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In re Pierce

United States Court of Appeals, Eighth Circuit

March 9, 2015

In re: Brandon G. Pierce; Nicole L. Pierce, Debtors; Brandon G. Pierce; Nicole L. Pierce, Appellants
v.
Collection Associates, Inc., Appellee

Submitted October 9, 2014

Page 815

Appeal from the United States Bankruptcy Appellate Panel for the Eighth Circuit.

For Brandon G. Pierce, Nicole L. Pierce, Appellants: Michael S. Boal, Kevin L. Ruser, UNIVERSITY OF NEBRASKA, College of Law, Lincoln, NE; David P. Lepant, LEPANT & LENTZ, Beatrice, NE; Douglas Hauber Partridge, Humphrey, NE.

For Collection Associates, Inc., Appellee: Trev E. Peterson, KNUDSEN & BERKHEIMER, Lincoln, NE.

Before COLLOTON, BRIGHT, and SHEPHERD, Circuit Judges. COLLOTON, Circuit Judge, dissenting.

OPINION

Page 816

SHEPHERD, Circuit Judge.

After filing for bankruptcy, Brandon and Nicole Pierce (the " Pierces" ) sought to avoid and recover funds Collection Associates, Inc. (" Collection Associates" ) had garnished from Brandon's wages during the pre-petition preference period. The bankruptcy court[1] found the Pierces' preference action barred by the defense for consumer debtor payments under $600. The Bankruptcy Appellate Panel (" BAP" ) affirmed. We agree that the defense applies because the Pierces sought to avoid the transfer of less than $600, and therefore affirm.

I.

The relevant facts of this case are few and undisputed. Collection Associates garnished a total of $858.98 in wages Brandon earned during six pre-petition pay periods. Brandon's employer sent the first four garnishments, totaling $562.78, to the state court that issued the garnishment order, and that court in turn delivered the payments to Collection Associates. See Neb. Rev. Stat. § 25-1056(2) (describing garnishment process). But then the Pierces filed their bankruptcy petition and notified the state court they had done so. When the state court later received the final two garnishments, totaling $296.20, instead of delivering those funds to Collection Associates, it returned the money to Brandon's employer, which refunded the money to Brandon.

The Pierces subsequently initiated this adversary proceeding against Collection Associates. They alleged $858.98 was transferred to Collection Associates during the preference period and sought an order avoiding the involuntary transfer and requiring Collection Associates to return $562.78.[2] The bankruptcy court denied the Pierces' complaint after " find[ing] that the aggregate value of all property affected by the transfer is less than $600." The BAP affirmed. Although the BAP found that " at one time all six wage garnishments . . . constituted preferences," it observed that " when the Pierces brought this preference action the garnishee had already returned $296.20 to them." Pierce v. Collections Assocs., Inc. (In re Pierce), 504 B.R. 506, 510 (B.A.P. 8th Cir. 2013). Thus, " [a]s 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." Id. Therefore, the BAP concluded, the defense for consumer debtor payments under $600 applied.

II.

As an initial matter, we note that the BAP questioned whether Nicole possesses standing in this adversary proceeding, ...


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