Dill v. Mataya

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
INDIAN CAPITOL DISTRIBUTING, INC.
Debtor. No. 11-09-11558 SA
CRAIG H. DILL, Chapter 11 Trustee,
Plaintiff,
v. Adv. No. 09-1119 S
MICHAEL P. MATAYA,
Defendant.
MEMORANDUM OPINION AFTER
TRIAL ON THE MERITS
This matter came before the Court for trial on the merits of
Craig H. Dill’s (“Trustee” or “Plaintiff”) Complaint for
Avoidance of Postpetition Transfer under 11 U.S.C. § 549. For
the reasons set forth below, the Court will issue a Judgment in
favor of Plaintiff.1
DISCUSSION
Under § 549, a trustee may avoid a transfer of estate
property that occurs after the commencement of the case without
court approval. Hill v. Kinzler (In re Foster), 275 F.3d 924,
926 (10th Cir. 2001). To recover under that section, the trustee
must prove: “(1) a transfer, (2) of property of the estate, (3)
This Court has subject matter jurisdiction and personal	1
jurisdiction under 28 U.S.C. §§ 157 and 1334. This is a core
proceeding. 28 U.S.C. § 157(b)(2)(A). See also Pollner v.
Connecticut Bank and Trust Co., N.A. (In re Harbor Park Assoc.
Ltd. Partnership), 112 B.R. 555, 559 (S.D.N.Y. 1990)(A post-
petition claim against a non-creditor that affects administration
of the estate is a core proceeding.) This Memorandum Opinion
constitutes the Court’s findings of fact and conclusions of law
as required by Federal Rule of Bankruptcy Procedure 7052.
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made after commencement of the case, and (4) that is not
authorized under the Bankruptcy Code or by the bankruptcy court.”
Devan v. Phoenix American Life Ins. Co. (In re Merry-Go-Round
Enter., Inc.), 400 F.3d 219, 224 (4th Cir. 2005). The statute
provides:
§ 549. Postpetition transactions.
(a) Except as provided in subsection (b) or (c) of this
section, the trustee may avoid a transfer of property
of the estate--
(1) that occurs after the commencement of the case; and
(2)(A) that is authorized only under section 303(f)
or 542(c) of this title; or
(B) that is not authorized under this title or by
the court.
11 U.S.C. 549(a). Bankruptcy Rule 6001 discusses the burdens of
proof of authorization when a postpetition transfer is
challenged:
Rule 6001. Burden of Proof as to Validity of
Postpetition Transfer.
Any entity asserting the validity of a transfer under §
549 of the Code shall have the burden of proof.
See also Merry-Go-Round, 400 F.3d at 226 (Defendant had not met
its burden of proving that post-petition interest payments
qualified as “ordinary course of business” transactions that
would have been authorized under 11 U.S.C. § 1107.)(citing
Fed.R.Bankr.P. 6001.)
FACTS
1. Indian Capitol Distributing, Inc. (“Debtor”) filed a
-2-
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voluntary Chapter 11 proceeding on April 14, 2009. (Doc 1, main
case).
2. Exhibit 42 consists of a copy of a check # 2272 that
Defendant on direct adverse examination admitted contained his
signature, and was drawn on account xx-19212 which was his
personal checking account.
3. Defendant also testified that account number xx-11208 was
the Debtor’s general checking account.
4. Exhibit 40 shows three transfers made after April 14, 2009,
from account xx-11208 into account xx-19212. The transfers total
$29,017.48.
5. Defendant was unaware of any attempt to obtain court
approval for these transfers.
6. Defendant made no attempt to show any authorization for the
transfers.
7. Defendant rested his case immediately after Plaintiff
rested.
8. The property transferred was property of the estate because
it consisted of funds in Debtor’s checking account.
9. Exhibit 5 is a cash collateral order filed in Debtor’s case
on April 16, 2009. It does not authorize payments to Defendant.
See main case, doc 10.
10. Exhibit 6 is a cash collateral order filed in Debtor’s case
on May 18, 2009. Paragraph D of that order prohibits payments to
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Defendant.
11. On May 22, 2009 the Court conducted a status conference at
which it orally denied any further use of cash collateral. See
Exhibit 7 (Minutes of May 22, 2009 status conference.)
12. On May 28, 2009 the Court orally denied further use of cash
collateral. See Exhibit 8 (Minutes of May 28, 2009 hearing.)
13. Exhibit 9 is an Order Prohibiting Use of Cash Collateral
filed in Debtor’s case on May 29, 2009.
14. The docket contains no other orders authorizing payment or
transfers to Defendant.
CONCLUSIONS OF LAW
Defendant received three transfers from the Debtor after the
filing of the case. The property transferred was property of the
estate. The transfers were not authorized by the Bankruptcy Code
or by Court order. Defendant did not meet his burden of proof to
demonstrate that the transfers were authorized. The Trustee is
entitled to a return of $29,017.48 consisting of unauthorized
postpetition transfers. The Court will enter a judgment under	2
Defendant filed a personal bankruptcy under Chapter 7,	2
Case 7-10-13628-SA, after the trial of this matter. The
automatic stay was partially modified in that case by a
stipulated order entered on September 16, 2010 that allowed
liquidation of this claim but no collection activities without
further Court order.
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sections 549, 550, and 551 against Defendant avoiding the
transfers and preserving them for the estate.
Honorable James S. Starzynski
United States Bankruptcy Judge
Date Entered on Docket: September 29, 2011
Copies to:
James A Askew
Arland & Associates, LLC
201 3rd ST NW, STE 505
Albuquerque, NM 87102-3331
William F. Davis
6709 Academy NE, Suite A
Albuquerque, NM 87109
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