OPINION 1
Before the Court is the request of Michael Doukas Associates (“Doukas”) for immediate payment of an allowed administrative expense claim and the Debtor’s objection thereto. For the reasons set forth below, we grant Doukas’ request and direct the Debtor to pay Doukas $136,196.02.
I. BACKGROUND
The Debtor is one of the world’s largest hat retailers. Pre-petition, Doukas and the Debtor entered into a service сontract pursuant to which Doukas digitally photographed each of the Debtor’s hats so that the digital pictures could be placed on the Debtor’s website. The agreement provided that the Debtor would remit a one-time payment to Doukas in exchange for granting the Debtor permanent rights to use the pictures. Pre-petition, the Debtor downloaded the photographs from Doukas to the Dеbtor’s website and the Debtor has continued to use Doukas’ pictures on their website since the filing of the Debtor’s petition on January 4, 2001.
On February 2, 2001, Doukas filed a motion seeking an order either (a) lifting the automatic stay to pursue a suit for
At the conclusion of the hearing, the Debtor asserted that it believed that Dou-kas was liable tо the estate for a preference and asked for a continuance to permit it to determine the amount. We granted a one-week continuance to permit the parties to determine the facts and see if a consensual resolution was possible. The Debtor subsequently filed an adversary proceeding pursuant to section 547 against Doukas seeking recovery of $139,000. At the continued hearing on Doukas’ administrative claim, held on March 23, 2001, the Debtor asserted that, pursuant to section 502(d), it need not remit any payment to Doukas until Doukas repays the asserted preference.
At the сonclusion of the hearing, we directed the parties to submit post-argument briefs.
II. JURISDICTION
This Court has jurisdiction over this Motion, which is a core proceeding pursuant to 28 U.S.C. § 1334 and § 157(b)(2)(A), (B), and (O).
III. DISCUSSION
The Debtor asserts that no administrative claim can be allowed or paid to Dou-kas until Doukas satisfies the preference claim the Debtor has against him. The Debtor relies on section 502(d) which provides:
Notwithstanding subsections (a) and (b) of this section, the court shall disallow any claim of any entity from which property is recoverable under section 542, 543, 550, or 553 of this title or that is a transferee of a transfer avoidable under section 522(f), 522(h), 544, 545, 547, 548, 549, or 724(a) of this titlе, unless such entity or transferee has paid the amount, or turned over any such property, for which such entity or transferee is liable under section 522(i), 542, 543, 550, or 553 of this title.
In response, Doukas cites Judge Walsh’s decision in Camelot Music, Inc. v. MHW Advertising and Public Relations, Inc. (In re CM Holdings, Inc.), slip, op., Adv. No. 97-9(PJW), (Bankr.D.Del. August 28, 2000). In CM Holdings, the Court concluded that administrative expense claims “are not within the purview of § 502(d).” Id. at 34-38. In so holding, the Court examined the context in which section 502(d) applies to some, but not all, post-petition claims. Further, the Court considered a number of Code provisions which distinguish between administrative and other types of claims.
First, the Court applied the statutory interpretation doctrinе of
expressio unius est exclusio alterius.
3
Section 502
shall be allowed under subsection (a), (b), or (c) of this section or disallowed subsection (d) of this section, the same as if the claim had become fixed before the date of filing of the petition.
The result is that although those claims arise post-petition, they are treated as pre-petition claims and section 502(d) expressly applies. The CM Holdings Court concluded that, because section 502(d) expressly applies to some рost-petition claims, it suggests that section 502(d) was not intended to apply to every post-petition claim. Id. at 34-36.
Second, the CM Holdings Court examined sections 101(10), 343(d) and 501 which distinguish between pre-petition, post-petition, and administrative claims. Id. at 36-38. Those differencеs, the Court concluded, demonstrate the preferred treatment which administrative claims receive under the Code. The Court found that applying section 502(d) would subvert the priority (and therefore the incеntive for potential creditors to do business with debtors) which the Code provides to administrative claims.
The Debtor’s brief focuses on two issues. First, the Debtor asserts that CM Holdings was incorrectly decided, and second, the Debtor asserts that Doukas’ claim arose pre-petition but became due post-petition. Therefore, its claim should be treated like a pre-petition claim even if it is classified as an administrative claim.
The Debtor asserts that applying section 502(d) to all administrative expense claims is not inconsistent with the express application of section 502(d) to some of the claims. The сase upon which the Debtor primarily relies is
Tidwell v. Atlanta Gas Light Co. (In re Georgia Steel, Inc.),
We decline to follow
Georgia Steel.
Rather, we agree with Judge Walsh’s analysis in
CM Holdings
that administrative expense claims are accorded special treatment under the Bankruptcy Code and are not subject to section 502(d). In particular, we conclude that Judge Walsh’s statutory analysis is correct. Congress’ inclusion of five post-petition claims to which section 502(d) exprеssly applies (none of which are applicable here) demonstrates that section 502(d) does not
The Debtor additionally argues that Doukas’ claim is a pre-petition claim and, therеfore, should be treated like any other pre-petition claim. The Debtor relies upon
In re Eye Contact,
There is an additional reason to overrule the Debtor’s objection. The Debtor does not have a final judgment on its preference complaint. To disallow a claim under section 502(d) requires a judicial determination that a claimant is liable.
See, e.g., Creditors of Melon Produce, Inc. v. Braunstein,
IV. CONCLUSION
For the foregoing reasons, we grant Doukas’ request for immediate payment of an allowed administrative expense claim.
. This Opinion constitutes the findings of fact and conclusions of law of the Court pursuant to Federal Rule of Bankruptcy Procedure 7052, which is made applicable to contested matters by Federal Rule of Bankruptcy Procedure 9014.
Notes
. This was less than the one-time payment provided in the parties’ contract and was calculated on the percentage of the photographs which Doukas proved the Debtor had actually used post-petition.
. This translates as: to express or include one thing is to exclude the other. Black's Law Dictionary 602 (7th ed. 1999).
. See 11 U.S.C. § 502(a), (b) & (c). See also, section 503 which defines post-petition claims.
. Section 57g provided:
The claims of creditors who have received or acquired preferences, liens, conveyancеs, transfers, assignments or encumbrances, void or voidable under this title, shall not be allowed unless such creditors shall surrender such preferences, liens, conveyances, transfers, assignments, or encumbrances.