Howell, III, Trustee v. Auto-Owners Insurance Company

Griffin E. Howell, III, duly appointed Chapter 7 Trustee (the "Plaintiff" or the "Trustee")¹ for the Chapter 7 estate of 3 Kings Construction Residential, LLC (the "Debtor"), commenced this action by filing a Complaint herein on September 9, 2024 (Docket No. 1)(the "Complaint") against Defendant Auto-Owners Insurance Company (the "Defendant"). This matter comes before the Court on Auto-Owners Insurance Company's Motion for Summary Judgment filed on July 17, 2025, with attachments²(Docket No. 19)(the "Motion") by the Defendant.

I. Background

As alleged in the Complaint, the Trustee seeks to set aside and recover various transfers (the "Transfers") of money received by the Defendant and voidable and recoverable as follows:

(i) as preferential transfers under 11 U.S.C. § 547 and § 550 in the amount of $13,589.21; (ii) as fraudulent transfers under 11 U.S.C. § 544, § 548, and § 550 and O.C.G.A. §§ 18-2-70, et seq. in the amount of $102,922.72; and finally, (iii) as unauthorized post-petition transfers under 11 U.S.C. § 549(a) and § 550 in the amount of $32,071.74, which were made to the Defendant by the Debtor through its insiders and principals. On October 3, 2024, the Defendant filed Auto-Owners Insurance Company's Answer (see Docket No. 4). The parties filed their Joint Rule 26(f) Report

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on December 20, 2024 (Docket No. 9), which was approved by the Court on January 14, 2025. See Order on Rule 26(f) Report (Docket No. 10).³

After the Motion was filed on July 17, 2025, on August 29, 2025, the parties filed a Stipulation (Docket No. 22)(the "Stipulation") in which they agreed that the Motion would be set aside and held in abeyance pending a request on notice by the Defendant that it be considered. The Stipulation further provided that if such a request was made, the Trustee would have ten (10) days to respond to the Motion. Subsequently, on December 29, 2025, the Defendant filed and served Defendant Auto-Owners Insurance Company's Notice Requesting Consideration of Motion for Summary Judgment (Docket No. 23)(the "Notice Requesting Consideration"). The Trustee subsequently filed the Trustee's Response to Motion for Summary Judgment by Defendant on January 28, 2026 (Docket No. 24)(the "Trustee's Response").⁴On February 10, 2026, Defendant filed Auto-Owners Insurance Company's Reply Brief in Support of Motion for Summary Judgment (Docket No. 25) ("Defendant's Reply"). The Trustee then filed Plaintiff's Sur-Reply to Defendant's Brief on Motion for Summary Judgment on March 6, 2026 (Docket No. 30)(the

"Trustee's Sur-Reply").⁵

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II. Timeliness of Trustee's Response and Analysis of Excusable Neglect

As a preliminary matter, the Defendant asserts that the Trustee effectively admitted the facts the Defendant relies upon in the Motion since he did not file a response to the Motion within twenty-one (21) days of its filing. See Defendant's Reply, pp. 2-3, citing BLR 7007-1(c). As noted above, the Stipulation later provided that the Trustee would have ten (10) days to respond once the Defendant filed a Notice Requesting Consideration of the Motion, which it did on December 29, 2025. Although the Trustee did file the Trustee's Response, it was filed after the ten-day period referenced in the Stipulation expired on January 13, 2026.⁶The Defendant further contends that the Trustee may not rely on his tardily filed Trustee's Response to create issues of fact without evidence or seek to revive theories of recovery not preserved in the Scheduling Order.⁷ Consequently, it urges the Court to treat the Defendant's Statement of Undisputed Material Facts as not properly controverted, disregard any late-raised theories and argument by the Trustee, and grant the Motion. See BLR 7056-1(a)(2).

The Trustee counters that the Trustee's Response should be considered by the Court under the doctrine of excusable neglect. He states that his delay in responding resulted primarily from the fact that during the 10-day response period triggered by the filing of the Notice Requesting Consideration, Trustee's counsel's entire legal office was incapacitated and unable to work for several weeks due to an outbreak of bacterial pneumonia. The Trustee maintains that he has proceeded in good faith throughout this litigation in conducting his affairs and never sought an

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undue advantage from the delay experienced due to his untimeliness in responding to the Motion. See Trustee's Sur-Reply, pp. 10-13.

As an initial matter, it is not clear for several reasons that there was an operative deadline for the Trustee's response to the Motion. First, by agreeing to the Stipulation asking that the Motion be held in abeyance at a time when the Plaintiff's response was already overdue under the applicable rules, the Defendant in no way preserved its right to assert the failure of the Trustee's to respond timely prior to that time. Instead, the Defendant agreed that the Trustee could have additional time, after it filed a notice, to file a response. In those circumstances, any argument that the response was already untimely and thus facts could not be controverted in a subsequent response was waived. Further, as to the purported new deadline so established, the parties requested in the Stipulation that it be made an Order of the Court, presumably to render the deadline meaningful. However, that request was never followed up on, and the Stipulation was never made an Order of the Court, such that the deadline was not one ordered by this Court. Finally, even if the January 13, 2026, deadline was an operative deadline, the Trustee's failure to meet it will be excused for the reasons that follow. As authorized by Federal Rule of Bankruptcy Procedure ("F.R.B.P.") 9006(b)(1)(B), for cause shown, the Court may permit an act that was required to be done within a specified period to be completed after the time has expired

"where the failure to act was the result of excusable neglect."⁸The United States Supreme Court clarified the meaning of "excusable neglect" under F.R.B.P. 9006(b)(1) in Pioneer Inv. Servs. Co.

v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380 (1993). In Pioneer, the Court acknowledged that

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although the term "neglect" as used in the rules does not "inflexibly" exclude every "instance of an inadvertent or negligent omission," still, such neglect must be "excusable." 507 U.S. at 394-

95.

The Court set forth an analysis guided by equitable concerns and a consideration of the circumstances in connection with an omission or failure to act timely. The factors to be weighed include the following: "'the danger of prejudice to the [opposing party], the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith.'"

Pioneer, supra, 507 U.S. at 395, quoted in Cheney v. Anchor Glass Container Corp., 71 F.3d 848, 850 (11th Cir. 1996).

Since a "determination of excusable neglect is an equitable one," an evaluation of each factor is appropriate. Valdez v. Feltman (In re Worldwide Web Sys., Inc.), 328 F.3d 1291, 1297 (11th Cir. 2003). ⁹

Thus, it is "a flexible standard that takes 'into account all the relevant circumstances' and is not a mechanical test." Petite v. MedCross Imaging, LLC (MedCross

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Imaging, LLC), 2023 WL 4111563, *5, 2023 Bankr. LEXIS 1603, at *17 (Bankr. N.D. Ga. June 21, 2023). Further, "[w]hen considering the reason for the delay, excusable neglect 'may include, when appropriate, late filings caused by inadvertence, mistake, or carelessness under certain circumstances.'" MedCross, supra, 2023 WL 4111563, at *5, quoting Locke v. SunTrust Bank,

484 F.3d 1343, 1346 (11th Cir. 2007). In Cheney, supra, 71 F.3d 848, the Eleventh Circuit applied the Pioneer analysis to F.R.C.P. 60(b) and reversed the denial of relief where a breakdown in communication between a party's own counsel led to the failure to meet a deadline to seek a new trial by six (6) days. In that case, the court noted the lack of prejudice to the nonmoving party in granting relief, the minimal extent of the delay, the absence of bad faith, and the failure amounting to innocent oversight or carelessness by counsel as opposed to a deliberate disregard of the rules. 71 F.3d at 850.

Applying these standards, the Court concludes that although the Trustee's Response was filed fifteen (15) days after the purported due date and thirty (30) days after the Defendant filed its Notice Requesting Consideration, this late-filed pleading will be allowed and considered. The Defendant has not shown any prejudice that it has endured based on the delayed response. Although not insignificant, a two (2) week delay in this matter is not overly concerning, especially in view of the reason for the delay and the length of time that this matter has been pending overall.¹⁰ As represented in the Trustee's Sur-Reply, the delay was based on a debilitating illness contracted by counsel and attorney error, which the Court finds to be adequate as a reason in the

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circumstances. On review, there also does not seem to be any credible suggestion of bad faith or attempt to obtain an undue advantage from the delay, and as discussed in more detail below, certain of the Trustee's claims appear to have sufficient merit such that he should be allowed to prosecute them based on the allegations in the Complaint.

III. Defendant's Motion for Summary Judgment A. Defendant's Statement of Facts

Among other things, the Defendant asserts in the Defendant's Statement of Undisputed Facts that the premium payments constituting part of the Transfers in the amount of $78,166.33 were made more than ninety (90) days before the Petition Date. The Defendant also states that it issued various insurance policies to the Debtor, including commercial general liability coverage for which the Debtor paid premiums in the course of operations of its construction business. This insurance coverage, however, did not include any automobile policies. Instead, the Defendant asserts that Owners Insurance Company ("Owners"), which the Defendant claims is a separate subsidiary insurer of the Defendant, issued the commercial automobile policies for which the Debtor paid $47,216.21 in premiums (as part of the Transfers).

The Defendant adds that these premiums were paid in the ordinary course of business and were made for new value received. It also states that Tony Harris, Sr. ("Mr. Harris"), the Debtor's principal, testified at the Section 341 Meeting of Creditors in this case that the insured vehicles were used in the Debtor's business.¹¹Further, in responding to the Defendant's Interrogatories,

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the Defendant notes that the Trustee failed to identify any persons involved in authorizing or directing the Transfers in support of his allegation that they were insiders. It further claims the Trustee also did not identify any actual or constructive fraud on the part of either the Defendant or Owners. See Defendant's Statement of Undisputed Facts.

B. Trustee's Response

The Trustee relies on the detailed factual allegations offered in the Complaint and the statements of Mr. Albretsen in the Albretsen Declaration. As summarized (see Trustee's Response, pp. 2-3), the Trustee contends that the only undisputed facts are that the Debtor made certain insurance premium payments to the Defendant as initial transferee for automobile insurance and that the Debtor did not own any vehicles. Instead, the insured vehicles were owned by Mr. Harris individually. It is otherwise apparent from the history of this case that Mr. Harris caused the Debtor to use its funds to pay various expenses for the benefit of Mr. Harris' family members (the "Insiders") and his other affiliate businesses. Based on his assessment of the facts previously established in this case, witness testimony, and available business records, the Trustee states that Mr. Albretsen would testify, as stated in his Declaration, that there is no basis to relate or connect Mr. Harris' personal use of these vehicles with any corporate purpose of the Debtor. Trustee's Response, p. 2 & p. 9, citing Albretsen Declaration, ¶¶ 9-19.

The Trustee also asserts that any statements by Mr. Harris that the vehicles were used in the Debtor's business lack supporting detail. Further, the Trustee contends that the Defendant's sole reliance upon Mr. Harris' testimony during his Section 341 Meeting to establish Debtor in bringing an action for recovery of assets for the benefit of the bankruptcy estate and creditors whose interests the trustee represents.

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benefit from the Transfers fails, as this Court has already found Mr. Harris' testimony lacks credibility.¹²The Trustee adds that no claims were ever made by the Debtor on the insurance policies at issue. The Trustee further states that Mr. Harris has either failed or refused to turn over to the Trustee any records that would show whether and to what extent the subject vehicles for which insurance coverage was obtained were ever used for the benefit of the Debtor in the conduct of its business affairs as Owners claims. Trustee's Response, p. 3.

The Trustee also states that he will amend his Complaint to abandon all claims premised upon payments for insurance policies other than those pertaining to automobile insurance coverage maintained on personal vehicles of insiders of the Debtor and paid for by the Debtor. Trustee's Response, p. 4.¹³The Trustee acknowledges that the Defendant maintains this amount totals $47,216.21 in premiums paid by the Debtor through Defendant to Owners on the commercial automobile insurance policies, but he does not concede that this amount is correct and asserts it is subject to evidence of payment allocation among all the policies. Trustee's Response, p. 7, ¶ 9; Trustee's Sur-Reply, p. 5. See also Defendant's Brief in Support, p. 7; Jason Declaration, ¶¶ 10

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& 11; Defendant's Statement of Facts (various insurance policy related documents attached thereto as Exhibits).¹⁴

Without offering contrary evidence, the Trustee takes issue with the Defendant's contention that the subject auto policies were issued by Owners, which as noted above the Defendant asserts is a separate corporate entity. As for its argument that Owners should have been, but was not, timely added to this action as the true party in interest and may not be added now, the Trustee maintains that he still may amend the Complaint to do so.¹⁵ On review, however, because the Defendant allegedly first received the payments constituting the Transfers, it would be an "initial transferee," and it would not be necessary to add Owners as a defendant herein as the party "for whose benefit" the Transfers were made.¹⁶Section 550(a) governs the scope of recovery regarding the transferee(s) of an avoided transfer, and it provides as follows:

(a) Except as otherwise provided in this section, to the extent that a transfer is avoided under section 544, 545, 547, 548, 549, 553(b), or 724(a) of this title, the trustee may recover, for the benefit of the estate, the

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property transferred, or, if the court so orders, the value of such property, from—

(1) the initial transferee of such transfer or the entity for whose benefit such transfer was made; or

(2) any immediate or mediate transferee of such initial transferee.

11 U.S.C. § 550(a)(emphasis supplied). Consequently, the Trustee can recover from the Defendant as the initial transferee without suing Owners, the party that allegedly provided the relevant auto policies and that allegedly was the ultimate recipient of the funds. The Trustee disputes the Defendant's statement that payments made by the Debtor to Owners total $47,216.21 because this figure is based on an allocation of a larger payment that he does not concede is correct. Defendant's Statement of Facts, ¶ 12; Jerome Declaration, ¶ 11. Thus, he disputes any claim that the Defendant did not receive any part of the Transfers or how the Transfers were allocated among the various insurance policies and further contends no evidence has been presented on these issues. Trustee's Response, p. 7. On this point, the Defendant counters that the fact $47,216.21 was paid to Owners is supported by the sworn testimony offered in the Jerome Declaration. Further, it argues that the Trustee cannot create a fact issue based on a "failure of proof" claim when he admits the fact purportedly in issue (the amount attributed to Owners) but presents no countervailing evidence of his own. Defendant's Reply, p. 5.

In any event, the Trustee asserts that it is beyond question that the Defendant may be liable as an initial transferee of the Transfers and that they may be recoverable from it by virtue of 11 U.S.C. § 544, § 548, and § 550(a) and O.C.G.A. §§ 18-2-70, et seq. Trustee's Response, pp. 5-6. The Trustee adds that since the Defendant is the moving party on the Motion, the Defendant will

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need to provide more information regarding the timing of the Transfers and how they were in fact allocated or credited between the Defendant and Owners.¹⁷Trustee's Response, pp. 6-8.¹⁸ The Trustee also challenges the statements offered in the Jerome Declaration on grounds that they are not competent evidence because Mr. Jerome is an attorney with no personal knowledge of the facts or transactions identified therein. See Sitts v. United States, 811 F.2d 736, 742 (2d Cir. 1987), holding modified by Einaugler v. Supreme Ct. of State of N.Y., 109 F.3d 836 (2d Cir. 1997). Mr. Jerome states that he is an employee of the Defendant. The extent to which he reviewed the records and other information presumably prepared by others and on which he based his declarative statements is not disclosed and he has not been offered as an expert.¹⁹

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Finally, the Trustee maintains that, along with the fact of the Debtor's funding the Transfers and the Defendant's receipt as transferee,²⁰it is undisputed that the Debtor was insolvent during the relevant statutory period. Relying on past testimony in this case, the Trustee further contends that insiders of the Debtor engaged in a continuing pattern of fraudulent activity that is indicative of both actual fraudulent intent and constructive fraud.²¹The Defendant has not addressed this latter contention regarding the insiders' pattern of behavior.

C. Legal Standard for Summary Judgment

Summary judgment may be granted pursuant to Federal Rule of Civil Procedure ("F.R.C.P.") 56, which is made applicable herein by Federal Rule of Bankruptcy Procedure ("F.R.B.P.") 7056, "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." F.R.C.P. 56(a). In deciding a motion for summary judgment, the court "is not . . . to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

The initial burden of proving the absence of dispute as to any material fact rests with the moving party. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). To meet this initial burden, the moving party must identify "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes

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demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)(internal quotations omitted). Once the party seeking summary judgment has identified those materials demonstrating the absence of a genuine issue of material fact, the non- moving party cannot rest on mere denials or conclusory allegations. Instead, the non-moving party must instead go beyond the pleadings and designate, through proper evidence such as by affidavits or personal knowledge or otherwise, specific facts showing the existence of a genuine issue for trial. See F.R.C.P. 56(c) & (e); see also Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Johnson v. Fleet Finance Inc., 4 F.3d 946, 948-49 (11th Cir. 1993); Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115-16 (11th Cir. 1993). Here, because the Defendant will not bear the burden of proof at trial, it can carry its initial burden on its Motion first, by showing that there is insufficient evidence to support the Trustee's case as the non-moving party, or second, by offering positive evidence that demonstrates the Trustee will not be able to prove his case at trial. See Standard Fire Ins. Co. v. Knowles, 129 F. Supp. 3d 1271, 1274-75 (N.D. Ala. 2015), citing Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115- 16 (11th Cir. 1993). When this burden is satisfied, the nonmoving party may not then rely on allegations or denials stated in its own pleadings (F.R.C.P. 56(e)) but must present specific facts demonstrating the existence of a genuine dispute concerning material facts in issue. In re White, 2017 WL 3278842, at *2 (Bankr. N.D. Ga. Aug. 1, 2017), citing Hairston v. Gainesville Sun Pub. Co., 9 F.3d 913, 918 (11th Cir. 1993).

All reasonable doubts should be resolved in favor of the non-moving party, and "[i]f reasonable minds could differ on any inferences arising from undisputed facts, summary judgment should be denied." Twiss v. Kury, 25 F.3d 1551, 1555 (11th Cir. 1994)(citing Mercantile Bank &

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Trust v. Fidelity & Deposit Co., 750 F.2d 838, 841 (11th Cir. 1985)). In addition, deciding issues of credibility or state of mind or intent are not appropriate in ruling on summary judgment. Atl. Specialty Ins. Co. v. Newson, 672 F. Supp. 3d 1346, 1348 (N.D. Ga. 2023), appeal dismissed sub nom. Newson v. Hernandez, 2023 WL 8316397 (11th Cir. Aug. 9, 2023), citing Stewart v. Booker T. Washington Ins., 232 F.3d 844, 848 (11th Cir. 2000).

D. Analysis

1. Voidable Preferences To avoid the Transfers as preferential under Section 547(b), the Trustee must show under Count I of the Complaint that they were: (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 insolvent," (4) "made on or within 90 days before the date of the filing of the petition," and (5) enabled the defendant to receive more than it would have received in a hypothetical Chapter 7 liquidation if the transfer had not been made. 11 U.S.C. § 547(b).²²The Defendant contends the Trustee has not satisfied and cannot satisfy the timing element of this test regarding all the Transfers. It also relies on certain affirmative defenses under Section 547(c)(1) and (2) such as contemporaneous exchange for new value and ordinary course of business.²³ On review, it does not appear either that the Defendant has shown that there is insufficient evidence to support the Trustee's case or that it has offered evidence demonstrating that the Trustee

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will not be able to prove his preference claim at trial. From the pleadings of record, it appears that the Trustee may properly proceed to prove his assertion of an avoidable preferential transfer to Owners as the ultimate beneficiary of such payments on the automobile policies, and that the Defendant initially received the Transfers, however they were finally allocated. Based on the above legal standard, it has not been shown by the Defendant that the Trustee cannot prove through proper evidence that, during the preference period, Owners received more than it would have otherwise received in a liquidation on its debt based on the Transfers made during the Debtor's insolvency.

Further, there appear to be issues of fact regarding Defendant's assertion of affirmative defenses. For instance, the Defendant has not shown undisputed facts establishing that the Transfers were made "in payment of a debt incurred by the debtor in the ordinary course of business." See 11 U.S.C. § 547(c)(2). Although the Defendant may have quantified the amounts paid on the automobile policies, there is an absence of evidence regarding payment and invoicing dates and how each portion of such payments was credited toward the automobile policies. See Trustee's Response, p. 6. Similarly, issues of fact remain concerning Defendant's assertion that the Transfers provided "value" under Section 547(c)(1) or (c)(4) because even though insurance is arguably "valuable," it has not been established that the Defendant is entitled to judgment on this affirmative defense. Here, a proper basis has not been shown to explain why it was necessary to the Debtor's business that it pay to insure vehicles used by the Insiders for personal matters such that it received any value or benefit through the Transfers to the extent used to pay premiums for the automobile policies. See Trustee's Response, pp. 16-17.

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2. Fraudulent Transfers As set forth in Count II, the Trustee seeks to avoid the Transfers as fraudulent under several legal theories. The Trustee may seek to void the Transfers as fraudulent conveyances pursuant to Section 548(a)(1)(A) for actual fraud, or for constructive fraud under Section 548(a)(1)(B). These subsections provide as follows:

(a)(1) The trustee may avoid any transfer…of an interest of the debtor in property, or any obligation…incurred by the debtor, that was made or incurred on or within 2 years before the date of the filing of the petition, if the debtor voluntarily or involuntarily—

(A) made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made or such obligation was incurred, indebted; or (B)(i) received less than a reasonably equivalent value in exchange for such transfer or obligation; and

(ii)(I) was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation;

(II) was engaged in business or a transaction, or was about to engage in business or a transaction, for which any property remaining with the debtor was an unreasonably small capital; [or]

(III) intended to incur, or believed that the debtor would incur, debts that would be beyond the debtor's ability to pay as such debts matured….

11 U.S.C. § 548(a)(1)(A) & (B)(emphasis supplied). Next, the Trustee seeks to use Georgia's Uniform Fraudulent Transfer Act ("UFTA") as a basis for avoiding the Transfers. See O.C.G.A. §§ 18-2-70, et seq. The Trustee first relies on the standing and powers conferred upon him under 11 U.S.C. § 544(a) as a hypothetical creditor extending credit to the Debtor as of the Petition Date and obtaining a judicial lien or an execution against the Debtor. Here, the Trustee may seek to void transfers made with actual fraudulent intent as provided under applicable Georgia law. See O.C.G.A. § 18-2-74(a)(1). To determine whether the Debtor acted with actual intent, "consideration is given to an open-ended set of factors

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listed in O.C.G.A. § 18-2-74(b), which are commonly called the 'badges of fraud.'" In re White, 2017 WL 3278842, at *3 (Bankr. N.D. Ga. Aug. 1, 2017).

As further alleged by the Trustee, the Transfers may also be set aside as constructively fraudulent under O.C.G.A. § 18-2-74(a)(2).²⁴To succeed on this claim, the Trustee would need to show that the Debtor made the Transfers while insolvent and "without receiving a reasonably equivalent value in exchange" or fair consideration. O.C.G.A. § 18-2-74(a)(2).²⁵In addition, under 11 U.S.C. § 544(b), to the extent the Trustee can identify a creditor in existence at the time of the Transfers holding an unpaid allowed unsecured claim, he may avail himself of certain remedies provided by applicable law.²⁶

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On review, the Defendant has not shown a lack of evidence to support the Trustee's claims as to some items and has not offered evidence demonstrating that the Trustee will be unable to prove his case at trial on this count. Issues of fact remain pertaining to the Debtor's receipt of reasonably equivalent value in exchange for the Transfers based on actual usage of the subject vehicles and benefit to the Debtor as well as actual fraud.

With respect to the arguments set forth in the Defendant's Reply and rebuttals in the Trustee's Sur-Reply, the Defendant has asserted that the Trustee cannot create an issue of fact through his conclusory insistence that the Defendant issued the policies or was the payee on the Transfers. As noted above, the Defendant objects to any attempt by the Trustee to defeat the Motion by attempting to raise an issue regarding allocation of payments. Here, the Defendant states the Trustee has failed to point to any evidence supporting such claim or the rendering of a judgment against the Defendant. It adds this conclusion is especially warranted when the issuer of the policies and payee of the premiums have already been shown by undisputed evidence not to be the Defendant—but a separate insurer and non-party herein. Defendant's Reply, pp. 4-5. As averred in the Jerome Declaration, ²⁷

Owners issued the commercial automobile insurance policies, and the Defendant issued the non-automobile related insurance policies. The

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parties appear to contest the allocation of lump sum payments made on the automobile and non- automobile policies and/or both. The question of what part of each payment included in the Transfers goes to which policy remains a disputed issue of fact.²⁸ Finally, as mentioned above, issues of witness credibility are not appropriate for evaluation on summary judgment. Based on the extensive history of this case and the Court's previous opportunities to observe Mr. Harris' on direct and cross-examination at trial, however, the Trustee is correct that the Court has previously determined Mr. Harris' testimony not to be credible and its utility in establishing disputed facts unreliable.²⁹

3. Unauthorized Post-Petition Transfers Finally, in Count III, the Trustee alleges that Insiders of the Debtor caused it to pay to the Defendant the amount of $32,071.74 during the post-petition period as part of the Transfers under

11 U.S.C. § 549(a). On review, the Trustee's claim is asserted within the time provided in Section 549(d), and the unauthorized post-petition transfers may be recovered from the Defendant as a transferee under Section 550(a) unless it shows it is entitled to a statutory defense. ³⁰ The Defendant argues in response that "these payments were made in exchange for ongoing insurance

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coverage that protected the Debtor's assets and continued operations during the pendency of its bankruptcy case." Defendant's Brief, p. 18. As such, the payments contributed to the ongoing value of this bankruptcy estate as a routine business expense.

The Defendant has not shown that it is entitled to a defense that these payments were made in the ordinary course of business. Although insurance is obviously valuable, the Defendant has presented no undisputed facts demonstrating that the insurance coverage in issue conferred any benefit upon the Debtor as opposed to Insiders of the Debtor. As alleged by the Trustee, all the post-petition payments were made for automobile coverage. As discussed above, there is no competent evidence showing that the Debtor had an insurable interest in the subject vehicles or that they were used in the Debtor's business. Moreover, the Court never approved the making of such payments from property of the Debtor's bankruptcy estate for the personal benefit of third- party insiders in connection with their vehicles. See Main Case Docket passim.

Conclusion

Based on the foregoing discussion, it is

ORDERED that the Motion is GRANTED to the extent that the Transfers were made to the Defendant as premium payments on insurance policies that were not automobile insurance policies. It is further

ORDERED that the Motion is DENIED to the extent that the Transfers were made to the Defendant as premium payments on the automobile insurance policies. The Clerk is directed to serve a copy of this Order upon the Trustee, counsel for the Trustee, Defendant, counsel for the Defendant, and the United States Trustee.

[END OF ORDER]

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