SHENYANG JINLI METALS & MINERALS IMP & EXP CO., LTD., Plaintiff-Appellant,
SIVYER STEEL CORPORATION, Defendant-Appellee, and TBK BANK, SSB f/k/a TRIUMPH COMMUNITY BANK, Garnishee-Appellee.
from the Iowa District Court for Scott County, Joel W.
Barrows and Mark D. Cleve, Judges.
judgment creditor appeals from a district court ruling that
it was entitled to the judgment debtor's funds subject to
a security interest.
Jonathan M. Causey of Causey & Ye Law, P.L.L.C., Des
Moines, for appellant.
Douglas R. Lindstrom Jr., Davenport, for appellee Sivyer
Richard A. Davidson of Lane & Waterman LLP, Davenport,
for appellee TBK Bank.
by Vaitheswaran, P.J., Mullins, J., and Gamble, S.J. [*]
VAITHESWARAN, Presiding Judge.
appeal pits a judgment creditor against a bank with a
perfected security interest in the judgment debtor's
property. The bank prevailed. On appeal, the judgment
creditor raises several arguments for reversal including a
contention that its entitlement to the judgment debtor's
funds was not "subject to" the bank's security
Background Facts and Proceedings
company Sivyer Steel Corporation (Sivyer) had operating loans
with TBK Bank (TBK). The bank, in turn, had a perfected
security interest in Sivyer's property, including its
deposit accounts. Sivyer admitted to defaulting on certain
loan payments. For a limited period of time, TBK agreed to
"forbear from exercising any rights and remedies under
the Loan Agreement" based on those defaults and agreed
to continue making advances to maintain business operations.
Jinli Metals & Minerals Imp & Exp Co., Ltd.
(Shenyang) supplied raw materials to Sivyer. Sivyer defaulted
on its payments to Shenyang. Shenyang sued Sivyer for breach
of contract and obtained a money judgment for $467, 982.55,
plus interest and costs.
sought to collect its judgment by garnishing Sivyer's
accounts at TBK. The bank filed an answer asserting it had
"a valid, perfected and senior security interest in such
accounts . . . and a right of offset to secure the principal
amount of loans extended by [the bank] to [Sivyer]."
and TBK filed cross-motions for summary judgment. Shenyang
asserted (1) Sivyer "was in default, but [TBK] lost its
priority by failing to take affirmative steps to enforce its
right of setoff"; (2) TBK "waived its right of
setoff"; and (3) "TBK was liable to
[Shenyang]" for the amount of the garnishment under Iowa
Code section 642.13 (2017). TBK asserted that (1) under
controlling case law, "a bank's prior security
interest in accounts is superior to a garnishment
claim"; (2) the bank had "a perfected continuing
security interest in the accounts and proceeds in the