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USAA Federal Savings Bank v. Hope

United States District Court, M.D. Georgia, Macon Division

July 6, 2018

USAA FEDERAL SAVINGS BANK, Appellant,
v.
CAMILLE HOPE, CHAPTER 13 TRUSTEE, Appellee.

          ORDER

          MARC T. TREADWELL, JUDGE.

         In this appeal from the United States Bankruptcy Court for the Middle District of Georgia, USAA Federal Savings Bank contends the Bankruptcy Court, Judge Austin E. Carter presiding, erroneously granted summary judgment to the Trustee[1] in an adversary proceeding to avoid a transfer, specifically a security deed, in favor of Appellant USAA Federal Savings Bank. For the following reasons, the Bankruptcy Court's decision is AFFIRMED.

         I. STANDARD OF REVIEW[2]

         The Court has jurisdiction to hear this appeal pursuant to 28 U.S.C. § 158(a). In reviewing the decision of a bankruptcy court, a district court functions as an appellate court. Williams v. EMC Mortg. Corp. (In re Williams), 216 F.3d 1295, 1296 (11th Cir. 2000) (per curiam). Here, the Bankruptcy Court made no findings of fact, nor could it on a summary judgment motion, and the Bankruptcy Court's grant of summary judgment, including its interpretation and application of the Bankruptcy Code, is reviewed de novo. See In re Optical Technologies, Inc., 246 F.3d 1332, 1335 (11th Cir. 2001); Nordberg v. Arab Banking Corp. (In re Chase & Sanborn Corp.), 904 F.2d 588, 593 (11th Cir. 1990). This Court, therefore, owes no deference to the Bankruptcy Court's interpretation of the law or its application of the law to the facts. Goerg v. Parungao (In re Goerg), 930 F.2d 1563, 1566 (11th Cir. 1991).

         A movant is entitled to summary judgment upon showing “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a).[3] When the movant bears the burden of proof at trial, it must show there is no genuine dispute that it has met the elements of the claim or defense. See United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1438 (11th Cir. 1991). The non-movant may defeat a properly supported motion by producing “significant, probative evidence demonstrating the existence of a triable issue of fact.” Id. (quoting Chanel, Inc. v. Italian Activewear of Fla., Inc., 931 F.2d 1472, 1477 (11th Cir. 1991)). In other words, by proving that there is indeed a genuine dispute regarding a material fact. See id.

         “A factual dispute is genuine only if ‘a reasonable jury could return a verdict for the nonmoving party.'” Info. Sys. & Networks Corp. v. City of Atlanta, 281 F.3d 1220, 1224 (11th Cir. 2002) (quotation marks omitted). Therefore, when deciding if summary judgment is appropriate, the court must not “weigh the evidence and determine the truth of the matter” on its own but should determine only whether a reasonable jury could find in favor of the non-movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249. 255 (1986) (“[C]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.”). In doing so, the court should draw all justifiable inferences, and resolve any reasonable doubts concerning the facts, in favor of the non-movant. Id. at 255; Info. Sys. & Networks Corp., 281 F.3d at 1224. If, after reviewing the entirety of the record in the light most favorable to the [non-movant], the court determines a reasonable jury could not find in favor of the non-movant, then summary judgment is appropriate. Strickland v. Norfolk S. Ry. Co., 692 F.3d 1151, 1154 (11th Cir. 2012) (“[T]he District Court [must] consider all evidence in the record when reviewing a motion for summary judgment-pleadings, depositions, interrogatories, affidavits, etc.-and can only grant summary judgment if everything in the record demonstrates that no genuine issue of material fact exists.” (quoting Tippens v. Celotex Corp., 805 F.2d 949, 952 (11th Cir. 1986)); Info. Sys. & Networks Corp., 281 F.3d at 1224.

         II. FACTUAL BACKGROUND

         The undisputed facts are as follows. In 2016, Robert and Alice Brashear refinanced their mortgage on their residence and 7.75 acres of adjoining property located at 84 Brown Hill Road, Elko, Georgia. Doc. 4-1 at 153. Specifically, on August 26, 2016, USAA agreed to loan $264, 964 to the Brashears and to pay off the Brashears' existing mortgagee, CB&T, which held its own security deed to the property. Id. at 106, 153. In exchange, the Brashears executed a Security Instrument, granting USAA a security deed to their property. Id. at 153. USAA paid $250, 005.73 to CB&T on August 31, 2016. Id. For reasons not explained, however, CB&T did not cancel its security deed until October 6, 2016. Id. For reasons also not explained, USAA did not file its security deed until October 17, 2016, 52 days after the execution of the Security Instrument. Id. On January 13, 2017, 88 days after the security deed was filed, the Brashears filed their Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the Middle District of Georgia. Id.

         III. PROCEDURAL BACKGROUND

         After the Brashears filed their bankruptcy petition, the Trustee filed this adversary proceeding pursuant to 11 U.S.C. § 547(b) to avoid the transfer of the security deed to USAA. Id. The Trustee argued that, under the Bankruptcy Code, the transfer was deemed to have occurred on October 17, 2016, when the security deed was filed, and, thus, the transfer occurred within 90 days of the Brashears filing a bankruptcy petition, making it an avoidable preference under § 547(b). Id. USAA did not then dispute, and never disputed before the Bankruptcy Court, that the transfer occurred on October 17, 2016.[4] After the Trustee moved for summary judgment, arguing there was no genuine issue of fact regarding the Trustee's right to avoid the transfer, USAA raised the affirmative defense that the transfer was a substantially contemporaneous exchange under 11 U.S.C. § 547(c)(1) and thus was not an avoidable transfer. Id. at 2-3. The Bankruptcy Court found, first, that there was no genuine issue that the Trustee had met its burden under § 547(b) and that that there was no genuine dispute that the transfer was not a substantially contemporaneous exchange under § 547(c)(1). Id. at 6, 11. Accordingly, the Bankruptcy Court granted summary judgment to the Trustee. Id. at 11. USAA then filed this appeal, which is fully briefed and for which the Court has heard oral argument. Docs. 1; 4; 10; 13; 14; 15.

         IV. DISCUSSION

         On appeal, USAA presents two challenges to the Bankruptcy Court's grant of summary judgment. First, USAA argues, for the first time, that the transfer did not occur when USAA filed its security deed on October 17, 2016. Doc. 4 at 12. Second, USAA argues, as it did before the Bankruptcy Court, that the transfer was a substantially contemporaneous exchange under § 547(c)(1). Id.

         A. Whether the Undisputed Facts Establish the Trustee Met the Elements of § 547(b)

         USAA argues the Bankruptcy Court erred in finding the Trustee met its burden to establish the security deed was an avoidable preference under § 547(b). Specifically, USAA argues the transfer did not occur within the 90-day preference period.[5]

         Under 11 U.S.C. § 547(b), the trustee may avoid a transfer of an interest by the debtor if the trustee establishes that the transfer was:

(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed by the debtor before such transfer was made;
(3) made while the debtor was ...

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