Opinion ID: 1269674
Heading Depth: 2
Heading Rank: 1

Heading: Hall transaction

Text: The Trustee sought to avoid transfers that Consolidated made to Enodis within one year of its bankruptcy filing under 11 U.S.C. §§ 547 and 548. The district court withdrew the reference on these claims. Under § 548, the Trustee sought to recover $7,000,000 that Consolidated transferred to Enodis in connection with Hall's purchase of Consolidated in January 1998. [5] The Trustee also alleged that between May 28, 1997 and December 30, 1997, Consolidated transferred $15,815,582.36 into accounts controlled by Enodis. During this period, Enodis made transfers from its accounts on Consolidated's behalf, and the Trustee sought to recover $369,559.35, the difference between Consolidated's deposits and the amount Enodis spent on its behalf. In order to prevail on a fraudulent transfer claim under § 548(a), a trustee must establish that the debtor transferred an interest in property within one year of the petition date, that the debtor received less than reasonably equivalent value in exchange for the transfer and that the debtor was insolvent or was rendered insolvent as a result of the transfer. 11 U.S.C. § 548(a)(1)(B). The Trustee also sought to avoid Consolidated's January 6, 1998 transfer of $108,500 to Enodis as a preference under § 547. A trustee may avoid a transfer under § 547 if it (1) was made to or for the benefit of a creditor, (2) was for or on account of an antecedent debt, (3) was made while the debtor was insolvent, (4) was made between ninety days and one year before the petition was filed and (5) allowed the creditor to receive more than it otherwise would have. 11 U.S.C. § 547(b). Both parties moved for summary judgment on these claims and the court granted judgment for the Trustee. Summary judgment is appropriate where, viewing the evidence and construing all reasonable inferences in favor of the non-moving party, the court concludes that there is no genuine issue for trial. Jordan v. Summers, 205 F.3d 337, 341-42 (7th Cir.2000). A genuine issue for trial exists only when a reasonable jury could find for the party opposing the motion based on the record as a whole. Roger v. Yellow Freight Sys., Inc., 21 F.3d 146, 149 (7th Cir.1994). We review the grant of summary judgment de novo. Moser v. Ind. Dep't of Corr., 406 F.3d 895, 900 (7th Cir.2005). The district court concluded that when Consolidated transferred money to Enodis in connection with the Hall transaction several months before Consolidated filed for bankruptcy, it was insolvent. In re Consolidated Indus. Corp., 292 B.R. 354, 359-61 (N.D.Ind.2002). The court also concluded that Consolidated received no value as a result of the transaction. Id. at 359. Therefore, the court concluded, the Trustee could avoid the $7 million and the $369,559 amounts under § 548. The court also determined that the $108,500 transfer from Consolidated to Enodis in January 1998 was a voidable preference under § 547. On appeal, Enodis challenges the court's determination that Consolidated was insolvent at the time of the transfers, claiming that the district court improperly weighed evidence in granting summary judgment for the Trustee. We agree. In concluding that Consolidated was insolvent, the court relied on Consolidated's internal financial statements. Id. at 360. In opposing summary judgment, Enodis proffered a draft audit as evidence that Consolidated was solvent prior to the Hall transaction. The district court rejected the audit's evidentiary value, stating that [a]n uncompleted draft is not better evidence of the fair value than the statements prepared by Consolidated and sworn to by the highest manager of accounting of Consolidated. Id. at 361. Enodis also submitted a report by its expert, Keith Gardner. The court noted that inconsistencies existed between Gardner's deposition testimony and the conclusion he reached in his expert report and appears to have disregarded his report. Id. at 360. On appeal, the Trustee defends the district court's solvency ruling, asserting that the draft audit had not been authenticated and was excludable as unreliable hearsay evidence. But the Trustee did not make this argument before the district court and thus has waived it. Zayre Corp. v. S.M. & R. Co., 882 F.2d 1145, 1150 (7th Cir.1989) (An evidentiary objection not raised in the district court is waived on appeal . . . and this rule holds as true for a summary judgment proceeding as it does for a trial.) (internal citation omitted). The Trustee also argues that remand would be pointless because during the trial before the bankruptcy court, the author of the draft audit testified that if he had completed it, it would have shown that Consolidated was insolvent. When we review a district court's grant of summary judgment, our review is limited to the information that was before the court when it made its ruling. Hildebrandt v. Ill. Dep't of Natural Res., 347 F.3d 1014, 1024 (7th Cir.2003) (citing Harrods Ltd. v. Sixty Internet Domain Names, 302 F.3d 214, 242 (4th Cir.2002); Chapman v. AI Transp., 229 F.3d 1012, 1028 (11th Cir. 2000)). Thus, we will not consider the testimony that was elicited at trial. With respect to the district court's treatment of the defendant's expert's report, the court appears to have discredited his report in part because of inconsistencies with his deposition testimony. But credibility determinations are not a matter for summary judgment. Washington v. Haupert, 481 F.3d 543, 550 (7th Cir.2007). Viewing the evidence in the light most favorable to Enodis, as we must on summary judgment, we conclude that Enodis adduced evidence sufficient to raise a genuine issue of material fact as to Consolidated's solvency in the year prior to the filing of the bankruptcy petition. Enodis contends that the district court should have entered summary judgment for Enodis on the fraudulent transfer issue because Consolidated received reasonably equivalent value in exchange for the challenged transfers and that we should enter judgment in its favor. Enodis faults the district court for failing to view Consolidated's transfers to Enodis and transfers made by Enodis as part of a single, integrated transaction in which Consolidated received reasonably equivalent value in exchange for the Hall transaction transfers. But Enodis did not make this argument before the district court and we will not consider it for the first time on appeal. See Republic Tobacco v. N. Atl. Trading Co., 381 F.3d 717, 728 (7th Cir. 2004); 10A WRIGHT, MILLER & KANE, FEDERAL PRACTICE AND PROCEDURE § 2716 (3d ed.1998). Moreover, the Trustee raised alternative theories of recovery, namely, that he could recover the transfers as preferences or as actual fraudulent transfers. The district court did not address these theories, precluding entry of summary judgment for Enodis. Chicago College of Osteopathic Med. v. George A. Fuller Co., 719 F.2d 1335, 1340-41 (7th Cir.1983). We reverse the court's entry of summary judgment for the Trustee and remand for trial as to the Trustee's preference and fraudulent transfer claims. [6]