Pergament v. Fairfield Univ.

DECISION DENYING TRUSTEE’S MOTIONS FOR SUMMARY JUDGMENT AND GRANTING DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT

*1  In these adversary proceedings, Marc A. Pergament (the “Trustee”), the chapter 7 trustee of the estate of Harold Adamo, Jr. (the “Debtor”), seeks to recover tuition payments made by the Debtor to two undergraduate universities and a graduate school for the education of his children. Specifically, the Trustee seeks to avoid pre-petition tuition payments made by the Debtor to Hofstra University (“Hofstra”) and Fairfield University (“Fairfield”) as pre-petition fraudulent conveyances under 11 U.S.C. §§548(a)(1)(B) and 544¹, and New York Debtor & Creditor Law (“NY DCL”) §§273, 273-a, and 285. The Trustee also seeks to avoid post-petition tuition payments made by the Debtor to Hofstra, Fairfield, and Brooklyn Law School (“Brooklyn,” and together with Hofstra and Fairfield, the “Defendants”) while he was a debtor in possession under chapter 11 as unauthorized post-petition transfers pursuant to §549. The Trustee and the Defendants have each moved for summary judgment. The Trustee seeks summary judgment on his claims that that the pre-petition tuition payments are avoidable under NY DCL §273-a, asserting that the Debtor did not receive reasonably equivalent value or fair consideration for the tuition payments because he was not a direct beneficiary of the tuition payments, and because he did not have a legal obligation to provide any education for his children over age 18. The Trustee also seeks summary judgment on his claim under §549, contending that the post-petition tuition payments made by the Debtor while he was a debtor in possession were not payments made in the ordinary course, and instead were unauthorized post-petition transfers of property of the estate. The Defendants seek summary judgment on all claims, arguing, among other things, that: (1) the pre-petition transfers are not avoidable because the Debtor received reasonably equivalent value and fair consideration in exchange; (2) the post-petition payments were not unauthorized transfers; (3) public policy does not support the avoidance of the tuition payments; and (4) even if the transfers are avoidable, the Defendants are