504 B.R. 506
8th Cir. BAP2014Background
- Brandon and Nicole Pierce filed Chapter 13 on December 10, 2012; prior to filing Collection Associates obtained a state-court judgment and garnished Brandon Pierce’s wages.
- Six payroll garnishments during the 90-day preference period totaled $858.98; only $562.78 had been delivered to Collection Associates before the petition.
- Two subsequent garnishment checks totaling $296.20 were received by the court after the petition but were returned to the garnishee and refunded to Pierce after Collection Associates filed a cancellation.
- The Pierces sued to avoid and recover preferential transfers, seeking return of $562.78 (the amount still in Collection Associates’ possession).
- Bankruptcy court held the transfers were not avoidable under the consumer-debtor $600 exception, § 547(c)(8); the Pierces appealed. The case dismissal was later vacated, so the appeal was not moot.
Issues
| Issue | Plaintiff's Argument (Pierce) | Defendant's Argument (Collection Associates) | Held |
|---|---|---|---|
| Whether § 547(c)(8) (consumer-debtor $600 exception) bars avoidance | All six garnishments ($858.98) were transfers when employer withheld wages; aggregate exceeds $600 so exception does not apply | Measure the amount the creditor actually received ($562.78); because Collection Associates received < $600 the exception bars avoidance | Held for Collection Associates: plaintiff sought only $562.78 (amount still held); because recovery sought < $600 § 547(c)(8) bars avoidance |
| Whether appeal was moot after dismissal and later motion to reinstate | N/A (Plaintiff prosecuted appeal) | Dismissal rendered appeal moot | Not moot: dismissal was vacated (motion to reinstate granted), so appeal proceeds |
Key Cases Cited
- Blackwell v. Lurie (In re Popkin & Stern), 223 F.3d 764 (8th Cir. 2000) (standard of review: factual findings clear error; legal conclusions de novo)
- Mid-City Bank v. Skyline Woods Homeowners Assoc. (In re Skyline Woods County Club, LLC), 431 B.R. 830 (8th Cir. BAP 2010) (appellate courts may affirm on any record-supported ground)
- McCarthy v. Brevik Law (In re McCarthy), 501 B.R. 89 (8th Cir. BAP 2013) (discussing debtor’s avoidance rights under §§ 522(g)–(h))
- Wade v. Midwest Acceptance Corp. (In re Wade), 219 B.R. 815 (8th Cir. BAP 1998) (wages constitute transferred property as of the time earned for preference purposes)
- James v. Planters Bank (In re James), 257 B.R. 673 (8th Cir. BAP 2001) (same rule regarding timing of wage transfers for preference analysis)