Stoebner v. San Diego Gas & Electric Co. (In re LGI Energy Solutions, Inc.)
482 B.R. 809
8th Cir. BAP2012Background
- Consolidated appeals involve SDG & E and SCE challenging §547(b) judgments for transfers received in the 90 days before the Feb 6, 2009 petition date.
- Debtors operated a utility-billing service; funds from customers were to pay utility invoices, with Debtors holding funds in trust for utilities.
- Transfers at issue relate to Buffets, Inc. and Wendy’s invoices: 24 transfers to SCE totaling $183,512.74 and eight transfers to SDG & E totaling $75,053.85.
- The bankruptcy court held the Defendants were creditors and that the transfers were in payment of antecedent debts, then awarded new value credits limited to the defendants’ own services.
- The court partially denied new value credits, and the bankruptcy court’s judgments were entered: SCE $131,267.63 and SDG & E $31,242.63; estates were substantively consolidated.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Defendants were creditors under §547(b)(1). | Stoebner contends Defendants were creditors as trust beneficiaries/third‑party beneficiaries. | Defendants argue they were not creditors; payments were not to or for a debt owed to them. | Yes; Defendants were creditors via trust/third‑party beneficiary theories. |
| Whether transfers were on account of antecedent debts under §547(b)(2). | Debtors incurred a debt to the Defendants when funds were received for utility services. | Debt accrues only upon breach; contracts alone do not create antecedent debts. | Yes; transfers were in payment of antecedent debts. |
| Whether new value credits were properly calculated under §547(c)(4). | Credit should reflect new value provided by the creditor that received the transfer. | Credit may include new value from tripartite relationship beyond current services. | No; new value must come from the creditor that received the transfer, as limited by the Ninth Circuit Jones Truck Lines approach; remanded to adjust credits. |
Key Cases Cited
- First Federal of Michigan v. Barrow, 878 F.2d 912 (6th Cir. 1989) (trust breach creates general claims; dissipation affects beneficiaries’ status)
- In re Jones Truck Lines, Inc., 130 F.3d 323 (8th Cir. 1997) (tripartite relation allows new value from the creditor benefiting the primary creditor)
- In re Bridge Information Systems, Inc., 327 B.R. 382 (8th Cir. BAP 2005) (contractual duty to pay debated; applicable to antecedent debt analysis)
- In re Jones Truck Lines, Inc., 196 B.R. 483 (Bankr. W.D. Ark. 1995) (alternative precedents on new value attribution)