Source: http://ar.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20180328_0000870.EAR.htm/qx
Timestamp: 2019-04-19 10:40:25+00:00

Document:
J. LEON HOLMES, UNITED STATES DISTRICT JUDGE.
This is an adversary proceeding commenced by Chapter 7 bankruptcy trustee Randy Rice in bankruptcy court to recover as an avoidable preference a $71, 957.10 payment that Prairie Gold Farms received from the debtor, Turner Grain, during the 90 days prior to Turner Grain filing a voluntary Chapter 11 petition (later converted to a Chapter 7 proceeding). The defendants moved to withdraw the reference, Rice did not respond, and the Court granted the motion to withdraw the reference on August 1, 2017. Document #1. The parties have filed cross-motions for summary judgment pursuant to Federal Rule of Civil Procedure 56. Documents #8 and #11. For the following reasons, the Trustee's motion is denied and the defendants' motion is granted.
Turner Grain was an Arkansas grain brokerage corporation. Frank Prislovsky is a farmer and a partner in Prairie Gold Farms, an Arkansas general partnership. Turner Grain regularly purchased grain from the defendants. Karen Marshall of Hurley & Associates Agri-Marketing Centers of Charleston, Inc. helps Prairie Gold Farms market its grain and sell it for the highest available price. Turner Grain and Prairie Gold Farms entered into two contracts on May 7, 2014. Document #12-1. Pursuant to one contract, Prairie Gold Farms agreed to sell 5, 000 bushels of wheat to Turner Grain, who agreed to pay $6.78 per bushel. Id. at 1. Pursuant to the other contract, Prairie Gold Farms agreed to sell 5, 000 bushels of wheat to Turner Grain, who agreed to pay $7.09 per bushel. Id. at 2. Both contracts include a notation: “Booked via Karen Marhsall Hurley & Associates, E-mailed to Karen.” Document #12-1. Both contracts provide that shipment was expected to begin anytime from June 1, 2014 through July 31, 2014. Id.
The record indicates that Prairie Gold Farms delivered the following shipments of wheat to Turner Grain. On July 21, 2014, Prairie Gold Farms delivered 6, 533.67 bushels. Document #12-2 at 3-4. On August 4, 2014, Prairie Gold Farms delivered 4, 279.40 bushels. Id. at 1-2. The total number of bushels Prairie Gold Farms delivered to Turner Grain is 10, 813.07. Id. at 1-4. Then, on August 11, 2014, Turner Grain made a payment to Prairie Gold Farms in the amount of $71, 957.10. Document #8-1. The check is dated August 4, 2014. Id. at 2. Turner Grain filed a voluntary Chapter 11 bankruptcy petition on October 23, 2014. The case was converted to a Chapter 7 proceeding on May 15, 2015, and Rice was appointed trustee on May 12, 2016. The Trustee initiated this adversary proceeding on October 10, 2016. The defendants moved to withdraw the reference on July 14, 2017, and the Court granted the motion on August 1, 2017.
A court should grant summary judgment if the evidence demonstrates that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The moving party bears the initial burden of demonstrating the absence of a genuine dispute for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). If the moving party meets that burden, the nonmoving party must come forward with specific facts that establish a genuine dispute of material fact. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc). A genuine dispute of material fact exists only if the evidence is sufficient to allow a reasonable jury to return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The Court must view the evidence in the light most favorable to the nonmoving party and must give that party the benefit of all reasonable inferences that can be drawn from the record. Pedersen v. Bio-Med. Applications of Minn., 775 F.3d 1049, 1053 (8th Cir. 2015). If the nonmoving party fails to present evidence sufficient to establish an essential element of a claim on which that party bears the burden of proof, then the moving party is entitled to judgment as a matter of law. Id.
The statute governing this case-11 U.S.C. § 547-is intended to “promote equality of distribution to creditors in bankruptcy” by discouraging creditors from “racing to dismember a debtor sliding into bankruptcy.” In re Jones Truck Lines, Inc., 130 F.3d 323, 326 (8th Cir. 1997). Generally, the trustee may avoid any transfer of an interest of the debtor in property to or for the benefit of a creditor; for or on account of an antecedent debt owed by the debtor before such transfer was made; made while the debtor was insolvent on or within 90 days before the date of the filing of the petition. 11 U.S.C. § 547(b). However, the trustee may not avoid the transfer to the extent the transfer was a contemporaneous exchange for new value or made in the ordinary course of business. Id. at § 547(c). If the trustee can show that a transfer is avoidable under § 547(b), the burden shifts to the creditor to prove by a preponderance of the evidence that one of the § 547(c) exceptions applies. See In re Genmar Holdings, 776 F.3d 961, 964 (8th Cir. 2015).
The Trustee argues that the transfer is avoidable under § 547(b) and that the defendants have failed to create a genuine dispute of fact as to whether an exception applies. Document #10 at 3. The defendants argue that the Trustee has failed to create a genuine dispute of fact as to whether the transfer is avoidable under § 547(b) because the transfer was not made on account of an antecedent debt. The Bankruptcy Code defines “debt” as a “liability on a claim.” Laws v. United Mo. Bank of Kansas City, N.A., 98 F.3d 1047, 1049 (8th Cir.1996) (citing 11 U.S.C. § 101(12)). “A debt is ‘antecedent' if it was incurred before the allegedly preferential transfer.” In re Jones Truck Lines, 130 F.3d at 329. “A debt is incurred ‘on the date upon which the debtor first becomes legally bound to pay.' ” Id. (quoting In re Iowa Premium Serv., Co., 695 F.2d 1109, 1111 (8th Cir.1982) (en banc)). Turner Grain became obligated to pay on July 21 and August 4, the dates the wheat was delivered. Turner Grain paid on August 4, after the deliveries, so the payment was made on account of an antecedent debt. The transfer is avoidable unless the defendants prove an exception applies. See In re Armstrong, 291 F.3d 517, 522 (8th Cir. 2002). The defendants argue that, even if the transfer was made on account of an antecedent debt, they have met their burden under § 547(c) to prove that the transfer was a contemporaneous exchange for new value and made in the ordinary course of business. Document #12 at 2.

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