Mano-Y & M, Ltd. v. Field (In Re Mortgage Store, Inc.), 773 F.3d 990

Mano owned Raymondville Plaza and contracted to sell it to Lindell for $2.2M; closing documents signed January 19–20, 2009.
The Mortgage Store wired $311,065.25 to closing attorney Mark Freeland on January 20, 2009; Freeland deposited funds in a trust account and disbursed them on January 21.
The Mortgage Store later filed Chapter 7; the trustee discovered a Ponzi scheme and sued to avoid the transfer as fraudulent and recover the funds under 11 U.S.C. § 550.
Bankruptcy court found the transfer avoidable and held Mano was the initial transferee; the district court affirmed and refused to address Mano’s alternative apportionment argument as waived.
Mano appealed, arguing (1) it was not the initial transferee because Lindell (through Freeland) had dominion over the funds, and (2) it should not be liable for the full $311,065.25 because third parties were entitled to portions of the transfer.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Mano was the initial transferee under 11 U.S.C. § 550	Trustee: Mano was the initial transferee because it was the first party to have dominion over the funds after receipt and thus is strictly liable	Mano: Lindell (via Freeland) had dominion; Freeland acted as Lindell’s agent so Lindell was the initial transferee	Court held Mano was the initial transferee under the dominion test—Lindell lacked legal title and the ability to unilaterally appropriate or redirect the funds, so he was not the initial transferee; Mano remains initial transferee
Whether Mano can avoid liability for portions of the $311,065.25 that were intended for other payees	Mano: some of the wired funds were intended to pay closing costs to third parties, so Mano should not be liable for the entire amount	Trustee/Appellees: full amount recoverable from initial transferee; issue was not raised below	Court held Mano waived this argument by failing to raise it in the bankruptcy court and declined to consider it on appeal

Universal Serv. Admin. Co. v. Post-Confirmation Comm. of Unsecured Creditors of Incomnet Commc'n Corp., 463 F.3d 1064 (9th Cir.) (articulates the "dominion" test for initial transferee status)
Bonded Fin. Servs., Inc. v. European Am. Bank, 838 F.2d 890 (7th Cir.) (illustrates dominion by ability to put funds to own purposes)
Schafer v. Las Vegas Hilton Corp. (In re Video Depot, Ltd.), 127 F.3d 1195 (9th Cir.) (discusses liability of initial transferees and standards for analysis)
Abele v. Modern Fin. Plans Serv., Inc. (In re Cohen), 300 F.3d 1097 (9th Cir.) (examines dominion and legal title in initial transferee inquiry)