Mid Ohio Petroleum Company et al v. Fifth Third Bank

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
In Re
MID OHIO PETROLEUM COMPANY
Debtor
LEONARD Z. EPPEL OF FINANCIAL
RESOURCE ASSOCIATES, INC. AS
ESTATE REPRESENTATIVE OF MID
OHIO PETROLEUM COMPANY
Plaintiff
vs.
FIFTH THIRD BANK
Defendant
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Case No. 02-16768
Chapter 11
Judge Hopkins
Adversary Case No. 04-1202
ORDER GRANTING SUMMARY JUDGMENT MOTION, IN PART,
AND DENYING SUMMARY JUDGMENT MOTION, IN PART
This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
Dated: August 24, 2005
____________________________________________________________
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Presently before the Court is a summary judgment motion (“Motion”) (Doc. 19) filed
by the Plaintiff, Leonard Z. Eppel, as estate representative (“Eppel”). By his complaint,
Eppel seeks to recover from the Defendant, Fifth Third Bank (“Bank”), $29,945.55 for
alleged preferential transfers and $62,252.62 for alleged postpetition transfers.
The Bank admits that it received certain payments from the Debtor during the
preference period and subsequent to the filing of the petition. The parties do not agree,
however, on the exact amount of the payments received. Accordingly, Eppel limits his
Motion to the payments that the Bank admits it received during these periods. The Bank
admits that it received $29,945.55 during the preference period and $40,011.35 after the
filing of the petition on September 10, 2002.
POSTPETITION TRANSFERS
Eppel must prove the following four elements to recover the postpetition transfers:
(1) a transfer; (2) of property of the estate; (3) made after the commencement of the case;
and (4) that is not authorized under the Bankruptcy Code or by the Bankruptcy Court. See
Devan v. Phoenix American Life Ins. Co. (In re Merry-Go-Round Enters. Inc.), 400 F.3d
219, 224 (4th Cir. 2005); Cohen v. KDC Fin. Servs., Inc. (In re Miller Mining, Inc.), 219
B.R. 219, 221-22 (Bankr. N.D. Ohio 1998). The record reflects that Eppel has sustained
his burden of proof. See Kebe Aff. at ¶ 4. Accordingly, Eppel is entitled to judgment with
respect to the $40,011.35 in postpetition transfers that the Bank admits it received.
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Adv. Case No. 04-1202
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PREFERENTIAL TRANSFERS
The elements of a preferential transfer are set forth in 11 U.S.C. § 547(b)(1)-(5).
Eppel bears the burden of proof on each. See § 547(g). The only § 547(b) element in
dispute is whether the Bank received more than it would have under a chapter 7
liquidation. See § 547(b)(5). The dispute concerns the value of two parcels of real
property that allegedly secure the debt to the Bank. The Bank argues that it would have
been fully secured under chapter 7 because the parcels are worth more than the debt.
Eppel argues that the value of the property is less than the total debt, thus rendering the
Bank an undersecured creditor.
There appears to be a genuine issue of material fact concerning the value of the
properties on the petition date. Eppel bases his valuation upon the price for which the
properties actually sold, importantly, however, subsequent to the date of filing. The Bank
also bases its valuation upon postpetition appraisals of the property. There is nothing in
the record that reflects the value of the property on the petition date.
In his reply brief, Eppel implies that Fifth Third bears the burden of proof on the
valuation issue. See Doc. 24 at 3 (“Fifth Third has no evidence from which the Court can
determine the values of the mortgaged properties as of the petition date”). However,
because the valuation issue serves to determine whether Fifth Third received more than
it would have under chapter 7 (i.e. § 547(b)(5)), Eppel bears the burden of proving the
same. See § 547(g). Eppel admits that “[n]o valuation exists as of the Petition Date.”
See Doc. 24 at 3. In the absence thereof, the parties have offered postpetition valuations
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as proof of the same. Yet, this creates an issue of fact that cannot be resolved on
summary judgment.
CONCLUSION
For the foregoing reasons, the Motion is: (1) GRANTED as to the undisputed
postpetition transfers in the amount of $40,011.35; and (2) DENIED as to the alleged
preferential transfers based upon a genuine issue of material fact under § 547(b)(5). This
action shall proceed to trial of all remaining issues currently set for September 8, 2005,
at 10:00 a.m.
Copies to:
James C. Frooman
jfrooman@lindhorstlaw.com
William B. Fecher
wbfecher@shselegal.com
jhager@shselegal.com
jwohlfrom@shselegal.com
U.S. Trustee
ustpregion09.ci.ecf@usdoj.gov
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