Court Opinion

ID: 3029556
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:43:01.931536+00
Date Added: 2024-06-11T10:44:08.677489
License: Public Domain

United States Court of Appeals
                         FOR THE EIGHTH CIRCUIT
                                 ___________

                                 No. 02-1389
                                 ___________

In re: Laclede Steel Company,         *
                                      *
               Debtor.                *
____________________                  *
                                      *
Laclede Steel Company,                * Appeal from the United States
                                      * Bankruptcy Appellate Panel.
                  Appellee,           *
                                      *      [UNPUBLISHED]
      v.                              *
                                      *
Concast Canada, Inc.,                 *
                                      *
                  Appellant.          *
                                 ___________

                            Submitted: September 9, 2002

                                Filed: September 23, 2002
                                 ___________

Before LOKEN, FAGG, and RILEY, Circuit Judges.
                            ___________

PER CURIAM.

      Laclede Steel Company (Laclede) filed for bankruptcy protection and sought
to avoid preferential transfer payments totaling $74,851 recently made to Concast
Canada, Incorporated (Concast). Concast replied the payments were made in the
ordinary course of business, thus were not avoidable preferential transfers. The
bankruptcy court found the ordinary course of business exception did not apply, and
Laclede could avoid the payments. Concast appealed and the Bankruptcy Appellate
Panel (BAP) affirmed. Concast Canada, Inc. v. Laclede Steel Co. (In re Laclede Steel
Co.), 271 B.R. 127 (B.A.P. 8th Cir. 2002). Concast now appeals to this Court.
Having reviewed the bankruptcy court’s findings of fact for clear error and
conclusions of law de novo and deferring to the BAP’s conclusions, we affirm.
Gateway Pac. Corp. v. Expeditors Int’l of Wash., Inc. (In re Gateway Pac. Corp.), 153
F.3d 915, 917 (8th Cir. 1998).

       Section 547(b) of the Bankruptcy Code provides that transfers made by the
debtor during the ninety-day period before a bankruptcy petition was filed may be
avoided as a “preference.” 11 U.S.C. § 547(b) (2000). Avoidance may be prevented
if three criteria are proved by a preponderance of the evidence: (A) the transfer paid
a debt that was incurred in the ordinary course of business; (B) the transfer was made
in the ordinary course of business between the debtor and the transferee; and (C) the
transfer was made according to ordinary business terms. 11 U.S.C. § 547(c)(2)
(2000); Gateway, 153 F.3d at 917. The only issue on appeal is whether the transfer
was made in the ordinary course of business between Laclede and Concast. 11 U.S.C.
§ 547(c)(2)(B).

       Because no precise legal test exists, resolution of the ordinary course of
business issue requires a peculiarly factual analysis. Harrah’s Tunica Corp. v. Meeks
(In re Armstrong), 291 F.3d 517, 527 (8th Cir. 2002); Gateway, 153 F.3d at 917. The
challenged transactions are within the ordinary course of business if the transfers
made during the preference period were consistent with other transfers made during
the history of Laclede’s relationship with Concast. Id. As the bankruptcy court and
BAP opinions point out, although Concast routinely accepted late payments from
Laclede, the challenged transfers were “excrutiatingly late.” During the year before
the preference period, the average late period was 52 days, and the latest payment was
70 days late. In contrast, the payments made during the preference period were each

                                         -2-
177 days late, which is a 237% increase in lateness of payments during the preference
period. Because the extent of the delay in payments is not consistent with Laclede’s
ordinary delay in paying Concast, the bankruptcy court and BAP correctly determined
the payments made during the preference period were not made in the ordinary course
of business and thus were avoidable. Gateway, 153 F.3d at 918. We see no need to
address Concast’s arguments under the four-factor test from Sulmeyer v. Suzuki (In
re Grand Chevrolet), 25 F.3d 728, 732 (9th Cir. 1994). The test Concast urges us to
adopt is not controlling law in this Circuit nor is it helpful to the disposition of this
case.

      We affirm for the reasons stated by the bankruptcy court and the BAP. See 8th
Cir. R. 47B.

      A true copy.

             Attest:

                     CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

                                          -3-