KSB

Judge Karlin

BAP UT-13-026 In Re C.W. Mining Company - Document Text

FILED

U.S. Bankruptcy Appellate Panel
of the Tenth Circuit
November 5, 2013
Blaine F. Bates

Clerk

PUBLISH

UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE TENTH CIRCUIT

IN RE C.W. MINING COMPANY,
Debtor.

KENNETH A. RUSHTON, Trustee,
Plaintiff – Appellant,

v.
SMC ELECTRICAL PRODUCTS, INC.
and BECKER MINING AMERICA,
INC.,

Defendants – Appellees.

BAP No. UT-13-026

Bankr. No. 08-20105
Adv. No. 10-02758
Chapter 7

OPINION

Appeal from the United States Bankruptcy Courtfor the District of Utah

Michael N. Zundel (Daniel C. Dansie and Callie Buys with him on the brief) ofPrince, Yeates & Geldzahler, Salt Lake City, Utah, for Plaintiff – Appellant.

Jeffrey L. Shields (Jacob D. Lyons with him on the brief) of Callister Nebeker &
McCullough, Salt Lake City, Utah, for Defendants – Appellees.

Before CORNISH, KARLIN, and ROMERO, Bankruptcy Judges.

KARLIN, Bankruptcy Judge.

This case poses the question, “how ordinary is ordinary?” The ordinary
course of business defense, set out in 11 U.S.C. § 547(c)(2)(A), protects the
creditor of a debtor who has filed bankruptcy from an action by a trustee to
recover, as a preference, payments made by the debtor prior to bankruptcy as long
as the creditor can meet two requirements. First, the creditor must show that the


alleged preferential payment was made “in payment of a debt incurred by the
debtor in the ordinary course of business” of the debtor and the creditor. The
creditor must then also show that the payment itself was “made in the ordinary
course of business” of the debtor and the creditor.

This appeal is from a bankruptcy court order applying the ordinary course
of business defense to a payment made by Debtor C.W. Mining Company (“C.W.
Mining”) to Creditor SMC Electrical Products, Inc. (“SMC”) within 90 days of

C.W. Mining being placed in involuntary bankruptcy. The Chapter 7 Trustee
challenged the payment as a preferential transfer, but after full discovery, the
bankruptcy court granted SMC’s motion for summary judgment based on
unchallenged material facts that it held demonstrated SMC was entitled to the
ordinary course of business defense.
The Trustee/Appellant argues that the bankruptcy court erred in both its
conclusions that: (1) the debt between SMC and C.W. Mining was incurred in the
ordinary course of business of SMC and C.W. Mining, and (2) the debt payment
that the Trustee seeks to avoid was a payment made in the ordinary course of
these two businesses. We conclude both that C.W. Mining incurred the debt from
SMC in an effort to increase the production of its coal mining operations, which
was C.W. Mining’s primary business, and that the transaction was a typical arms-
length creation of debt on the open market. The bankruptcy court did not err
when it found that the debt was incurred in the ordinary course of business. In
addition, the evidence supports the bankruptcy court’s finding that the challenged
debt payment was made in the ordinary course of both businesses. Applying the
clearly erroneous standard of review, the bankruptcy court had adequate factual
support in the record to conclude that SMC carried its burden of proof to show
that the debt payment was incurred and made in the ordinary course of both
businesses. As a result, we AFFIRM.

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I. Background Facts and Procedural History
The following facts were established by an affidavit filed by SMC, which
the Trustee essentially elected not to challenge. In mid-2007, C.W. Mining
sought to purchase a longwall electrical system from SMC. 1 Before then, C.W.
Mining had engaged in continuous mining, a form of coal mining that is different
from the longwall mining method. 2 Presumably to reduce its costs of engaging in
this new method of coal mining, C.W. Mining elected to purchase previously
scrapped equipment and to then refurbish that equipment for a new longwall
system. C.W. Mining anticipated that the longwall system would increase its coal
production by four or five times.

In June 2007, SMC and C.W. Mining agreed that SMC would provide C.W.
Mining the equipment, service, and training for a longwall electrical system. The
provision of longwall electrical controls, and the service and training on longwall
electrical systems, are within the normal scope of products and services that SMC
provides. In July 2007, SMC provided C.W. Mining with a quotation (Quotation
70312.3) that reflected the June 2007 agreement. Prior to the 2007 purchase,

C.W. Mining had no relationship of any kind with SMC.
Quotation 70312.3 did not specify due dates for payments by C.W. Mining,
but it did provide that additional charges could be applied to any amount not paid
within thirty days of the invoice date. In addition, Quotation 70312.3 required
progress payments as follows: 15% due within 7 days, 25% due upon issuance of
submittals, 25% due upon release of manufacturing, 25% due upon completion of

1 A longwall electrical system is part of the implementation of a longwall
mining system, a form of underground coal mining where a long wall of coal ismined in a single seam. See Plateau Mining Corp. v. Fed. Mine Safety & Health
Review Comm’n, 519 F.3d 1176, 1178 (10th Cir. 2008) (describing operation of a
longwall mine).

2 The Trustee freely admitted at oral argument that both methods of mining
result in the production of coal.

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testing, and 10% due upon completion of commissioning. The payment terms
between SMC and C.W. Mining were typical of the progress payment terms SMC
had with its other customers. This “pay as you go” or “progress payment”
schedule was typical for longwall system purchases at the time.

On September 18, 2007, SMC issued to C.W. Mining an invoice for
$805,539.75, representing the cost of the majority of the equipment and services
it had provided or was to provide. That invoice, as well as other invoices SMC
issued to C.W. Mining, indicated the terms of payment as “special,” to reflect the
fact that C.W. Mining was to make progress payments as it received invoices
from SMC. Although the Trustee argues the term “special” is itself reflective that
this transaction was not “ordinary,” he introduced no expert or other testimony in
opposition to demonstrate that this term meant anything other than what SMC
claimed.

For its customers, like C.W. Mining, who were making progress payments,
SMC prepared and maintained two different sets of invoices, one internal and one
external. The internal invoices were used for internal accounting purposes only,
and were not typically issued to a customer. On October 16, 2007, C.W. Mining
made payment by wire transfer, in the amount of $200,000, on the September 18,
2007 external invoice. SMC credited this payment to its internal invoice.

The October 2007 payment was one of five wire transfer payments made
between September 27, 2007 and October 23, 2007, and applied to the September
18, 2007 invoice. The five payments came from three different sources: C.W.
Mining’s own account, the account of C.W. Mining’s accounts payable service
provider, and the account of Standard Industries, another company doing business
with C.W. Mining, using proceeds from the coal mined by C.W. Mining. It was
not unusual for SMC’s customers to make multiple payments on a single invoice,
particularly when an invoice exceeded $250,000. It was also not unusual for
SMC to receive payment from entities affiliated with or directed by its customers.

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Other than the terms of the purchase contract between SMC and C.W. Mining,
SMC was not aware of how or why C.W. Mining decided to make multiple
payments on the September 18, 2007 invoice. Further, SMC had no knowledge of
how or why C.W. Mining decided to have payments made to SMC from multiple
entities.

The payment C.W. Mining made in October 2007 was made twenty-eight
days after SMC issued the September 18, 2007 invoice. In SMC’s experience,
payment within this time frame was typical for its customers. Further, other than
its original agreement with C.W. Mining, SMC did not provide any instructions to

C.W. Mining or its representatives or affiliates regarding the form, manner, or
time of payments on the longwall electrical system. SMC also made no demands
upon C.W. Mining of any kind related to payment. In addition, SMC is not aware
why or how decisions were made by C.W. Mining regarding the manner, form,
and timing of payments to SMC.
The bankruptcy court specifically found that neither early payment nor
partial payment was inconsistent with the agreement SMC and C.W. Mining had
made. The bankruptcy court also found that the October 2007 payment was made
in accordance with the longwall system purchase agreement between SMC and

C.W. Mining. Finally, the bankruptcy court found that SMC did not engage in
any coercive collection activity with regard to the October 2007 payment.
On January 8, 2008, several months after C.W. Mining had purchased the
longwall electrical system from SMC and just under 90 days since it made the
October 2007 payment, C.W. Mining was involuntarily placed into bankruptcy.
The involuntary bankruptcy was precipitated by a judgment obtained by Aquila,
Inc. against C.W. Mining on October 30, 2007. 3 Although C.W. Mining remained

The October 30, 2007 judgment stemmed from a July 5, 2005 lawsuit by
Aquila against C.W. Mining for breach of a coal supply agreement.

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in the Chapter 11 bankruptcy for some time, the case was later converted to
Chapter 7.

The parties have never disputed that the transfer was a preference, instead
only disputing whether the § 547(c)(2) ordinary course of business defense
applied. 4 After the lengthy period of discovery, the bankruptcy court granted
summary judgment to SMC and dismissed the adversary proceeding.

II. Jurisdiction and Standard of Review
This Court has jurisdiction to hear timely filed appeals from “final
judgments, orders, and decrees” of bankruptcy courts within the Tenth Circuit,
unless one of the parties elects to have the district court hear the appeal. 5 Neither
party elected to have this appeal heard by the United States District Court for the
District of Utah. The parties have therefore consented to appellate review by this
Court. The Trustee timely appealed the decision, and the bankruptcy court’s
order is an appealable, final order.6

This Court reviews the bankruptcy court’s legal conclusions de novo and its
findings of fact under the “clearly erroneous” standard of review. 7 The Tenth
Circuit has assessed the application of the ordinary course of business defense as

4 “The ‘ordinary course’ of business exception in § 547(c)(2) is an
affirmative defense to an avoidance procedure.” Jagow v. Grunwald (In re Allied
Carriers’ Exch., Inc.), 375 B.R. 610, 615 (10th Cir. BAP 2007).

5 28 U.S.C. § 158(a)(1), (b)(1), and (c)(1); Fed. R. Bankr. P. 8001, 8002;
10th Cir. BAP L.R. 8001-3.

6 See Elec. Metal Prods., Inc. v. Bittman (In re Elec. Metal Prods., Inc.), 916
F.2d 1502, 1503 (10th Cir. 1990) (appeal of summary judgment in adversaryproceeding to recover a preference); Gonzales v. Conagra Grocery Prods. Co. (In
re Furr’s Supermarkets, Inc.), 373 B.R. 691, 697 (10th Cir. BAP 2007) (holdingthat an order of a bankruptcy court concluding a preference action was a final,
appealable order).

7 In re Robinson, 295 B.R. 147, 149 (10th Cir. BAP 2003).

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“primarily factual” and applied the clearly erroneous standard of review. 8 A

factual finding is clearly erroneous only “if it is without factual support in the

record or if, after reviewing all the evidence, we are left with the definite and

firm conviction that a mistake has been made.”9

III. Discussion
A. Burden of Proof
SMC, as the transferee of the payment from C.W. Mining, bears the burden

of proving the ordinary course of business defense. 10 The ordinary course of

business defense should be narrowly construed.11

B. Application of Ordinary Course of Business Defense
The sole issue on appeal is the application of the ordinary course of

business defense of 11 U.S.C. § 547(c)(2). That subsection states:

(c) The trustee may not avoid under this section a transfer–
. . .

(2) to the extent that such transfer was in payment of a debtincurred by the debtor in the ordinary course of business orfinancial affairs of the debtor and the transferee, and suchtransfer was–
8 Clark v. Balcor Real Estate Fin., Inc. (In re Meridith Hoffman Partners),
12 F.3d 1549, 1553 (10th Cir. 1993); see also Jobin v. McKay (In re M & L Bus.
Mach. Co.), 84 F.3d 1330, 1339 (10th Cir. 1996) (“On this factual question[concerning application of § 547(c)(2)], we must accept the conclusions of thebankruptcy court unless they are clearly erroneous.”); In re Allied Carriers’
Exch., Inc., 375 B.R. at 616 (“The bankruptcy court’s determination that thetransaction at issue fell within the ordinary course of business exception of
§ 547(c)(2) is a question of fact, reversible only if clearly erroneous.”).

9 In re Miniscribe Corp, 309 F.3d 1234, 1240 (10th Cir. 2002) (internal
quotation marks omitted); see also Fed. R. Bankr. P. 8013 (“Findings of fact,
whether based on oral or documentary evidence, shall not be set aside unlessclearly erroneous[.]”).

10 In re M & L Bus. Mach. Co., 84 F.3d at 1339; see also 11 U.S.C. § 547(g)
(“For the purposes of this section, . . . the creditor or party in interest againstwhom recovery or avoidance is sought has the burden of proving thenonavoidability of a transfer under subsection (c) of this section.”).

11 In re M & L Bus. Mach. Co., 84 F.3d at 1339.

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(A) made in the ordinary course of business or financialaffairs of the debtor and the transferee; or
(B) made according to ordinary business terms[.]12
The purpose of the preference statute is to both “prevent[] creditors from exerting

undue pressure on struggling debtors” and to “discourage ‘unusual action’ that

might ‘favor certain creditors or hasten bankruptcy by alarming other creditors

and motivating them to force the debtor into bankruptcy to avoid being left

out.’” 13 The “general purpose of the § 547(c)(2) defense” to the preference

action, however, is “‘to leave undisturbed normal financial relations, because it

does not detract from the general policy of the preference section to discourage

unusual action by either the debtor or his creditors during the debtor’s slide into

bankruptcy.’” 14 The fact that there is no prior history between the parties –the

parties here had not engaged in business prior to the longwall electrical system

purchase in mid-2007– does not preclude the application of § 547(c)(2).15

Although “ordinary course of business” is not defined in the Bankruptcy

12 SMC elected to proceed exclusively under § 547(c)(2)(A), and therefore
subsection (c)(2)(B) of § 547 is not relevant to this appeal.

13 Milk Palace Dairy LLC v. L & N Pump, Inc. (In re Milk Palace Dairy
LLC), 385 B.R. 765, 771 (10th Cir. BAP 2008) (quoting In re Meridith Hoffman
Partners, 12 F.3d at 1553).

14 In re M & L Bus. Mach. Co., 84 F.3d at 1339-40 (quoting In re Meridith
Hoffman Partners, 12 F.3d at 1553). See also Barnhill v. Johnson, 503 U.S. 393,402 (1992) (stating that § 547(c) was “designed to encourage creditors to continueto deal with troubled debtors on normal business terms by obviating any worrythat a subsequent bankruptcy filing might require the creditor to disgorge as apreference an earlier received payment”).

15 See In re Hedged-Invs. Assocs., Inc., 48 F.3d 470, 471-72, 475-76 (10th
Cir. 1995) (applying § 547(c)(2) when the only payment made to the creditor wasa single payment during the preference period, and concluding that the one-timetransfer to creditor/investor in Ponzi scheme was not made in ordinary course ofbusiness); see also Kleven v. Household Bank F.S.B., 334 F.3d 638, 642 (7th Cir.
2003) (observing that most courts “side with the view that a first-time transactionis not per se ineligible for protection from avoidance under § 547(c)(2)”); Gosch

v. Burns (In re Finn), 909 F.2d 903, 908 (6th Cir. 1990) (stating that the issuanceof a debt “can be in the ordinary course of financial affairs even if it is the firstsuch transaction undertaken by the [parties]”).
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Code, the statute clearly has two prongs: whether the debt was incurred in the

ordinary course of business of the debtor and creditor, and whether the debt

payment was made in the ordinary course of business of the debtor and creditor.

The first prong is focused on the original transaction between C.W. Mining and

SMC when the debt was created. Regarding the “incurred” part of the § 547(c)(2)

question, a leading bankruptcy treatise states:

[C]ourts generally are interested in whether the debt was incurred ina typical, arms-length commercial transaction that occurred in themarketplace . . . . If the debt were incurred in the routine operation ofthe debtor and the creditor, then it can be said to have been incurredin the ordinary course of each party’s business . . . . [A] debt will notbe considered incurred in the ordinary course of business if creationof the debt is atypical, fraudulent or not consistent with an arms-
length commercial transaction.16

This Court must decide, therefore, whether the bankruptcy court was correct to
conclude that the debt for the longwall electrical system was incurred by C.W.
Mining in the ordinary course of both the business of C.W. Mining and of SMC.

The Trustee argues that because the debt arose from C.W. Mining’s
purchase from SMC of a longwall electrical system of mining –a type of mining
different from the type of mining C.W. Mining had previously used– the debt
could not have been incurred in the ordinary course of business. In other words,
the Trustee argues that the debt could not have been incurred in the ordinary
course of C.W. Mining’s coal mining business because the debt was for a
longwall coal mining system, not to support a continuous coal mining system.
The Trustee also argues that the longwall electrical system purchase was itself
extraordinary, because C.W. Mining sought to build the longwall system from
refurbished parts –a task for which it had no prior experience.

Decisions from the Tenth Circuit Court of Appeals have not discussed the
“incurred” prong of the ordinary course of business defense. However, in an oft


5 Collier on Bankruptcy ¶ 547.04[2][a][i] (Alan N. Resnick & Henry J.
Sommer eds., 16th ed. 2013).

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cited bankruptcy court opinion addressing this prong, Huffman v. New Jersey
Steel Corp. (In re Valley Steel Corp.), 17 the bankruptcy court stated: “courts
generally are interested in whether or not the debt was incurred in a typical, arms-
length commercial transaction that occurred in the marketplace, or whether it
occurred as an insider arrangement with a closely-held entity.” 18 The Valley Steel
Corp court specifically noted that the “transaction need not have been common; it
need only be ordinary.”19

The decisions of those circuits addressing the “incurred” prong of the
ordinary course of business defense have used similar reasoning to that expressed
in Valley Steel Corp. The Sixth Circuit concluded that the “incurring of long-
term consumer debt that is a ‘normal financial relation’ and that is not ‘unusual
action’” met the requirement that debt be incurred in the ordinary course of
business. 20 The Ninth Circuit has similarly focused on “whether the debt [was
incurred] similar to what we would expect of similarly situated parties.” 21 On the
other side of the coin, the Eighth Circuit found that a gambling debt was not
incurred in the ordinary course of business because the debt was not incurred to
“preserve ‘normal financial relations,’” but, rather, was “a desperate debtor’s
irresponsible accumulation of gambling debts in an ill-fated attempt to cover
fraud and embezzlement losses.”22

The Trustee does not dispute either that C.W. Mining was a mining
company or that SMC is a mining equipment vendor. The Trustee also does not

17 182 B.R. 728 (Bankr. W.D. Va. 1995).
18 Id. at 735.
19 Id. (internal quotation marks omitted).
20 In re Finn, 909 F.2d at 907.
21 In re Ahaza Sys., Inc., 482 F.3d 1118, 1126 (9th Cir. 2007).
22 In re Armstrong, 291 F.3d 517, 527 (8th Cir. 2002).
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dispute that C.W. Mining incurred the debt from SMC in an effort to increase its
coal mining production, i.e., its primary business purpose. Although we
acknowledge that the ordinary course of business defense “should be narrowly
construed,” 23 the Trustee’s focus is misplaced. The bankruptcy court was not
tasked with judging the business decisions of C.W. Mining in determining
whether debt was incurred in the ordinary course of business. Rather, the
bankruptcy court only had to determine whether the debt was incurred ordinarily
between C.W. Mining and SMC. As a result, the bankruptcy court properly
focused on the creation of the debt at issue, asking whether the transaction was a
typical arms-length creation of debt in the open market. The Trustee challenged
none of the facts that demonstrated it was such an arms-length transaction in the
open market by previously unrelated companies.

The second prong of the ordinary course of business defense –whether a
debt payment is made in the ordinary course of business –requires that the
creditor asserting that the payment was made in the ordinary course of business
“establish that the disputed payment was ‘ordinary’ . . . as between the parties.”24
In Milk Palace Dairy, we analyzed four factors: “1) the length of time involved
in the preference period transaction; 2) whether the amount or the form of that
payment differed from previous practice; 3) whether that transaction involved any
unusual collection or payment activity; and 4) the circumstances under which the

23 Jobin v. McKay (In re M & L Bus. Mach. Co.), 84 F.3d 1330, 1339 (10th
Cir. 1996).

24 Milk Palace Dairy LLC v. L & N Pump, Inc. (In re Milk Palace Dairy
LLC), 385 B.R. 765, 769 (10th Cir. BAP 2008). Prior to the 2005 amendments to
the Bankruptcy Code (oft-referred to as “BAPCPA,”), a creditor was required toshow that a transfer was ordinary both subjectively and objectively. The
BAPCPA amendments to § 547(c)(2) changed the requirements so that thecreditor could show either subjective ordinariness or objective ordinariness, but
need not show both. See id. at 769 n.6 (explaining BAPCPA’s amendments).
SMC proceeded with the subjective prong of ordinariness, under § 547(c)(2)(A),
rather than (c)(2)(B) –focusing only on whether the transfer was made in theordinary course of business of C.W. Mining and SMC.

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transfer was made.” 25 Ordinariness is judged both from the perspective of the
debtor and the transferee. 26 Ordinary business terms “are those used in ‘normal
financing relations’: the kinds of terms that creditors and debtors use in ordinary
circumstances, when debtors are healthy.”27

Here, the Trustee asserts the payment was not ordinary because the five
payments made from C.W. Mining to SMC came from different C.W. Mining-
related accounts. The Trustee also asserts error because the amounts that were
paid from C.W. Mining to SMC did not precisely correspond to an invoice
amount or a progress payment. The Trustee claims these facts show that the
amounts and sources of tender differed from past practice, and that as a result,

C.W. Mining engaged in unusual payment activity. Finally, the Trustee claims
the bankruptcy court erred in not considering that shortly after C.W. Mining made
the October, 2007 payment to SMC, Aquila received a substantial money
judgment against C.W. Mining. 28 The Trustee argues that the existence of that
judgment supports a finding that the circumstances under which the October,
2007 payment was made were unusual.
We must again note that the Trustee did not challenge the affidavit SMC
used to support the facts upon which it based its claim for summary judgment.
That affidavit established that the payment terms between SMC and C.W. Mining
were typical of SMC’s progress payment terms with other customers, and that the
“pay as you go” schedule was typical for longwall electrical system purchases.

25 Id. at 769.

26 Gonzales v. Amplex Corp. (In re Furr’s Supermarkets, Inc.), NM-06-109,
2007 WL 2827459, at *9 (10th Cir. BAP Sept. 26, 2007).

27 Clark v. Balcor Real Estate Fin., Inc. (In re Meridith Hoffman Partners),
12 F.3d 1549, 1553 (10th Cir. 1993).

28 The $24 million judgment for Aquila was entered against C.W. Mining on
October 30, 2007.

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The invoice from SMC to C.W. Mining was large, and SMC established that it
was not at all unusual for its customers to make multiple payments on a single
invoice, particularly with invoices over $250,000. Further, SMC’s affidavit
established that the payments by C.W. Mining from multiple accounts were not
unique; SMC specifically stated that it was not unusual to receive payment from
entities affiliated with or directed by its customers. SMC’s affidavit also
established that the October 2007 payment was made 28 days after receiving the
invoice upon which it was based, and that in SMC’s experience, payment within
this time frame was typical for its customers.

It is also important that SMC established it did nothing to solicit the
October 2007 payment from C.W. Mining. The bankruptcy court specifically
found that other than negotiate the original contract terms reflected in Quotation
70312.3, SMC did not provide any instructions to C.W. Mining or its
representatives or affiliates regarding the form, manner, or time of payments, nor
did SMC make demands of any kind upon C.W. Mining related to payment. The
bankruptcy court specifically found that SMC did not engage in coercive
collection activity with regard to the October 2007 payment. The Trustee points
to no evidence to contradict these facts; he simply would prefer a different
conclusion be drawn from those facts. There is no basis, however, to do so.

We have previously noted that although a payment for “significantly less
than the total due” was an indication that a transaction was not subjectively
ordinary, the facts that “[t]here was no collection activity with respect to the
disputed payment, no pressure put on Debtor to pay, nor any other apparent
change in the parties’ dealings with respect to [the] payment” indicated a
transaction was subjectively ordinary. 29 We have also previously held that
payment by cashier’s check in an attempt to maintain friendly relations with

In re Milk Palace Dairy, LLC, 385 B.R. at 769, 770.
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creditors was not unusual, because it was not unusual for the transferee to receive
payment by cashier’s check, and because the transferee did nothing to solicit the
payment. 30 The payment from C.W. Mining to SMC was similar to the payments
in these cited cases; it was a payment made shortly before bankruptcy, but with
no other unusual factor surrounding it.

The evidence clearly supports the bankruptcy court’s finding that the
October 2007 payment was made in the ordinary course of business of C.W.
Mining and of SMC. There is nothing about the terms of that payment, or the
parties’ interactions surrounding the payment, that make the October 2007
payment unusual or extraordinary. Further, there was no implicit or explicit
pressure put on C.W. Mining by SMC. Applying the clearly erroneous standard
of review, the factual record supports the bankruptcy court’s conclusion that SMC
carried its burden of proof to show that the October 16, 2007 payment was
incurred and made in the ordinary course of business of C.W. Mining and SMC.31

IV. Conclusion
Because we conclude that the bankruptcy court properly applied the
ordinary course of business defense of 11 U.S.C. § 547(c)(2)(A) to the facts of
this case, we affirm the bankruptcy court’s order entering judgment for SMC.

30 Tomlins v. BRW Paper Co., Inc. (In re Tulsa Litho Co.), 229 B.R. 806, 81011
(10th Cir. BAP 1999).

31 Jobin v. McKay (In re M & L Bus. Mach. Co.), 84 F.3d 1330, 1339 (10th
Cir. 1996) (transferee has burden of proof); In re Miniscribe Corp, 309 F.3d1234, 1240 (10th Cir. 2002) (finding is clearly erroneous only when “it is withoutfactual support in the record or if, after reviewing all the evidence, we are leftwith the definite and firm conviction that a mistake has been made” (internalquotation marks omitted)).

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