# U ni te d S ta te s B an kr up tc y A pp el la te P an el For the Eig hth Circu it

__ __ __ __ __ __ __ __ __ __ __ __ __ _ No. 1 3- 60 48

__ __ __ __ __ __ __ __ __ __ __ __ __ _ In re: Bran do n G. Pi erce ; Ni co le L. Pierc e

ll ll ll ll ll ll ll ll ll ll l Deb to r s

----- ----- ----- ----- ----- -----

Bran do n G. Pi erce ; Ni co le L. Pierc e

ll ll ll ll ll ll ll ll ll ll l Pla in ti

ff s - Ap pe ll an ts

v.

Co ll ect io n As so ci at es , Inc

.
ll ll ll ll ll ll ll ll ll ll l Defe nd

an t - Ap pe ll ee

__ __ __ __ __ __ App eal fro m

Uni te d S ta te s B an kr up tc y Co ur t fo r th e Dis tri ct of Ne br as ka - Lin co ln

__ __ __ __ __ __ Su bm it te d: Decem

be r 10 , 20 13 Fil ed : Dec em

be r 30 , 20 13 (Fi li ng Date Co rrec te d o n J an ua ry 15 , 20 14 )

__ __ __ __ __ __ Befo re FEDERMAN, Ch ie f Ju dg e, KRESSEL an d S HODEEN, Ban kr up tc y Ju dg es

.

__ __ __ __ __ __

KRESSEL, Ban kr up tc y

Ju dg e.The de bt or s, Bran do n G. Pi erce an d Nico le L. Pi erce , ap pe al fro m an or de r of

th e ba nk ru pt cy co ur t de nyin g th ei r co m pl ai nt to av oi d an d reco ve r tra ns fers of wag es 1
to th e ap pe ll ee, Co ll ect io n Ass oc ia te s, In c.. Fo r th e rea so ns th at fol lo w, we affi rm

.

BACKGROUND

O n Decem

be r 10 , 20 12 , th e Pi erce s fil ed a ch ap te r 13 ba nk ru pt cy pe ti ti on

. Pri or to th e pe ti ti on , Co ll ect io n Ass oc ia te s fil ed a co ll ect io n su it ag a i n s t Bran do n Pi erce in Neb ras ka st at e co ur t an d ob ta in ed a jud gm en t. Pu rs ua nt to a Neb ras ka co ur t

or de r Co ll ect io n Ass oc ia te s ga rn is he d Pi erce ’s em pl oym en t wag es

. The ga rn is hm en t

oc cu rred pa rti al ly du rin g th e 90 da y s pr io r to th e ba nk ru pt cy fil in g. The ga rn is hm en ts th at to ok pl ace d ur in g t ha t t im e were i n t he fol lo win g a m ou nt s:

Payroll W eek End in g Ch eck Date Am ou nt Garn is he d 1. 9/ 23 /2 01 2 9/ 28 /2 01 2 $1 18 .48 2. 10 /7 /2 01 2 10 /1 2/ 20 12 $1 48 .10 3. 10 /2 1/ 20 12 10 /2 6/ 20 12 $1 48 .10 4. 11 /4 /2 01 2 11 /9 /2 01 2 $1 48 .10 5. 11 /1 8/ 20 12 11 /2 3/ 20 12 $1 48 .10 6. 12 /2 /2 01 2 12 /7 /2 01 2 $1 48 .10

The to ta l am ou nt of th e wag e ga rn is hm en ts was $8 58 .98

. Howev er, Co ll ect io n Ass oc ia te s di d no t rece iv e th at en ti re su m

. Pu rs ua nt to Neb . R ev . S ta t. Sect io n 25

- 10 56 , wag es th at are wit hh el d by a ga rn is he e m us t fir st be tra ns ferr ed to th e co ur t fo r de li ve ry to th e jud gm en t cred it or

. At th e ti m e of th e ba nk ru pt cy fil in g th e co ur t ha d

on ly recei ve d a nd de li ve red $5 62 .78 to Co ll ect io n As so ci at es

.

Two da y s aft er th e ba nk ru pt cy fil in g, on Decem be r 12 , 20 12 , th e co ur t rece iv ed

a ch eck fo r $1 48 .10 fro m Pie rce’s em

pl oyer, th e ga rn is he e. It di d no t de li ve r th es e

The Ho no rab le Tho m as L. Salad in o, Ch ie f Ju dg e, Uni te d S ta te s 1 Ban kr up tc y Co ur t fo r th e Dis tri ct of Ne br as ka

.fu nd s to Co ll ect io n Ass oc ia te s. On Decem be r 21 , 20 12 , Co ll ect io n Ass oc ia te s fil ed

a can cel la ti on of ga rn is hm en t. Des pi te th e can cel la ti on , on Decem be r 26 , 20 12 , th e

co ur t rece iv ed an ot he r ch eck fo r $1 48 .10 fro m th e ga rn is he e. The se fu nd s al so were

no t tran sf erre d to Co ll ect io n Ass oc ia te s. In st ead , th e co ur t re tu rn ed th e two ch eck s to th e ga rn is he e. The ga rn is he e th en di rect l y r efu nd ed th e ch eck s to Pi erce

.

On Feb ru ary 13 , 20 13 , th e Pi erce s fil ed an ad ve rs ary pr oc eed in g se ek in g an

o r d e r av oi di ng th e tra ns fers of th e ga rn is he d fu nd s an d req ui rin g Co ll ect io n Ass oc i a t es to ret ur n $5 62 .78 to th em

. On Ju ne 20 , 20 13 , th e pa rti es su bm it te d a 2
st at em en t of st ip ul at ed fact s. The cas e was tri ed on th os e st ip ul at ed fact s on Aug us t 21 , 20 13

. The ba n k r u p t c y c o ur t he ld th at th e tra ns fers were no t av oi da bl e. On Sep te m be r 3, 2 01 3, t he Pie rces fil ed a ti m el y no ti ce o f ap pe al

.

Mea nwh il e, on Aug us t 21 , 20 13 , th e ch ap te r 13 tru st ee f i l e d a no ti ce of
pa y m en t de fau lt

. The Pi erce s fai le d t o c ur e th e de fau lt an d on Sep te m be r 25 , 2 01 3 th e ba nk ru pt cy cas e was di sm is se d. On Octo be r 23 , 20 13 , th e Pi erce s fil ed a “ m ot io n to rei ns ta te ” th ei r cas e. On No ve m be r, 14 , 20 13 , th at m ot io n was gra nt ed

.

STANDARD OF REVIEW

W e rev ie w th e ba nk ru pt cy co ur t’s fact ua l fin di ng s fo r cl ea r erro r an d it s

co nc lu si on s of la w de no vo

. Bla ckw el l v. Lu ri e (In re Pop ki n & St er n) , 22 3 F.3 d 76 4, 76 5 (8 th Cir . 20 00 ).

W e m ay affi rm th e ba nk ru pt cy co ur t’s or de r on an y ba si s su pp or te d by th e

reco rd , ev en if th at gr o u n d w a s no t co ns id ered by th e tri al co ur t. Mid -Ci ty Ban k v. Sk yl in e W oo ds Homeo wn er

s Ass oc

. (In re Sk

yl in e W oo ds Co un ty Cl ub
, LLC) , 43 1 B.R. 8 30 , 83 6 n .16 (B.A.P. 8t h C ir. 2 01 0)

.

It is un cl ear wh at st an di ng Nico le Pie rce h ad in th is ad ve rs ary 2 pr oc eed in g. Th e g arn is hm en t was so le ly of Bra nd on Pie rce’s em pl oym en t wag es

.ANALYSIS

Moo tn es s Co ll ect io n Ass oc ia te s arg ue s th at th is ap pe al is m oo t be cau se on Sep te m be r 25 , 20 13 th e ba nk ru pt cy cas e was di sm is se d. Howev er, Co ll ect io n As s o c i a te s fai ls to ad dr es s th e fact th at th e Pi erce s’ “ m ot io n to rei ns ta te ” th e cas e was gr an te d. The re is real ly no su ch pr oc ed ur e as “ rei ns ta ti ng ” a cas e. In effe ct , whe n th e co ur t gr an te d th e “ m ot io n to rei ns ta te ” th e or de r of di sm is sa l was va cat ed

. Se e F. R. Ban k. P. 90 23

. The refo re t hi s ap pe al is no t m oo t.

Avo id an ce o f Tr an sf er s Sect io n 54 7( b) of th e Ban kr up tc y Co de pr ov id es th at a tru st ee m ay av oi d an y tra ns fer o f an in te res t o f th e d eb to r in pro pe rty:

(1 ) To o r fo r th e b en efi t o f a cre di to r; (2 ) Fo r or on acco un t of an an te ced en t de bt owe d by th e de bt or be fo re s uc h t ran sf

er was m ad e; (3 ) Mad e whi le th e d eb to r was in so lv en t (4 ) Mad e- (A) on or wit hi n 90 da y s be fo re th e da te of th e fil in g o f th e p et it io n; or (B) be twee n 90 da y s an d on e y ear be fo re th e da te of th e fil in g of th e pe ti ti on , is su ch cred it or at th e ti m e of su ch tra ns fer was an in si de r. (5 ) The en ab le s su ch cred it or to rece iv e m or e t h an su ch cred it or wou ld rece iv e if

- (A) th e cas e were a cas e u nd er Ch ap te r 7 (B) t he tra ns fer h ad no t b een m ad e; an d (C) su ch cred it or rece iv ed pa y m en ts of su ch de bt to th e ex te nt pr ov id ed by t he p r o v i s i on s of th is ti tl e.

As pr ov id ed by th e st at ut e, a tru st ee m ay br in g an act io n to av oi d a pr ep et it io n tra ns fer. Howev er, 11 U.S.C. § 52 2( h) , wh en read in co nju nc ti on wit h 1 1 U.S.C. §52 2( g) , al lo ws a de bt or to av oi d pre pe ti ti on pr efer en ti al tra ns fers if (1) th e pr op ert y

tra ns ferr ed wou ld ha ve be en ex em pt ; (2 ) th e pr op ert y was no t tra ns ferr ed vo lu nt ari ly;

an d (3 ) th e tru st ee ha s no t so ug h t t o br in g an av oi da nc e act io n. Se e McCa rt hy v. Brev ik La w (In re McCa rt hy ) , 50 1 B.R. 89 (B.A.P. 8t h Ci r. 20 13 ); se e al so 11 U.S.C. § 5 22 (g )-(h ).

The Pi erce s and Co ll ect io n Ass oc ia te s agre e th at al l elem en ts of § 54 7( b) are

m et wit h reg ard to th e tra ns fers of th e ga rn is he d wag es

. Howev er, ev en if th e el em en ts of § 54 7( b) are m et th ere are de fen se s to av oi da nc e act io ns

. The rel ev an t de fen se is fou nd in 11 U.S.C. § 5 47 (c)( 8) . It rea ds :

(c) a tru st ee m ay no t av oi d un de r th is se c t i o n a t ran sf er - (8 ) if , in a cas e fil ed by an in di vi du al de bt or who se de bt s are pr im ari ly co ns um er de bt s, th e ag gr eg at e

va lu e of al l pr op ert y th at co ns ti tu te s or is affe ct ed by

su ch tra ns fer i s l es s t ha n $ 60 0.

The pa rti es di sa gr ee on whe th er th e ab ov e ex cep ti on ap pl ie s. The ba nk ru pt cy

co ur t he ld th at § 54 7( c)(8 ) di d ap pl y be cau se Co ll ect io n Ass oc ia te s d i d no t ge t th e be ne fit or t he va lu e o f $6 00 or m or e

. 3

Co ll ect io n Ass oc ia te s ag rees wit h th e ba nk ru pt cy co ur t an d arg ue s th at § 54 7( c)(8 ) ap pl ie s be cau se th ey rece iv ed le ss th an $6 00

. The y arg u e t h a t it is irr el ev an t th at $8 58 .98 was ga rnish ed fr om Pi erce’s wag es be cau se th ey on ly rece iv ed

a po rti on of th at am ou nt

. The am ou nt rece i v ed by Co ll ect io n Ass oc ia te s do es no t in cl ud e th e la st two ga rn is hm en t paym en ts

. Tho se pa y m en ts , to ta li ng $2 96 .20 , m ay ha ve be en tra ns ferr ed to th e co ur t bu t th ey were ne ve r tra ns ferr e d t o C o l le ct io n

The p art ie s, an d a s a r es ul t, t he ba nk ru pt cy co ur t o pe rat ed un de r th e 3

as su m pt io n t ha t a d eb to r m ay

ag gr eg at e m

ul ti pl e tr an sf

ers to a si ng le cred it or
m ad e d ur in g t he pre fere nc e p eri od to de te rm in e whe th er t he $6 00 th res ho ld of § 54 7( c)(8 ) ha s b een m et . Sin ce n o o ne ha s ra is ed th is is su e we to o o pe rat e u nd er th is ass um

pt io n wi th ou t d eci di ng th e is su e.Ass oc ia te s. In fact , th e pa y m en ts were ret ur n e d to Pi erce

. Fo r th es e reas on s,

Co ll ect io n Ass oc ia te s a rg ue s th at § 54 7( c)(8 ) ap pl ie s an d th e tra ns fers can no t be

av oi de d.

The Pi erce s di sa gr ee. The y arg ue th at § 54 7( c)(8 ) do es no t ap pl y be cau se m or e th an $6 00 was tra ns ferr ed

. Acco rd in g to th e Pi erce s, al l $ 8 5 8

. 98 was tra ns ferr ed

un de r th e m ean in g of § 54 7( c)(8 ). The tra ns fer oc cu rred whe n Pi erce ’s em pl oyer wit hh el d h is earn in gs be cau se at t ha t t im e Pi erce was i nv ol un ta ril y pa rti ng wit h hi s in te res t in th os e wag es

. I t fo ll ows th en , th e Pi erce s arg ue , th at th e $2 96 .20
tra ns ferr ed fr o m t h e ga rn is he e bu t ne ve r to Co ll ect io n Ass oc ia te s sh ou ld st il l be in cl ud ed in th e cal cu la ti on of t he am ou nt of t he tra ns fer.

W e ag ree wit h th e Pi erce s th at at on e ti m e al l si x wag e ga rn is hm en ts , to ta li ng $8 58 .98 , co ns ti tu te d pr e f e r e n c e s. W e ha ve pr ev io us ly he ld th at fo r pr efer en ce pu rp os es , i f t h e pr op ert y tra ns ferr ed is th e de bt or ’s wag es th en th e tra ns fer oc cu rs p r e c i s e l y whe n wag es are earn ed

. Se e W ad e v. Mid

wes t Accep ta nc e Co rp

. (In r e W ad e), 21 9 B.R. 81 5 (B.A.P. 8t h Cir. 19 98 ); se e al so Ja mes v. Pla nt er

s Ban k (In re Ja mes ) , 2 57 B.R. 67 3 (B.A.P. 8t h Ci r

. 2 00 1)

. In th is cas e, each ga rn is hm en t was a pr efer en ce at th e ti m e Pi erce earn ed hi s wag es

.

Howev er, wh en th e Pi erce s b ro ug ht th is pre fere nc e act io n t he ga rn is he e h ad al read y ret ur ne d $2 96 .20 to th em

. As th e Pi erce s r e c o gn iz ed , th e on ly rem ed y

av a i l ab le to th em was av oi da nc e of th e wag es st il l in po ss es si on of Co ll ect io n Ass oc ia te s. Acco rd in gl y , th ei r req ue st ed rel ie f was fo r th e ret ur n of $5 62 .7 8 , a n

am ou nt le ss th an $6 00

. The refo re, un de r an y de fin it io n o f t h e w o rd tra ns fer an d
reg ard le ss of t he be ne fit Co ll ect io n As so ci at es rece iv ed § 5 47 (c)( 8) ap pl ie s.CONCLUSION

Bec au se th e am ou nt so ug ht be to reco ve red is le ss th an $6 00 , § 54 7( c ) (8 )
ap pl ie s as a de fen s e t o th is pr efer en ce act io n. The ba nk ru pt cy co ur t’s jud gm en t is affi rm ed

.

7