Candise Hooker v. Wanigas Credit Union

Case Type:
Consumer
Case Status:
Affirmed
Citation:
Case No. 20-2252 (6th Circuit, Jan 26,2021) Not Published
Tag(s):
Ruling:
The Court of Appeals for the Sixth Circuit affirmed the bankruptcy court's decision to deny the Creditor's motion for summary judgment, because the Creditor failed to show that the transfer to the Law Firm on behalf of the Creditor was not a transfer "to of for the benefit of a creditor." The Court of Appeals also found that the attorney-charging lien theory was irrelevant. The matter was affirmed and remanded back to the bankruptcy court for further proceedings.
Procedural context:
The Debtor commenced an adversary proceeding under section 547(b)(1) after receiving less than half of her garnished wages returned from the Creditor. The Creditor moved for summary judgment on the grounds that the remaining funds could not be avoided, because the funds were never remitted to the Creditor. The Creditor also asserted the theory that the remaining funds were subject to an attorney-charging lien. The bankruptcy court for the Eastern District of Michigan denied summary judgment. The Creditor made an interlocutory appeal to the district court, which the district court heard. The district court affirmed the bankruptcy court. The Creditor appealed to the Court of Appeals for the Sixth Circuit asserting the same errors.
Facts:
Wanigas Credit Union (Creditor) garnished almost $900 from the Debtor's wages within the 90-day preference period before the Debtor filed for bankruptcy. The Debtor's employer sent the funds to the Creditor's law firm, Shek Law Offices (Law Firm). The Law Firm retained over half of the funds under a contingency-fee agreement between the Law Firm and the Creditor. The remaining funds were sent to the Creditor. The Debtor then filed Chapter 7 bankruptcy and made demand for return of the garnished funds under section 547(b)(1). The Creditor only returned the funds it received, less than half of what was garnished.
Judge(s):
The Hons. Clay, Gibbons, and Nalbandian

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