Asset Protection Planner Liability

Below are a collection of opinions regarding the liability of debtors’ planners to creditors for overly-aggressive or fraudulent planning.

Alabama

A.T. Stephens Enterprises, Inc. v. Johns (Ala. 01/21/2000)
A.T. Stephens Enterprises, Inc., filed this action against Scott Transportation, including Arnold Johns. The court discusses whether or not Alabama recognizes a cause of action for conspiracy to defraud a creditor. The court has previously held that a civil conspiracy is a combination of two or more persons acting to accomplish an unlawful end or to accomplish a lawful end by unlawful means. The court notes that nothing in the statutes or case law would prohibit a creditor of one of the conspirators from bringing an action based upon this cause of action.

Alaska

Donald L. Summers v. William E. Hagen (Alaska 05/28/1993)
This dispute arises from an action brought by William E. Hagen against Donald L. Summers, alleging that Summers participated in a fraudulent conveyance scheme with Jerald C. Briske, a debtor of Hagen's. Hagen sold Briske a parcel of real property. In exchanges, Briske gave Hagen a deed of trust note to secure the principal amount. Needless to say, Briske defaulted on the note. But before defaulting on the note, Briske executed fourteen quitclaim deeds conveying seventeen parcels of real property to various family members, as well as his longtime business partner, Summers. The court discusses the elements needed to prove liability for participation in a fraudulent conveyance scheme. The court finds that the plaintiff must establish: (1) An unlawful agreement; (2) The specific intent of each participant in the scheme to hinder, delay and defraud a creditor of one who participated in the scheme; (3) Acts committed pursuant to the unlawful agreement; (4) Damages caused by the acts committed pursuant to the unlawful agreement.

Arizona

McElhanon v. Hing (Ariz.App.Div.1 10/01/1985)
The case at bar raises the issue of whether there is a cause of action against an attorney who, while acting in his capacity as an attorney, engages in a conspiracy to defraud a judgment creditor of his client. In McElhanon, the court recognized the cause of action for judgment creditors, applying the Uniform Fraudulent Conveyance Act. The court held that the cause of action is recognizable for those who are general creditors at the time of the fraudulent conveyance, noting that, general creditors must reduce their claims to judgment before asserting this cause of action. Prior to judgment, general creditors have no legal right to the property fraudulently conveyed.

California

Professional Collection Consultants Inc. v. Griffis (Cal.App. Dist.2 04/09/2004)
Appellant, Professional Collection Consultants, Inc., commenced this action on January 25, 2002. After several demurrers and amended complaints, appellant filed the third amended complaint on April 10, 2003. The third amended complaint alleges that in September 1994, Palos Verdes National Bank ("the bank") obtained a money judgment against respondent, Eldon R. Griffis, and in 1995, the bank assigned the judgment to appellant. Appellant contends that various transactions are alleged to have been fraudulent transfers in violation of the California Uniform Fraudulent Transfers Act. The court concludes that this indeed was a fraudulent transfer, made with the actual intent to hinder, delay, or defraud, and was brought in a timely matter.

Keitel v. Heubel (Cal.App. Dist.1 03/05/2004)
The claims that were litigated in the present action arose while Keitel was trying to enforce a judgment that she obtained against the Heubels, her brother and sister-in-law. The case at bar concerns the actions taken by the Heubels prior to the previous judgment being entered against them. Keitel alleges that the day before the judgment was entered; the Heubels executed four Grant Deeds in order to prevent Keitel from executing her judgment. Pursuant to the deeds, the Heubels then transferred title to the trustees of the “George William Heubel and Peggy Anne Heubel Blind Trust dated June 19, 1997.” Keitel further alleges that a notice of levy was recorded and served on the Heubels, but Keitel was unable to execute on the property. Keitel alleges that the transfers into the trust violated the UFTA because they were 1) made without consideration, 2) rendered the Heubel’s insolvent, and 3) were done with the specific intent to defraud Keitel. The court held that the conspiracy claim failed as a matter of law because there is no independent cause of action for conspiracy and the fraud claims upon which the conspiracy was based, failed. Keitel claims that the civil conspiracy claim should survive because the Heubels violated a penal code section that forbids fraudulent transfers to avoid debt execution. However, the court reasons that that particular provision of the Penal Code doesn’t authorize a civil action for damages and can’t support a civil conspiracy claim.

Solar Precision Products v. Cubic Technologies (Cal.App. Dist.2 04/27/2004)
In the case at bar, a judgment debtor corporation’s assets were transferred to a corporate insider who continued the business using a new corporate entity. Solar Precision Products, Inc. appeals from a summary judgment entered in favor of Cubic Technologies, Inc. The complaint alleged that Solar obtained a judgment from Helisys, Inc., which had never been paid and that Helisys transferred it’s assets to Cubic without adequate consideration, in an effort to hinder or delay the collection of Solar’s judgment. The court found that there was no claim for civil conspiracy, as the commission of an actual civil wrong must initiate the conspiracy.

Rooftop Management & Consulting v. Washington Mutual Bank (Cal.App. Dist.2 05/15/2003)
The unpublished case of Rooftop Management v. Washington Mutual Bank, deals with the ramifications of a fraudulent conveyance. The court in this case holds, that a creditor can’t be truly injured by the fraudulent conveyance, unless that transfer puts beyond their reach, property that would be able to be subject to the payment of the creditor’s debt. This case illustrates the principle that a plaintiff seeking the equitable relief of setting aside a fraudulent transfer of property must show entitlement to relief and the inadequacy of a remedy at law.

Korea Data Systems, Inc. v. Cheng (Cal.App. Dist.4 03/05/2003)
This case is an action to enforce a prior judgment. The unpublished case of Korea Data Systems v. Cheng, illustrates the subtlety of conveyances that may or may not be fraudulent in nature. The court concludes that absent a transfer by a judgment debtor, there can be no claim of fraudulent conveyance.

Kim v. Tsai (Cal.App. Dist.2 02/26/2003)
In the case at bar, the plaintiffs appeal from a summary judgment entered against them, and in favor of defendant, in an action to recover monies owed to the plaintiffs under a commercial lease. The action is based on the alleged fraudulent transfer of real property and business interests to defendant to avoid creditors’ claims. The court agrees that there are triable issues of fact as to the civil conspiracy claim. The court finds that "the elements of an action for civil conspiracy are the formation and operation of the conspiracy and damage resulting to plaintiff from an act or acts done in furtherance of the common design."

Sax v. Kritt (Cal.App. Dist.2 11/20/2002)
Defendant Averil Kritt is the son of the late Sarah Kritt. His brother is Larry Kritt. Sarah appointed Averil successor trustee of the Kritt Living Trust during her lifetime, after removing Larry as co-trustee. Sarah Kritt retained the law firm of Darling, Hall & Rae to pursue claims against her son Larry for embezzlement of funds and misappropriation of real estate belonging to Sarah. The law firm files an action against Averil for non-payment of services. Averil is forced to hire yet another law firm to represent him in the matter with the previous law firm. Second attorney files an action against Averil for breach of contract. Attorney proffers a claim of civil conspiracy.

Monastra v. Konica Business Machines, U.S.A., Inc. (Cal.App. Dist.2 03/28/1996)
Plaintiff appeals from a summary judgment entered against him and in favor of the eight named defendants in his action to set aside fraudulent transfers and establish a constructive trust, and for damages for fraud and conspiracy. One issue that the court examines in this case is whether or not the California Bulk Sales Act insulates a bulk sale from attack under the Fraudulent Transfer Act, even if the transfer is one of those fraudulent or constructively fraudulent transfers proscribed in Civil Code section 3440. The court lists the elements of a conspiracy, as being the formation and operation of the conspiracy and damage resulting to the plaintiff. However, the court notes that "standing alone, a conspiracy does no harm and engenders no liability; it must be activated by the commission of an actual civil wrong."

Mehrtash v. ATA Mehrtash (Cal.App. Dist.2 10/24/2001)
In the case at bar, creditor files action to set aside as a fraudulent transfer, the transfer of debtor's home to his stepsons. Under the California Fraudulent Transfers Act, in some circumstances a creditor may sue to set aside a transfer of property by a debtor, where the transfer defrauds the creditor. The court argues that a well-established principle of fraudulent transfers law is that "a transfer in fraud of creditors may be attacked only by one who is injured by the transfer; mere intent to delay or defraud is not sufficient." As far as the civil conspiracy claim is concerned, the court held that "there is no separate tort of civil conspiracy, and there is no civil action for conspiracy to commit a recognized tort unless the wrongful act itself is committed and damage results therefrom."

Lyons v. Security Pacific Nat. Bank (Cal.App. Dist.2 10/31/1995)
The plaintiff’s complaint alleged three counts of conspiracy among defendants. According to the alleged conspiracy, the Bank agreed with the Yuroseks to seek repayment of the entire $2.35 million from Lyons only. Meanwhile, the complaint alleged, the Yuroseks amassed a $23 million sham debt to the Bank, and then granted the Bank security interests in all of their remaining assets. Lyons alleged this preferential transfer was made for the purpose of preventing him from obtaining contribution from the Yuroseks for their share of the funds Lyons paid to the Bank in satisfaction of the $2.35 million loan. Civil conspiracy consists of "'. . . (1) the formation and operation of the conspiracy, (2) the wrongful act or acts done pursuant thereto, and (3) the damage resulting from such act or acts. It is the "‘ . . . acts done and not the conspiracy to do them which should be regarded as the essence of the civil action.'

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Colorado

Double Oak Construction, LLC. v. Cornerstone Development International, LLC (Colo.App. 09/25/2003)
Plaintiff entered into a contract with defendant (Cornerstone), an alter ego of co-defendant Ho. The contract was for plaintiff to construct, and later expand, a shopping plaza for $710,202. Ho transferred his interest in Cornerstone to co-defendant Yoo, because Ho had unsatisfied civil judgments against him. Plaintiff was not paid fully for this work, and it served Cornerstone its demand for arbitration in January 1997. The court held that 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.

Connecticut

Litchfield Asset Management Corp. v. Howell (Conn.App. 06/04/2002)
Defendant Howell, who worked as an interior designer, was hired by the plaintiffs to perform services at its facilities in Texas. In 1995, the plaintiff brought an action in a Texas court against Mary Ann Howell and her now defunct company Mary Howell Interiors based on disputes arising from the agreement. Howell was unsuccessful in her defense, and a judgment for over $650,000 was entered against her in a Texas court. Plaintiffs then sought to enforce the Texas judgment in Connecticut. As these proceedings were unfolding, Howell and her family formed two LLC’s which were used to ''to perpetrate a fraud or promote injustice by preventing the plaintiff from collecting on its judgment against Mary Ann Howell.'' Under Connecticut law, there is no such thing as a civil action for conspiracy. The court held that a claim of civil conspiracy, therefore, is ''insufficient unless based on some underlying cause of action . . ..''

Florida

Freeman v. First Union National Bank (Fla. 01/29/2004)
In the case at bar, the Court must answer the question of whether Florida's Uniform Fraudulent Transfer Act created a cause of action for damages in favor of a creditor against an aider or abettor to a fraudulent transaction. Appellants sought monetary damages for First Union's role in an alleged fraudulent Ponzi scheme conducted by a company called Unique Gems. The appellants alleged that First Union, as a banking institution servicing Unique Gems' financial transactions, aided and abetted in the fraudulent transfers of money by Unique Gems to the harm of Unique Gems' creditors. The court however was not willing to expand the FUFTA as it was not intended to serve as a vehicle by which a creditor may bring a suit against a non-transferee party (like First Union in this case) for monetary damages arising from the non-transferee party's alleged aiding-abetting of a fraudulent money transfer.

Bankfirst v. Legendre (Fla.App. 02/14/2003)

Robert Fehlhaber v. Robert Fehlhaber (Fla.App. 01/20/1987)
In the case at bar, the deceased, Fred F. Fehlhaber, established an intervivos trust. Subsequently, his wife traveled to California and sought a final judgment of legal separation and determination of community property, among other things. Decedent's wife secured a final judgment from the California court, in regards to the community property, claiming her husband had significant assets. Decedent's wife was awarded over $9.9 million in damages. She then proceeded to return to Florida and successfully established the California judgment in Florida. The court held that at the time the appellant accepted the California money judgment, rather than pursue her community property interest in the specific property owned by Fred and commence further proceedings to enforce that judgment, she waived any further right to seek a claim against the specific assets of Fred and was relegated to status of a judgment creditor.

Georgia

Miller v. Lomax (Ga.App. 03/04/2004)
Estelle Miller, Linda Miller, and Robert Miller sued Robert Lomax as executor of the estate of Thomas Miller, Carolyn Miller, and Ray's Uptown Body Shop, Inc. for fraud and breach of contract. A conspiracy is a combination of two or more persons to accomplish an unlawful end or to accomplish a lawful end by unlawful means. To recover damages for a civil conspiracy claim, a plaintiff must show that two or more persons, acting in concert, engaged in conduct that constitutes a tort. Absent the underlying tort, there can be no liability for civil conspiracy. The court in this case held that there was sufficient evidence to conclude that Carolyn Miller participated with Thomas Miller in a scheme to effect fraudulent transfers.

Illinois

Bressner v. Ambroziak (N.D.Ill. 05/16/2003)
In the case at bar, plaintiff claims the defendants engaged in a civil conspiracy against him and violated the Illinois Uniform Fraudulent Transfer Act. Plaintiff alleges that defendant Dennis is a primary participant in the generation of wealth that is formally held by defendant Shirlee and that the defendants Ambroziaks have since the date of judgment conspired together to defraud plaintiff by hiding Dennis's assets and income so as to prevent plaintiff from collecting his judgment. The court defines a civil conspiracy as (1) an agreement (2) by two or more persons (3) to perform an overt act or acts (4) in furtherance of the agreement or conspiracy (5) to accomplish an unlawful purpose or a lawful purpose by unlawful means (6) causing injury to another. The court reasons that "[t] o state a cause of action for conspiracy, a plaintiff must allege not only that one of the conspirators committed an overt act in furtherance of the conspiracy, but also that such act was tortious or unlawful in character." In this case, the court held that there was no underlying tortiuous act to merit upholding a claim of civil conspiracy.

T.J. Gendron v. Chicago & North Western Transportation (Ill. 10/30/1989)
This appeal is brought by creditors of a railroad to stop the sale of a portion of the railroad as a fraudulent conveyance and for damages associated with the fraudulent conveyance. The trial court held that Illinois common law preempts plaintiffs' claim of civil conspiracy. And this court agreed. The court states that the civil conspiracy claim here is also preempted by the decision of the Illinois Supreme Court.

Kansas

McKibben v. Chubb (10th Cir. 02/26/1988)
Ula McKibben died on October 21, 1983. His surviving brother, Fred McKibben, brought the current action. It concerns two related occurrences: (1) the drafting and execution of Ula McKibben's will, and (2) an alleged gift of stock that Ula owned shortly before his death. Before his death, Ula was living at his home in Topeka, Kansas with Leland Morris. Morris phoned defendant Janet A. Chubb and told her that Ula was ill and asked that she prepare a will for him. Chubb brought a will to Ula's home, where it was executed and witnessed. The will left substantially all of Ula McKibben's assets to Morris. Shortly thereafter Ula died. After Ula’s death, the Kansas court admitted the will to probate. Fred contested the validity of the will, but was unsuccessful. The court held there was absolutely no evidence in the record to suggest that Chubb was anything more than a casual acquaintance of Morris and Ula McKibben retained to draft Ula's will. The court found there was no cause for a finding of civil conspiracy.

Missouri

Mark VII v. Stephen M. and Sherry E. (Mo. 05/28/1996)
Appellants appeal from an order sustaining respondent's motion to dismiss appellants' claim for civil conspiracy. This case arises out of a claim for civil conspiracy filed by appellants, Mark VII, Inc. and Missouri-Nebraska Express, Inc., against respondent, Jeffrey B. Tonkin, an attorney practicing in Kansas City. The court also found that appellants did not allege the elements of a cause of action for civil conspiracy with the specificity required under Missouri law, and that dismissal was appropriate for that alternative reason as well. The court found that "a 'civil conspiracy' is an agreement or understanding between two or more persons to do an unlawful act, or to use unlawful means to do an act which is lawful.” Civil conspiracy is not a cause of action in and of itself; rather, it extends liability based on an underlying wrongful act. The court upheld the lower court’s decision.

New Jersey

Morganroth & Morganroth v. Norris, McLauglin & Marcus (3rd. Cir. 05/30/2003)
This is by far the most egregious case of civil conspiracy in the body of law. This case really illustrates the fine line between an attorney giving counsel to a client, and the attorney’s outright illegal and unethical participation. In the case at bar, the plaintiffs, Morganroth & Morganroth, a Michigan law firm, and Mayer Morganroth, sued John DeLorean in a federal court in Michigan for legal services rendered over approximately ten years. The plaintiffs brought the instant suit against Norris,McLaughlin & Marcus, P.C., a New Jersey law firm, as well as Victor S. Elgort and Daniel R. Guadalupe its employees or affiliates, who represent DeLorean. Plaintiff’s complaint alleges that they actively, knowingly, and intentionally participated in their client's unlawful efforts to avoid execution on his property. In order to be successful under a claim for civil conspiracy one must look to see if there is an underlying tort to support the conspiracy claim. Mere agreement to do a wrongful act can never alone amount to a tort, whether or not it may be a crime. However, the court in this case held that the behavior of defendant law firm was so egregious that it did rise to the level of conspiracy.

Banco Popular North America v. Gandi (N.J.Super.App.Div. 04/29/2003)
In the case at bar, debtor defaulted on a loan. Prior to the default he transferred title of his properties into his wife's name. Debtor claims his lawyer encouraged him to transfer the titles. The issue in this case then becomes whether the attorney participated in the conspiracy by the very fact that he offered them legal advice, or whether it takes a more constructive act to be implicated in the conspiracy. In general a lawyer is not liable for a client's tort unless the lawyer assisted the client through conduct itself tortious or gave substantial assistance to the client knowing the client's conduct to be tortious.

Karo Marketing Corporation v. Playdrome America (N.J.Super.App.Div. 06/12/2000)
Plaintiff entered into a contract with defendant, to provide marketing and advertising services. Full payment was never received and plaintiffs commenced and action to recover the monies owed. Plaintiff was unable to collect on its judgment. Plaintiff's present complaint alleged fraudulent conveyance and civil conspiracy. The court held that the civil conspiracy contentions are an appropriate adjunct to the fraud claims.

Morganroth & Morganroth v. Delorean (10th Cir. 06/05/2000)
Plaintiffs/appellees Morganroth and his law firm, Morganroth and Morganroth filed this diversity suit to set aside a transfer of property as fraudulent. The transfer of property at issue was from defendant-appellant to Zachary DeLorean, individually and as custodian for Kathryn A. DeLorean. Morganroth's present suit sought to set aside defendant-appellant’s transfer of the property to the DeLorean children so that Morganroth could then pursue the property to satisfy Morganroth's judgment against appellee’s. The civil conspiracy claim at issue in the present case concerns the transfer of property between defendant and other parties, in an effort to delay Morganroth’s collection on a judgment.

New Mexico

Miller v. Triad Adoption and Counseling Services, Inc. (N.M.App. 02/06/2003)
This is an appeal of a summary judgment granted to defendants. The couple in this case sued the adoption agency alleging negligence in a failed adoption attempt. The insurance coverage that the adoption agency had was provided to the professional staff and not the corporation itself. The trial court eventually found for and assessed a judgment against the adoption agency. The agency was also ordered to pay all attorney’s fees and costs. The Board of Directors of the adoption agency met and decided to form a new corporation and transfer all of the existing corporation’s assets in the new corporation. The court held that the insurance company had no duty to defend against plaintiff’s lawsuit; all corporate liability and civil conspiracy charges were dismissed.

North Carolina

Fox v. Wilson (N.C.App. 04/21/1987)
In the case at bar, the plaintiff has alleged that defendants Erby and Wilson conspired to defraud her in order to obtain ownership of the newspaper. She has also alleged that each of them committed certain specific overt acts by which she was defrauded and, as a result of which, she was damaged. These allegations are sufficient to allege a claim for damages caused by acts committed pursuant to a conspiracy. The gist of the civil action for conspiracy is the act or acts committed in pursuance thereof -- the damage -- not the conspiracy or the combination. The court held there was enough evidence of fraud and conspiracy to remand the case to the Superior Court.

Oregon

Kotera v. Daioh International U.S.A. Corp., 179 Or.App. 253, 40 P.3d 506 (Or.App. 01/30/2002)

Tennessee

Brooks v. Creech (Tenn.App. 01/28/2003)
In the case at bar, plaintiff used his real property as collateral on a loan. Plaintiff quitclaimed the property to defendant Creech. Defendant Stigall used the real property as collateral to obtain a loan as well. The trial court found that defendants Creech and Stigall were involved in a conspiracy to defraud plaintiff. The present court upheld that ruling. The court held that defendants were involved in the conspiracy.

Nelson v. Metric Realty (Tenn.App. 09/26/2002)
In the case at bar, Samuel H. Hardige hired Kenneth E. Nelson to oversee one of his businesses. Nelson was fired a short time later. After much convoluted litigation, the parties find themselves here. The case at bar presents an interesting question of “intracorporate civil conspiracy. Courts in other jurisdictions - - both federal and state - - that have addressed issues involving civil intracorporate conspiracy allegations have adopted the `intracorporate conspiracy immunity doctrine' to hold that wholly intracorporate conduct does not satisfy the plurality requirement necessary to establish an actionable conspiracy claim. This single entity view of intracorporate conduct derives from traditional principles of agency law. A basic principle of agency is that a corporation can act only through the authorized acts of its corporate directors, officers, and other employees and agents. Thus, the acts of the corporation's agents are attributed to the corporation itself. `The two are not one and another. So merged are their identities, when the agent is acting for the corporation (the only way it can act al all), that the one may not be an accessory of the other. Because the law requires two or more persons or entities to have a conspiracy, a civil conspiracy is not legally possible where a corporation and its alleged co- conspirators are not separate entities, but instead stand in a principal-agent relationship.

Burton v. Hardwood Pallets, Inc. (Tenn.App. 12/13/2001)
The case at bar, involves a dispute between the sellers of a business and the bank that financed a portion of the purchase price. The plaintiffs entered into an agreement with the defendants to sell the plaintiff’s pallet manufacturing business. Additional consideration for the sale included, Hardwood Pallets pledging its assets as collateral. As a condition to the making of the loan, the bank required the plaintiffs to execute a subordination agreement. When Hardwood Pallets defaulted on the bank loan, the bank sold the collateral at a private sale. The plaintiff’s allege breach of contract and civil conspiracy. In order to be liable under a claim for civil conspiracy, each conspirator must have the intent to accomplish this common purpose, and each must know of the other's intent. The court held that the stated facts do not establish, directly or inferentially, that the bank had intent to defraud the Burtons or that it knew of any fraudulent intent on the part of the other defendants.

Texas

Martinek v. Farmers & Merchants State Bank of Krum (Tex.App. Dist.2 05/01/2003)
Martinek appeals the trial court summary judgment entered for Farmers & Merchants State Bank of Krum. Martinek argues that the trial court erred when it granted the Bank's motion for summary judgment because the evidence presented raised a question concerning the existence of a civil conspiracy and fraudulent transfer. The court states that a civil conspiracy is "a combination between two or more persons to accomplish an unlawful purpose or to accomplish a lawful purpose by unlawful means." The elements needed to accomplish a civil conspiracy are 1) two or more persons; 2) an object to be accomplished; 3) a meeting of the minds on the object or course of action; 4) one or more unlawful overt acts; and 5) damages as the proximate result. The court held that the Bank committed no unlawful, overt act in furtherance of a conspiracy.

Walker v. Geer (Tex.App. Dist.1 01/16/2003)
The case at bar is an appeal from a summary judgment in favor of appellee Green, in which appellant Walker sought to have a judgment lien declared valid to foreclose on that judgment lien and to recover damages for civil conspiracy and fraudulent transfer. A piece of real property, for which appellant had a judgment lien, was sold and re-sold through a series of diluted transactions. To establish a claim for civil conspiracy it must be shown that two persons had the specific intent to agree to accomplish an unlawful purpose or a lawful purpose by unlawful means. The court held that the evidence presented by appellant doesn’t rise to the level necessary to prove civil conspiracy.

Gluck v. Sky Island Partnership, Ltd. (Tex.App. Dist.8 09/27/2001)
In the case at bar, appellant appeals from a grant of summary judgment in favor of appellees. Gluck argues that 1) the trial court erred in granting summary judgment on his claim for breach of contract; 2) the trial court erred in granting summary judgment on his claims for fraudulent transfer and civil conspiracy; and 3) the trial court erred in granting summary judgment on his claim for fraud. The court held that without a written contract of sale, there is no obligation that is created; therefore there can be no fraudulent transfer of the property. And since there can be no fraudulent transfer, there can be no civil conspiracy.

1994 Land Fund II v. Ramur, Inc., (Tex.App. Dist.5 02/05/2001)
The Resolution Trust Corporation assigned a note it acquired from a failing financial institution to 1994 Land Fund II. Land Fund sued Ramur, Inc. and others, alleging fraudulent transfer and conspiracy to fraudulently procure a release of lien from the RTC on property securing the note. Land Fund appeals the summary judgment in favor of RTC. The issue in this case is whether a civil conspiracy can exist in a real estate transaction. A civil conspiracy consists of two or more persons combining to accomplish an unlawful purpose or to accomplish a lawful purpose by unlawful means. The essential elements of conspiracy are: (1) two or more persons; (2) an object to be accomplished; (3) a meeting of minds on the object or course of action; (4) one or more unlawful, overt acts; and (5) damages as the proximate result. The court held that the evidence is sufficient to raise a fact issue on whether there was a meeting of the minds between Ramur and Watson to fraudulently secure the release of lien on Lot 2, and whether Ramur performed an overt act in furtherance of the conspiracy in its correspondence with the RTC.

Estate Ethel Arnetta Herring (Tex. 03/04/1998)

Earl and Gail Newsome, I v. Charter Bank Colonial (Tex. 12/31/1996)

Michael H. Vosko, v. The Chase Manhattan Bank (Tex. 08/28/1995)

Donald M. White and Kath v. Melvin D. Babcock (Tex. 08/28/1995)
Appellants sued Gates Rental, Inc., a company controlled by appellees, Melvin Babcock and Babcock Management, Inc. for breach of contract. When appellants went to collect from Gates, they discovered that Mar-Jean Management, Inc. had purchased all the assets of Gates. The court finds that the essential elements of a civil conspiracy are: (1) two or more persons; (2) an object to be accomplished; (3) a meeting of the minds on the object or course of action; (4) one or more unlawful, overt acts; and (5) damages as the proximate result. The summary judgment evidence in this case, even when viewed in the light most favorable to appellants, does not show any unlawful, overt acts. The sale of the assets to Mar-Jean to pay the loan to BankSouth was legal. Because there were no improper or illegal acts in paying the valid loan due to BankSouth, appellees did not engage in a conspiracy.

Jean Connell and Martin W. Seidler v. Alvin L. Connell (Tex. 10/26/1994)
This is an appeal from the judgment of divorce after the trial court granted a directed verdict in favor of appellees as to "all matters [except the divorce] in this case." The court states that the elements of civil conspiracy, which must all be proved, are (1) two or more persons (2) with an object to be accomplished (3) and with a meeting of minds on the object or course of action (4) commit one or more unlawful overt acts, and (5) there are damages as the proximate result. The court reasons that liability is sufficiently established by proof of a concert of action or other facts and circumstances from which "the natural inference arises that the unlawful, overt acts were committed in furtherance of common design, intention, or purpose of the alleged conspirators.” However, a vital fact may not be proved by unreasonable inferences from other facts and circumstances. There must be shown the existence of a combination of two or more persons to accomplish an unlawful purpose or to accomplish a lawful purpose by unlawful means. The court held that this was not shown.

Haralson v. E.F. Hutton Group Inc. (5th Cir. 12/26/1990)
Defendants E.F. Hutton Group Inc. and its securities and commodities brokerage subsidiary, E.F. Hutton & Co. Inc. sued George Aubin, his wife Cameron Aubin, several trading companies owned by George Aubin, John B. Haralson, Caren C. Grant, Richard L. Fuqua, II, IBR, Inc., and RBI, Inc. to recover approximately $60 million. The transactions involving this case are lengthy and complicated. In short, Hutton asserts a claim of civil conspiracy against plaintiffs. In Texas, the elements of the “tort” of civil conspiracy of this kind, are: (1) the existence of an enforceable contract; (2) two or more non-parties' agreement to induce a party to breach a contract; (3) a party to the conspiracy commits an overt act in furtherance of the conspiratorial objective; (4) the overt act proximately causes the plaintiff actual damages; and (5) the conspirators lack justifiable excuse or privilege. The court held that the existence of a conspiracy is usually proved with circumstantial evidence, and the courts assessment of the record is that Hutton has adduced enough such evidence to survive summary judgment.

Mack v. Newton (5th Cir. 08/06/1984)
This case is a bit complex and needs a layout of the principal players. This case concerns the financing of the dairy cattle operations of the now bankrupt corporation, Dairyland, Inc. and of its acquisition of the Bosque County ranch on which such operations were conducted. Defendant Equirco Lessors, Inc. provided part of the financing both for Dairyland's operations and for its acquisition of the ranch from plaintiff Brazos Enterprises, Inc., a corporation wholly owned and controlled by G.J. Roberts. Defendants Wade Newton and Bill Mesker were principals in Dairyland, and were also owners of a separate business, a partnership know as Dairy Cows. Equico subsequently provided financing to Dairy Cows. The affairs and debts of Dairyland and Dairy Cows became intertwined. Involuntary bankruptcy proceedings were instituted against Dairyland and it filed voluntary proceedings. This suit by Dairyland's Trustee in Bankruptcy and Brazos generally claimed that Newton and Mesker transferred Dairyland cows mortgaged to Equico without applying the proceeds to the mortgage debt, and that Equico conspired with them and applied Dairyland assets to discharge unsecured Dairy Cows indebtedness to Equico, to the prejudice of both of Dairyland's general creditors and of Brazos in its capacity as a holder of a lien on the ranch inferior to that of Equico. The Trustee also asserted a usury claim against Equico respecting its loan to Dairyland. The court finds there is no cause for civil conspiracy. The court argues that the Texas Supreme Court has held that a general creditor does not have a cause of action for civil conspiracy when a debtor's property is conveyed to others to evade payment, see Estate of Stonecipher v. Estate of Butts.

Utah

Morganroth & Morganroth v. Delorean (10th Cir. 06/05/2000)
Plaintiffs/appellees Morganroth and his law firm, Morganroth and Morganroth filed this diversity suit to set aside a transfer of property as fraudulent. The transfer of property at issue was from defendant-appellant to Zachary DeLorean, individually and as custodian for Kathryn A. DeLorean. Morganroth's present suit sought to set aside defendant-appellant’s transfer of the property to the DeLorean children so that Morganroth could then pursue the property to satisfy Morganroth's judgment against appellee’s. The civil conspiracy claim at issue in the present case concerns the transfer of property between defendant and other parties, in an effort to delay Morganroth’s collection on a judgment.

Wisconsin

Lane v. Sharp Packaging Systems, Inc. (Wis. 03/20/2002)
In the case at bar, attorney encouraged business owner to start transferring money out of the business, as to avoid making a 25% stock option sale available for their employee. The court discusses the following elements required to prove civil conspiracy. To form a conspiracy there must be an actual agreement to violate or disregard the law, and the persons involved must knowingly be members of the conspiracy. The court found that an attorney and a client can conspire with one another and that they don’t fall into the Attorney/Client exception of the Ford Motor Company, court dicta.

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