Opinion ID: 3170817
Heading Depth: 3
Heading Rank: 3

Heading: the wettachs’ deposits of wages into an

Text: ENTIRETIES ACCOUNT ARE TRANSFERS OF ASSETS UNDER THE PUFTA Finally, the Wettachs argue that the deposit of wages into an entireties account is not a “transfer” of an “asset” under the PUFTA. The district court considered and rejected this argument. We review the issue de novo and affirm. The PUFTA defines a “transfer” as “[e]very mode . . . of disposing of or parting with an asset or an interest in an asset.” 12 Pa. C.S.A. § 5101(b). Likewise, an “asset” under the PUFTA is “[p]roperty of [the] debtor . . . [but] does not include: . . . (2) property to the extent it is generally exempt under nonbankruptcy law . . . .” Id. Because Pennsylvania state law exempts wages held by the employer, see 42 Pa. C.S.A. § 8127(a), the Wettachs argue that such wages are not “assets” that a debtor can fraudulently “transfer” under the PUFTA, Appellants’ Br. 2728. This Court interprets a state statute by “predict[ing] how the highest court of that state would decide the relevant legal issues.” Ohio Cas. Grp. of Ins. Cos., 130 F.3d at 1125. Neither the Pennsylvania Supreme Court nor the Third Circuit has addressed this issue, but intermediate Pennsylvania state courts have permitted attachment of wages directly deposited into an entireties account. See, e.g., Stinner v. Stinner, 446 A.2d 651, 653 (Pa. Super. Ct. 1982). We have recognized that decisions of intermediate appellate state courts are indicative of how the state Supreme Court would interpret state law. See Sheridan v. NGK Metals Corp., 609 F.3d 239, 254 (3d Cir. 2010). The intermediate courts’ view 27 also coincides with the weight of judicial authority on this issue. See, e.g., Cohen v. Sikirica, 487 B.R. at 632; In re Arbogast, 466 B.R. at 310-12; cf. Kaler v. Craig (In re Craig), 144 F.3d 587, 593 (8th Cir. 1998). The Wettachs’ reference to Resolute Ins. v. Pennington, 224 A.2d 757, 760 (Pa. 1966), is inapposite. That case stated, in dictum, that an individual could not waive his or her exemption from attachment as to wages. Id. It did not address the issue presented here, i.e., whether a direct deposit of wages into an entireties account can constitute a fraudulent transfer of assets under the PUFTA. The Wettachs also make much ado about the fact that Pennsylvania law exempts wages from attachment “while in the hands of the employer . . . .” 42 Pa. C.S.A. § 8127(a). Relying, without citation, on “fundamental commercial law,” they argue that wages directly deposited into an account “remain in the hands of the employer . . . until the funds are received by the bank . . . .” Appellants’ Br. 28. Yet the Wettachs ignore the broad scope of the term “transfer” under Pennsylvania law. The PUFTA states that a “transfer” can be “direct or indirect, absolute or conditional, [or] voluntary or involuntary . . . .” 12 Pa. C.S.A. § 5101(b) (emphasis added). Thomas Wettach exercised control over where his employer deposited his wages. Therefore, when his employer initiated the direct deposit, the funds left the employer’s “hands.” The subsequent deposit of those funds into the entireties account is precisely the type of indirect transfer covered by the PUFTA. See Cohen v. Sikirica, 487 B.R. at 632; In re Arbogast, 466 B.R. at 312. “A person may not do by indirection what he is forbidden to do directly.” In re Craig, 28 144 F.3d at 592 (quoting Merriam v. Venida Blouse Corp., 23 F. Supp. 659, 661 (S.D.N.Y. 1938)). The Wettachs also draw an analogy to an employer stopping payment on a check as evidence of retained employer control “until the funds are received by the bank.” Appellants’ Br. 28. However, they misstate Pennsylvania law. Pennsylvania requires that a stop-payment notice provide “reasonable time for the bank to act,” meaning that the ability to stop payment is not absolute until the payment of funds. See 13 Pa. C.S.A. § 4303(a); see also id. § 4403(a). Thus, there exists some period of time before the payment of funds to the bank where wages are no longer in the employer’s “hands,” which is consistent with our analysis. Accordingly, the Court affirms the district court’s holding that the direct deposit of wages into an entireties account is a “transfer” of an “asset” under the PUFTA.