In re Diversified
Livingston v. Kendall (In Re Diversified Contract Services Inc.)
Opinion
Opinion
Lynch, J.
ORDER
I. Introduction
Appellant Dr. Don Livingston, dba Work Fitness Institute [“Livingston”], filed this appeal from a final judgment of the Honorable Randall J. Newsome, United States Bankruptcy Judge for the Bankruptcy Court, Northern District of California. This Court has jurisdiction pursuant to Federal Rule of Bankruptcy Procedure 8001(a).
On August 12, 1991, Carolyn N. Lorence, Chapter 11 Trustee of the bankruptcy estate of Diversified Contract Services, Inc. [“DCS”], filed an action against Livingston seeking an avoidance of a $75,000 transfer on the grounds that it was either a fraudulent conveyance or a preferential transfer. Following a bench trial, the Honorable Randall J. Newsome found that the payment was not a fraudulent conveyance, but was an avoidable preference. Livingston appeals. Counsel for both parties were present at oral argument before this Court on April 9, 1993.
II. Background
Before filing bankruptcy, DCS was operated by its president and majority shareholder, Kenneth Smith [“Smith”]. Livingston was a longtime friend of Smith. In early 1989, Smith asked Livingston to loan him $75,000 so that DCS could meet its payroll obligations while it awaited…