In Re Susan Hagen, A/K/A S.D. Hagen, A/K/A Susan Dianne Hagen, Debtor. Charles W. Grant, Trustee v. Mark Jay Kaufman, P.A.

JOHNSON, Circuit Judge,

dissenting.

The fundamental issue in this case is whether the security interest was made within the 90-day preference period. I agree with the majority’s holding that the creation of a security agreement can be a voidable preference. If the lien was made before the start of the 90-day preference period, the majority would be correct in reversing the court below. Furthermore, the panel is correct in holding that a debtor does not make a voidable preference payment when the debtor pays a secured creditor within the preference period. The majority, however, holds that due to a state relation back provision the security interest was created before the start of the 90-day preference period and is therefore not a voidable preference. For the following reasons, I disagree.

Section 547(b) of the Bankruptcy Code requires us to void all transfers made within 90 days prior to the filing of the petition. The creation of a security interest by Ms. Hagen in favor of Attorney Kaufman was a transfer. The issue we must determine is when was this transfer made? Was it the date the attorney commenced services, i.e., the date the security interest was created and perfected? Or, was it the date the debtor obtained possession of the award from the insurance company?

Section 547(e) governs the timing, for preference purposes, when a transfer is made and when a transfer is perfected. This case presents the panel with a dispute over the former event. Section 547(e)(2) and (3) governs this dispute.

Section 547(e)(2) determines the date that the transfer was made by comparing the date of perfection and the date that the transfer took effect. It is therefore necessary first to determine when the transfer was perfected. Section 547(e)(1)(B) defines perfection as occurring “when a creditor on a simple contract cannot acquire a judicial lien that is superior to the interest of the transferee.” Section 547(e)(1)(B) requires us to ask when, under state law, any creditor can obtain a lien superior to transferee-Kaufman’s interest. See Askin Marine Co. v. Conner (In re Conner), 733 F.2d 1560, 1562 (11th Cir.1984). Florida state law is clear; the date of perfection is March 20, 1984, when Mr. Kaufman began representing Ms. Hagen. See Randall v. Archer, 5 Fla. 438 (1854).

With the date of perfection in mind, we then must determine when the transfer took effect for Section 547(e)(2). The language “transfer takes effect” is not defined either in the Bankruptcy Code or in the Uniform Commercial Code. However, the language becomes clearer when we recall that at least three transfers actually occur in most secured transactions: one transfer between the debtor and the creditor creating the debt, a second one between the debtor and the creditor creating a security interest, and a third one between the debtor and the creditor paying off the debt. But Section 547 is concerned only with the second and third transfers. See Section 547(b)(1) (“transfers to or for the benefit of a creditor”). The dispute before this panel regards the second transfer, which created the security interest.¹

When determining which date a security interest transferred, we have two possible dates: either the date of perfection or the date that the security interest was signed. It seems most logical that the date that the transfer takes effect is not the date of perfection. It would make little sense for Section 547(e)(2) to compare the date of perfection to the date of perfection. Therefore, under Section 547(e)(2) this panel should compare the date that the security agreement was entered into with the date of perfection. In this case, the date the security interest was entered into was March 20, 1984, the day that Ms. Hagen hired Attorney Kaufman. This date also happens to be the date of perfection under state law.

With these two dates in mind it is possible to turn to Section 547(e)(2) and determine when, for preference purposes, a transfer was made. Section 547(e)(2) divides transfers into three categories. The first category governs those transfers which are perfected “at or within ten days” of the date that the transfer “takes effect between the transferor and the transferee.” 11 U.S.C.A. § 547(e)(2)(A). The second category governs those transfers which are perfected after ten days of the effective date of the transfer. 11 U.S.C.A. § 547(e)(2)(B). And, the third category governs those transfers which are never perfected. 11 U.S.C.A. § 547(e)(2)(C). It is clear that, if we ignore for the moment Section 547(e)(3), the date the transfer is made is March 20, 1984, which is outside the 90-day preference period.²

However, Section 547(e)(3) prohibits setting the date of transfer before the date that the debtor “has acquired rights in the property transferred.” Therefore, irrespective of which date Section 547(e)(2) would ordinarily set as the date the transfer was made, the earliest the transfer could occur under Section 547(e)(3) is the date that Ms. Hagen acquired rights in the property. Under Florida law, Ms. Hagen did not acquire rights in the property until she settled with the insurance company. See Scott v. Kirtley, 113 Fla. 637, 152 So. 721 (1933) (holding that attorney’s lien does not attach until the client has possession of the res). The settlement date was May 14, 1985, which is within the 90-day preference period.³ Therefore, the transfer is a preference and must be voided.

I therefore dissent.

1 . The third transfer clearly occurred during the preference period; however, the majority is correct in noting that "[a] transfer to a secured creditor in the amount of its lien during the preference period does not constitute an avoidable preference."

2 . Since the date the transfer took effect was March 20, 1984, and the date of perfection was March 20, 1984, it is clear that the day of perfection was at or within ten days of the date that the debtor signed the security interest.

3 . The majority claims that Section 547(e)(3) is inapplicable because it "pertains to when a transfer is made, not when the creditor attained secured status if the lien has a relation back element." (emphasis in the original). The majority is mistaken because attaining a security interest is a transfer as it concedes on page 746 of its opinion. Since attaining a security interest is a transfer, Section 547(e)(3) forbids the use of a relation back provision for setting the date of the transfer.