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FILED

APR 06 2018

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

ORDERED PUBLISHED

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. NC-17-1186-BSTa

)

CRESTA TECHNOLOGY CORPORATION,) Bk. No. 16-50808-MEH

)

Debtor. ) Adv. No. 17-05030-MEH

 )

)

MATTHEW LEWIS, )

)

Appellant, ) 

) 

v. ) O P I N I O N

) 

DORIS A. KAELIN, Chapter 7 )

Trustee, )

)

Appellee. )

______________________________)

Submitted Without Argument on January 25, 2018 

Filed - April 6, 2018

Appeal from the United States Bankruptcy Court

for the Northern District of California

Honorable M. Elaine Hammond, Bankruptcy Judge, Presiding

 

Appearances: Appellant Matthew Lewis, pro se on brief; Gregg S. 

Kleiner of Rincon Law LLP on brief for appellee, 

Doris A. Kaelin, Chapter 7 Trustee. 

 

 

Before: BRAND, SPRAKER and TAYLOR, Bankruptcy Judges.
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BRAND, Bankruptcy Judge:

This case brings to mind the adage: “No good deed goes

unpunished.” Appellant Matthew Lewis appeals a judgment under

§§ 549(a)1 and 550(a)(1) avoiding a postpetition transfer of

$10,000 as reimbursement for payment of the debtor’s legal fees

and ordering recovery of the funds from Lewis. The issue before

the bankruptcy court was whether an ordinary check delivered to

the creditor prepetition, but honored postpetition, was

transferred on the date of delivery or honor for purposes of 

§ 549(a). Relying on Barnhill v. Johnson, 503 U.S. 393 (1992),

the bankruptcy court determined that the payment was transferred

when the check was honored by the debtor’s bank. 

This is an issue of first impression before any appellate

court in the Ninth Circuit since Barnhill. We agree with the

bankruptcy court, and we AFFIRM. 

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A. The check

On March 16, 2016, Lewis, in his role as Chief Financial 

Officer of the debtor, Cresta Technology Corp. (“Cresta”), issued

a check from Cresta’s bank account to Patrick Castello, Cresta’s

bankruptcy attorney, as payment for representing Cresta in its

bankruptcy case. Castello refused the check in favor of a

cashier’s check. 

On March 17, 2016, Lewis delivered to Castello a cashier’s

1 Unless specified otherwise, all chapter, code and rule

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. 

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check drawn on Lewis’s personal bank account for Cresta’s legal

fees, with the agreement that Cresta would reimburse Lewis. 

On March 18, 2016, Cresta (via Lewis as CFO) issued a check

for $10,000 (“Check”) to Lewis from Cresta’s bank account. Later

that same day, Cresta filed its chapter 7 bankruptcy petition,

signed by Lewis. Doris Kaelin was appointed as the chapter 7

trustee.

The Check cleared Cresta’s bank account on March 22, 2016,

four days after the petition date. 

B. The adversary proceeding against Lewis

Trustee filed a complaint against Lewis, seeking to avoid the

$10,000 payment as a postpetition transfer under § 549(a) and to

recover the funds for the benefit of the estate under § 550(a)(1). 

On summary judgment, Trustee argued that a “transfer” by an

ordinary check for purposes of § 549 occurs when the check clears

the debtor’s bank account, not when it is delivered to the

creditor. She relied on Barnhill, 503 U.S. at 394-95 and Mora v.

Vasquez (In re Mora), 199 F.3d 1024, 1027 (9th Cir. 1999).2 In

contrast, Lewis argued that § 547 applied here, not § 549. In

cases of check payments for purposes of § 547(c)(1), Lewis argued,

the “date of delivery” governs when a transfer occurs. Because he

received the Check prepetition and it was a contemporaneous

2 Mora did not address this precise issue. The issue there

was whether, under § 549(a), a transfer of an interest in a

cashier’s check occurs at the time the check is mailed. 199 F.3d

at 1025. Applying the rationale of Barnhill, the Ninth Circuit

Court of Appeals held that the act of “mailing” did not constitute

“delivery” for purposes of effectuating a transfer under § 549(a);

delivery does not occur until the cashier’s check is in the

physical possession and control of the payee. In re Mora, 199 at

1027. 

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exchange of new value between him and Cresta, Lewis asserted that

the Check was not an avoidable postpetition transfer under 

§ 549(a) but rather a non-avoidable preference under § 547(c)(1).

After a hearing, the bankruptcy court granted Trustee summary

judgment, determining that the “transfer” to Lewis occurred on

March 22, 2016 — the date the Check was honored by Cresta’s bank. 

Therefore, because the Check was transferred postpetition without

authorization from the court or the Code, it was an avoidable

postpetition transfer under § 549(a) recoverable by the estate. 

The court entered a money judgment against Lewis and in favor of

Trustee for $10,000 plus costs. Lewis timely appealed. 

II. JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334

and 157(b)(2)(H). Because the judgment resolved all claims

asserted in the complaint, it was a final appealable order. 

Therefore, we have jurisdiction under 28 U.S.C. § 158.

III. ISSUES

1. Did the bankruptcy court err in determining that § 549 

applied to the Check and not § 547? And did it err in determining

that the “date of honor” rule applied? 

2. Did the bankruptcy court err in granting Trustee summary 

judgment?

IV. STANDARDS OF REVIEW

We review de novo the bankruptcy court’s summary judgment

ruling. Ulrich v. Schian Walker, P.L.C. (In re Boates), 551 B.R.

428, 433 (9th Cir. BAP 2016). The determination of when an

avoidable postpetition transfer of estate property occurs is a

question of law also reviewed de novo. In re Mora, 199 F.3d at

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1026 (citing Barnhill, 503 U.S. at 397). 

 When we review a matter de novo, we give no deference to the

bankruptcy court’s ruling. In re Boates, 551 B.R. at 433.

V. DISCUSSION 

A. The bankruptcy court did not err by applying § 549(a) to the

Check and determining that the date of honor rule applied.

Lewis contends that the bankruptcy court committed reversible

error because it applied § 549 and not § 547. Precisely, he

argues that, because the Check was delivered prepetition, 

§ 549(a)3 is inapplicable, and the court should have applied the

affirmative defenses available for a preferential transfer under 

§ 547(c). 

Section 547(b) permits a bankruptcy trustee to recover

preferential payments from a debtor to a creditor made within the

ninety days preceding the filing of the bankruptcy. Section

547(c) establishes various exceptions, or affirmative defenses, to

§ 547(b)’s general rule. For example, § 547(c)(1) provides an

exception for transfers that are part of a contemporaneous

exchange for new value between a debtor and creditor. Section

547(c)(1) provides that the trustee may not avoid a transfer to

the extent the transfer was: (A) intended by the debtor and the

creditor to or for whose benefit such transfer was made to be a

contemporaneous exchange for new value given to the debtor; and

(B) in fact was a substantially contemporaneous exchange. This is

3 For purposes here, § 549(a) provides that the trustee may

avoid a transfer of property of the estate that occurs after the

commencement of the case and that is not authorized under the Code

or by the court. § 549(a)(1), (a)(2)(B). 

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the defense Lewis asks us to apply here.4

In Barnhill, the United States Supreme Court held that under

§ 547(b) the “transfer” of an ordinary check does not occur until

the check is honored by the debtor’s bank. 503 U.S. at 394-95. 

Barnhill overruled Ninth Circuit law, which held that for purposes

of § 547(b) a “transfer” occurs at the time an ordinary check is

delivered to the creditor, not on the date the check is honored. 

See Robert K. Morrow, Inc. v. Agri-Beef Co. (In re Kenitra, Inc.),

797 F.2d 790, 791 (9th Cir. 1986), abrogated by Barnhill, supra. 

The Ninth Circuit has since followed the holding of Barnhill. See

MBNA Am. v. Locke (In re Greene), 223 F.3d 1064, 1067 n.3 (9th

Cir. 2000) (a “transfer” for purposes of § 547(b) occurs when the

check is honored by the debtor’s bank). 

Without deciding the issue, Barnhill expressly noted that, in

the context of the affirmative defenses available under § 547(c),

the Courts of Appeals that have considered the issue were

unanimous in concluding that a “date of delivery” rule should

apply to ordinary check payments for purposes of § 547(c). 503

U.S. at 402 n.9. That was, and still appears to be, the rule in

the Ninth Circuit. See Kupetz v. Elaine Monroe Assocs., Inc. (In

re Wolf & Vine), 825 F.2d 197, 200-202 (9th Cir. 1987) (for

purposes of determining a contemporaneous exchange, a transfer

made by check is deemed to occur at the time of delivery as long

as it is presented for payment within a reasonable time); Shamrock

Golf Co. v. Richcraft, Inc., 680 F.2d 645, 646 (9th Cir. 1982);

Gold Coast Seed Co. v. Spokane Seed Co. (In re Gold Coast Seed

4 It is undisputed that Lewis was a creditor of the estate. 

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Co.), 30 B.R. 551, 553 (9th Cir. BAP 1983). 

Lewis improperly conflates the affirmative defenses available

under § 547(c) with § 549(a), which has its own exceptions for

postpetition transfers. See § 549(b), (c). In preference cases

under § 547, the events constituting the transfer between the

debtor and creditor were completed prior to the bankruptcy filing. 

In other words, as relevant here, both the delivery and honoring

of the check occurred prepetition. The only question remaining in

such a case is whether the ordinary check was honored within the

90-day (or in the case of an insider, one year) reach-back period. 

That is not this case. 

Here, the transaction between Cresta and Lewis straddles the

date of the commencement of the case. Lewis received the Check

prepetition, but it was honored postpetition. See In re Plaza

Hotel Corp., 111 B.R. 882, 887 (Bankr. E.D. Cal. 1990) (noting

that a bankruptcy filing before a check is honored is very

different from a transaction in which the payment was actually

completed prepetition; in the former case, the transaction is

incomplete for not having been paid due to the account now

belonging to the estate). Thus, neither § 547(b) nor the

affirmative defenses available under § 547(c) apply. 

Section 549(a) permits the trustee to avoid a postpetition

transfer of estate property, and § 550(a)(1) permits the trustee

to recover the amount of the avoidable transfer from the initial

transferee. To recover under § 549, the trustee must show that

the postpetition transfer occurred after the filing of the

bankruptcy petition and that the transfer was not authorized by

either the bankruptcy court or the Code. § 549(a); In re Mora,

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199 F.3d at 1026. 

The question, then, is whether the transfer from Cresta to

Lewis occurred before or after the bankruptcy petition was filed. 

That answer turns on whether the “transfer” of an ordinary check

occurs on the “date of delivery” or “date of honor” for purposes

of § 549(a). 

In cases where an ordinary check was delivered prepetition

but honored by debtor’s bank postpetition, several courts, postBarnhill, have determined that the pertinent date for “transfer”

is the date the check was honored. See Guinn v. Oakwood Props.,

Inc. (In re Oakwood Mkts., Inc.), 203 F.3d 406, 409 (6th Cir.

2000) (the only circuit court to address this issue after

Barnhill)5; Cont’l Mfg. Co. v. Sommers (In re Contractor Tech.,

Ltd.), 2006 WL 1118039, at *2 (S.D. Tex. Apr. 26, 2006); Wittman

v. State Farm Life Ins. Co. (In re Mills), 176 B.R. 924, 927 (D.

Kan. 1994); Sommers v. Katy Steel Co. (In re Contractor Tech.,

Ltd.), 343 B.R. 573, 577-79 (Bankr. S.D. Tex. 2006); In re

Dybalski, 316 B.R. 312, 316 (Bankr. S.D. Ind. 2004); Spear v. CEMA

Distrib. (In re Rainbow Music, Inc.), 154 B.R. 559, 561 (Bankr.

N.D. Cal. 1993). See also 5 Collier on Bankruptcy ¶ 549.04[2]

(Alan N. Resnick & Henry J. Sommer, eds., 16th ed. 2012). We

could not locate any authority to the contrary. 

These courts agree that Barnhill’s holding was not limited to

5 Although the Sixth Circuit in Oakwood Markets expressly

stated that Barnhill was not controlling, it held that “adoption

of the date of honor rule in the context of 11 U.S.C. § 549(a) is

appropriate because this rule encourages the prompt submission of

checks to the bank, and provides a date certain upon which parties

to the transfer can rely and upon which courts can base a ruling

in the event of litigation.” 203 F.3d at 409. 

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§ 547, given its application of the definition of “transfer” found

in § 101(54)6 and ruling that “[f]or purposes of payment by

ordinary check, therefore, a ‘transfer’ as defined by § 101(54)

occurs on the date of honor, and not before.” 503 U.S. at 400. 

The definitions in § 101 apply to all provisions of the Code, not

just § 547(b). See § 101 (“In this title the following

definitions shall apply”). See also In re Plaza Hotel Corp., 111

B.R. at 887 (checks that straddle the filing of the case — i.e., a

check that is delivered prepetition and honored postpetition — can

be recovered by the trustee from the payee as an unauthorized

postpetition transfer). 

Prior to Barnhill, we held that a transfer by ordinary check

occurs on the “date of delivery” for purposes of § 549. See

Tarver v. Trois Etoiles, Inc. (In re Trois Etoiles, Inc.), 78 B.R.

237, 239 (9th Cir. BAP 1987) (prepetition tender of check to

debtor’s bankruptcy attorney for legal fees honored postpetition). 

In so holding, we noted:

Although Shamrock Golf and its Ninth Circuit progeny

involved interpretations of ‘transfer’ under Section 547,

we find no reason to alter this Circuit’s definition of

‘transfer’ merely because the present case involves

Section 549. In the interests of uniformity and

consistency, we hold that a transfer by check occurs when

the check is received by the payee for purposes of Section

549. 

Id. (emphasis added). 

We conclude that our holding in Trois Etoiles has been

effectively overruled by the Supreme Court in Barnhill and is no

6 Section 101(54)(D) defines “transfer” to include any mode,

“of disposing of or parting with (i) property or (ii) an interest

in property.” 

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longer controlling precedent. See United States v. Lancellotti,

761 F.2d 1363, 1366 (9th Cir. 1985) (“When an intervening Supreme

Court decision undermines an existing precedent of the [Panel],

and both cases are closely on point, a three judge panel of this

court may reexamine our precedent to determine its continuing

authority”). See also In re Rainbow Music, Inc., 154 B.R. at 561

(determining that Barnhill overruled Trois Etoiles’s transfer-onreceipt rule for avoidance actions under § 549). 

At the time of Trois Etoiles, the “date of delivery” rule

controlled for § 547(b) in the Ninth Circuit. It is clear that

the Panel felt compelled to adopt the date of delivery rule for 

§ 549(a) in order for the two sections to be consistent with each

other, thereby facilitating the trustee’s ability to recover

transfers under either section and supporting the Code’s general

policy of equal distribution among creditors. To have held

otherwise would have created a period wherein transfers would be

unrecoverable. After Barnhill, however, the “date of delivery”

rule is no longer the law in this circuit with respect to

preferential transfers by ordinary check under § 547(b). 

In reaching its decision in Barnhill, the Supreme Court

reasoned that the debtor does not dispose of or part with the

funds subject to the check until the creditor cashes it, because:

“receipt of a check gives the recipient no right in the funds held

by the bank on the drawer’s account. Myriad events can intervene

between delivery and presentment of the check that would result in

the check being dishonored.” 503 U.S. at 399. Consequently, an

ordinary check does not transfer property of the estate until the

check is honored. Id.

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We are persuaded by the other courts that have addressed this

issue post-Barnhill; the Supreme Court’s rationale for when a

transfer occurs in the case of an ordinary check under § 547

applies with equal force to postpetition transfers under § 549. 

See also In re Mora, 199 F.3d at 1027 n.5 (not addressing this

precise issue but reasoning that, under Barnhill, the term

“transfer” under § 547(b) is analogous to § 549(a), and therefore

case law analyzing one is applicable to analysis under the other). 

We see no logical reason, and Lewis articulates none, for not

using the same test to determine the date of transfer for purposes

of both statutes. 

As courts have recognized, to apply the “date of honor” rule

to preferences and the “date of delivery” rule to postpetition

transfers creates a safe harbor for certain transfers by check. 

Ordinary checks delivered prepetition but honored postpetition

would be recoverable neither as a preference nor as a postpetition

transfer. See In re Mills, 176 B.R. at 927; In re Rainbow Music,

Inc., 154 B.R. at 561-62. That is not a result Congress could

have intended. 

B. The bankruptcy court did not err by granting Trustee summary

judgment.

Summary judgment is properly granted when no genuine issues

of disputed material fact remain, and, when viewing the evidence

most favorably to the non-moving party, the movant is entitled to

prevail as a matter of law. Fed. R. Civ. P. 56 (applicable in

adversary proceedings by Rule 7056); Celotex Corp. v. Catrett, 477

U.S. 317, 322-23 (1986). Material facts are those that may affect

the outcome of the case under applicable substantive law. 

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Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). And

issues are genuine only if the trier of fact reasonably could find

in favor of the nonmoving party on the evidence presented. Far

Out Prods., Inc. v. Oskar, 247 F.3d 986, 992 (9th Cir. 2001)

(citing Anderson, 477 U.S. at 248-49).

Here, the undisputed facts established that the Check was

honored postpetition on March 22, 2016, and that the payment made

by the Check was not authorized by the Code or the bankruptcy

court. Lewis articulated no defenses available under § 549(b) or

(c); they would not apply in any event. The undisputed facts

established the necessary elements for an avoidable postpetition

transfer under § 549. Because there were no genuine issues of

material fact in dispute, Trustee was entitled to judgment as a

matter of law. Accordingly, the bankruptcy court did not err in

granting her summary judgment and ordering recovery of the $10,000

(plus costs) from Lewis. 

VI. CONCLUSION

For the foregoing reasons, we AFFIRM.7

7 Lewis does not contest the bankruptcy court’s ruling under

§ 502(d) that his $19,000 claim be disallowed until the judgment

is paid to Trustee. Therefore, we do not address this issue. 

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