2017 Fifth Third Colorado Opinion Voidable Transactions And Fraudulent Transfers

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2017 - Colorado - Fifth Third Bank

Fifth Third Bank v. Morales, 2017 WL 6492108 (Dec. 19, 2017).

 

United States District Court, D. Colorado.

 

FIFTH THIRD BANK, Plaintiff,

 

v.

 

Lucy MORALES, The Lucy Morales Revocable Trust, Marie Korallus, and Marie Ludian, Defendants.

 

Civil Action No. 16–cv–01302–CMA–STV

 

Signed 12/19/2017

 

Attorneys and Law Firms

 

Lars Henrik Fuller, Baker & Hostetler, LLP, Denver, CO, for Plaintiff.

 

Adam Patrick O’Brien, Andrew Keith Lavin, Wells Anderson & Race, LLC, Denver, CO, for Defendants.

 

ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

 

CHRISTINE M. ARGUELLO, United States District Judge

 

*1 This matter is before the Court on dueling motions of summary judgment filed by Plaintiff Fifth Third Bank (Doc. # 52) and Defendants Marie Korallus and Marie Ludian (Doc. # 51). Because the Court finds the existence of a fraudulent transfer as a matter of law, the Court grants Plaintiff’s motion and denies Defendants’ motion.

 

I. BACKGROUND

 

In 2009, Lucy T. Morales (Ms. Morales) created the Lucy T. Morales Revocable Trust (the Trust) (collectively, the Defaulting Defendants)1 and, as grantor, named herself as Trustee and beneficiary. (Doc. # 52–3 at 349.) Ms. Morales later amended the Trust to name her daughters Marie Ann Korallus and Marie Tess Ludian (Defendants) as successor trustees. (Doc. # 52–1 at 1, 9.) Upon Ms. Morales’s death, all the Trust’s assets would be distributed to the Defendants. (Doc. # 52–2 at 146, 151–52.) Ms. Morales also transferred real property in Montrose, Colorado (the Montrose Property) to the Trust. (Doc. # 52–1 at 146, 158, 164–67.)

 

1

 

Neither Ms. Morales nor the Trust has filed an answer, entered an appearance, or otherwise responded to the Complaint in this case. On October 17, 2016, the Clerk entered default against them. (Doc. # 26.) On September 12, 2017, the Court declined to enter a default judgment against them because Plaintiff’s claims against the non-defaulting defendants—Marie Korallus and Marie Ludian—had not yet been resolved. (Doc. # 63.) The Court nonetheless finds it appropriate to refer to Ms. Morales and the Trust as “Defaulting Defendants” for the purposes of this order.

 

In 2011, Plaintiff loaned approximately $510,000.00 to Grand Park Surgical Center (Grand Park) and Chicago Medical and Surgical Center (Chicago Medical). (Doc. # 52–3 at 349–50.) Ms. Morales guaranteed the repayment obligation on the loan. (Id. at 350.) In 2013, based on an alleged default on the loan, Plaintiff commenced a civil suit against them in the Circuit Court of Cook County, Illinois (Illinois Court). (Doc. # 52–2 at 244, 253.) The Illinois Court entered judgment in Plaintiff’s favor in the amount of $607,768.10 (Illinois Judgment). (Doc. # 52–1 at 179–80.) In 2014, Plaintiff domesticated and publicly recorded the Illinois Judgment against Ms. Morales in Montrose County, Colorado (Colorado Judgment). (Id. at 182–84.) Meanwhile, Plaintiff also obtained an Order from the Illinois Court impressing a judicial lien against the assets of the Trust, including the Montrose Property (Judicial Lien). (Doc. # 52–2 at 189.) In September 2015, Plaintiff commenced post-judgment collection proceedings against Ms. Morales on the Illinois Judgment (Id. at 252.)

 

In December 2015, the Defaulting Defendants2 transferred the Montrose Property by warranty deed to the Defendants (the Transfer). In exchange, the Defaulting Defendants received a promissory note and deed of trust (the Note) from the Defendants in the principal amount of $395,000.00. (Doc. # 51–1 at 3.) The Note had a fifteen-year maturity date and bore no interest. (Id.) It included provisions requiring Defendants to maintain the Montrose Property and an acceleration clause in the event of breach or default. (Id. at 4–10.) At the time of Transfer, the market value of the property was between $395,000.00 and $400,000.00. (Doc. # 51 at 4; Doc. # 52 at 6.)

 

2

 

Ms. Morales participated in the transfer as trustee of the Trust.

 

*2 In July 2017, the Illinois Court entered an Order directing the Defaulting Defendants to “turn over the [Note]” to Plaintiff “who may collect upon it.” (Doc. # 52–3 at 331.) The Illinois Court later ordered that “a writ of execution shall issue directing public auction of the Note.” (Doc. # 58–2 at 91.) Neither party contends that any such auction has occurred.

 

As the proceedings in Illinois remained pending, Plaintiff commenced this lawsuit raising three Claims for Relief. (Doc. # 1.) In its First and Second Claims, Plaintiff argues that the Defaulting Defendants fraudulently transferred the Montrose Property to the Defendants pursuant to Colorado Revised Statute § 38–8–105(a) and (b). (Id. at 7–10.) Plaintiff seeks the avoidance of that Transfer pursuant to § 38–8–108. (Id.) Plaintiff’s Third Claim alleges that Defendants are liable for Civil Conspiracy based on their collective participation in the Transfer. (Id. at 10–11.) The parties agree that all claims are ripe for summary judgment.

 

II. STANDARD OF REVIEW

 

Summary judgment is warranted when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A fact is “material” if it is essential to the proper disposition of the claim under the relevant substantive law. Wright v. Abbott Labs., Inc., 259 F.3d 1226, 1231–32 (10th Cir. 2001). A dispute is “genuine” if the evidence is such that it might lead a reasonable jury to return a verdict for the nonmoving party. Allen v. Muskogee, Okl., 119 F.3d 837, 839 (10th Cir. 1997). When reviewing motions for summary judgment, a court must view the evidence in the light most favorable to the non-moving party. Id.  However, conclusory statements based merely on conjecture, speculation, or subjective belief do not constitute competent summary judgment evidence. Bones v. Honeywell Int’l, Inc., 366 F.3d 869, 875 (10th Cir. 2004).

 

The well-pleaded facts in the Complaint are deemed true with respect to defaulting parties. Newell Recycling, LLC v. DC Brands Int’l, Inc., No. 13–CV–1238–WJM–KMT, 2014 WL 1213366, at *2 (D. Colo. Mar. 24, 2014).

 

III. ANALYSIS

 

Because the parties request summary judgment on each of Plaintiff’s claims, the Court address them in turn.

 

A. FRAUDULENT TRANSFERS

 

Plaintiff claims that the Transfer was fraudulent pursuant to § 38–8–105(a) and (b) of the Colorado Uniform Fraudulent Transfer Act (CUFTA). The burden of proof lies with Plaintiff to prove fraudulent transfer under either subsection of this statute. Schempp v. Lucre Mgmt. Grp., LLC, 75 P.3d 1157, 1165 (Colo. App. 2003).

 

1. § 38–8–105(a)

 

The Court begins with subsection (a), which provides:

 

A transfer made...by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made..., if the debtor made the transfer... (a) [w]ith actual intent to hinder, delay, or defraud any creditor of the debtor.

 

§ 38–8–105(a). Plaintiff need only demonstrate that the “debtor”—here, the Defaulting Defendants—made the Transfer “with actual intent to hinder, delay, or defraud” Plaintiff—the creditor.

 

“Actual intent” under subsection (a) is seldom susceptible to direct proof. Courts therefore look to the following non-exclusive factors, otherwise known as “badges of fraud,” to assess a debtor’s intent:

 

(a) The transfer or obligation was to an insider;

 

*3 (b) The debtor retained possession or control of the property transferred after the transfer;

 

(c) The transfer or obligation was disclosed or concealed;

 

(d) Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;

 

(e) The transfer was of substantially all the debtor’s assets;

 

(f) The debtor absconded;

 

(g) The debtor removed or concealed assets;

 

(h) The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred;

 

(i) The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;

 

(j) The transfer occurred shortly before or shortly after a substantial debt was incurred; and

 

(k) The debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.

 

§ 38–8–105(2). “While a single badge of fraud may only create suspicion of fraud, several badges of fraud considered together may infer intent to defraud.” Schempp v. Lucre Mgmt. Grp., LLC, 18 P.3d 762, 764 (Colo. App. 2000) (citation omitted); see also § 38–8–105(2), cmt. 4; Springfield Ins. Co. v. Fry, 267 F. Supp. 693, 695 (N.D. Okla. 1967) (“ ‘Badges of fraud’ are suspicious circumstances that overhang a transaction or appear on the face of papers involved and a single badge of fraud may stamp a transaction as fraudulent, and when several badges of fraud are found in combination, strong and clear evidence will be required to repel a conclusion of fraud.”).

 

Factors (a), (d), (h), (i) and (j) support a finding that the Defaulting Defendants had the actual intent to hinder, delay, or defraud Plaintiff. With respect to factor (a), it is undisputed that the transferees are Ms. Morales’s daughters. Pursuant to § 38–8–102(8)(1)(I), a “relative” of the debtor is considered an insider. Thus, factor (a) supports a finding of an intent to hinder, delay, or defraud. With regard to factors (d) and (j), it is undisputed that Plaintiff sued Ms. Morales in Illinois before the Transfer occurred; received an Illinois Judgment in its favor in the amount of $607,768.10 and a lien against the assets of the Trust, including the Montrose Property; and initiated post-judgment collection proceedings several months before the Transfer occurred. Factors (d) and (j) support a finding of intent to hinder, delay, or defraud. Factor (i) likewise supports this finding. The well-pled allegations in Plaintiff’s Complaint, which this Court may accept as true with respect to the Defaulting Defendants, demonstrate that Ms. Morales has failed to make payments on her substantial debt obligations to Plaintiff, resulting in a presumption of her “insolvency” pursuant to § 38–8–103(2) (“A debtor who is generally not paying his debts as they become due is presumed to be insolvent.”).3

 

3

 

Ms. Morales has not responded to Plaintiff’s motion for summary judgment and has not, therefore, rebutted this presumption of insolvency.

 

Much of this dispute hinges on factor (h)—whether the value of consideration received by Ms. Morales and the Trust was reasonably equivalent to the value of the Montrose Property transferred. Reasonably equivalent value “depends upon an analysis of all the facts and circumstances of each case.” Leverage Leasing Co. v. Smith, 143 P.3d 1164, 1166 (Colo. App. 2006); Silverberg v. Colantuno, 991 P.2d 280 (Colo. App. 1998). It “is not susceptible to simple formulation” and is largely a question of fact. In re Commercial Fin. Servs., Inc., 350 B.R. 559, 578 (Bankr. N.D.Okla. 2005); see also In re Wes Dor, Inc., 996 F.2d 237, 242 (10th Cir. 1993); CB Richard Ellis, Inc. v. CLGP, LLC, 251 P.3d 523, 530 (Colo. App. 2010). However, when the facts of the transfer are undisputed and the Court’s only task is to fit undisputed facts within the statutory parameters, the Court may decide the issue as a matter of law. Omedelena v. Denver Options, Inc., 60 P.3d 717, 722 (Colo. App. 2002); Schempp, 18 P.3d at 765; see also In re Erlewine, 349 F.3d 205, 209 (5th Cir. 2003) (“Certain transactions...can give the debtor reasonably equivalent value as a matter of law.”).

 

*4 The phrase “reasonably equivalent value,” which was derived from 11 U.S.C. § 548 of the federal Bankruptcy Code, has been construed to include both direct and indirect benefits to the debtor, even if the benefit does not increase the debtors net worth. See, e.g., In re Image Worldwide, Ltd., 139 F.3d 574 (7th Cir. 1998). Although not wholly synonymous with market value, market value is still an important factor to consider in the assessment. Schempp, 18 P.3d at 765. Indeed, “a grossly inadequate price raises a rebuttable presumption of actual fraudulent intent.” BFP v. Resolution Tr. Corp., 511 U.S. 531, 532 (1994) (internal quotations omitted). “Intangible, non-economic benefits, such as preservation of marriage, do not constitute reasonably equivalent value.” In re Erlewine, 349 F.3d at 212. Moreover, a non-public sale that appears collusive or that does not proscribe to standard state procedures may give rise to an inference of fraud. BFP, 511 U.S. at 545. “Consideration having no utility from a creditor’s viewpoint does not satisfy the statutory definition.” § 38–8–104, cmt. 2; Leverage Leasing, 143 P.3d at 1167.

 

Section 38–8–104 further defines “value” that is “given for a transfer or an obligation.” Leverage Leasing, 143 P.3d at 1167. Comment 2 states that value “is to be determined in light of the purpose of [CUFTA] to protect a debtor’s estate from being depleted to the prejudice of the debtor’s unsecured creditors.” § 38–8–104, cmt. 2. “[A] court must...keep in mind the equitable purposes” behind CUFTA “because any significant disparity between the benefit received and the value transferred harms innocent creditors.” Leverage Leasing, 143 P.3d at 1167. Ultimately, the purpose behind this value determination is not to identify binding agreements, but to identify transfers made with no rational purpose except to avoid creditors. Donell v. Kowell, 533 F.3d 762, 777 (9th Cir. 2008).

 

Here, the record indicates that the Defaulting Defendants did not receive reasonably equivalent value from the Transfer of the Montrose Property to the Defendants. At the time of the Transfer, the Montrose Property was worth between $375,000.00 and $400,000.00. Yet, the Defaulting Defendants received no funds for the Transfer. They instead received a Note with no payments due for fifteen years (when Ms. Morales would be 90 years old), no accumulating interest, and only one default provision that merely provided for the acceleration of payment. Moreover, the Note was made payable to the Trust—the assets of which would revert back to Defendants upon Ms. Morales’s death. Nothing in the record suggests that Defendants assumed additional liability for Ms. Morales’s outstanding loan obligation to Plaintiff or for the judicial lien on the property. Nor did the Transfer involve a public non-collusive sale following Colorado state procedures.

 

Neither the parties nor this Court has found any legal authority suggesting that the value provided in this case—a promise of future payment with no contemporaneous economic obligations—constitutes reasonably equivalent value under the CUFTA. Indeed, a majority of cases hold that future promises are insufficient as a matter of law to constitute reasonably equivalent value for a debtor’s asset transfers to a third party— particularly when that third party is family. See, e.g., § 38–4–108(1) (“[V]alue does not include an unperformed promise made otherwise than in the ordinary course of the promisor’s business to furnish support to the debtor or another person.”); In re Ventimiglia, 362 B.R. 71, 83 (Bankr. E.D.N.Y. 2007) (“In general, a promise of future support is not considered a fair equivalent of property transferred.”); Springfield Ins. Co., 267 F. Supp. at 696 (“[O]rdinarily a transfer of property in consideration of future support is held to be invalid, at any rate, as to existing creditors whose rights are prejudiced by such transfer.”).

 

*5 Defendants nonetheless argue that their deed of trust, promises to maintain the property, and agreement to assign any remaining rents to the Defaulting Defendants constitute reasonably equivalent value as a matter of law. The Court disagrees.

 

Value is viewed from the objective standpoint of the creditor, not the debtor. Consideration having no utility or value from a creditor’s vantage point may be “good” consideration supporting a valid contract, but it cannot constitute reasonably equivalent value, as a matter of law, where the exchange injures creditors’ interests. SE Prop. Holdings, LLC v. Ctr., No. CV 15–0033–WS–C, 2016 WL 7493623, at *10 (S.D. Ala. Dec. 30, 2016); see In re Wierzbicki, 830 F.3d 683, 688 (7th Cir. 2016) (transferees promise to drop his appeals in state court and promises to assume liability for mortgages and other liens were not worth anywhere close to her the value of the transferred interest and were not, therefore, reasonably equivalent value as a matter of law).

 

Under the circumstances of this case and considering the relationship between the transferring parties, a bare deed coupled with property maintenance and the assignment of rents, which totalled less than $20,000, did not provide the Defaulting Defendants with a sufficient economic benefit to support a finding of reasonably equivalent value. To the contrary, all of the circumstances surrounding the Transfer suggest that it occurred for no other reason than to avoid Ms. Morales’s payment obligation to Plaintiff. see Donell, 533 F.3d at 777. No reasonable juror could find otherwise. see Schempp, 18 P.3d at 765 (the reasonable equivalence standard implies a rule of reasonableness in light of the particular circumstances).

 

Recognizing that this Transfer was supported by reasonably equivalent value would contravene the CUFTA’s purpose of protecting a debtor’s estate from depletion, to the prejudice of unsecured creditors and would violate the mandate to ignore consideration having no utility to creditors. Because no reasonably equivalent value was provided, factor (h) supports a finding that the Defaulting Defendants’ intended to hinder, delay, or defraud Plaintiff when they transferred the Montrose Property to the Defendants.

 

Accordingly, at least five factors weigh in Plaintiff’s favor, and the Court finds that the Transfer was fraudulently made pursuant to § 38–8–105(a). The Court therefore grants Plaintiff’s request for summary judgment on its First Claim for Relief.

 

2. § 38–8–105(b)

 

With respect to § 38–8–105(b), the analysis is similar. Subsection (b) provides:

 

A transfer made...by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made..., if the debtor made the transfer...(b) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:

 

(I) was engaged or was about to engage in...a transaction for which the remaining assets of the debtor were unreasonably small in relation to the...transaction; or

 

(II)...reasonably should have believed that he would incur debts beyond his ability to pay as they became due.

 

The Court has already found that reasonably equivalent value was not provided. see Schempp, 18 P.3d at 765 (Colo. App. 2000) (“In order to succeed on [any] fraudulent transfer claim...a creditor must show that the debtor did not receive a reasonably equivalent value in exchange for the property.”). With respect to subsections (I) and (II), it is undisputed that Ms. Morales had outstanding money judgments against her—in Illinois and Colorado—totaling just over $600K. Plaintiff also had a judicial lien on the assets of the Trust, which included the Montrose Property. This Court has also already found that Ms. Morales was considered insolvent pursuant to § 38–8–103(2). Considering these facts, the Court has no trouble concluding that the Defaulting Defendants should have reasonably believed that transferring approximately $375,000.00 worth of real property would leave them with “unreasonably small” assets and an inability to pay their outstanding debts.

 

*6 The Court accordingly grants Plaintiff’s request for summary judgment on its second claim for relief—fraudulent transfer pursuant to § 38–8–105(b).

 

3. § 38–8–109

 

Because this Court has found that no reasonably equivalent value was provided, the Court also finds against Defendants on their affirmative defense under § 38–8–109(1), which requires a showing of reasonable equivalence to prevail. see § 38–8–109(1) (“A transfer or obligation is not voidable under section 38–8–105(1)(a) against a person who took in good faith and for a reasonably equivalent value....”).

 

4. § 38–8–108

 

The CUFTA sets forth the remedies available once a transfer is determined to be fraudulent. Plaintiff requests that this Court issue judgment avoiding the Transfer pursuant to § 38–8–108(1)(a), which allows for the “[a]voidance of the transfer...to the extent necessary to satisfy the creditor’s claim.” The Court grants that request.

 

The Colorado Supreme Court has explained that in fraudulent conveyance actions, “[t]he primary remedy...is a declaration that the fraudulent conveyance is void as to the judgment creditor. In other words, the remedy sought is to return the property fraudulently conveyed to its prior status of ownership thereby bringing it within reach of the judgment creditor of the fraudulent transferor.” Miller v. Kaiser, 164 Colo. 206, 433 P.2d 772, 775 (1967). Having found in Plaintiff’s favor on its fraudulent transfer claims, the proper remedy is to avoid the Transfer of the Montrose Property.

 

Defendants nonetheless argue that Plaintiff should be judicially estopped from seeking an avoidance of the Transfer in this case because, from Defendants’ perspective, Plaintiff took an inconsistent position in the Illinois proceedings. The Court disagrees.

 

Judicial estoppel “generally prevents a party from prevailing in one phase of a case on an argument and then relying on a contradictory argument to prevail in another phase.” New Hampshire v. Maine, 532 U.S. 742, 749 (2001). Plaintiff’s position in this case is not inconsistent with or contradictory to its position in the Illinois lawsuit. There, Plaintiff was seeking assignment of the Note, which they received; here, Plaintiff, lawful holder of the Note, is seeking to avoid the Transfer of, and to execute on, the Montrose Property pursuant to a legitimate right to collect on Ms. Morales’s outstanding debt obligation under § 38–8–108. Nothing about Plaintiff’s actions in these lawsuits warrants the application of the doctrine of judicial estoppel.

 

B. CIVIL CONSPIRACY

 

The parties also seek summary judgment on Plaintiff’s Third Claim for Relief—Civil Conspiracy.

 

To establish a claim for civil conspiracy, a plaintiff must show by a preponderance of the evidence that there exists: (1) an object to be accomplished; (2) an agreement by two or more persons on a course of action to accomplish that object; (3) in furtherance of that course of action, one or more unlawful acts which were performed to accomplish a lawful or unlawful goal, or one or more lawful acts which were performed to accomplish an unlawful goal; and (4) damages to the plaintiff as a proximate result. Magin v. DVCO Fuel Sys., Inc., 981 P.2d 673 (Colo. App. 1999); see also Nelson v. Elway, 908 P.2d 102 (Colo. 1995). A fraudulent transfer is an unlawful act that supports a creditor’s claim for conspiracy. Double Oak Const., L.L.C. v. Cornerstone Dev. Int’l, L.L.C., 97 P.3d 140, 147 (Colo. App. 2003).

 

*7 The elements of conspiracy are clearly met in this case. Ms. Morales, the Trust, and the Defendants engaged in a fraudulent transfer of the Montrose Property, evidenced by a written agreement and resulting in damage to Plaintiff, who had a valid lien on the transferred assets and a large outstanding judgment against Ms. Morales.

 

The Court therefore grants Plaintiff’s request for summary judgment on its claim for civil conspiracy.

 

IV. ADDITIONAL RELIEF

 

In addition to avoidance of the Transfer, Plaintiff’s Motion requests the following additional relief: foreclosure on the Judicial Lien against the assets of the Trust, a writ of execution directing the Sheriff of Montrose to conduct a public foreclosure of the Montrose Property, actual damages in the amount of $400,000.00 (the alleged appraisal value of the Montrose Property), exemplary damages, and attorney fees. Without additional information, the Court cannot grant Plaintiff’s requests. It appears to this Court that the state court is the most appropriate forum to foreclose on the county court lien. Moreover, one the lien is foreclosed and the Montrose Property sold, it is unclear that Plaintiff would be entitled to an additional award of $400,000.00 in actual damages. Finally, Plaintiff has provided no documentation to support its requests for exemplary damages or attorney’s fees.4

 

4

 

Pursuant to D.C.COLO.LCivR 54.3, a motion for attorney’s fees shall be supported by affidavit and shall include the following for each person for whom fees are claimed: (1) a summary of relevant qualifications and experience; and (2) a detailed description of the services rendered, the amount of time spent, the hourly rate charged, and the total amount claimed.

 

The Court therefore finds that a hearing is necessary to resolve these issues.

 

V. CONCLUSION

 

For the foregoing reasons, the Court GRANTS Plaintiff’s Motion for Summary Judgment (Doc. # 52) and DENIES Defendants’ Motion for Summary Judgment (Doc. # 51). The Court therefore ORDERS as follows:

 

1. Judgment is entered in favor of Plaintiff and against Defendants Lucy Morales, the Lucy T. Morales Revocable Living Trust, Marie Korallus, and Marie Ludian, jointly and severally. The Transfer of the Montrose Property, which was a fraudulent transfer pursuant to § 38–8–105(a) and (b), is avoided under § 38–8–108(1)(a).

 

2. The parties are ordered to contact Chambers by Wednesday, December 27, 2017, at [DELETED] to set this matter for a hearing on Plaintiff’s additional requests for relief.

 

3. The Final Trial Preparation Conference set for February 7, 2018, and the Jury Trial set to begin on February 20, 2018, are HEREBY VACATED.

 

 

RECENT ARTICLES

 

2020.05.21 ... Utah Supreme Court Rejects Mixed Motive Test For Intentional Fraudulent Transfers In Jones Case

2020.01.06 ... Twyne’s Case And The Most Infamous Flock Of Sheep In Anglo-American Law

2019.12.07 ... New York Finally Modernizes Its Fraudulent Transfer Laws By Adopting The Uniform Voidable Transactions Act

2019.10.29 ... Repeal Of Kentucky’s Fraudulent Transfer Law In Favor Of UVTA Causes Headaches In Orchard

2019.10.19 ... Texas Homestead Gets Constitutional Protection From Fraudulent Transfer Claim In Lapides

 

 

Many more articles on voidable transactions law found here

 

UVTA - LOGICAL ORGANIZATION

(Designed For Litigators)

 

Click here to go to the Voidable Transactions Decision Chart

 

Overview of UVTA -- The process and result

 

Learn The Vocabulary Of The Act (Main Page)

 

Has A Voidable Transaction Occurred? (Main Page)

 

Does The Transferee Have A Defense? (Main Page)

 

What Remedies Are Available? (Main Page)

 

Other Helpful Provisions (Main Page)

 

UVTA - NUMERICAL ORGANIZATION

(Confusing & Difficult To Use)

 

The Uniform Law Commission's complete copy of the UVTA with comments in PDF format is available here. The webpage for the UVTA, showing states that have enacted and much other information regarding the Act is found here.

 

1 - Definitions

(1) Affiliate -- (2) Asset -- (3) Claim -- (4) Creditor -- (5) Debt -- (6) Debtor -- (7) Electronic -- (8) Insider -- (9) Lien -- (10) Organization -- (11) Person -- (12) Property -- (13) Record -- (14) Relative -- (15) Sign -- (16) Transfer -- (17) Valid Lien

2 - Insolvency - How insolvency is calculated

3 - Value - Issues relating to calculating value

4 - Transfer Or Obligation Voidable As To Present Or Future Creditor

(a)(1) {Intent Test} - To hinder, delay or defraud any creditor

(a)(2)(i) {Overextending Insolvency Test} - The debtor engages in a transaction for which it does not have the financial strength

(a)(2)(ii) {Sinking Insolvency Test} - The debtor is not technically insolvent but headed for insolvency

(b) {Badges of Fraud} - Circumstances available to prove the debtor's intent

5 - Transfer or Obligation Voidable As To Present Creditor

(a) {Insolvency Test} - The test preferred by creditors

(b) {Insider Preference Test} - Not really a fraudulent transfer test at all

6 - When Transfer Is Made Or Obligation Is Incurred - Determines the time of the transfer

7 - Remedies Of Creditor

      {Non-Money Judgment Remedies} - Avoidance, attachment, etc.

8 - Defenses, Liability, And Protection Of Transferee Or Obligee

{Main Provisions} -The transferee's good faith for-value defense

(b) and (c) {Money Judgment Remedy} - Alternative remedy for creditors when avoidance is not good enough

9 - Extinguishment Of Claim For Relief - Similar to Statutes of Limitation

10 - Governing Law - Conflicts of Laws provisions

11 - Application To Series Organization - Applies to intra-series transfers

12 - Supplementary Provisions - Allows application of other law to issues unresolved by the UVTA

13 - Uniformity Of Application And Construction - Court opinions from other states may be looked to for guidance

14 - Relation To Electronic Signatures In Global And National Commerce - Waste of statutory space

15 - Short Title - From fraudulent transfers to voidable transactions

16 - Repeals; Conforming Amendment - Information for enacting legislatures

 

OTHER SOURCES OF

FRAUDULENT TRANSFER LAW

 

Fraudulent Transfers In Bankruptcy - Main Page

 

28 U.S.C. § 3301, et seq. - Where United States is the creditor

 

Common Law Fraudulent Transfer - Still exists in most states

 

Fraudulent Conveyances Act of 1571 a/k/a Statute of 13 Elizabeth - The medieval statute to which the modern American UVTA traces some of its roots.

 

Statutes Of The U.S. Jurisdictions -- State and Territorial Voidable Transaction and Fraudulent Transfer Laws

 

TOPICAL COURT OPINIONS

 

DEFINITIONS

     Creditor Definition - Court opinions on the definition of creditor

     Debtor Insider Affiliate Relative Organization Person Definitions   - Court opinions on the definitions of debtor, insider, etc.

     Claim And Debt Definitions  - Court opinions on the definitions of claim and debt

     Asset And Property Definitions  - Court opinions on the definitions of assets and property

     Lien And Valid Lien Definitions  - Court opinions on the definitions of lien and valid lien

     Transfer Definition  - Court opinions on the definition of transfer

     Value And Reasonably Equivalent Value (REV) Definition  - Court opinions on the definitions of value and reasonably equivalent value

     Insolvency Definition  - Court opinions on the definition of insolvency

TESTS

     Insolvency Test  - Court opinions relating to the Insolvency Test

     Insider Preference Test  - Court opinions relating to the Insider Preference Test

     Overextending Insolvency Test  - Court opinions relating to the Overextending Insolvency Test

     Sinking Insolvency Test  - Court opinions relating to the Sinking Insolvency Test

     Intent Test  - Court opinions relating to the Intent Test

           Badges Of Fraud  - Court opinions relating to the Badges of Fraud

DEFENSES

     Extinguishment Periods a/k/a (incorrectly) Statute Of Limitations  - Court opinions relating to the extinguishment periods

     Transferee Good Faith  - Court opinions relating to the transferee good faith for-value defense

REMEDIES

     Non-Money Remedies  - Court opinions relating to avoidance and other non-money remedies

     Money Judgment Remedies  - Court opinions relating to money judgments

OTHER

     Burdens of Proof  - Court opinions relating to the burdens of proof

     Conflict Of Laws  - Court opinions relating to conflict of laws

     Uniformity  - Court opinions relating to uniformity with the laws of other jurisdictions

     Supplementary Law  - Court opinions relating to the interplay of the UVTA with other law

     Jurisdictional Issues - Court opinions relating to jurisdiction of UVTA actions.

BANKRUPTCY

     Section 548  - Court opinions relating to 11 USC 548

 

OTHER RESOURCES

 

 

OTHER INFORMATIONAL WEBSITES

by Jay Adkisson

 

  • Jay Adkisson - More about Jay D. Adkisson, background, books, articles, speaking appearances.

 

  • Captive Insurance - Licensed insurance companies formed by the parent organization to handle the insurance and risk management needs of the business, by the author of the best-selling book on the topic: Adkisson's Captive Insurance Companies.

 

  • Asset Protection - The all-time best-selling book on asset protection planning by Jay Adkisson and Chris Riser.

 

  • Creditor-Debtor - An explanation of common creditor remedies, strategies and tactics to enforce a judgment, including a discussion of common debtor asset protection strategies.

 

  • Private Retirement Plans - An exploration of a unique creditor exemption allowed under California law which can be very beneficial but is often misused.

 

  • Charging Orders - The confusing remedy against a debtor's interest in an LLC or partnership is explained in reference to the Uniform Partnership Act, the Uniform Limited Partnership Act, and the Uniform Limited Liability Company Act.

 

  • Protected Series - An examination of the single most complex statutory legal structure yet created, with particular reference to the Uniform Protected Series Act of 2017.

 

  • California Enforcement of Judgments Law - Considers the topic of judgment enforcement in California, including the California Enforcement of Judgments Law and other laws related to California creditor-debtor issues.

 

  • Anti-SLAPP Laws - A collection of and commentary about Anti-SLAPP laws and significant court decisions on the subject within the United States, and special section on California Anti-SLAPP.

 

 

Voidable Transactions:

Fraudulent Transfers In American Law

 

by Jay D. Adkisson (Available 2021)

 

Click here for more information

Contact Jay Adkisson:

 

Phone: 702-953-9617     Fax: 877-698-0678     jay [at] jayad.com

 

Unless a dire emergency, please send me an e-mail first in lieu of calling to set up a telephone appointment for a date and time certain.

 

Las Vegas Office: 6671 S. Las Vegas Blvd., Suite 210, Las Vegas, NV 89119, Ph: 702-953-9617, Fax: 877-698-0678. By appointment only.

 

Newport Beach Office: 100 Bayview Circle, Suite 210, Newport Beach, California 92660. Ph: 949-200-7773, Fax: 877-698-0678. By appointment only.

 

Social Media Contact: Twitter and LinkedIn

 

Admitted to practice law in Arizona, California, Nevada, Oklahoma and Texas.

 

© 2020 Jay D. Adkisson. All rights reserved. No claim to government works or the works of the Uniform Law Commission. The information contained in this website is for general educational purposes only, does not constitute any legal advice or opinion, and should not be relied upon in relation to particular cases. Use this information at your own peril; it is no substitute for the legal advice or opinion of an attorney licensed to practice law in the appropriate jurisdiction. This site https://voidabletransactions.com Contact: jay [at] jayad.com or by phone to 702-953-9617 or by fax to 877-698-0678.