity found |
Key Cases Cited
- Katchen v. Landy, 382 U.S. 323 (U.S. 1966) (bankruptcy court authority in preference actions)
- Langenkamp v. Culp, 498 U.S. 42 (U.S. 1990) (defendant with proof of claim not entitled to jury trial in preference actions)
- In re Enron Creditors Recovery Corp., 376 B.R. 442 (Bankr.S.D.N.Y. 2007) (ordinary course / preference analysis in complex reorganizations)
- In re CIS Corp., 214 B.R. 108 (Bankr.S.D.N.Y. 1997) (ordinary course analysis; multiple factors, including timing and pattern of payments)
- In re Hechinger Inv. Co. of Delaware, Inc., 489 F.3d 568 (3d Cir. 2007) (multi-factor ordinary course assessment; grouping by age of payments)
- In re 360networks (USA) Inc., 338 B.R. 194 (Bankr.S.D.N.Y. 2005) (uses average lateness and historical baseline in ordinary course)
- In re Pameco Corp., 356 B.R. 327 (Bankr.S.D.N.Y. 2006) (pre-judgment interest and new value defenses context)