Carr v. Loeser et al

Filing 2

ORDER & JUDGMENT - It hereby ORDERED that: 1. Report 1 of Chief BR Judge France is ADOPTED in its entirety.; 2. JUDGMENT ENTERED in favor of defts Alan D. Loeser & Patricia M. Britton & against pltf Steven M. Carr as trustee of BR estate of Internat'l Auction & Appraisal Svcs., LLC.; 3. Clrk of Ct shall CLOSE case. (See order & jdgmt for complete details.)Signed by Chief Judge Christopher C. Conner on 3/23/15. (ki)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
STEVEN M. CARR, Trustee,
Plaintiff
v.
ALAN D. LOESER and PATRICIA
M. BRITTON,
Defendants

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CIVIL ACTION NO. 1:14-CV-1931
(Chief Judge Conner)

ORDER
AND NOW, this 23rd day of March, 2015, upon consideration of the report
(Doc. 1) of Chief Bankruptcy Judge Mary D. France, rendered following a bench
trial and in accordance with the United States Supreme Court’s recent decision in
Executive Benefits Insurance Agency v. Arkinson, __ U.S. __, 134 S. Ct. 2165 (2014),1
wherein Judge France recommends the court enter judgment in favor of Alan D.
Loeser and Patricia M. Britton (“defendants”) and against Steven M. Carr, trustee
of the bankruptcy estate of International Auction and Appraisal Services, LLC
(“IAAS”), as to the trustee’s fraudulent transfer claims based upon actual fraud in
Counts I and III of the adversary complaint, and also as to the trustee’s fraudulent
transfer claims based upon constructive fraud in Counts II and IV of the adversary

1

In Arkinson, the Supreme Court concluded that when the United States
Constitution prohibits the bankruptcy courts from entering final judgment on a
core bankruptcy claim, “[t]he bankruptcy court should hear the proceeding and
submit proposed findings of fact and conclusions of law to the district court for de
novo review and entry of judgment.” Id. at 2173 (citing 11 U.S.C. § 157(c)(1)).

complaint, and specifically finds that the trustee failed to prove by a preponderance
of the evidence that defendants made any pre-petition transfer of IAAS’s assets
“with actual intent to hinder, delay, or defraud” creditors for purposes of avoidance
under 11 U.S.C. § 548(a)(1)(A) and 12 PA. CONS. STAT. § 5104(a)(1),2 and failed to
prove that IAAS was insolvent at the time of the pre-petition transfers for purposes
of avoidance under 11 U.S.C. 548(a)(1)(B) and 12 PA. CONS. STAT. § 5105,3 and,
following an independent review of the record and the parties’ arguments, the court
concurring with Judge France that the trustee’s proof establishes neither actual nor
constructive fraud, and noting that the trustee filed an objection (Doc. 1-3) to the
report, see 11 U.S.C. § 157(c)(1) (providing that the district court reviews “de novo
those matters to which any party has timely and specifically objected”), and the

2

Judge France concludes that, although several “badges of fraud” proved by
the trustee give rise to a presumption of fraudulent intent, the trustee nonetheless
failed to prove that any challenged transfers was made for an illegitimate purpose.
(See Doc. 1 ¶¶ 19-20).
3

Judge France concludes that, despite proof of IAAS’s deteriorating financial
condition, the trustee did not establish that IAAS was insolvent at the time of the
disputed transfers as required for avoidance under either provision. (See Doc. 1
¶¶ 21-23).
2

court finding the trustee’s objection to be without merit and squarely addressed by
Judge France’s report, it is hereby ORDERED that:
1.

The report (Doc. 1) of Chief Bankruptcy Judge Mary D. France is
ADOPTED in its entirety.

2.

Judgment is ENTERED in favor of defendants Alan D. Loeser and
Patricia M. Britton and against plaintiff Steven M. Carr, as the trustee
of the bankruptcy estate of International Auction and Appraisal
Services, LLC.

3.

The Clerk of Court shall close this case.

/S/ CHRISTOPHER C. CONNER
Christopher C. Conner, Chief Judge
United States District Court
Middle District of Pennsylvania