Rushton v. Bank of Utah (In re C.W. Mining Co.), 477 B.R. 176

Trustee appeals the bankruptcy court’s grant of Bank of Utah’s summary judgment and denial of Trustee’s summary judgment in a claim arising from a post-petition transfer and related lien issues.
Debtor C.W. Mining operated a coal mine and executed three secured loan agreements with Bank, with cross-collateralization and a PPMC guarantee; a CD securing a letter of credit was created in August 2007.
Bank liquidated the CD and applied proceeds to two Notes in February 2009 while a Chapter 7 case was pending; Bank later sold the related loans to PPMC.
Trustee asserted §549 avoidance of the Transfer and recovery under §550 for the estate, and a claim under §362(a) and §542 for turnover of the CD value; Bank argued avoidance would be futile and turnover unnecessary.
Bank’s liquidation left it with an oversecured lien; Trustee sought to strip Bank’s lien and recover $383,099, contending the stay was violated and the estate benefited from avoiding the transfer.
The bankruptcy court concluded the Transfer did not deplete the estate, avoidance would revive Bank’s lien, and turnover or lien-stripping would be improper; summary judgment for Bank was granted, which this court affirms.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether §549/§550 allow recovery for a post-petition transfer to a secured creditor	Trustee: avoid Transfer under §549 and recover under §550 for estate benefit.	Bank: avoidance would revive lien; no estate benefit; §550 requires estate benefit.	Affirmed: post-petition transfer to secured creditor cannot be avoided for recovery where no estate depletion occurs.
Whether the Transfer violated the automatic stay and permits turnover or lien-stripping	Trustee: void the transfer and turnover value of the CD to estate to remove Bank’s lien.	Bank: stay violation cannot extinguish a valid pre-petition lien; remedy is status quo, not lien stripping.	Affirmed: stay violation is void ab initio but does not authorize stripping Bank’s lien; turnover not warranted.
Whether §362(k) damages or §105(a) civil contempt sanctions are available to Trustee	Trustee seeks damages and sanctions for stay violation.	Trustee, as an estate entity, is not an “individual” under §362(k); contempt not appropriate.	Affirmed: Trustee cannot recover damages under §362(k); contempt not applicable to strip lien; remedies inadequate.

Dewsnup v. Timm, 502 U.S. 410 (1992) (liens survive bankruptcy unless expressly avoided)