15-3710-bk
John Nagle Co. v. McCarthy

                             UNITED STATES COURT OF APPEALS
                                FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed
on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate
Procedure 32.1 and this Court’s Local Rule 32.1.1. When citing a summary order in a
document filed with this Court, a party must cite either the Federal Appendix or an
electronic database (with the notation “summary order”). A party citing a summary order
must serve a copy of it on any party not represented by counsel.

       At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 12th day of July, two thousand sixteen.

PRESENT:        JOSÉ A. CABRANES,
                SUSAN L. CARNEY,
                CHRISTOPHER F. DRONEY,
                             Circuit Judges.



IN RE: THE COUSINS FISH MARKET, INC.,

                        Debtor.

************************************************
JOHN NAGLE CO.,

                        Appellant,                              No. 15-3710-bk

                        v.

WILLIAM J. MCCARTHY, AS THE CHAPTER 7 TRUSTEE
TO BANKRUPTCY ESTATE OF THE COUSINS FISH
MARKET, INC.,

                        Appellee.


FOR APPELLANT:                                       JOSEPH S.U. BODOFF, Rubin and Rudman
                                                     LLP, Boston, MA.
FOR APPELLEE:                                             CHRISTIAN H. DRIBUSCH, The Dribusch
                                                          Law Firm, East Greenbush, NY.

     Appeal from a judgment of the United States District Court for the Northern District of
New York (Gary L. Sharpe, Judge).

     UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the October 14, 2015 judgment of the District Court is
AFFIRMED.

         Appellant John Nagle Co. (“Nagle”) appeals from a judgment of the District Court affirming
a judgment of the United States Bankruptcy Court for the Northern District of New York (Robert
E. Littlefield, Jr., Judge). See John Nagle Co. v. McCarthy, 539 B.R. 205 (N.D.N.Y. 2015). The
Bankruptcy Court had entered judgment in an adversary proceeding against Nagle, a fish-and-
seafood wholesaler, and in favor of appellee William J. McCarthy (the “trustee”), the Chapter 7
trustee to the bankruptcy estate of the Cousins Fish Market, Inc. (“Cousins”), in the amount of
$109,325.01 plus costs and interest, after ruling that certain transfers from Cousins to Nagle were
avoidable preferences under 11 U.S.C. § 547(b).

         On appeal, Nagle principally argues that the Bankruptcy Court erred by (1) excluding certain
documentary evidence and witness testimony from the bench trial; and (2) concluding that Nagle
failed to prove its two affirmative defenses under 11 U.S.C. § 547(c)(1) and (c)(2). We assume the
parties’ familiarity with the underlying facts, the procedural history of the case, and the issues on
appeal. For the reasons set forth below, we reject Nagle’s appeal as meritless.

        First, we conclude that the Bankruptcy Court did not abuse its discretion in excluding
evidence from the bench trial that had not been produced to the trustee during discovery. After
conducting a hearing on the trustee’s motion in limine, the Bankruptcy Court articulated the factors
from Patterson v. Balsamico, 440 F.3d 104, 117 (2d Cir. 2006), and considered each seriatim. The
Bankruptcy Court found that, although the new evidence was important to Nagle because Nagle
would be unlikely to prove its affirmative defenses without it, the other three factors weighed in
favor of exclusion: The Bankruptcy Court found that Nagle had failed to meaningfully explain why
the evidence was not produced or disclosed; that prejudice to the trustee would be great given that
discovery had been closed for more than three months despite previous extensions; and that a
continuance would be inopportune because the bench trial was scheduled to commence in only two
weeks and pretrial statements were due in less than one week. As for the proposed witness
testimony at issue, the Bankruptcy Court found that it would be improperly based on undisclosed
evidence, not personal knowledge. Based on the Bankruptcy Court’s findings, and our independent
review of the record, we cannot say that the Bankruptcy Court abused its discretion in excluding the
documentary evidence and related witness testimony.



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         Second, we conclude that the Bankruptcy Court—based on the limited record evidence
resulting from the above rulings—did not err in ruling that Nagle failed to establish its affirmative
defenses. See 11 U.S.C. § 547(g) (“[T]he creditor or party in interest against whom recovery or
avoidance is sought has the burden of proving the nonavoidability of a transfer under subsection (c)
of this section.”).

        With respect to the contemporaneous-exchange-for-new-value defense, the Bankruptcy
Court did not err in concluding that Nagle failed to prove the requisite intent. See id. § 547(c)(1). As
the Bankruptcy Court pointed out, Nagle introduced no testimony or contractual terms governing
the transfers. And although reasonable inferences of intent can be drawn from the invoices and
corresponding checks between the parties, we cannot say in these circumstances that the Bankruptcy
Court’s finding that Nagle failed to prove intent was clearly erroneous. See Ceraso v. Motiva Enters.,
LLC, 326 F.3d 303, 316 (2d Cir. 2003) (explaining that the clearly erroneous standard “applies [after
a bench trial] whether . . . findings are based on witness testimony, or on documentary evidence, or
on inferences from other facts” and that “[i]n reviewing findings for clear error, we are not allowed
to second-guess . . . the trial court’s . . . choice between permissible competing inferences”).
Accordingly, the Bankruptcy Court did not err in ruling that Nagle failed to prove the defense.

         With respect to the ordinary-course-of-business defense, the Bankruptcy Court did not err in
concluding that Nagle failed to prove a sufficient baseline of prior dealings between the parties. See
11 U.S.C. § 547(c)(2). The Bankruptcy Court found that Nagle had submitted 44 invoices, but that
37 of these were dated within the preference period (July 28, 2009 to October 26, 2009), and the
remaining 7 were dated within the week before the preference period; and that only 2 of the checks
tendered by Cousins were dated before the preference period. The Bankruptcy Court further found
a lack of evidence of when payments were due during the pre-preference period or of an agreement
between the parties that showed the terms of the transfers or what was expected of the parties.
Based on the Bankruptcy Court’s findings, which were not clearly erroneous, and the paucity of
evidence regarding pre-preference-period transfers, we agree with the Bankruptcy Court that Nagle
failed to prove that the transfers at issue were made in the ordinary course of business or according
to ordinary business terms. See id. Accordingly, the Bankruptcy Court did not err in ruling that Nagle
failed to prove the defense.

                                          CONCLUSION

        We have considered all of the appellant’s remaining arguments and find them to be without
merit. Accordingly, we AFFIRM the October 14, 2015 judgment of the District Court.


                                                        FOR THE COURT:
                                                        Catherine O’Hagan Wolfe, Clerk



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