Bifani - Florida Fraudulent Transfer & Equitable Lien

Discussion of transfers made in defraud of creditors and the Uniform Fraudulent Transfers Act (UFTA)
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Bifani - Florida Fraudulent Transfer & Equitable Lien

Postby Riser Adkisson LLP » Sun Jul 21, 2013 9:37 am

In re Bifani, 2013 WL 3490350 (Bk.M.D.Fla., July 12, 2013). http://goo.gl/Vrxk9g

United States Bankruptcy Court, M.D. Florida, Tampa Division

In re: Ronald Bifani, Debtor.

Shari Streit Jansen, as Chapter 7 Trustee, Plaintiff,

v.

Arlene M. LaMarca, Defendant.

Case No. 8:12–bk–00562–MGWAdv. No. 8:12–ap–00288–MGW

July 12, 2013.

Attorneys and Law Firms

Benjamin G. Martin, Law Offices of Benjamin Martin, Sarasota, FL, for Defendant.

Lori V. Vaughan, Trenam Kemker, Tampa, FL, for Plaintiff.

Opinion

Chapter 7

ORDER GRANTING IN PART TRUSTEE'S MOTION FOR SUMMARY JUDGMENT

Michael G. Williamson, United States Bankruptcy Judge

*1 THIS PROCEEDING came before the Court on January 28, 2013, at 10:30 a.m., on the Chapter 7 Trustee's Motion for Summary Judgment.1 According to the Trustee's summary judgment motion, the undisputed facts show that she is entitled to summary judgment as a matter of law on her claims to (i) avoid and recover the fraudulent transfer of two parcels of real property located in Colorado (Counts I–VI); and (ii) impose an equitable lien on real property in Sarasota, Florida, that was purchased using the proceeds from the sale of one of the Colorado properties (Count VII). The Court agrees. For the reasons discussed below, the Court will grant summary judgment in part in favor of the Trustee on her fraudulent transfer and equitable lien claims.2

Undisputed Facts

The Debtor was a builder and developer of single-family homes in Breckenridge, Colorado. He met the Defendant, Arlene LaMarca, sometime in 2000. About two years after they met, the Debtor and LaMarca began living together in a house the Debtor owned at 207 North Ridge Street, Breckenridge, Colorado. The Debtor eventually quitclaimed that property to LaMarca in August 2006.3

At the time the Debtor transferred the Breckenridge property to LaMarca, it was encumbered by a $450,000 mortgage securing a line of credit the Debtor had taken out with Wells Fargo Bank. The Debtor apparently used the line of credit to finance the construction of various houses he built. The Debtor and LaMarca continued to live together in the Breckenridge property until February 2009.

In February 2009, LaMarca sold the Breckenridge property for $955,000.4 At the closing, LaMarca was required to pay off the $450,000 mortgage held by Wells Fargo.5 The closing costs were also deducted from the gross sales proceeds. In the end, LaMarca received $341,297.57 in net sales proceeds.6 LaMarca split the $341,297.57 net sales proceeds evenly with the Debtor. So the Debtor and LaMarca each received approximately $171,000 from the sale of the Breckenridge property.7

Four months later, the Debtor transferred two more properties to LaMarca. One property was located at 1400 Golden Eagle Road, Silverthorne, Colorado; the other was located at 988 Bald Eagle Road, Silverthorne, Colorado. Those properties were encumbered by a $242,700 mortgage. On the same day he transferred the Silverthorne properties to LaMarca, the Debtor also executed an amended promissory note in the amount of $126,867.93 in favor of LaMarca that purportedly memorialized the Debtor's obligation to repay amounts LaMarca had previously advanced him in March 2008.8

*2 LaMarca sold the Golden Eagle Road property three months later for $970,000.9 LaMarca was required to pay off the $242,700 mortgage on the Golden Eagle Road property at closing.10 After paying off that mortgage (and paying closing costs), LaMarca received $669,233.29 in net sales proceeds. LaMarca then used the nearly $670,000 in net sales proceeds from the Golden Eagle Road property to buy a house located at 101 Garden Lane, Sarasota, Florida, for $650,000 in September 2009.

While all of these transfers were taking place, the Debtor was a defendant in a pending state-court lawsuit in Colorado filed by Richard Davis (the Debtor's former business partner). That lawsuit, which was originally filed in May 2001, sought damages for breach of a mediated settlement agreement. The state court initially dismissed Davis' complaint, but that decision was reversed on appeal and remanded to the state court on November 11, 2008. The state court docket reflects that on June 12, 2009—one week before the Debtor transferred the Silverthorne properties to LaMarca—the state court entered an order scheduling a telephonic status conference (in light of the remand). The state court ultimately entered a $166,750.15 final judgment against the Debtor on December 12, 2011.

One month after the judgment was entered, the Debtor filed for chapter 7 bankruptcy. In his schedules, the Debtor listed a total of $286,158.93 in claims (secured and unsecured) and $35,437 in assets. A total of nine proofs of claim—totaling $448,374.56—have since been filed in this case. One of those claims was filed by Davis. Another three claims were filed by LaMarca. One of those claims—in the amount of $126,868—was on the promissory note.11 The Trustee filed this adversary proceeding on April 11, 2012, to avoid and recover the transfer of the Silverthorne properties and impose an equitable lien on the house LaMarca purchased in Sarasota with the proceeds from the sale of the Golden Eagle Road property.

The Trustee now claims that she entitled to judgment as a matter of law on her fraudulent transfer and equitable lien claims.12 According to the Trustee, it is undisputed that the Debtor transferred the Silverthorne properties with the actual intent to hinder, delay, or defraud his creditors and that LaMarca used the proceeds from that fraudulent transfer to purchase her Sarasota home. LaMarca says summary judgment is inappropriate because the Debtor was not insolvent at the time of the transfers.13

Conclusions of Law14

The Trustee need not show that the Debtor was insolvent if she can prove that the Debtor had the actual intent to hinder, delay, or defraud his creditors.15 To prevail on her fraudulent transfer claim under section 726.105(1)(a), the Trustee need only prove that (i) the Debtor transferred property within four years of filing his bankruptcy case; and (ii) the transfer was made with the actual intent to hinder, delay, or defraud any creditor.16 There is no dispute that the Debtor transferred property within four years of this bankruptcy case. So that leaves the "actual intent" element.

*3 As this Court recognized in In re McCarn's Allstate Finance, Inc., actual fraud "is seldom proven by direct evidence."17 Instead, it is often proven through circumstantial evidence. To determine whether circumstantial evidence supports a finding of actual intent, courts looked to the badges of "fraud" adopted by the Eleventh Circuit.18 Those "badges of fraud" are codified in Florida's fraudulent transfer statute.19 While the presence of the one of the badges of fraud—by itself—may only amount to a suspicion of actual intent, the presence of multiple badges of fraud justifies a finding of actual intent to hinder, delay, or defraud.

Here, several of the badges of fraud are present. For starters, the Debtor transferred the Silverthorne properties to the functional equivalent of an insider. The Debtor had lived with LaMarca for close to seven years at the time of the transfer (and still lives with her). Moreover, the Debtor has—at least in some respects—maintained control of the property after it was transferred. After all, LaMarca purchased the Sarasota home with the proceeds from the Golden Eagle Road property, and it is undisputed the Debtor has been living with LaMarca at that house ever since. At the time the Debtor transferred the Silverthorne properties to LaMarca, there was a lawsuit pending against him. In fact, just one week before the transfers, the state court scheduled a status conference to discuss the status of the case in light of an appellate ruling against the Debtor. Finally, the Debtor did not receive reasonably equivalent value for the transfers.

On that last point, LaMarca contends she did provide reasonably equivalent value in exchange for the Silverthorne properties. Specifically, LaMarca claims the property was transferred to her as payment for over $900,000 in loans she made to the Debtor. Those purported loans consist of: (i) the $450,000 mortgage on the Breckenridge property that she paid off at the closing of the sale of that property; (ii) the $171,000 she gave him from the proceeds from the sale of the Breckenridge property; (iii) the $242,700 mortgage on the Silverthorne properties that she paid off when she sold the Golden Eagle Road property; and (iv) the $131,000 she loaned the Debtor in March 2008.

There is no credible argument—nor is there any record evidence to suggest—that the $450,000 mortgage payoff, the $171,000 distribution from the sale proceeds, or the $242,700 mortgage payoff were loans. Those were simply encumbrances on property that the Debtor transferred to her for no consideration. The record does, however, reflect that the $131,000 was, in fact, a loan. But the Silverthorne properties were not transferred in consideration of that loan since LaMarca never credited the Debtor for those transfers. In fact, she filed a claim in his bankruptcy case for nearly the entire amount of the $131,000 loan. And in any case, LaMarca realized nearly $670,000 from the sale of the Golden Eagle Road property (plus, she now holds the Bald Eagle Road property free and clear). So there is no genuine issue of material fact that the Debtor did not receive reasonably equivalent value in exchange for the properties.

Because there is no issue of fact that the Debtor transferred property to an insider at the time a lawsuit was pending against him, did not receive reasonably equivalent value in exchange for the transfers, and retained (at least some) control of the property after it was transferred, the Trustee is entitled to summary judgment as a matter of law on her claims under section 726.105(1)(a), Florida Statutes (Counts I and IV). As a consequence, the Court need not decide whether the Debtor was solvent at the time he made the transfers. That leaves for consideration the Trustee's equitable lien claim (Count VII).

*4 Under Florida law, the court may impose an equitable lien if the general considerations of right and justice dictate that one party has a special right to a particular property and there is an absence of an available lien or no adequate remedy at law.20 For instance, courts have imposed equitable liens where property—including homestead property—was obtained through ill-gotten proceeds.21 Here, LaMarca's Sarasota house was acquired with ill-gotten proceeds.

LaMarca used the nearly $670,000 from the sale of the Golden Eagle Road property to purchase her Sarasota house. It would be inequitable and unjust to allow the Debtor to fraudulently transfer property to LaMarca to keep it from his creditors. And now the Debtor is reaping the benefits of that fraudulent transfer by living in the house that LaMarca purchased with the proceeds from the Debtor's fraudulent transfer. The Trustee, therefore, is entitled to summary judgment on her equitable lien claim.

Conclusion

The undisputed facts of this case fit the classic pattern of most fraudulent transfer cases. The Debtor was engaged in litigation with his former business partner for nearly a decade, and just when that lawsuit appears to be heading toward a judgment against him, the Debtor transfers nearly all of his property to a close friend he had been living with for years. His friend then sells some of the property the Debtor transferred to her and invests it in homestead property in Florida. On those undisputed facts, the Trustee is entitled to partial summary judgment as a matter of law on her fraudulent transfer and equitable lien claims. Accordingly, it is

ORDERED:

1. The Trustee's Motion for Summary Judgment is GRANTED in part.

2. The Trustee is entitled to final judgment as a matter of law on Counts I, IV, and VII of her complaint.

3. The Trustee's Motion for Summary Judgment is DENIED AS MOOT as to Counts II, III, V & VI of her complaint.

4. The Court will enter a separate final judgment.

DONE and ORDERED.

Footnotes

1

Adv. Doc. No. 39. The Court tentatively ruled at the conclusion of the January 28 summary judgment hearing. The Court, however, gave the parties an opportunity to mediate this proceeding before the Court formally issued its ruling. The parties were unable to resolve the dispute between them at mediation. As a consequence, it is now appropriate for the Court to rule on the Trustee's summary judgment motion.

2

At the conclusion of the January 28 summary judgment hearing, the Court gave the parties an opportunity to brief an evidentiary issue relating to the admissibility of the Debtor's Rule 2004 exam testimony on summary judgment. The Court, however, concludes that testimony is unnecessary to its ruling at summary judgment. So the Court declines to rule on that evidentiary issue.

3

Adv. Doc. No. 36–2 at 1.

4

Adv. Doc. No. 36–2 at 2–4.

5

Id. at 4.

6

Id.

7

Id. at 6.

8

On March 18, 2008, LaMarca loaned the Debtor $101,867.93. Ten days later, she loaned him another $30,122.

9

Adv. Doc. No. 36–2 at 22.

10

Id. at 23. That mortgage also encumbered the Bald Eagle Road property. So after the sale of the Golden Eagle Road property, LaMarca owned the Bald Eagle Road property free and clear.

11

She also filed two other claims in the amount of $36,489.50 each.

12

Adv. Doc. No. 39.

13

Adv. Doc. No. 56.

14

The Court has jurisdiction over this contested matter under 28 U.S.C. sec. 1334. This is a core proceeding under 28 U.S.C. sec. 157(b)(2)(H). The parties have consented to the Court's entry of a final judgment in this proceeding for purposes of 28 U.S.C. sec. 157(c)(2).

15

sec. 726.105(1)(a), Fla. Stat.

16

Id.

17

In re McCarn's Allstate Finance, Inc., 326 B.R. 843, 849 (Bankr.M.D.Fla.2005) (quoting In re Toy King Distrib., 256 B.R. 1, 126 (Bankr.M.D.Fla.2000)).

18

Id. (citing In re Levine, 134 F.3d 1046, 1053 (11th Cir.1998)).

19

sec. 726.105(2), Fla. Stat.

20

Maurer v. Maurer (In re Maurer), 267 B.R. 639, 652 (Bankr.M.D.Fla.2001).

21

Id. (citing Havoco of Am., Ltd. v. Hill, 790 So.2d 1018, 1026–28 (Fla.2001); Palm Beach Sav. & Loan Ass'n v. Fishbein, 619 So.2d 267, 269 (Fla.1993)).

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Re: Bifani - Florida Fraudulent Transfer & Equitable Lien

Postby Riser Adkisson LLP » Sat Feb 22, 2014 9:27 am

2014 WL 272920


United States District Court, M.D. Florida,

Tampa Division.

In re Ronald BIFANI, Debtor.

Arlene M. Lamarca, Appellant,

v.

Shari Streit Jansen, Chapter 7 Trustee, Appellee.

No. 8:13–cv–02197–JDW.Bankr.Case No. 8:12–bk–00562–MGW.

Jan. 23, 2014.

Attorneys and Law Firms

Benjamin G. Martin, Law Office of Benjamin G. Martin, Sarasota, FL, for Appellant.

Lori Virginia Vaughan, Trenam Kemker, Tampa, FL, for Appellee.

Opinion



ORDER

JAMES D. WHITTEMORE, District Judge.

*1 BEFORE THE COURT is Appellant's Verified Emergency Motion to Stay Sale of Property (Dkt.13), to which Appellee filed a response in opposition (Dkt.15). Appellant seeks a stay of the sale of real property (the "Bald Eagle Road" property), scheduled to close on January 24, 2014.

The Bankruptcy Court succinctly summarized this case in its Order granting Appellee summary judgment on her fraudulent transfer claims brought against Appellant:

The undisputed facts of this case fit the classic pattern of most fraudulent transfer cases. The Debtor was engaged in litigation with his former business partner for nearly a decade, and just when that lawsuit appears to be heading toward a judgment against him, the Debtor transfers nearly all of his property to a close friend he had been living with for years. His friend then sells some of the property the Debtor transferred to her and invests it in homestead property in Florida. On those undisputed facts, the Trustee is entitled to partial summary judgment as a matter of law on her fraudulent transfer and equitable lien claims.

(Dkt. 1–1 at 8). A thorough review of Appellant's motion, her merits brief, and the record confirms this characterization to be accurate. The Bankruptcy Court's decision was not clearly erroneous, and Appellant is not likely to prevail on her appeal. The motion (Dkt.13) is therefore DENIED.

I. Introduction

In January 2012, Ronald Bifani filed a Chapter 7 bankruptcy petition for relief. The Bankruptcy Court appointed Appellee Shari Streit Jansen as Trustee for Bifani's bankruptcy estate. The Trustee instituted an adversary proceeding against Appellant Arlene LaMarca, as memorialized in the operative Second Amended Complaint (Dkt.1–6). The adversary proceeding sought to avoid certain transfers of real property as fraudulent (Counts I–VI) and to impose an equitable lien on LaMarca's house she shares with Bifani in Sarasota, Florida (Count VII).

After discovery, the Trustee moved for summary judgment on the Second Amended Complaint (Dkt.1–13), to which LaMarca responded in opposition (Dkt.1–19). The Bankruptcy Court convened a hearing on the motion (see Dkt. 1–23), and ultimately granted it on Counts I, IV, and VII (Dkt.1–1).1 The remainder of the motion was denied as moot (id.).

Pertinent to the instant motion, Count IV sought to avoid the transfer of the "Bald Eagle Road" property as a fraudulent transfer. The transfer of the Bald Eagle Road property from Bifani to LaMarca was voided when the Trustee prevailed on Count IV, and the property is therefore part of the Estate. In its Order granting summary judgment, the Bankruptcy Court found no genuine issues of material fact with regard to the existence of "badges of fraud," and concluded that the badges combined to evidence actual intent on the part of Bifani to hinder, delay, or defraud his creditor (id.). Specifically, the Bankruptcy Court found that Bifani transferred property to a functional insider at the time a lawsuit was pending against him, did not receive reasonable equivalent value in exchange for the transfers, and maintained control of the property after it was transferred "at least in some respects" (Dkt. 1–1 at 5–6, 7).2

*2 LaMarca appealed the Order (see Dkt. 1–2). On appeal, LaMarca argues that the Bankruptcy Court erred by imposing an equitable lien on LaMarca's homestead and by granting summary judgment on a finding of "actual fraud" when material facts remained in dispute (Dkt. 8 at iii). The appeal has been fully briefed and is pending.

On November 27, 2013, after entry of the summary judgment order and after LaMarca filed her appeal, the Trustee applied to the Bankruptcy Court for authority to sell the Bald Eagle Road property (also known as "Lot 2") for $225,000.00 (Dkt.15–1). LaMarca objected to the sale (see Dkt. 15–2 at 1), but the Bankruptcy Court overruled her Objection and on December 18, 2013, granted the Trustee's motion to sell the property (Dkt.15–2). LaMarca took no further action until January 15, 2014, when she filed the instant motion to stay the sale (Dkt.13).

II. Standard

Federal Rule of Bankruptcy Procedure 8005 provides that a motion for stay of an order or judgment "must ordinarily be presented to the bankruptcy judge in the first instance." A motion to stay may also be made to the district court, but it must "show why the relief, modification, or termination was not obtained from the bankruptcy judge." Fed. R. Bankr.P. 8005; see In re Kahihikolo, 807 F.2d 1540, 1542 (11th Cir.1987) ("Rule 8005 allows for such a motion to be made to the district court upon a showing of why the relief was not obtained from the bankruptcy court.").

"A motion for a stay pending appeal under Rule 8005 is an extraordinary remedy and requires a substantial showing on the part of the movant." In re F.G. Metals, Inc., 390 B.R. 467, 471 (Bankr.M.D.Fla.2008). To obtain a stay, the movant must demonstrate: (1) that the movant is likely to prevail on the merits of her appeal;3 (2) that the movant will suffer irreparable injury if a stay or other injunctive relief is not granted; (3) that other parties will suffer no substantial harm if a stay or other injunctive relief is granted; and (4) in circumstances where the public interest is implicated, that the issuance of a stay will serve, rather than disserve, such public interest. Tooke v. Sunshine Trust Mortgage Trust, 149 B.R. 687, 689 (M.D.Fla.1992).

III. Discussion

A. LaMarca Has Not Shown Why a Stay Was Not Sought in Bankruptcy Court.

There is no dispute that LaMarca did not first seek relief in the Bankruptcy Court, as required by Rule 8005. The motion is due to be denied on that basis alone. See In re Zahn Farms, 206 B.R. 643, 644 (B.A.P.2d Cir.1997) ( "We are of the view that we may not consider the merits of the request for a stay pending appeal, because by their own admission, the Debtors have not complied with the duty imposed by [Rule] 8005 to present the request for stay first to the bankruptcy judge from whose order the appeal is taken."); In re Taub, 470 B.R. 273, 276 (E.D.N.Y.2012) ("If the party improperly bypasses the bankruptcy court and seeks a stay first from the district court, the district court lacks the jurisdiction to hear the matter."); In re 347 Linden LLC, No. 11–CV–1990 (KAM), 2011 WL 2413526, at *4 (E.D.N.Y. June 8, 2011) (denying motion to stay foreclosure sale because motion should have been filed with bankruptcy court first).

*3 Nevertheless, Rule 8005 allows parties to seek a stay of a Bankruptcy Order in the District Court in certain circumstances, but only if the movants "show why the relief ... was not obtained from the bankruptcy judge." Fed. R. Bankr.P. 8005. LaMarca argues that recourse in the District Court is appropriate because it is "impracticable" to seek relief before the Bankruptcy Court, citing Federal Rule of Civil Procedure 8(a)(2)(A). Rule 8 does not govern bankruptcy appeals, and even if it did, LaMarca has failed to demonstrate how seeking a stay from the Bankruptcy Court would have been impracticable. She argues that the "pending nature of the Property sale causes impracticality," but appellants faced with an impending property sale have regularly sought relief from the Bankruptcy Court. See, e.g., Chetola Severn, LLC v. Bank of Granite, No. 5:11–CV–82, 2011 WL 3156542, at *1 (W.D.N.C. July 26, 2011) (appellant applied for stay with bankruptcy court six days before sheriff sale of property, motion was denied, and appellant then moved for a stay in the district court).

LaMarca argues that "[t]here is simply not enough time before closing to obtain ruling at the bankruptcy court level, and then, if denied, appeal to this Court" (Dkt. 13 at 3). This argument is unavailing for two reasons. First, LaMarca created the urgency she now claims prevents an application to the Bankruptcy Court by waiting six weeks after the Trustee moved for approval of the sale and four weeks after the Court approved the sale to seek a stay. Her motion contains no explanation for this delay. Second, she offers no proof that there was insufficient time to apply to the Bankruptcy Court for a stay. The court considered an identical contention in In re Taub, rejecting the movant's "urgency" argument because the movant "waited nearly seven (7) weeks before seeking a stay of the orders at issue and now fails to provide this Court with any explanation-let alone a reasonable one-for this delay. The [movant] cannot rely on an 'urgency' argument because any emergency now existing is the product of her own doing." 470 B.R. at 276.

LaMarca also argues that seeking review in the Bankruptcy Court was impracticable because "the bankruptcy court has already indicated its reluctance to grant any stay relief [sic ] to protect the Property pending appeal" (Dkt. 13 at 4). She cites nothing in the record supporting this contention, however, and a review of the Bankruptcy Court's actions, statements, and findings-including the transcript of the hearing on the Trustee's motion for summary judgment-reveals nothing that would support the contention.4 In re Taub likewise rejected this "futility" argument. See 470 B.R. at 276–277.

Finally, LaMarca argues that she did not apply to the Bankruptcy Court first because it does not have jurisdiction to consider such a motion. This argument is contradicted by LaMarca's first three arguments and the language of Rule 8005. In any event, the argument is incorrect. See Christian & Porter Aluminum Co. v. Titus, 584 F.2d 326, 334 (9th Cir.1978) ("[The] general rule that a properly filed notice of appeal deprives the trial court of jurisdiction to proceed further except by leave of the appellate court does not apply in bankruptcy proceedings."); id. ("The Trustee in a bankruptcy proceeding is expected and encouraged to proceed with administration of the estate after the entry and during the appeal of an order of adjudication.") (citing Ga. Jewelers, Inc. v. Bulova Watch Co., 302 F.2d 362, 370 (5th Cir.1962)).5

*4 In sum, LaMarca has failed to comply with Rule 8005 by failing to show why relief was not sought from the Bankruptcy Judge. On that basis alone, the motion is due to be denied.6

B. LaMarca Fails to Demonstrate a Substantial Likelihood of Success or that Other Parties Will Suffer No Substantial Harm if a Stay Is Entered.

Even if LaMarca complied with Rule 8005 and the issue of a stay is properly presented, a stay would not be appropriate because LaMarca fails to satisfy two of the four required factors. As to the first factor, the most important one, LaMarca fails to demonstrate that the Bankruptcy Court's decision was clearly erroneous or that she has a substantial likelihood of prevailing on the merits of her appeal. She offers no evidentiary support or record citations establishing that genuine issues of material fact existed when the Bankruptcy Court granted the Trustee summary judgment. She also fails to demonstrate that the Trustee will not suffer substantial harm if the sale is stayed.

1. No Substantial Likelihood of Success.

LaMarca addresses the likelihood of success on the merits of her appeal in a cursory manner (see Dkt. 13 at 6–7). Essentially, she argues that her affidavit attached to the motion to stay negates the badges of fraud found by the Bankruptcy Court, and that her status as a creditor of Bifani obviates any intent to defraud. Because she also appears to argue that she presented evidence before the Bankruptcy Court creating disputed issues of fact concerning intent, the first two arguments are examined, and then a plenary review of the merits of the appeal concerning the fraudulent transfer claims is undertaken. See In re Optical Techs., Inc., 246 F.3d 1332, 1335 (11th Cir.2001) (district court reviews bankruptcy court's entry of summary judgment de novo ).

a. LaMarca's Affidavit.

LaMarca's affidavit filed in support of her motion to stay (see Dkt. 13–5) was not presented to the Bankruptcy Court during the summary judgment proceedings, and appears to have been created solely for the purpose of this motion pursuant to Federal Rule of Bankruptcy Procedure 8011(d).7 As the affidavit was not presented to the Bankruptcy Court, it has no bearing on whether the Bankruptcy Court erred in granting summary judgment to the Trustee or on determining LaMarca's likelihood of success on the appeal. In any event, it does not contain any facts bearing on the badges of fraud LaMarca contends are disputed.

b. LaMarca's Status as a Creditor and Jacksonville Bulls.

LaMarca next argues that her status as a creditor of the Estate negates any intent to defraud.8 In support of that broad conclusion, she cites Jacksonville Bulls Football Ltd. v. Blatt, 535 So.2d 626 (Fla. 3d DCA 1988). Jacksonville Bulls does not stand for the proposition for which LaMarca cites it. Rather, it held:

[I]f a judgment debtor disposes of assets for adequate cash, the transaction will not be considered fraudulent in the absence of a showing that the debtor intended to give the funds received to other than existing creditors. Otherwise stated, it is not fraudulent to give the funds to some but not all existing creditors, even though the effect might be to injure or prejudice an existing creditor who was not chosen to receive the debtor's largesse.

*5 Id. at 629. Such transfers are called "preferential transfers," and they are not fraudulent. Id.

The transfer of the Bald Eagle Road property from Bifani to LaMarca, however, was not a "preferential transfer." There is no evidence that Bifani received above-market compensation for the property and used the income to selectively compensate LaMarca as a creditor, as in Jacksonville Bulls. As the Bankruptcy Court found, the undisputed record evidence demonstrates that Bifani received nothing in exchange for quitclaiming the Bald Eagle Road property to LaMarca-not even a partial satisfaction of the debt allegedly owed to her, now evidenced by a claim against the Bankruptcy Estate.

c. Plenary Review of the Merits.

Actual intent is often proved through circumstantial evidence and typically presents a jury question. Wiand v. Waxenberg, 611 F.Supp.2d 1299, 1312 (M.D.Fla.2009) (Whittemore, J.); Nationsbank N.A. v. Coastal Utilities, Inc., 814 So.2d 1227, 1231 (Fla. 4th DCA 2002) (summary judgment in cases involving actual intent to hinder, delay, or defraud is available "only in extraordinary circumstances"). If, however, the evidence is one-sided, the plaintiff may be entitled to summary judgment on the issue of a fraudulent transfer. Wiand v. Cloud, 919 F.Supp.2d 1319, 1331 (M.D.Fla.2013). In deciding whether summary judgment is appropriate, a court must decide "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256, 1260 (11th Cir.2004) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).

As discussed, the Bankruptcy Court found four badges of fraud: (1) LaMarca is a "functional insider," (2) Bifani retained possession or control over the property after the transfer, (3) Bifani had been sued or threatened with suit before the transfer was made, and (4) the value of the consideration received by Bifani for the transfers was not reasonably equivalent to the value of the asset transferred. See secs. 726.105(2)(a), (2)(b), (2)(d), (2)(h), Fla. Stat. LaMarca argues that the Bankruptcy Court erred in finding all four badges of fraud. For the purposes of this motion, the Bankruptcy Court's Order is reviewed only to determine whether it is "clearly erroneous," with respect to whether LaMarca has shown a substantial likelihood of success on her appeal. Garcia–Mir, 781 F.2d at 1453–54.

i. "Functional Insider."

LaMarca contests the Bankruptcy Court's finding that she is a "functional insider" to Bifani. She argues that because she and Bifani are not married or related by blood, they cannot be "insiders" under sec. 726.102(8), Florida Statutes. While LaMarca is correct that section 726.102(8) only mentions family members, "[a] close relationship between a transferor debtor and a transferee is a factor equivalent to a badge of fraud which should be considered in determining fraudulent intent." Gen. Trading Inc. v. Yale Materials Handling Corp., 119 F.3d 1485, 1489 (11th Cir.1997). See also Orlando Light Bulb Serv., Inc. v. Laser Lighting & Elec. Supply, Inc., 523 So.2d 740, 744 (Fla. 5th DCA 1988) (close business relationship, although not listed in the statute, is badge of fraud). Accordingly, the Bankruptcy Court's conclusion that LaMarca was a "functional insider," which was indicative of fraud, was not clearly erroneous.9

ii. Retention of Possession or Control over the Property.

*6 LaMarca next challenges the Bankruptcy Court's conclusion that Bifani retained control over at least some of the property after it was transferred.10 She argues that the fact that Bifani lives in the Sarasota home purchased with the proceeds of LaMarca's sale of the Golden Eagle Road property transferred to her by Bifani does not demonstrate possession or control after transfer. LaMarca cites no authority to support her argument. Nor does she point to any facts in the record demonstrating that the factual issues supporting the Bankruptcy Court's conclusion were in dispute.11 The Bankruptcy Court's finding of this badge of fraud was therefore not clearly erroneous. See Compania de Elaborados de Cafe v. Cardinal Capital Mgmt., Inc., 401 F.Supp.2d 1270, 1281 n. 5 (S.D.Fla.2003) ("It is the non-moving party's obligation to present evidence that precludes the entry of summary judgment ..., the Court is not required to 'scour the record to determine whether there exists a genuine issue of material fact to preclude summary judgment.' ") (quoting L.S. Heath & Son, Inc. v. AT & T Info. Sys. Inc., 9 F.3d 561, 567 (7th Cir.1993)). See also Veigle v. United States, 873 F.Supp. 623, 627 (M.D.Fla.1994) (living in transferred property rent free is indicative of continued control over fraudulently transferred property)

iii. Suit or Threat of Suit Before the Transfer.

As to the third badge of fraud found by the Bankruptcy Court, LaMarca argues that "unusual circumstances" mitigate in LaMarca's favor. Specifically, she argues that the duration of the Colorado litigation12 and prior dismissals of the suit (before it was reinstated by the Colorado appellate courts) demonstrate that Bifani could not have been motivated to fraudulently transfer the properties at issue. These arguments are unpersuasive. Again, LaMarca again presents no authority to support her argument that these factors should mitigate against a finding of actual intent. And for good reason: section 726.105 contains no such language. Moreover, the Bankruptcy Court did not err in concluding that Bifani's transfers soon after the litigation was reinstated by the Colorado appellate courts was indicative of actual intent, supporting a finding of a badge of fraud.

iv. Not Reasonably Equivalent Value.

Finally, LaMarca argues that the value of consideration received by Bifani was reasonably equivalent to the property transferred because Bifani owed LaMarca nearly $1 million. As pointed out by the Trustee, the undisputed evidence belies this assertion. The purported $1 million in debt consisted in part of (1) LaMarca paying off the $450,000 mortgage encumbrance on the Ridge Street Property with the proceeds from the sale of that property; (2) the $171,000 LaMarca provided to Bifani when they split the remaining proceeds of the Ridge Street Property; and (3) LaMarca satisfying the $242,700 mortgage encumbrance on the Golden Eagle Road property with the proceeds from the sale of that property (the remainder of which was used to purchase the Sarasota house). LaMarca's attempt to characterize the transactions as payments of debts owed to her is unavailing.

*7 The Bankruptcy Court did find, however, that Bifani owed LaMarca $126,897.93 pursuant to an amended promissory note in favor of LaMarca purportedly memorializing Bifani's obligation to repay amounts LaMarca had previously advanced (Dkt. 1–1 at 3). But none of the property transfers extinguished or reduced that debt. When Bifani filed for bankruptcy, LaMarca asserted a claim against the Estate for the full amount of the promissory note. The Bankruptcy Court's finding that Bifani did not receive reasonably equivalent consideration was not clearly erroneous.

v. Finding of Actual Intent.

The Bankruptcy Court found actual intent based on these four badges of fraud. That conclusion was not clearly erroneous. See In re Seminole Walls & Ceilings Corp., 446 B.R. 572, 595 (Bankr.M.D.Fla.2011) (finding actual intent based on five badges of fraud). Nor was the Bankruptcy Court's conclusion that no genuine issues of material fact remained for determination by a jury clearly erroneous. Nevertheless, LaMarca argues that the grant of summary judgment was erroneous because the Bankruptcy Court did not make a finding of insolvency. That finding was unnecessary, however, under the plain terms of the statute. See sec. 726.105(1)(a), Fla. Stat. When concluding that a debtor transferred property with the actual intent to hinder, delay, or defraud a creditor, insolvency is a sufficient, but not necessary, element of the determination. See id.; Veigle, 873 F.Supp. at 628 (section 726.105(1)(a) does not require court to make a finding as to insolvency).

In sum, LaMarca has not demonstrated that the Bankruptcy Court's decision was clearly erroneous, and therefore she has failed to show a substantial likelihood of success on the merits of her appeal.

2. No Showing that the Trus tee Will Not Suffer Substantial Harm.

Although the sale of the property will moot that portion of her appeal related to the property,13 she fails to demonstrate that the Trustee and other creditors will not suffer substantial harm if the property sale is stayed. The Trustee has a buyer and the sale price has been approved by the Bankruptcy Court. A delay in the sale could result in the purchaser walking away from the sale or a breach of the sale contract. The equities therefore weigh in favor of denying a stay.

IV. Conclusion

LaMarca is not entitled to a stay of the sale. She failed to comply with the express requirement of Rule 8005 that a motion for stay be directed to the Bankruptcy Court in the first instance, and failed to adequately demonstrate why the motion was made in the District Court and relief could not be sought in the Bankruptcy Court. Notwithstanding her procedural failings, LaMarca fails to establish a substantial likelihood of success on the merits of her appeal, and likewise fails to show that the Trustee and other creditors will not suffer substantial harm if the sale is stayed.

Accordingly, Appellant's Verified Emergency Motion to Stay Sale of Property (Dkt.13) is DENIED.

*8 DONE AND ORDERED.

Footnotes

1

Count I sought to avoid the fraudulent transfer of the "Golden Eagle Road Property" on the basis of LaMarca's "actual intent to hinder, delay or defraud creditors of the Debtor"; Count IV sought to avoid the fraudulent transfer of the "Bald Eagle Road Property," also on the basis of actual intent to hinder, delay, or defraud; and Count VII sought to impose an equitable lien on LaMarca's house because she allegedly purchased the house with proceeds garnered from the sale of Golden Eagle Road Property, which had been fraudulently transferred.

2

The Bankruptcy Court also imposed an equitable lien on the Sarasota home because it had been purchased with funds obtained by selling the Golden Eagle Road property after it had been fraudulently transferred to LaMarca by Bifani.

3

This criterion is generally considered to be the most important. In the comparable context of a motion to the Court of Appeals for the stay of a district court's decision, in order to find a likelihood of success on the merits, the district court's decision must be "clearly erroneous." Garcia–Mir v. Meese, 781 F.2d 1450, 1453–54 (11th Cir.1986); but see In re Stearns Bldg., 165 F.3d 28, at *3 (6th Cir.1998) (requiring movant to demonstrate a "likelihood of reversal"). See generally In re Cnty. Squire Associates of Carle Place, L.P., 203 B.R. 182, 183 (B.A.P.2d Cir.1996) (analogizing Rule 8005 to Federal Rule of Appellate Procedure 8). Absent being able to establish the first factor, a movant must establish that the three remaining factors, the "equities," weigh heavily in her favor. Garcia–Mir, 781 F.2d at 1454.

4

Although she cites nothing in the record, her affidavit avers that "it was not practical to seek stay of relief before the bankruptcy judge who already indicated he would not grant me stay relief after previously hearing the same issues raised in the emergency motion" (Dkt. 13–5 para. 11). This bald, self-serving statement is not probative evidence of impracticability, and is certainly not a proper substitute for record evidence, considering the affidavit's failure to refer to any action or statement of the Bankruptcy Court that could be understood to indicate an unwillingness to consider a stay.

5

In Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1207 (11th Cir.1981), the Eleventh Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to the close of business on September 30, 1981.

6

LaMarca did not appeal the Bankruptcy Court's Order approving the sale of the property.

7

Rule 8011(d) requires "emergency" motions to be accompanied "by an affidavit setting forth the nature of the emergency."

8

There is no dispute that LaMarca is a creditor of Bifani. She has filed a notice of claim in the bankruptcy proceedings.

9

LaMarca does not contest any of the factual underpinnings of the Bankruptcy Court's conclusion that she was a "functional insider."

10

The Bankruptcy Court found that Bifani "has-at least in some respects-maintained control of the property after it was transferred" (Dkt. 1–1 at 6). He added, "After all, LaMarca purchased the Sarasota home with the proceeds from the Golden Eagle Road property, and it is undisputed [Bifani] has been living with LaMarca at that house ever since." (Id.)

11

LaMarca argues that Bifani was not on the deed when the Sarasota, Florida home was purchased. She fails, however, to establish that such evidence was presented to the Bankruptcy Court. She also fails to provide a citation to the record establishing that fact. In any event, the lack of the debtor's name on the deed does not preclude a finding of this badge offraud. See Osley v. Adams, 268 F. 114, 116 (5th Cir.1920) (debtor was in actual possession even after deed was transferred); In re Lee, 223 B.R. 594, 600 (Bankr.M.D.Fla.1998) (debtor retained control over property in a manner indicative of fraud even though his name did not appear on the deed).

12

Bifani was engaged in litigation in Colorado state court with a former business partner, Richard Davis. Originally filed in May 2001, the lawsuit sought damages from Bifani for breach of a mediated settlement agreement. The state court initially dismissed Davis' complaint, but Colorado's appellate courts reversed and remanded the case to the trial court on June 12, 2009. Eventually, a $166,750.15 final judgment was entered against Bifani on December 12, 2011. (See Dkt. 1–1 at 3–4).

13

See In re Kahihikolo, 807 F.2d at 1542 ("This court has repeatedly held that where a debtor fails to obtain a stay pending appeal of an adverse bankruptcy court order and the creditor subsequently conducts a foreclosure sale, the court of appeals is powerless to grant relief, and the appeal must be dismissed as moot.").
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