93 B.R. 605 | Bankr. E.D. Tenn. | 1987
MEMORANDUM AND ORDER ON MOTION FOR PARTIAL SUMMARY JUDGMENT
In this adversary proceeding plaintiff seeks summary judgment on an alleged voidable preference. 11 U.S.C.A. § 547 (West 1979). Plaintiff has heretofore established all the elements of § 547(b). At issue, however, is whether the “45-day ordinary course of business” exception created by § 547(c)(2) in the 1978 Code is applicable to this proceeding. That section, as of March 10, 1983, when this chapter 11 case was filed, provided as follows:
(c) The trustee may not avoid under this section a transfer—
(2) to the extent that such transfer was—
(A)in payment of a debt incurred in the ordinary course of business or financial affairs of the debtor and the transferee;
(B) made not later than %5 days after such debt was incurred;
(C) made in the ordinary course of business or financial affairs of the debtor and the transferee; and
(D) made according to ordinary business terms.
11 U.S.C.A. § 547(c)(2) (West 1979) (emphasis added).
In 1983 Congress amended this provision to delete the 45-day requirement. The provision was deleted by § 462(c) of the Bankruptcy Amendments and Federal Judgeship Act of 1984, Pub.L. No. 98-353, 98 Stat. 333 (1984) (the “1984 Act”).
Section 553 of Title III of the 1984 Act, the implementing section fixing the effective dates of the amendments made to § 547, among others, provides in pertinent part as follows:
(a) Except as otherwise provided in this section the amendments made by this title shall become effective to cases filed 90 days after the date of the enactment of this Act. (Emphasis added.)
The date of enactment of the 1984 Act was July 10, 1984. The effective date for amendments made by Title III of the 1984 Act, as fixed by § 553(a), was October 8, 1984.
The controversy in this proceeding arises over the word “cases” as used in § 553(a), i.e., whether the date the chapter 11 petition was filed (March 10,1983) or the date the adversary proceeding was filed (March 15, 1985) controls. If the date of the filing of the chapter 11 case controls, the former 45-day rule will apply; if the date of the filing of the adversary proceeding controls, then the 1984 Act will apply, with no resulting 45-day limitation.
The defendant holds fast to the proposition that the term “cases” as used in § 553 should be broadly defined to encompass not only the title 11 bankruptcy case itself but also all “cases” arising under or related to title 11. In support of this position, defendant cites Judge Votolato’s statement in In re Brenton’s Cove Development Co., 52 B.R. 287 (Bankr.R.I.1985). In that case the debtor filed a bankruptcy petition on Au
However, all this ignores the fact that the term “case” is a precise term in the bankruptcy context. In Nordberg v. Wilcafe, Inc. (In re Chase and Sanborn Corp.), 51 B.R. 736 (Bankr.S.D.Fla.1985), defendants argued that the effective date provision of § 553(a) should be applied as though Congress had specified that the amendment is applicable to “adversary proceedings” filed on and after October 8, 1984, rather than bankruptcy “cases” filed after that date. Judge Britton disagreed.
This argument presupposes that Congress was unaware of the distinct meaning each of these terms has acquired in the bankruptcy law since the 1973 adoption of the bankruptcy rules, which first introduced adversary proceedings. I reject this contention.
It is apparent from a review of the 1984 Act that the two terms are used with precision in many other provisions where the context makes it clear that the terms were intended to have their customary meaning. A similar effective date provision was contained in the Bankruptcy Reform Act of 1978, Pub.L. 95-598 § 403(a), which also employed the word “case” and provided that all matters and proceedings in or relating to any such “case” would be determined under the former Act as if the 1978 amendment had not been enacted. Without dissent, that provision has been applied literally, giving the customary bankruptcy meaning to the term “case.” Nicholson v. First Investment Co., 705 F.2d 410, 411 n. 1 (11th Cir.1983). There is no reason to assume less precision in the selection of the same term for the same purpose by Congress six years later....
In re Chase & Sanborn Corp., 51 B.R. at 738.
This court is persuaded by Judge Brit-ton’s reasoning and conclusion in In re Chase and Sanborn, supra. To follow defendant’s position, the court would effectively be required to apply two different and separate acts to the same bankruptcy case; one act for the title 11 case itself, and one act for proceedings and cases arising thereunder. This is simply unacceptable. Parties should be able to reasonably rely upon one statute or the other. Jumping from one to the other for various aspects of the determination of the case would cause more confusion than already abounds.
Therefore, for purposes of plaintiff’s Motion for Summary Judgment, the court GRANTS the Motion for Partial Summary Judgment with regard to the application of the 45-day rule under the pre-amendment version of § 547(c)(2). All other issues raised in plaintiff’s motion will be either set for trial or ruled upon at a later date.
IT IS SO ORDERED.
. This statement is dictum because the court concluded that § 547(c)(2) was not applicable.
. In Nordberg v. Sanchez (In re Chase and Sanborn Corporation), 813 F.2d 1177 (11th Cir. 1987), the court applied the amended version of § 548 in a case filed prior to the 1984 amendment in an adversary proceeding filed post-amendment. The court, however, did not address the applicability of the amendment.
. Citing Bradley v. Richmond School Board, 416 U.S. 696, 94 S.Ct. 2006, 40 L.Ed.2d 476 (1974), defendant insists the court should apply the law in effect (the amended version of § 547(c)(2)) at the time of decision "unless doing so would result in manifest injustice or there is statutory direction or legislative history to the contrary.” Bradley, 416 U.S. at 711, 94 S.Ct. at 2016. This court declines to apply § 547(c)(2) as amended by the 1984 Act because Congress has expressly stated that "the amendments ... shall become effective to cases filed 90 days after the date of enactment of the Act.” Pub.L. No. 98-353, 98 Stat. 333 (1984).