In re Mitchell (Ch. 7 Case No. 14-51473, Adv. No. 14-05059)

Chapter 7 Trustee sought avoidance under §§ 547 and 548 of alleged transfer of interest of Debtor in property.  Defendant recorded quitclaim deed transferring to Debtor one-half interest in property.  Transfer alleged by Trustee consisted of Debtor’s later (prepetition) execution and recordation of quitclaim deed as to such property in favor of Defendant.  Both deeds were apparently executed and recorded pursuant to unrecorded agreement under which Debtor was either to earn his interest in property by performing listed repairs by date certain or deed property back to Defendant (the “Agreement”).  Parties brought cross-motions for summary judgment, which the Court disposed of as follows: (1) cross-motions as to threshold issue of “transfer of an interest of the debtor in property” denied because genuine issue of fact existed as to whether equitable interests remained in Defendant (such as in constructive trust) and transfer was of bare legal title; (2) cross-motions as to Defendant’s assertion of Debtor’s exemption under § 522(g) denied because Defendant had no standing to raise Debtor’s exemptions; (3) cross-motions as to Defendant’s ordinary course defense under § 547(c)(2) denied because Agreement (though apparently constituting first-time debt) could potentially be shown as ordinary from record and second quitclaim was plausibly executed in accordance with Agreement’s terms; (4) Plaintiff’s motion as to Defendant’s new value defense under § 547(c)(4) granted (and Defendant’s motion denied) because Defendant did not show new value, and new value (if any) was not extended after alleged transfer.

Wednesday, March 23, 2016