may please the court this case involves six transfers from stanford coins and bullion or s c be the dealing gauge beginning on january twenty third two thousand and nine and ending at the inception of the receivership the next month receiver challenged only those transfers for very good reason and that is that unlike in the typical fraudulent transfer case in this case the payments from that date forward involve direct and conclusive evidence of both of the two critical issues that make up this appeal under the texas uniform fraudulent transfer act first that the challenged transfers were made with actual intent to hinder delay or to fraud and second that dylan gage cannot establish its affirmative defense that it took any of the transfers in good faith and those two things together mean that all the transfers are voidable the uncontroverted evidence at trial that justifies a rendition by this court by simultaneously proving significant that the receiver did not challenge any of the prior transfers but only those that happened after that call and so starting with intent and looking at that particularly important evidence intent is not the desire to cause harm intent is understanding the effects the natural consequences of one's actions and if you look at plaintiff's exhibit one sixty which starts on page twenty nine six seventy seven of the record we see terry hamlin dealing gauges president placing the call because c b o d l engage over two point three million dollars that blown past its credit limit was four months past due on many of these bills in an industry that were three six nine day turnarounds typically and one was very worried and he made it very clear in response scott terry s c v's vice president of operations didn't say what in the world are you calling for he said i understand your concern and he provided the plan in order to make dylan gage whole and that plan was to make a fraudulent transfer the substantial certainty of him during the laying into fraud in the creditors being the basis that here is what he said first as c b s reassurance just two days earlier to hand one from s c b that there was no problem was false as c b secondly said it didn't have enough money to pay bill and gauge third it said we have previously paid our bills gotten the money to be able to do this by taking the loans and capital from stanford stanford international bank stanford group company and told dillon gauge that line of credit that access to capital has been i don't know if this is the story  that you gave also in closing argument powerfully that what they were doing was robbing peter to pay paul but that exact line was your you know the thing that was stated by dylan gage in this case in that all but therefore the jury heard  and the jury also heard frizz art is that his name and terry say it was all on an upswing we had a lot of you know accounts receivable we had inventory but for being shut down so they had that choice and they chose to believe that they still thought they would be able to pay the gallery back your honor the reason that that verdict can't stand is twofold in response to what you just said first of all there isn't a substantial conflict in the evidence because everything that is actually in the record in there is agreed to substantiated points in a single direction that course entire history up until that point dylan gave s c b had never once been profitable but then in your closings you said you know don't don't credit terry in for the jury to decide they weren't going to just keep robbing peter to pay paul they actually had a big well if the first thing is that business model even in that year was sixty million dollars was a pipe that was their best year five hundred thousand dollars deficit and so it's only speculation which does not rise to the level of evidence that can sustain a jury verdict but second what slow down it's only speculation that they would ever be able to turn a plan would we when would we on appeal characterize two witnesses testimony as speculation litigation moment of saying we think things were going to turn around but the actual evidence of the condition at the time that was made and confirmed at trial was that s c b never had they had no prospects this was a three million dollar deal that made twenty six thousand dollars on it would require one hundred fifteen of those deals in order just to be able to pay back the gallery to get its its money but let me turn to the second point your honor legal and right and that is that the jury even understanding everything that we said had been missin structed because the definition of intent the legal definition of intent was denied and so when you look at tough to and you know most lawyers let alone laymen are not going to read the uniform fraudulent transfer act and readily understand every little nuance on it and actual intent is in particular a term of art that we know means the natural consequence like when i have to case do you have th that sort of ricin is our normal pattern instruction that knowledge and intent are used in their common meaning and therefore do not require further instruction what tough to case who acquires elaboration when generally intent doesn't require further elaboration well i don't know that it's ever been in a tough tough case but that does say in section twenty four point zero one two adding the uniformity provision this should be understood this statute should be understood in the light of the comments to the uniform law commissioner's promulgated of the uniform fraud of transfer i guess i'm just wondering is there legal error in not giving it looked like you are still free to argue this was what you argued you got the badges of fraud instruction so you could say they're in dismal dismal shape it's all baloney they can't pay well how did how did the one prejudice you and what's the case that says it's legal or not to elaborate as to what intent well i would say sentinel one which is described in there although that's coming from the seventh circuit it was thought about twice by two panels and it made very clear that actual intent cannot mean anything that that is normal colloquial usage would suggest which is to say actual intent to harm the gallery for instance  course a c b had no such intent but sentinel won and i know this is your factual proposition here too but that was a case where you could they could never have paid back and you're saying that's exactly like what happened well it it's not essential to say that they could not have paid back the gallery the only way they could do that was by doing the same thing that they had done in l a is sufficient and it's very clear there was a call to explore and saying you know what you're still two million dollars behind they had no options for being able to do they're not going to speculate and stance for the proposition that is solvent company has to segregate accounts is perfectly fine for a company that solvent to have one business account so necessarily the money from the gallery could easily pay antecedent debts owed to other creditors but that's not a fraud you're not fraud is if you put the money comingled pay antecedent debts and you know when your head you're going to  fraud or hinder the first creditor and that was the point that was argued factually and the very story said you bought well in its direct evidence from the statement the jury was instructed about actual intent without understanding this our argument cannot replace the judge and there are a number of cases and you can look at page twenty five not seven and eight are opening brief which go through a number of cases which make it always helps you in jail or says a number of cases give me your best one i think sentinel one is the best ones i honestly important at all to us the hit it yes or no in the commodities exchange that did require that is correct but here's why that that's significant and helpful i think in this case to understanding it is the reason that those particular creditors in the sentinel one could say we had no expectation of being subjected to this risk that our money would be used for centinels a collateral hospitals own trade is because we're protected by this law that the court said makes it especially a breach as but it was not an essential part of finding that it was actual intent similarly here there's uniformity there is one thing that all witnesses agree to in this case it was at the gallery and each of the witnesses themselves and any reasonable person would not have transferred that money if they had known that would be immediately short circuited passed through the same day to dylan gage and that's what the transcript says this is our plan we have this crazy deal that's the phrase that was used three million dollars which we will use to make you whole in other words we are subjecting the gallery to a risk of which he has no expectation and we know that the gallery the transcript of a call between hanlon and melissa lazaroff she said oh my god oh my god they're using my money old that's all my god i am and then a word i would say in court and the point of that is that whether it's from the commodities exchange act or from reasonable commercial practice there is no case that has been cited that says that intent only means the desires of the gallery would be harmed of course s c b hope that some miracle would happen another hundred fifteen crazy you can't do preferential payments to a different creditor w see g e capital under tough to specifically says that case resolved that question that was a good three well it was also a preference case part for a of that opinion i think your honor deals with this question alleged exactly the same way we're just prefer him to pay worthington instead of g e capital that is exactly the same thing g e capital transferred the money in for fraudulent purpose that was immediately transferred to pay the preexisting debt of the creditor just as here dylan gage was paid because the gallery transferred money it was supposed to be buying gold for it instead s t b bought time for it self and that is the one thing that a preference is not and that is the one thing this court has said whatever the preference might be if one's i want to pass laws that's right it's and again the segregation point of playing the float point is only a big problem if you'd know that you don't have anything else in this pool to pay that's true but why is that that's just a fact question i  important to make clear the jury here i think was doing the job the best that it could and laboring under the instructions without understanding of what intent meant as a legal matter without understanding this preference instruction which is to say that must be in there for a reason it was supposedly in there to correct the receiver's testimony the receiver's testimony was entirely correct about what a fraudulent transfer was there was nothing to correct the judge himself said i would not normally give this instruction why because it only can mislead and confuse at that exact moment there was an objection and the judge told the jury i'll explain the loss of this over correction actually cause the jury to say well there must be a mere preference in here somewhere but there is no evidence in this record any more than if you're at an a machine and you haven't been structured wrong as a matter of law or you just say it could have led to the impression that all preferences are ok well i think two things one it leads to that impression but more importantly it leads to the misimpression the part of the jury somehow has something to do with this case but is it a correct statement of law in isolation it is and i think that a correct statement was the bare minimum which we can expect and instructions hopefully they do more and they actually guide the jury i think the judge a statement that he would ordinarily never give that instruction is quite telling and he shouldn't give it in a case like this because it can only mislead there was no more preference in this case oh i owe something to the gallery i owe something to the bill and gauge up a delegate of what i have than there would be as i say if you're at the a t m and somebody with a gun a chair head says would you prefer to give me that money or to have your head blown off that wouldn't be a mere preference and nothing in this record suggests that with a mere preference for two reasons first we know that it was as n g capital the creation of a new creditor the gallery in order to pay off the existing creditor that's not like to preexisting creditors the music is stopped and i say i'll pay this guy instead of that guy it was the plan that was described still in the worms that hadn't yet happened in p s one sixty you see the principals talking about what they're going to do with the gallery's money and that is why that call is so important it simultaneously establishes both actual inten and bad faith this is not one of those where we have as in most tough to our of the cases to use circumstantial evidence the badges of fraud instruction was also misleading but the badges of fraud are just circumstantial icing on the cake if you look at cases like circuit which has multiple times in the opinion it is a rare day in which we have direct evidence of any of these things and that's why since that best record site that other creditors were not being paid do is it to your expert or is there a specific document or anything to show this wasn't just a single creditor not being paid well i think it is the expert is is the best and it's unreal but there are two things i'd say first the amount of trade credit or debt growing more than doubling in the first six weeks of two thousand and nine aside from the gallery is pretty good indication of that but secondly there was no need to identified by name that billing gauge was the creditor the supplier in without it t b is out of business and that transcript says that exact thing if you don't pay us don't think you can go to somebody else because this is a small industry you have two positions open you're going to start telling your customers why you're not answering their their orders i would submit to you that the receiver's evidence was insufficient to establish that any of the six transfers was a fraudulent transfer their their case really faces i think two obstacles and that's before we even look at the station see the evidence supporting the jury's ver first of course is from this court's deferential standard of review to jury verdicts the review is especially deferential and secondly on their best day they only have two badges of fraud claims like that fail as a matter of law they don't succeed as a with respect to the jury instructions i don't think their argument fares any better the court's instructions tracked texas law track tough and their claims of harm are nothing more than just speculation there was no ever there was no indication that any of those instructions pract outcome i want to talk about the insufficiency of the evidence of actual intent there's no direct evidence that s c b had an actual intent to hinder delay or defraud any creditor there were two officers of  testified here mr well the phone call where they don't acknowledge the gallery that the three million they're paying them is actually going to gauge seems to go fair bit another's i guess i mean ask that phrase as a question would you disagree that a jury could have found intent to hinder here based on the fact that they had no profit and the fact that they're diverting the gallery money to gauge a jury could have found that but they did there is no evidence that any of those were fraudulent transfers those payments are made to dealing gage to pay it for shipments that it had previously made and there's no evidence that any of those hindered anybody in fact the only if the evidence showed that they knew they wouldn't be able to pay back gallery and so they paid gage instead is their biggest client then that center what sentinel one right well this case is a far cry from sentinel why nobody but just the legal proposition in sentinel one is accurate shown with a substantial certainty that s c b thought they would never be able to pay back without getting new customers sort of a ponzi scheme that would be direct evidence of fraud possible except there was no such evidence in fact that the two people from more than that to add i should talk about really public three million dollars transaction really went down well let me as you can and i love you too but maybe get to the intense struction because the intense struction if that's erroneous that would have caused this hole if that didn't properly describe the sentinel one theory telling the jury that if these people had a substantial certainty that they were never going to pay galley one back then that is so i years to come i do have a problem this way i say things and then i have to phrase it as a question the question is is there speak would you dispute well that this was complicated the record is the concept is the charge conference recorded anywhere yes well there was an informal charge conference but the formal charges charge conference is on the record it is but i didn't see any given take about that proposed instruction because it looks like everything went off the record what the judge said is he said you've asked for this additional language i'm not going to give it to you because i think what i'm giving to you is absolutely accurate it tracks tough day and indeed his instruction was taken the bait and from tough and most importantly it's so what's the record cipher the judge saying no i'm not going to give it to you because the instruction i'm giving tracks exactly tough though it was it was the last day of trial your honor over the leeway in fact what it says an indeterminant actual intent consideration may be given among other factors for the following and the among other factors gave them all the leeway they needed to argue their substantial certainty theory and which they receivership they only needed one point nine million dollars to to make the order to the gold was sitting here we had bought the gold one hundred hundred bars were sitting there we already shipped one on the day of the receivership february seventeenth they had one point six million dollars they only needed another one they only needed a total of one point nine there were three more weeks to go importantly before that order was even do they lost over the fact that the gallery's order wasn't even due to be shipped until march fourth that gave a three week window actually about two weeks from the time of the receivership to come up with the remaining money which they had every intention of doing and were able to do because the evidence establishes that in this business most your money comes in the last week of held that that in another self is makes for a correct instruction and here he did one step better he simply quoted verbatim from the toughest action self which allowed them the flexibility through this other factor language to  argue the theory that they did the germans didn't buy it and rightly so because as i say there was one point six million dollars sitting there and the testimony of that the only really the only two disinterested witnesses in this case for terry was but for the receiver coming in and shutting us down improperly we had every intention of and would have paid the money to delegates to release those gold bars i thought in closing argument you responded to their the jury instruction you're going to hear the judge said the pressure preferential payments are fine well here's what happened on that mr jan beat was the first witness to take the stand he said i'm a lawyer stablished he was a lawyer very knowledgeable and he told the jury he is he told you half of what the judge got he said judge gabi said ordinarily i don't give instructions telling what's what something is not but in this case i need to do it because the receiver misstated the law and he didn't state the law the law in texas fraudulent if at the time that you preferred you knew you couldn't pay the first back that's the distinction sentinel you don't just want of course and then we fall back every ability to argue that did argue that and they weren't impacted all by that absolute correct preference instruction that again simply tracked texas saw the alexander case the queen case in the in the adams case alexander which one of the cases alexander was a did a federal district court case decided by judge means but he had that exact language and he quoted from two texas supreme court cases quinn and adams so that's where that that language comes from and i think it's rather telling that that the gallery prewar in its own can i case denied that any fraud have been committed against the bottom line is that the evidence is legally sufficient to support the jury's findings that not one of the transfers was fraudulent transfer that's you're not going  typical transfer case into really sort of a power of law fraud case where they were contending that the gallery had been defrauded and they're still actually asserting that if you look at their reply brief the yellow pages i think twenty one and twenty two they're it's hard to see how any upstream ponzi company was was defrauded so i don't want to overstate the standing theory but it is a problem given the way they are now picturing their pace and given the way it sort of morphed during the  he never tried to value the to put fair value either the assets or the liabilities study try to rely on equitable insolvency that s c b generally was not paying its debts as they became due that's the statutory test but question about that we were often behind the bill and big but we were catching up and that's that actually disproves i think the receivers claim the and in fact the receiver two months before the trial in a deposition and this came in a trial admitted that he did know of any defense that s c b had their expert mid span tassel was a much better she didn't analyze any of the factors that either the after comments or the case law require debts she couldn't identify or didn't identify the age of any unpaid debts she did not identify the proportion of debts that were being paid and she didn't take into account any of se b s payment practices and i would point to the court judge rosenthal's opinion actually pinions in the williams case as williams versus houston plants and garden where the trustee there move for summary judgment saying i proved epiphone saw the sea as a matter of law and judge rosenthal said no you didn't because you didn't address any of these factors the egg exiting the number of deaths the amount of deaths so on and so forth a smidge of that task as proof was even worse than the than the trustee of the williams case and judge rosenthal i think rightly said i'm not d well there to me have been a small connector right right i think the point was mr fritz our general manager he said he said he said sep was always slow it was always late but they always paid and i think that kind of encapsulated what was happening here they were always slow and they were always late but they always paid and that stand to this is trying to say that you know you had a debt or not generally paying its debts they became due the problem with million dollars payment that for those came in on a friday in this sort of rarefied area of law why wouldn't it be very helpful for a jury there's if there's a substantial certainty that they will only be able to pay back to first  constantly taking money from you creditors and then that's fraudulent would that be wrong legally or that was implicit in the instruction and are you i think the i think the instruction from judge god gave them all the leeway they needed and deserved actually to make that argument i say deserve because i think the there was ample evidence to the time that that seps intention was to make sure that every single customer that had got paid and indeed this is her important they just have one business account get all mon and go into one and they paid old as i think there was one general operating account and importantly when they paid their it was in councils rule make that itself just a fraudulent predicament well i don't think so because that went when the money came to us to delegate we applied one point nine million dollars to ship seventy some orders thus helping them help fulfill obligations not hindered the fraud or anybody i mean and we not done that there would have been seventy four credit sitting out there who have however many people have those orders so actually we help them fill orders and indeed we would help them as we sat with one hundred gold bars to fulfill the goal order as well so so the galleries recourses the and they nonetheless were part of their damages here included that million but we don't we don't have the money anymore went back it's sitting there and now they're entitled to it to apply it i guess to the state because we've now won to establish that the delegates had acted in good faith no matter how you define good faith they make an argument about how you define it i say it doesn't matter we there's ample evidence that we neither knew nor should have known a bunch of the things they  claim we should have known so i won't talk about that further i would like to talk about our cross appeal with respect to attorneys fees because i think this is the one area where judge god the erred he erred by applying a more demanding standard to dealing gauge as the prevailing defendant then he supplied to the receiver when the receivers of prevailing point he made to show that the receivers claims were frivolous and reasonable and without merit a very difficult standard to meet that was really the the sole test applied there's there's no basis in tough to or the mirror statute in texas declaratory judgment act to imposing that kind of burden and treating prevailing plaintiffs a lot better than prevailing defendants there's just no basis for that instead what the court should have done was to look at the totality of the circumstances including the ject of the reason the lists of the of the receivers claims and i draw support from two copyright that cases in the u it will do is deter the receiver from spending the state's money which he has on bringing claims that were i would say over aggressive in unnecessary and intensely litigated only to then be aband he was claiming constructive project transfer he backed off every one of those at trial and yet we were forced to spend money defending against those and it's only those fees that we seek to recover we're not seeking to have to recover any of the fees defending against a claim the claim he did go to trial we're only trying to get a smaller a much smaller portion those fees incurred defending against what i would submit were unnecessary in overaggressive and  that i guess that there were over aggressive an unnecessary only to then be abandoned those are the fees that we seek to recover under a proper legal standard we want the opportunity to to obtain those fees or at least have a case sent to judge god to be considered on the and it has a contingent claim with the receivership question is whether or not one creditor with its insider knowledge and its pressure tactics will be able to extricate itself from that process and take one hundred percent and leave others who didn't have that kind of knowledge or didn't exercise that kind of pressure to the claims process of the receivership i would talk a little bit about intent you know we talked about the instruction here in our brief sight several cases both of them do know one of them is from the federal circuit the structural rubber products case in which the word obviousness was at issue and that has a colloquial meaning in the court said look it's a term that's over laden with layman's meaning and it would be error not to give a instruction about its legal connotation because it's so different it can only add confusion and our point about intent here is exactly the same actual intent is something that no one would say i don't know what that means and precisely because actual intent there are no cases that say that actual intent means what we ordinarily would say that it means that instruction started off the jury on entirely wrong path and so at the very least you take that you take the mistaken preference instruction you add that to the unwillingness to explain that the badges of fraud are only additional circumstantial evidence that the receiver didn't need a much less the counting of them as some federal district courts have done the branson case in the seventh circuit said that has a mesmerising effect and indeed the judge in that case said well there are five badges there are that were found here eleven on the list that's not enough so i guess they haven't been able to establish it and that clearly was roll of the seventh circuit said and you take those three in particular together and the jury cannot possibly have been proceeding in this case by examining the evidence in its rightful way or by allowing the receiver's theories to be credited according to what the law requires the intention to pay back the gallery to buy the gold for the gallery there is no dispute with that as she had such a desire no question about that but that simply relies on a mistaken understanding again of what intent was the fact that we're having that argument that's a big part of the briefing only illustrates why that instruction must have been wrong if if we have  counsel in this case unable to recognize what every court that's considered this question has said clearly the jury would fall back to its understanding colloquial of what intent meant bad faith is indeed a often  district court made another error in the court of appeals against that well the problem was that we shouldn't have even sent it back this was established as a matter of law your honor i think that in concluding the receiver's case we would say first of all that this is the rare case in which that direct evidence has to have been conclusive at the very least because of the jury's confusion the receiver should have an opportunity to persuade the jury which we think it is really come out with and you know there was one question i can honestly can't remember what it was right now your honor but it wasn't on the intent quite i don't think that it was and if i'm mistaken on that i apologize but  what's clear is that a jury looking at these instructions would probably not of thought it needed to ask too many questions because any of us instructed to find whether or not there was actual intent to harm the gallery or other creditors would say there's unoppose testimony that there was no such intent the problem is that that only could mislead the jury in finding the legal question is actually at issue and so cordingley at the very least the jury should have the opportunity to understand using the proper framework without much more technical together all of those together and the fourth one is about the stanford transfers which certainly had the effect of telling the jury that he could regard as c b s had even more assets that clearly were not proper for it to have and so with