United States Bankruptcy Appellate Panel

For the Eighth Circuit

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No. 13-6048

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In re: Brandon G. Pierce; Nicole L. Pierce

lllllllllllllllllllllDebtors

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Brandon G. Pierce; Nicole L. Pierce

lllllllllllllllllllll Plaintiffs - Appellants

v.

Collection Associates, Inc.

lllllllllllllllllllll Defendant - Appellee

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 Appeal from United States Bankruptcy Court 

for the District of Nebraska - Lincoln

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 Submitted: December 10, 2013

 Filed: December 30, 2013

(Filing Date Corrected on January 15, 2014)

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Before FEDERMAN, Chief Judge, KRESSEL and SHODEEN, Bankruptcy

Judges.

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KRESSEL, Bankruptcy Judge. 
The debtors, Brandon G. Pierce and Nicole L. Pierce, appeal from an order of

the bankruptcy court denying their complaint to avoid and recover transfers of wages 1

to the appellee, Collection Associates, Inc.. For the reasons that follow, we affirm. 

BACKGROUND

On December 10, 2012, the Pierces filed a chapter 13 bankruptcy petition.

Prior to the petition, Collection Associates filed a collection suit against Brandon

Pierce in Nebraska state court and obtained a judgment. Pursuant to a Nebraska court

order Collection Associates garnished Pierce’s employment wages. The garnishment

occurred partially during the 90 days prior to the bankruptcy filing. The garnishments

that took place during that time were in the following amounts:

Payroll Week Ending Check Date Amount Garnished 

1. 9/23/2012 9/28/2012 $118.48

2. 10/7/2012 10/12/2012 $148.10

3. 10/21/2012 10/26/2012 $148.10

4. 11/4/2012 11/9/2012 $148.10

5. 11/18/2012 11/23/2012 $148.10

6. 12/2/2012 12/7/2012 $148.10

The total amount ofthe wage garnishments was $858.98. However, Collection

Associates did not receive that entire sum. Pursuant to Neb. Rev. Stat. Section 25-

1056, wages that are withheld by a garnishee must first be transferred to the court for

delivery to the judgment creditor. At the time of the bankruptcy filing the court had

only received and delivered $562.78 to Collection Associates. 

Two days after the bankruptcy filing, on December 12, 2012, the court received

a check for $148.10 from Pierce’s employer, the garnishee. It did not deliver these

 The Honorable Thomas L. Saladino, Chief Judge, United States

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Bankruptcy Court for the District of Nebraska. 
funds to Collection Associates. On December 21, 2012, Collection Associates filed

a cancellation of garnishment. Despite the cancellation, on December 26, 2012, the

court received another check for $148.10 from the garnishee. These funds also were

not transferred to Collection Associates. Instead, the court returned the two checks

to the garnishee. The garnishee then directly refunded the checks to Pierce. 

On February 13, 2013, the Pierces filed an adversary proceeding seeking an

order avoiding the transfers of the garnished funds and requiring Collection

Associates to return $562.78 to them. On June 20, 2013, the parties submitted a

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statement of stipulated facts. The case was tried on those stipulated facts on August

21, 2013. The bankruptcy court held that the transfers were not avoidable. On

September 3, 2013, the Pierces filed a timely notice of appeal. 

Meanwhile, on August 21, 2013, the chapter 13 trustee filed a notice of

payment default. The Pierces failed to cure the default and on September 25, 2013

the bankruptcy case was dismissed. On October 23, 2013, the Pierces filed a “motion

to reinstate” their case. On November, 14, 2013, that motion was granted. 

STANDARD OF REVIEW

We review the bankruptcy court’s factual findings for clear error and its

conclusions of law de novo. Blackwell v. Lurie (In re Popkin & Stern), 223 F.3d 764,

765 (8th Cir. 2000). 

We may affirm the bankruptcy court’s order on any basis supported by the

record, even if that ground was not considered by the trial court. Mid-City Bank v.

Skyline Woods Homeowners Assoc. (In re Skyline Woods County Club, LLC), 431

B.R. 830, 836 n.16 (B.A.P. 8th Cir. 2010). 

 It is unclear what standing Nicole Pierce had in this adversary 2

proceeding. The garnishment was solely of Brandon Pierce’s employment wages.
ANALYSIS

Mootness 

Collection Associates argues that this appeal is moot because on September 25,

2013 the bankruptcy case was dismissed. However, Collection Associates fails to

address the fact that the Pierces’ “motion to reinstate” the case was granted. There

is really no such procedure as “reinstating” a case. In effect, when the court granted

the “motion to reinstate” the order of dismissal was vacated. See F. R. Bank. P. 9023.

Therefore this appeal is not moot. 

Avoidance of Transfers 

Section 547(b) of the Bankruptcy Code provides that a trustee may avoid any

transfer of an interest of the debtor in property: 

(1) To or for the benefit of a creditor;

(2) For or on account of an antecedent debt owed by the

debtor before such transfer was made;

(3) Made while the debtor was insolvent

(4) Made- 

(A) on or within 90 days before the date of the

filing of the petition; or

(B) between 90 days and one year before the date of

the filing of the petition, is such creditor at the time

of such transfer was an insider. 

(5) The enables such creditor to receive more than such

creditor would receive if - 

(A) the case were a case under Chapter 7 

(B) the transfer had not been made; and 

(C) such creditor received payments of such debt to

the extent provided by the provisions of this title. 

As provided by the statute, a trustee may bring an action to avoid a prepetition

transfer. However, 11 U.S.C. § 522(h), when read in conjunction with 11 U.S.C. §
522(g), allows a debtor to avoid prepetition preferential transfers if (1) the property

transferred would have been exempt; (2) the propertywas not transferred voluntarily;

and (3) the trustee has not sought to bring an avoidance action. See McCarthy v.

Brevik Law (In re McCarthy), 501 B.R. 89 (B.A.P. 8th Cir. 2013); see also 11 U.S.C.

§ 522(g)-(h). 

The Pierces and Collection Associates agree that all elements of § 547(b) are

met with regard to the transfers of the garnished wages. However, even if the

elements of § 547(b) are met there are defenses to avoidance actions. The relevant

defense is found in 11 U.S.C. § 547(c)(8). It reads: 

(c) a trustee may not avoid under this section a transfer - 

(8) if, in a case filed by an individual debtor whose

debts are primarily consumer debts, the aggregate

value of all property that constitutes or is affected by

such transfer is less than $600. 

The parties disagree on whether the above exception applies. The bankruptcy

court held that § 547(c)(8) did apply because Collection Associates did not get the

benefit or the value of $600 or more . 

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Collection Associates agrees with the bankruptcy court and argues that §

547(c)(8) applies because they received less than $600. They argue that it is

irrelevant that $858.98 was garnished fromPierce’s wages because they only received

a portion of that amount. The amount received by Collection Associates does not

include the last two garnishment payments. Those payments, totaling $296.20, may

have been transferred to the court but they were never transferred to Collection

 The parties, and as a result, the bankruptcy court operated under the

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assumption that a debtor may aggregate multiple transfers to a single creditor

made during the preference period to determine whether the $600 threshold of §

547(c)(8) has been met. Since no one has raised this issue we too operate under

this assumption without deciding the issue. 
Associates. In fact, the payments were returned to Pierce. For these reasons,

Collection Associates argues that § 547(c)(8) applies and the transfers cannot be

avoided. 

The Pierces disagree. They argue that § 547(c)(8) does not apply because more

than $600 was transferred. According to the Pierces, all $858.98 was transferred

under the meaning of § 547(c)(8). The transfer occurred when Pierce’s employer

withheld his earnings because at that time Pierce was involuntarily parting with his

interest in those wages. It follows then, the Pierces argue, that the $296.20

transferred from the garnishee but never to Collection Associates should still be

included in the calculation of the amount of the transfer. 

 

We agree with the Pierces that at one time all six wage garnishments, totaling

$858.98, constituted preferences. We have previously held that for preference

purposes, if the property transferred is the debtor’s wages then the transfer occurs

precisely when wages are earned. See Wade v. Midwest Acceptance Corp. (In re

Wade), 219 B.R. 815 (B.A.P. 8th Cir. 1998); see also James v. Planters Bank (In re

James), 257 B.R. 673 (B.A.P. 8th Cir. 2001). In this case, each garnishment was a

preference at the time Pierce earned his wages. 

 However, when the Pierces brought this preference action the garnishee had

already returned $296.20 to them. As the Pierces recognized, the only remedy

available to them was avoidance of the wages still in possession of Collection

Associates. Accordingly, their requested relief was for the return of $562.78, an

amount less than $600. Therefore, under any definition of the word transfer and

regardless of the benefit Collection Associates received § 547(c)(8) applies. 
CONCLUSION

Because the amount sought be to recovered is less than $600, § 547(c)(8)

applies as a defense to this preference action. The bankruptcy court’s judgment is

affirmed.

 

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