Western States Glass Corp. v. Barris (In Re Bay Area Glass, Inc.)
454 B.R. 86
| 9th Cir. BAP | 2011Background
- Western obtained a California state-court judgment against Debtor for $5,820.74 and secured a lien via an ORAP to enforce it; Debtor filed Chapter 7 shortly after service of the ORAP; Western amended its bankruptcy claim to secured under Cal. Civ. P. § 708.110(d); Trustee objected under § 502(d) alleging the lien was an avoidable preference under § 547(b); Western conceded $370.74 was avoidable and sought § 547(c)(9) as a partial exemption; the bankruptcy court sustained the objection and disallowed the secured claim in full; Western appealed to the BAP (NC-10-1525).
- Debtor’s case is a nonconsumer, business bankruptcy; the transfer at issue is the creation of a lien on Debtor’s assets (bank account proceeds) via the ORAP following judgment; § 547(a)–(b) governs preferences and § 502(d) disallows claims that are transfers avoidable under § 547; statutory text of § 547(c)(9) is central to determining whether a partial exemption applies.
- The panel analyzes whether § 547(c)(9) creates a safe harbor for transfers up to $5,475 in nonconsumer cases; it concludes the statute’s plain text provides a threshold for avoidance and does not limit the extent of avoidance by “to the extent” language; the court cites policy considerations but adheres to the plain-language interpretation; the result is that transfers of $5,475 or more are entirely avoidable, and smaller transfers may be left unavoided in consumer contexts only.
- The decision adheres to the interpretation of § 547(c)(9) as a monetary floor for avoidance in nonconsumer cases and affirms the bankruptcy court’s disallowance of Western’s secured claim under § 502(d).
- The opinion notes that § 547(c)(9) was modeled after § 547(c)(8) and, based on its plain language, Congress did not intend a partial “to the extent” limitation in § 547(c)(9).
- The court discusses related authorities interpreting § 547(c)(8) to illustrate consistent statutory intent across subsections and cites various pre-BAPCPA and post-BAPCPA authorities on preference avoidance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §547(c)(9) creates a partial exemption in nonconsumer cases. | Western argues §547(c)(9) prevents avoidance up to $5,475, i.e., a partial exemption. | Trustee/Bankruptcy Court read §547(c)(9) as plain, not allowing partial avoidance; transfers of $5,475+ are fully avoidable. | No partial exemption; §547(c)(9) bars avoidance only up to full threshold; transfers of $5,475 or more are fully avoidable. |
Key Cases Cited
- Vickery (In re Vickery), 63 B.R. 222 (Bankr.N.D. Ohio 1986) (first applied threshold logic for §547(c)(8) analogous to §547(c)(9))
- Djerf (In re Djerf), 188 B.R. 586 (Bankr. D. Minn. 1995) (discussed consumer-focused purpose of small transfers under §547(c)(8))
- Via (In re Via), 107 B.R. 91 (Bankr. W.D. Va. 1989) (held §547(c)(8) does not guarantee a $600 safe harbor in all cases)
- V. Batlan v. Bledsoe (In re Bledsoe), 569 F.3d 1106 (9th Cir. 2009) (explains broad definition of transfer; supports broad avoidance unless statutory language limits)
- Transcon. Refrigerated Lines (In re Transcon. Refrigerated Lines, Inc.), 438 B.R. 520 (Bankr.M.D. Pa. 2010) (analyzed aggregation arguments for §547(c)(9) timing and scope)