501 B.R. 17
Bankr. D.P.R.2013Background
- Debtor PMC Marketing Corp. filed Chapter 11 on March 18, 2009; case converted to Chapter 7 on May 21, 2010; trustee appointed.
- Creditor PREPA (Puerto Rico Electric Power Authority) sought administrative-expense priority under 11 U.S.C. § 503(b)(9) for electricity supplied in the 20 days before the petition; unpaid amount asserted: $89,336.42.
- PREPA argued electricity is a “good” under UCC § 2-105 and thus qualifies for § 503(b)(9) priority because it is moveable and identifiable at the meter.
- Trustee opposed, contending PREPA’s request was a belated proof of claim (missed bar dates) and that PREPA’s supplies are services, not goods; also noted PREPA earlier filed proofs of claim that did not assert § 503(b)(9).
- Court found PREPA timely filed underlying proofs of claim but concluded the pivotal legal question is whether electricity here is a “good” for § 503(b)(9); it determined PREPA is a public utility and that the electricity it provided is a “service,” not a “good,” and denied the § 503(b)(9) claim.
Issues
| Issue | PREPA's Argument | Trustee's Argument | Held |
|---|---|---|---|
| Whether electricity supplied by PREPA in the 20 days prepetition qualifies as "goods" under § 503(b)(9) | Electricity is a movable, metered commodity identifiable to the contract and thus a "good" under the UCC, so § 503(b)(9) applies | Electricity supplied by a utility is a service, not a good; § 503(b)(9) therefore inapplicable | Court held PREPA’s electricity was a service (utility context) and § 503(b)(9) did not apply; claim denied |
| Whether PREPA’s § 503(b)(9) request is an untimely, disguised proof of claim | PREPA said it had timely filed proofs of claim in the chapter 11 case (Claims 94-1, 94-2) and § 503(b)(9) has no filing deadline; chapter 11 claims carried into chapter 7 | Trustee argued PREPA missed multiple bar dates and cannot belatedly assert the claim | Court found PREPA had timely filed claims covering the amounts, but resolution rested on § 503(b)(9) substance (no need to deny solely for timeliness) |
| Whether PREPA’s status (monopoly public utility) affects characterization of electricity | PREPA emphasized sale of electricity; argued sale context controls | Trustee emphasized utility nature and special position making supply a service | Court treated PREPA as a government-owned public utility with monopoly attributes and relied on that context to characterize the supply as a service |
| Reconsideration motion standard — whether PREPA showed grounds to alter judgment | PREPA reargued prior legal points and contested characterization | Trustee argued no new evidence or intervening law; prior decision was correct | Court denied motion to alter/amend: PREPA presented no newly discovered evidence, clear error, or change in controlling law |
Key Cases Cited
- In re Erving Indus., 432 B.R. 354 (Bankr. D. Mass. 2010) (discusses electricity as a “good” under UCC in alternative supplier context)
- In re Pilgrim’s Pride Corp., 421 B.R. 231 (Bankr. N.D. Tex. 2009) (holds electricity is not a good for § 503(b)(9))
- In re Grede Foundries, Inc., 435 B.R. 593 (Bankr. W.D. Wis. 2010) (interpreting § 503(b)(9) as limited to goods, not services)
- In re Pacific Gas & Elec. Co., 271 B.R. 626 (N.D. Cal. 2002) (treats electricity as a good under certain commercial arrangements)
- GFI Wisconsin, Inc. v. Reedsburg Util. Comm’n, 440 B.R. 791 (W.D. Wis. 2010) (analyzes movability and market characteristics of electricity for UCC purposes)
- Brown & Cole Stores, LLC v. Associated Grocers, Inc. (In re Brown & Cole Stores, LLC), 375 B.R. 873 (9th Cir. BAP 2007) (declares § 503(b)(9) limited to goods, not services)