Opinion ID: 780461
Heading Depth: 2
Heading Rank: 4

Heading: Proceedings in the Lower Courts

Text: 10 The Trustee brought adversary proceedings against Ganis and Bank of the West under § 547(b) to avoid the three lien payoffs and the refund payment as preferential transfers. After granting summary judgment against both defendants on all the elements of § 547(b) and on the contemporaneous exchange for new value (new value) defense, § 547(c)(1), the bankruptcy court held separate trials on the issue of whether the transfers were made in the ordinary course of business (or ordinary course) pursuant to § 547(c)(2). If so made, these transfers would not have been avoidable. After the trials, the bankruptcy court issued a published combined opinion, taking judicial notice of the evidence presented in both cases. Anderson, 245 B.R. at 379 n. 1. 11 The bankruptcy court focused on § 547(c)(2)(C), the ordinary business terms prong of the ordinary course defense. The court found the testimony of David Russell (Russell), a Bank of the West vice-president and former RV dealer, to be most persuasive on the issue of lien payoff practices among RV dealers and lenders. Id. at 383. Ultimately, the court found that the payoffs would meet the ordinary course standard [1] if payoff is within 45 days of trade-in or, [2] if payoff is within 20 days of receipt of funds from the third party purchaser, and described the test as giving creditors two bites at the apple. Id. at 389. The bankruptcy court found that neither the trade-in nor consignment payoffs fit within either time frame and ordered Ganis and Bank of the West to return the funds to the Trustee. Both the district court and the BAP, in a published decision, affirmed the lien payoff findings and conclusions. 1 Ganis Credit Corp. v. Anderson (In re Jan Weilert R. V., Inc.), 258 B.R. 1, 7 (9th Cir.BAP 2001). 12 Regarding the refund payment on the new RV, the only witness to testify on ordinary course of business was Pamela Norton, a Bank of the West vice-president. Norton described Bank of the West's procedures for recovering double payments but provided no testimony on procedures followed by other lenders. Bank of the West argued that no additional evidence was necessary because no industry standard could be more stringent than immediate demand and repayment within three days. The bankruptcy court found the transfer to be within the ordinary course of business. The district court, however, reversed the finding on Trustee's cross-appeal, holding that Bank of the West failed to produce evidence of the standard practices other lenders in the industry use to recover double payments. 13 Ganis and Bank of the West both timely appealed to this court. We have jurisdiction pursuant to 28 U.S.C. § 158(d). We reverse the BAP, and we affirm in part and reverse in part the district court. II