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In re Mortgage Store, Inc.

United States Court of Appeals, Ninth Circuit

December 5, 2014

IN RE THE MORTGAGE STORE, INC., Debtor. MANO-Y& M, LTD., Appellant,
v.
DANE S. FIELD, Trustee; GEORGE W. LINDELL; KAREN K. LINDELL; HECTOR & ALICIA INVESTMENTS, LLC; HECTOR GUERRA, Appellees

Argued and Submitted October 7, 2014 Honolulu, Hawaii

Page 991

Appeal from the United States District Court for the District of Hawaii. Nos. CV 12-0653 JMS KSC; 10-03454 (Chapter 7). Adv. Pro. No. 10-90146. J. Michael Seabright, District Judge, Presiding.

SUMMARY[*]

Bankruptcy

The panel affirmed the district court's decision affirming the bankruptcy court's summary judgment in an adversary proceeding seeking avoidance of a fraudulent transfer.

Applying the " dominion test," the panel held that under 11 U.S.C. § 550, appellant Mano-Y& M Ltd. was the initial transferee, rather than a subsequent transferee, of $311,065.25 paid by the bankruptcy debtor, The Mortgage Store, Inc., in connection with the sale of a shopping plaza. The panel concluded that McCarty v. Richard James Enters., Inc. (In re Presidential Corp.), 180 B.R. 233 (9th Cir. BAP 1995), which applied in part the " control test" for identifying initial transferees, is no longer good law.

Christopher J. Muzzi (argued) and Leila Rothwell Sullivan, Tsugawa, Biehl, Lau & Muzzi, Honolulu, Hawaii, for Appellant.

Simon Klevansky (argued), Alika L. Piper, and Nicole D. Stucki, Klevansky Piper, LLP, Honolulu, Hawaii, for Appellee Dane S. Field.

Before: A. Wallace Tashima, Johnnie B. Rawlinson, and Richard R. Clifton, Circuit Judges.

OPINION

Page 992

TASHIMA, Circuit Judge.

Appellant Mano-Y& M, Ltd. (" Mano" ) appeals from the judgment of the district court holding that under 11 U.S.C. § 550 Mano was the initial transferee of $311,065.25 paid by the debtor, The Mortgage Store, Inc., in connection with the sale of a shopping plaza. We affirm.

Page 993

I.

Mano owned the Raymondville Plaza, a six-acre shopping plaza in Raymondville, Texas. In 2008, Mano was approached by representatives of George Lindell (" Lindell" ) who offered, on Lindell's behalf, to buy the plaza. In mid-December 2008, Mano and Lindell entered into a contract for Mano to sell the plaza to Lindell for $2.2 million. Lindell was to pay $300,000 cash; the remainder of the purchase price was to be covered by a seller-financed mortgage. The contract obligated both parties to pay fees associated with closing. Additionally, Lindell was to pay ...


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