Opinion
Bankruptcy Case No. 19-12135 EEB Adversary Proceeding No. 21-1057 EEB
2023-03-10
IN RE; CORNERSTAR WINE & LIQUOR, LLC, Debtor. Jeffrey A. Weinman, chapter 7 trustee, Plaintiff, v. Paulette Dragul, Defendant.
Kristin Arthur, Kyler Burgi, Davis Graham & Stubbs LLP, Denver, CO, for Plaintiff. Aaron A. Garber, Littleton, CO, T. Edward Williams, Williams LLP, New York, NY, for Defendant.
Kristin Arthur, Kyler Burgi, Davis Graham & Stubbs LLP, Denver, CO, for Plaintiff.
Aaron A. Garber, Littleton, CO, T. Edward Williams, Williams LLP, New York, NY, for Defendant.
ORDER ON CROSS- MOTIONS FOR SUMMARY JUDGMENT
Elizabeth E. Brown, Bankruptcy Judge THIS MATTER is before the Court for a summary judgment disposition of a preference lawsuit. The Debtor operated a retail liquor store. It borrowed money from the Defendant to enable it to purchase inventory. The Debtor made four loan repayments to the Defendant during the preference period. The Trustee filed his complaint under § 547(b) to recover these payments. He later filed a motion requesting summary judgment. Upon review, it was clear that neither party had raised disputed facts. The Court then issued a notice pursuant to Fed. R. Civ. P. 56(f) indicating its intention to treat the Trustee's motion as cross motions for summary judgment, to which both parties have consented. However, on closer inspection, one of the issues will require a trial.
Unless specified otherwise, all further references to "section" or "§" are to the Bankruptcy Code, Title 11, United States Code.
To establish a prima facie case for an avoidable preference under § 547(b), the Trustee must show that the transfer at issue: "(1) is of an interest of the debtor in property; (2) is for the benefit of a creditor; (3) is made for or on account of an antecedent debt owed by the debtor before the transfer was made; (4) is made while the debtor is insolvent; (5) is made on or within ninety days [or one year if the transferee is an insider] before the date the bankruptcy petition was filed; and (6) allows the creditor to receive more than the creditor would otherwise be entitled to receive from the bankruptcy estate." Bailey v. Big Sky Motors, Ltd. (In re Ogden) , 314 F.3d 1190, 1196 (10th Cir. 2002). The Trustee has the burden of proof on each of these elements. Id.
To satisfy his burden, the Trustee has provided evidence that the Debtor made four payments to the Defendant, representing transfers of the Debtor's property. These payments occurred in the one-year period immediately preceding the bankruptcy filing. Defendant is an insider of the Debtor under § 101(31)(B)(vi). This allows the Trustee to seek recovery for the longer one-year preference period. During this window, the Debtor made three separate payments of $500 each on May 31, 2018, June 30, 2018, and July 31, 2018 ("the $500 Transfers") and one payment of $25,000 on October 24, 2018 (the "$25,000 Transfer"). The bankruptcy filing occurred on March 22, 2019. These undisputed facts satisfy elements 1, 2, and 5. The Defendant also admits that the Debtor made the $500 Transfers on account of antecedent debts (element 3).
The Debtor is an LLC that is managed by SRD Management, Inc. Shelly Dragul is the President of SRD. The Defendant is her mother-in-law.
But the Defendant disputes the remaining elements. She contends that the $25,000 Transfer was not on account of an antecedent debt because it was a contemporaneous exchange of new value. However, there was an existing debt that the Debtor repaid with this transfer. Whether it is insulated from avoidance by the contemporaneous exchange defense will be discussed separately below. In addition, the Defendant disputed that the Debtor was insolvent on the date of each transfer and that the transfers enabled her to receive more than she would have in a chapter 7 liquidation. However, in his Motion, the Trustee provided evidence of both the fourth and sixth elements and the Defendant did not provide any evidence to the contrary. As a result, pursuant to Fed. R. Civ. P. 56(e)(2), the Court considers these elements undisputed for the purposes of these cross motions.
From this evidence, the Court concludes that the Trustee has met his burden of establishing the necessary elements of a preferential transfer as to all four payments. This shifts the burden to the Defendant to establish a defense. She has asserted two: an ordinary course of business defense under § 547(c)(2) and a contemporaneous exchange of new value defense under § 547(c)(1).
A. Ordinary Course Transactions
Defendant argues that all four transfers are protected from avoidance by § 547(c)(2). That exception to preference recovery provides that a trustee may not avoid a transfer:
to the extent that such transfer was in payment of a debt incurred by the debtor in the ordinary course of business or financial affairs of the debtor and the transferee, and such transfer was –
(A) made in the ordinary course of business of financial affairs of the debtor and the transferee; or
(B) made according to ordinary business terms.
11 U.S.C. § 547(c)(2). The ordinary course of business exception "was intended 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." Jubber v. SMC Electrical Products, Inc. (In re C.W. Mining Co.) , 798 F.3d 983, 987 (10th Cir. 2015) (quoting Union Bank v. Wolas , 502 U.S. 151, 160, 112 S.Ct. 527, 116 L.Ed.2d 514 (1991) ). "[E]ven if payments were not common, they may be in the ordinary course if they did not favor certain creditors or encourage a race to dismember the debtor." Id. at 988 (citing Clark v. Balcor Real Estate Fin., Inc. (In re Meridith Hoffman Partners) , 12 F.3d 1549, 1553 (10th Cir. 1993) ).
This defense requires proof of two things: (1) proof that the Debtor incurred the debt in the ordinary course of business and either one of two possibilities: (2) the Debtor made the payments in the ordinary course of business that existed between these two business partners (a subjective test) or (3) the payments were made in accordance with industry standards (an objective test). Originally, the statute required proof of all three elements, but in 2005 Congress relaxed the requirements by rewriting the statute in the disjunctive form. By doing so, Congress made the test more flexible. Nevertheless, the Tenth Circuit still construes the ordinary course exception narrowly. Id. at 987.
Defendant supported her defense with her sworn statement and an affidavit from Susan Markusch, the Debtor's controller from 2008-2019. In this sworn testimony, they say that, prior to the Debtor's bankruptcy, Defendant regularly provided funds to the Debtor to enable it to purchase inventory and the Debtor would pay Defendant back "promptly after liquidation of the inventory." They assert that the Debtor made the $500 Transfers and the $25,000 Transfer in accordance with this "customary practice."
The Trustee merely states in his brief that there is no evidence it was the Debtor's ordinary practice to borrow from the Defendant. However, "[a]n opposition to summary judgment cannot rely on [mere] allegations or general denials in either its pleadings or its briefs; rather, specific and material facts for trial, together with probative evidence supporting such facts, must be identified." Am. Express Bank v. Mowdy (In re Mowdy) , 526 B.R. 63, 73 (Bankr. W.D. Okla. 2015) (citing State Farm Fire and Cas. Co. v. Edie (In re Edie) , 314 B.R. 6, 18 (Bankr. D. Utah 2004) ).
This Court's local rules on summary judgment procedure also specify how litigants must support their positions with evidence. Statements in support of, or against, a motion for summary judgment "must be followed by citation to admissible evidence either by reference to a specific paragraph number of an affidavit under penalty of perjury or fact contained in the record." L.B.R. 7056-1(c). Furthermore, "[w]here facts referred to in an affidavit are contained in another document, such as a deposition, interrogatory answer, or admission, a copy of the relevant excerpt from the document must be attached with the relevant passages marked or highlighted." Id. Otherwise, allowing self-serving, unsupported statements to effectively controvert undisputed and properly supported material facts set forth in a motion for summary judgment would divest the summary judgment process of any real effectiveness. Garrett v. Vaughan (In re Vaughan) , No. WO-05-028, 2006 WL 751388, at *4 (B.A.P. 10th Cir. Mar. 22, 2006).
Admittedly, the parties have submitted this matter to the Court on scant facts. The Defendant's affidavits, unsupported by documentary evidence, such as ledgers, are essentially conclusory, but nevertheless the sworn statements are some evidence. The Trustee failed to support his assertion on this point with any evidence. Therefore, the Court finds these debts were incurred in the ordinary course.
As to the second element of this defense, the Defendant has chosen to rely solely on the subjective test (the customary dealings between these two parties) rather than the objective test (industry standards). "[T]o determine what is ‘ordinary’ among parties who have interacted repeatedly, we inquire into the pattern of interactions between the actual creditor and the actual debtor in question, not about what transactions would have been ‘ordinary’ for either party with other debtors or creditors." Wood v. Stratos Prod. Dev., LLC (In re Ahaza Sys., Inc.) , 482 F.3d 1118, 1124 (9th Cir. 2007) (emphasis in original). As such, a creditor must establish a baseline of past practices between it and the debtor and show that the disputed payments were ordinary in relation to the baseline. Weinman v. New Penn Motor Express, Inc. (In re Office Source, Inc.) , No. 09-34901-HRT, Adv. Pro. No. 11-01858-HRT, Adv. Pro. No. 11-01869 HRT, 2013 WL 6507186, at *2 (Bankr. D. Colo. Dec. 11, 2013) ; 5 Collier on Bankruptcy ¶ 547.04[2][a][ii](16th ed. 2022).
To assess the applicability of the ordinary course defense, courts generally consider four factors: "(1) the length of time the parties were engaged in the type of dealing at issue; (2) whether the amount or form of tender differed from past practices; (3) whether the debtor or creditor engaged in any unusual collection or payment activities; and (4) the circumstances under which the payment was made." Gonzales v. Conagra Grocery Prod. Co. (In re Furr's Supermarkets, Inc.) , 373 B.R. 691, 705 (B.A.P. 10th Cir. 2007). "[A]ny significant alteration in any one of the factors may be sufficient to conclude that a payment was made outside the ordinary course of business." Id. at 706. As to the $500 Transfers, the submissions show these payments were made for the same amount, for the same purpose (to enable the Debtor to purchase inventory), and were each made at the same time – at the end of the same month in which the Debtor borrowed the funds. It would have been more helpful if the parties had offered evidence as to their pattern of borrowing, if any, prior to the preference period. Often parties will offer, as a comparative baseline, evidence of their dealings in the two-year period prior to the bankruptcy. But that is not an absolute requirement. Here the parties have only provided evidence of their payments during the one-year preference period. Yet the fact that the only transactions between the parties occurred within the preference period is not a bar to the ordinary course defense. Dill v. Brewer Oil Co. (In re Indian Capitol Distrib., Inc.) , 484 B.R. 394, 413 (Bankr. D. N.M. 2012). Thus, given the limited evidence offered, the Court finds the $500 Transfers satisfy the ordinary course defense.
The $25,000 Transfer is different primarily because of its magnitude. It is literally fifty times the amount of the other transfers. And the trustee's affidavit said that, in the one year prior to bankruptcy, there was only this one large transfer. It may be that, over the past two years prior to bankruptcy, there were several large loans like this one. But no one offered anything to support such a finding. Based on this limited evidence, the Court finds that this larger transaction was not part of the ordinary dealings between these two parties. As a result, the $25,000 Transfer is not protected by § 547(c)(2).
B. Contemporaneous Exchange for New Value
Defendant also contends that the preference exception in § 547(c)(1) shields the $25,000 Transfer from recovery. That section states: "The trustee may not avoid ... a transfer – (1) to the extent such transfer was – (A) intended by the debtor and the creditor ... to be a contemporaneous exchange for new value given to the debtor; and (2) [was] in fact a substantially contemporaneous exchange." The purpose of this exception is to "encourage creditors to continue to deal with troubled debtors without fearing they will have to disgorge payments received for value given." 5 Collier on Bankruptcy ¶ 547.04[1] (16th ed. 2022); Lindquist v. Dorholt (In re Dorholt, Inc.), 224 F.3d 871, 873 (8th Cir. 2000). This section insulates transfers that do not cause a diminution of the estate because unsecured creditors are not harmed by a transfer if the estate is replenished by an infusion of assets that are of roughly equal value to those transferred. Manchester v. First Bank & Trust Co. (In re Moses), 256 B.R. 641, 652 (B.A.P. 10th Cir. 2000).
We can break this statute into three subparts. The Defendant must prove: (1) the debtor received new value for the transfer; (2) from the outset, the parties intended the transfer to be a contemporaneous exchange; and (3) the exchange was in fact substantially contemporaneous.
1. New Value
The Bankruptcy Code defines "new value" as
money or money's worth in goods, services, or new credit, or release by a transferee of property previously transferred to such transferee in a transaction that is neither void nor voidable by the debtor or the trustee under any applicable law, including proceeds of such property, but does not include an obligation substituted for an existing obligation.
§ 547(a)(2). The Defendant asserts she gave new value in the form of a cash infusion of $25,000. The Trustee counters that the $25,000 represents a repayment of an antecedent debt. And it is well established that the satisfaction of an antecedent debt is not new value under § 547(c)(1). In re Moses, 256 B.R. at 652 (citations omitted).
But the transaction between the Debtor and the Defendant was part of a multi-party transaction. The Defendant advanced funds to the Debtor to enable the Debtor to buy liquor inventory from a wholesale supplier(s), which the Debtor then immediately resold to a customer(s) at retail price, and the Debtor returned the wholesale price to the Defendant within five days, keeping the up-charge for itself. The Court has not been given anything but these bare bones facts. Yet they suggest that the Debtor needed the funds to buy the liquor and had the ability to immediately resell it and repay the Defendant. The fact that the Defendant gave the Debtor a cashier's check for the funds suggests that, whatever the details of the arrangement, it had to happen quickly.
As the Moses court noted, there is an important difference between § 547(c)(1) ’s contemporaneous exchange defense and § 547(c)(4) ’s new value defense. Subsection (c)(4) requires the creditor who received the transfer to be the one who gave the debtor the new value directly. Subsection (c)(1) does not require the transferee to be the one who gave the new value. In fact, a third party may provide it. This built-in flexibility makes the (c)(1) defense available in multi-party transactions. Here the multi-party transaction enabled the Debtor to sell new inventory at a profit, thereby enhancing and not diminishing the estate.
2. The Intentions of the Parties
This is not to say that all loan repayments will fit within this exception. In fact, most will not. What distinguishes the contemporaneous exchange exception from most credit transactions is the parties’ intention – at the outset – to effectuate an almost immediate repayment of the credit. Defendant's statement says that she "agreed to provide the Debtor with $25,000 so that the Debtor could purchase inventory on the understanding that the funds would be repaid as soon as the Debtor sold the inventory and with the expectation that the funds would be available nearly immediately." Ms. Markusch's affidavit states that, on October 19, 2019, Defendant "transferred $25,000 to the Debtor by cashier's check to enable the Debtor to purchase inventory" and that "[t]he Debtor then repaid [Defendant] by way of the $25,000 Transfer on or about October 24, 2018, just five days later." Defendant and Ms. Markusch affirm that the Debtor and the Defendant "intended the $25,000 Transfer to be, and that [it] was in fact, in exchange for new value conveyed contemporaneously with the $25,000 Transfer and was not intended to create an antecedent debt."
The Trustee offered no facts to refute these statements. Instead he argues that, as a matter of law, a loan or credit transaction cannot fit within this exception. He relies on Brown v. Kitchenmaster (In re Hertzler Halstead Hospital ), 334 B.R. 276 (Bankr. D. Kan. 2005). In that case, a principal of the creditor made short-term loans to enable the hospital to make payroll and then caused the hospital to repay him as soon as the hospital received sufficient payment on its account receivables. The hospital executed promissory notes to evidence the loans. The creditor argued this defense with one loan repayment because the length of time between borrowing and repayment was very brief. Nevertheless, the court held that this evidence was "fatal to [the creditor's] § 547(c)(1) defense because it indicates [the parties] never intended the transfer to be a contemporaneous exchange." Id. at 289 (emphasis in original). While the court did not articulate this, the implication is that these note obligations were either for a stated term or an indefinite term – whenever the hospital was able to repay the creditor. The parties did not go into the transaction with the expectation of an almost immediate repayment. It just happened to be the case that one payment followed shortly on the heels of the borrowing. Such facts would not indicate an intention of the parties from the outset that the loan be repaid immediately.
In Moses , the debtor had a secured loan from a trust but was unable to make a payment on the loan without additional borrowing. It arranged for a thirty-day unsecured loan from the bank. It used the bank proceeds to make a payment on the trust loan. Having received a payment, the trust was then willing to loan additional funds to the debtor on a secured basis. The debtor used the secured loan proceeds to repay the bank and other creditors. The trustee sued the bank to recover the funds it had received in repayment of its loan during the preference period. On appeal, the court did not find error in the bankruptcy court's conclusion that the parties did not intend an almost immediate exchange when they entered into the loan. The debtor signed a thirty-day promissory note. It did not condition the loan on an immediate payment on the trust loan and use of new trust loan proceeds to repay the bank. Therefore, the transaction failed the "intention" test. Moreover, the court noted that the net effect of the transactions diminished the estate. The debtor replaced an unsecured debt owed to the bank with an additional secured loan owed to the trust.
At a minimum, both Kitchenmaster and Moses stand for the proposition that most loan or credit transactions will fail to meet the "intention" aspect of the contemporaneous exchange defense when they do not contemplate an almost immediate repayment. One could also interpret them, as the Trustee does here, as an absolute bar to using this defense in a credit transaction. In fact, some courts have expressly held just that. But this Court rejects that supposition.
See, e.g., Feltman v. City Nat'l Bank of Fla. (In re Sophisticated Commc'ns, Inc.), 369 B.R. 689, 704 (Bankr. S.D. Fla. 2007) (opinion clarified on denial of reconsideration, Bankr. No. 00-17635-BKC-RAM, Adv. No. 02-1526-BKC-RAM-A, 2007 WL 2257604 (Bankr. S.D. Fla. Aug. 1, 2007) ); Saracheck v. Crown Heights House of Glatt, Inc. (In re Agriprocessors, Inc.), 521 B.R. 292, 311–12 (Bankr. N.D. Iowa 2014).
And the weight of authority agrees. See 5 Collier on Bankruptcy ¶ 547.04[1][a] (16 ed. 2022). In Hechinger Inv. Co. of Del. v. Universal Forest Prods. (In re Hechinger Inv. Co. of Del., Inc.) , 489 F.3d 568 (3rd Cir. 2007), the court held that a credit transaction does not preclude, as a matter of law, a finding that the transfers between the parties were part of a contemporaneous exchange for new value. "The question is one of intent and although a delay between the incurrence of the debt and its payment can evidence that the exchange was not intended to be contemporaneous, the passage of time does not necessarily negate that intent." Id. at 574-75.
Most courts construing the § 547(c)(1) exception have not limited its application to instances where a debtor pays for goods or services with a check. Instead, courts have focused on the policy the exception serves – to encourage creditors to deal with financially stressed debtors in transactions that do not harm other creditors because they do not diminish the debtor's assets. As such, many courts have found the contemporaneous exchange defense applicable in cases involving short-term loans or where a debtor makes a payment a few days after incurring a debt.
See also In re Indian Capitol Distrib., Inc. , 484 B.R. at 411-12 (payments debtor made two to four days after the creditor billed for fuel it delivered were substantially contemporaneous); Morse Operations, Inc. v. Goodway Graphics of Virginia, Inc. (In re Lease-a-Fleet, Inc.) , 155 B.R. 666, 684 (Bankr. E.D. Penn. 1993) (determining that debtor's payment of a short-term bank loan one day after it received the funds was a contemporaneous exchange protected by § 547(c)(1) ; Redmond v. CJD & Assoc., LLC (In re Brooke Corp.) , 536 B.R. 896, 911 (Bankr. D. Kan. 2015) (one day between advance of funds and transfer of replacement funds was substantially contemporaneous transaction); Official Comm. of Unsecured Creditors of the Estate of CCG 1355, Inc. v. CRST, Inc. (In re CCG 1355, Inc .), 276 B.R. 377, 385-86 (Bankr. D.N.J. 2002) (debtor's payment, made seven to eleven days after shipment of goods, was contemporaneous exchange); Peltz v. Hartford Life Ins. Co (In re Bridge Inform. Sys., Inc .), 321 B.R. 247, 256 (Bankr. E.D. Mo. 2005) (contemporaneous exchange defense applied where parties agreed that debtor would pay creditor within one business day following its receipt of invoice for services provided the previous week); Webster v. The Management Network Group, Inc. (In re NETtel Corp.) , 364 B.R. 433, 460 (Bankr. D.D.C. 2006) (denying trustee's motion for summary judgment where court could infer from evidence that debtor issued a check for computer equipment four days after supplier shipped the equipment).
For example, in Pogge v. Nolan (In re Nolan), No. 96-71407, 1997 WL 33479209 (Bankr. C.D. Ill. Oct. 15, 1997), a debtor received funds from his brother and repaid him eleven days later from the proceeds of a mortgage refinance. The court ruled that the transaction was a substantially contemporaneous exchange protected by § 547(c)(1). It concluded that a loan that contemplates "almost immediate repayment" constitutes a contemporaneous exchange and that such a transaction is consistent with the purpose of the exception to protect transactions that do not diminish the bankruptcy estate. Id. at *3-4. The debtor's brother was a new creditor who advanced funds to the struggling debtors and received payment soon thereafter. As such, the court explained, "[t]he legitimate expectations of the [d]ebtors’ other creditors were not defeated by this transaction because the net available assets were not diminished by the [brother's] brief entry and exit from the pool of creditors. The transaction did not result in the depletion of the [d]ebtors’ estate." Id. at *4.
Here, as in In re Nolan , the undisputed evidence shows that the Debtor's other creditors were not harmed by this transaction. The Defendant's brief entry and exit from the pool of creditors enhanced the estate with an additional $25,000 in inventory that the Debtor used to realize a profit on its resale. But what is not clear from the submissions is whether the Debtor and the Defendant intended an almost immediate repayment from the outset or whether it was merely an understanding that the Debtor would repay the Defendant as soon as it had the necessary funds. It may be that the Debtor had a customer(s) waiting in the wings that assured it of its ability to repay immediately. But the Court cannot tell from the bare bone facts presented. Thus, the Court will err on the side of caution and set this one issue for trial.
3. Substantially Contemporaneous
As to the objective portion of the exception -- whether the $25,000 Transfer was "in fact" a substantially contemporaneous exchange -- the Court first observes that the Bankruptcy Code does not, define "substantially contemporaneous." The legislative history to § 547(c)(1), notably scant, indicates that one focus of the exception was to protect transactions where a debtor purchases goods or services with a check. It states that the exception:
is for a transfer that was intended by all parties to be a contemporaneous exchange for new value, and was in fact substantially contemporaneous. Normally, a check is a credit transaction, however, for the purposes of this paragraph, a transfer involving a check is considered to be "intended to be contemporaneous." And if the check is presented for payment in the normal course of affairs, which the Uniform Commercial Code specifies as 30 days ..., that will amount to a transfer that is "in fact substantially contemporaneous."
H.R.Rep. 95-595, at 373 (1977), as reprinted in 1978 U.S.C.C.A.N. 5963, 6329.
It is important to note that the plain language of the statute does not require a simultaneous exchange of value. In fact, if it were simultaneous, there would be no antecedent debt and no need for the defense. In re Indian Capitol Distrib., 484 B.R. at 408. Instead, the use of the word "substantially" as a modifier to "contemporaneous" connotes a flexible approach. As the Dorholt court explained,
[T]he plain language of the statute is at odds with [a] bright-line test. The statute uses a more elastic term, substantially contemporaneous .... Congress knew how to adopt a specific time limit; it did so in the purchase money security interest exception, § 547(c)(3). It chose a less rigid standard for § 547(c)(1), no doubt because that provision governs a wider variety of loans and credit transactions. We must construe the statute accordingly.
In re Dorholt, 224 F.3d at 874 (emphasis in original).
A flexible approach to determining whether a transaction is "substantially contemporaneous" requires a court to consider all the relevant circumstances surrounding the transaction. In Pine Top Ins. Co. v. Bank of America Nat'l Trust & Sav. Ass'n , 969 F.2d 321 (7th Cir. 1992), the court observed that
[t]he focus of the "in fact" prong of the [ § 547(c)(1) analysis] is obviously on the temporal proximity between the issuance of credit and transfer of assets to secure that credit. However, the modifier "substantial" makes clear that contemporaneity is a flexible concept which requires a case-by-case inquiry into all relevant circumstances (e.g., length of delay, reason for delay, nature of the transaction, intentions of the parties, [and the] possible risk of fraud) surrounding the allegedly preferential transfer.
Pine Top , 969 F.2d at 328.
This Court finds that repayment of the loan within five days satisfies the "contemporaneity" requirement. Not only was this only five calendar days in total, but there were only two business days between the loan's advance and its repayment. This would appear to satisfy anyone's definition of "substantially" contemporaneous.
For these reasons, the Court hereby ORDERS that the Trustee's Motion for Summary judgment is DENIED and Defendant's Cross-Motion for Summary Judgment is GRANTED in part and DENIED in part. The only issue left for trial is that of the intention of the Debtor and the Defendant at the outset of the $25,000 advance in connection with the contemporaneous exchange defense.