Mcdonald's Corp. v. Stratosphere Corp.

MEMORANDUM *

McDonald’s Corporation appeals from a decision of the Bankruptcy Appellate Pan *750 el affirming the bankruptcy court’s decision that (1) two pre-bankruptcy payments to McDonald’s by Stratosphere Corporation (Debtor) are avoidable preferences under 11 U.S.C. § 547 (b) and that (2) McDonald’s has no claim for rejection damages stemming from Debtor’s rejection of McDonald’s lease. We affirm.

I. Whether the bankruptcy court erred in determining that McDonald’s did not have an equitable lien on the escrow account or related segregated account.

The question whether McDonald’s had a valid equitable lien on the construction funds in the escrow account or related segregated account for purposes of bankruptcy is governed by state law. Trust Corp. of Mont. v. Patterson (In re Copper King Inn, Inc.), 918 F.2d 1404, 1407 (9th Cir.1990). Under Nevada law, for an equitable lien to be based on a contract between two parties, there must be (1) an identifiable res and (2) an indication that the parties intended that res to serve as security for a debt. Topaz Mut. Co. v. Marsh, 108 Nev. 845 , 839 P.2d 606, 612-13 (1992); see also Ferrara v. Firsching, 92 Nev. 38 , 544 P.2d 1198,…