Memorandum of Decision Re: Ordinary Course of Business

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Decisions
IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re LITTLE LAKE INDUSTRIES,                                                       No. 1-90-01331        Debtor. ___________________________/ RAYMOND A. CAREY, Trustee,        Plaintiff,     v.                                                                                                       A.P. No. 92-1202 TITAN SALES OF KENTUCKY,        Defendant. ______________________________/
Memorandum of Decision
     In this preference action, all of the elements of section 547(b) of the Bankruptcy Code have been demonstrated by the trustee and are not subject to substantial dispute. The issue in the case is whether the payments were made in the ordinary course of business pursuant to section 547(c)(2). None of the payments was made timely in accordance with the agreement of the parties, with most being made about 30 days late.      Defendant Titan Sales of Kentucky failed to convince the court that one of the five payments in question, for $18,396.37 made June 22, 1990, was made in the ordinary course of business. This payment was unusually large and was made unusually late. It was not made according to any ordinary business terms either established by the dealings of the parties or acceptable generally in any applicable industry. There was nothing ordinary about it. These factors, and particularly the unusual delay in payment, take the payment outside the ordinary course of business exception. See In re Food Catering & Housing, Inc., 971 F.2d 396, 398 (9th Cir. 1992).      The other four payments, totalling $16,234.97, were made according to the past practices of the parties, by which Titan could expect payment about a month after the payment was due under its agreement with debtor Little Lake Industries. The court was not convinced of any sort of general industry standard applicable to the dealings between Titan and Little Lake. The main issue for the court to decide is whether a payment can be considered in the ordinary course of business if made in violation of the parties' agreement and not within any discernible industry standard.      A review of applicable case law makes it clear that a payment is not necessarily outside the ordinary course of business even though it was made late. In re Grand Chevrolet, Inc., 25 F.3d 728, 732 (9th Cir. 1994).      While Titan established no general industry standard for its type of business, the payments it received (other than the one discussed three paragraphs above) were within the range of practices of similar businesses. It appears that payments fall outside ordinary business terms only when they are idiosyncratic to the point of being extraordinary. See In re Cocolat, Inc., 176 B.R. 540, 550 (Bkrtcy.N.D.Cal.1995), and cases there cited. Accordingly, the court finds the remaining payments to be unavoidable.      For the foregoing reasons, the trustee shall have judgment against Titan in the sum of $18,396.97, together with interest at the legal rate from and after June 22, 1990, and costs of suit.      This memorandum constitutes the court's findings and conclusions pursuant to FRCP 52(a) and FRBP 7052. Counsel for plaintiff shall submit an appropriate form of judgment forthwith.
Dated: June 12, 1995                                                                                                       _______________________                                                                                                                                                          Alan Jaroslovsky                                                                                                                                                          U.S. Bankruptcy