judgment in favor of the debtors the debtors are nathan reuter a judgment daughter who owes more than two point seven million dollars but claims no assets and his wife kathleen and interven or who is the record owner of substantial assets that the writers once the post judgment claims that issue and i think it was so many claims originally because of the uncertainty of where the assets were or what legal theories or equitable theories would prove useful by the time we've got here there's only a few of the claims that are in the pleadings there's still that issue i want to highlight as i think i did my reply brief there's first a fraudulent transfer claim that's parts of count five against nathan writer alleging that during the pendency of this very post judgment action he fraudulent lea abandoned his settlers interest in a trust to his wife so that the creditors could not in this very case pursue their claims against his settlers interest the second claim the issue on appeal is parts of counts one and four below which together plea to misery creditors bill claim against the reuters to collect a judgment against vertical group the company that was involved in this fraud the theories pierce vertical group what you find behind the veil of vertical group is the tendency by the entirety that is nate and kathy and the collection theory there is in in missouri if you have tenancy by the entirety assets the only way to levy against them is to have a judgment against both the husband and the wife so the legal theory there is if we can find both the was a shell in city it was a scam entity it was it was created sholay for the purpose of of carrying out these investment frauds in the action against nathan and there's a default judgment against vertical group on that basis those facts are not contested as far as the judgement against part of a group in nathan orders bankruptcy there was an adversarial proceeding against nathan reuter in which the court found in which in which this court upheld on appeal and affirmed the notion that there was no real entity here that it was a group of people acting as a partnership to commit the fraud and in fact the fraud of one of his partners darryl brown wind up in federal prison was attributed to nathan reuter in that case which has been affirmed on appeal the evidence that kathleen was a partner we thought was at least enough evidence to give us a trial on the issue the evidence that kathleen is a partner the question there's no dispute that nathan was a partner in this the question is was i well the question is was it nathan or was it nathan and kathleen  it's undisputed the contributions to a part that contributions to this partnership came from nathan and kathleen together his deposition testimony about it is undisputed the money that funded this partnership was tenets he by the entirety money the law in missouri is that tennessee by the entirety is presumed to follow an investment so if one has an ordinary course this is a good rule husband or wife have money together it's their money the husband or the wife goes off and invest it somewhere the fact that the husband made the investment or the wife signed jennifer i would phrase it subtly different i think that the piercing is almost a given in this case there's no dispute about the piercing there's already been a default on a pleading that says this was a sham entity there's already been a finding  but it's always your intention to carry on as partners and to disregard the corporate entity that for equitable reasons the corporate anyone will just be disregarded so then the question is  the reuters assets and it nathan writer settled those assets into the trust he still has some rights as a settler the currently belongs to me as the bankrupt steps a trustee stand in his shoes and so if he has any power to revoke that trust which would cause those funds to go back to the settler those funds would go back to the bankruptcy estate so the bankruptcy trustee was asserting a turn over claim to turn over nathan reuters powers over the trust so that the bankruptcy trustee could revoke the trust using those powers put the funds in the estate the bankruptcy court had already determined at that point in time that the bankruptcy state had an interest in this trust so the trust us and i want to declaratory judgment to determine what's the extent of my powers standing in nathan road or shoes can revoke that trust and put the the funds in the estate so the settlement was of two things the settlement was first of that turnover claim which is a very different claim from the claim of the creditors here which is an equitable claim chasing assets on a completely different judgment a judgment against a vertical group so the first reason that you so we have to look at what was the purpose of that settlement agreement and the stardom agreement one thing that happened was the reuters wanted the trustee to abandon to them our practice claim against the trustee who formed the trust we're we're getting far afield there but that was one of the main their main motivations in entering into the agreement with a bankruptcy trustee was to get back this malpractise claim against the attorney who formed the revocable trust so they the writers got that claim back in exchange for pain one hundred fifty thousand dollars and in addition to that the trustee set this settles all of my claims against the trust or for powers of the trust or for assets that are in the trust interesting only the writers now take the position that there was nothing in the trust on that date they claim that the trust had already at that point in time been revoked and dispersed so if that's true there wasn't even any consideration there the only thing that occurred in that settlement was the the bankruptcy trustee abandon the malpractise claim and the writers paid one hundred fifty thousand dollars to get that claim back and if the construed consistently there were no assets in the trust on that day and that was all that that settlement agreement did but our position is if you even if you look at the settlement agreement itself it recites the perp since the settlement agreement among are to resolve the bankruptcy state's interest in the trust and in the assets of the trust one of the issues with with that settlement agreement is that there's no privity between the bankruptcy trustee in the creditors ordinarily a bankruptcy trustee does act in the interest of the creditors and there is pretty and the creditors would be bound by the a settlement agreement to the extent that it it was directly applicable which we don't think it is because they're different claims but even assuming they're the same claim can the bankruptcy trustee settle a claim on behalf of creditors only if there's pretty in this case there was no property because the bankruptcy trustee expressly sad you have to there were different claims here there were the claims against nathan reuter nathan schedule does and it's bankruptcy and it was determined they were non dischargeable and and there's an attempt now to collect those claims there were also the claims which at the time of the bankruptcy were an liquidated there was a  default judgment against vertical group which triggered the bankruptcy and the creditors nathan or didn't schedule the default judgment against part of a group in his bankruptcy wasn't seeking just charge for many derivative liability for those claims the creditors however scheduled  made claims not only directly against nathan writer for his liability in the adversary case but they also schedule separate claims for his derivative liability for the vertical group liability the bankruptcy trustee objected to those  claims for the vertical group liability and expressly said in her objection that she did not feel that those claims needed to be resolved as part of the bankruptcy that she had no intention to resolve those claims as a part of the bankruptcy and that's how things proceeded so then the final step of this argument is after the settlement agreement the bankruptcy concluded those claims weren't resolved in the bankruptcy we went back to district court and judge lowery then for the very first time liquidated entered final judgment against a vertical group so the question is how can the bankruptcy trustee settlement on this day have settled liability for the vertical group judgment which wasn't entered until a later date by a different court on different claims that weren't in front of the bankruptcy court they used their funds the building that was used to perpetrate the fraud kathleen reuter own that building and contributed that building that was used to perpetrate the fraud she paid the mortgage payment out of nate and kathy funds every month while the while the while the fraud was going on the salaries of the employees who were committing the fraud were paid using funds from the company and she test the testimony was that she expected the profits of that that's the key thing if you put the money into the business enterprise and then if you expect to get the profits back out of the enterprise we contend that's enough for a trial on that issue funds if there was testimony that there was some other intention then they would not in this case there was testimony that the intention was after the investment when in if profits were made the profits would belong to nathan and kathy so there was testimony that the intention was that the profits then would come back out so in your in your analogy if there was testimony that if the cars wrecked nate and kathy will both pay for the wreck or something like that nature that which would which would which would show that i think that they have a burden to when when when individuals form a corporate entity with no intention of ever operating as a corporate entity and their intention all along is to operate as partners and to disregard the entity that the entity should be disregarded that it never had any real existence and that's what the testimony in this case was nate's testimony was we were just a group of guys partners and there was there is no is the thing that makes the partnership i think that might be a question are is when you have been a corporate entity that's disregarded or that's improperly formed under corporate law if you fail to properly form an entity or if it's pier are two reasons first there was determined in the adversary judgment that there was a piercing to reach nate right or at that level that was a partnership secondly the default judgment against vertical group it was alleged in the pleading there that was a sham into the that's now presumed to be true but the operative facts are they formed a series of companies that were for show vertical this vertical mortgage vertical insurance to create the impression of legitimacy they never operated and there were no formalities observed the funds were commingled they were operating a building that was owned by named kathy the employees were paid by money out of a company that was o kathy it was a sham in city for the purpose of committing a fraud against people one of the elements of instrumentality that the only purpose of this entity was to be used as an instrument tally to defraud investors  i inquire whether the court has any questions that they would wish me to answer before i launch in right obviously your honour's are free to ask questions during the interceding five minutes cannot be pierced is because the self same identical play games against the same assets were asserted by the trustee and were the subject then of a bankruptcy determination memorandum an opinion which became final upon the settlement of the case and upon the of the adversary case in upon the closing of the bankruptcy case to the effect that those assets simply could not be reached as fraudulent transfers i beg your pardon is it is a preclusion argument and there is a limitations argument there it's hard to argue the merits when there is no evidence of any of the elements of  evidence that kathleen reuter ever used any partnership or l l c as her own instrumentality if for any purpose two that may be the argument those those frankly are the facts this court has never found or into prior ward or appeals but scored those that was the issue well let me just say this to you and in one your honour's found border cold to be a partnership in the other one your honour's found vertical to be an l l city so it's sort of a big match but there's been no evidence there was no evidence at the time that and brown were found to be part and and reuter to be vicariously liable for the towards the brown and some of his own there was no evidence that kathleen reuter was in any way in roe by it sounds almost religious doesn't there's nothing in that statute that says anything about post judgment remedies having to be asserted within one year are ten years from and after the entry of judgment and look at the peerless case carefully because the peerless case the missouri court of appeal says that the d creditors bill in that case was timely because the allegedly fraudulent transfer was brought within a ten year period from and after the the defrauds and the transfer so the progeny printers were attacked by creditors bill within ten years after they were  may look what happened here this creditors bill was filed more than ten years and two months after the assets were transferred it was filed more than eight years and three months after roy or disclosed in exquisitely years and seven months after her lawyer filed his first disclosure statement it was filed five years in seven months after the bankruptcy court held that reutter had committed fraud against the people so assuming that peerless is the rule your honor this lawsuit is two months out of time thank your hon to for an order piercing the corporate veil of defendant vertical group fellow c i just want to make that clear because i think as we got into the weeds here a little bit that is that might have been lost a little bit the other live count i believe the other live claim that's before this court is count four which is denominated anyway as a creditors bill an equitable garnishment the preface to count one or the preface to count four in the revealed that although it's been a little un certain in the briefing i would suggest respectfully i think there ferry is the instrumentality test based on what council said today and i think in fairness based on what the briefs say under the instrumentality test they have to prove control that's where their claim breaks down with regard to kathleen they have to prove control their uptick of basically the case the cases say that there are basically three elements that have to be met and proved appellant's have to prove that kathleen was part of the tortfeasor partnership and there hasn't been any finding to that effect by any court and so well do you right i think under their theory as i said that they have to prove that she was part of professor partnership but to answer your question there's no control i mean the evidence on the record with regard to kathleen's involvement in the tortfeasor partnership to the extent there was one that evidence is very very thin and there was no she played no role in management whatsoever because they failed to prove the instrumentality test on the record before the court control again as the central aspect of the instrumentality test under missouri law they have to prove that the the tortfeasor partnerships so dominated vertical groups affairs businesses operations management finances all that they have to prove all that in order to pierce that corporate veil i think the case to which counsel was referring and the the example to which council was referring is when parties intended for example to form a limited liability company but they fail to jump through all the right procedural hoops let's say they operate for a month before they file their articles of organization under those circumstances for that one month period yes i think the law is that they're deemed to operate as a general partnership that those cases don't apply or that's not what we have here he's arguing councils ar appellant's are arguing again the instrumentality test and and on the facts before the court you just don't have the control that is required by kathleen i know that wasn't your honour's question but even by that suppose a i don't i don't think in and of themselves they are there certainly are sufficient to for the court to have entered a default judgment against vertical but not to take that next step and those admissions those default admissions certainly aren't binding on kathleen because she wasn't part of the litigation then and so again i think in order to hang in the liability here with regard to kathleen i think there's case law that says the mere employment of tennessee by the entirety assets is not sufficient and based on the record before the court based on the summary judgment record in the writ judgment of record before the court here you have to get into the control issues i don't think tenancy by the entirety of the tennessee by the entirety facts in and of themselves aren't sufficient to establish liability on the part of kathleen in this in facts are in the record there's no question about my point is the overwhelming evidence the other going the other way to the contrary supports africa that supports what the district court did they are simply not enough evidence after extensive discovery that was done in this case including the lengthy deposition of kathleen that she participated certainly sufficiently or in my judgment at all with regard to control in what happened with that's right that's correct there was there was no there's no opinion or explanatory order that the district court or that's correct kathleen had no involvement with regard to establishing any of the entities no knowledge of how they operated no control over anything having to do with how any of the vertical entities operated essentially essentially no valving in the actual business operations management whatsoever and i think the summary judgment record is very very complete with regard to facts that support that cl case that i referred to saxon versus a company says that a constructive partnership exists by operation of law where partners follow a course of conduct such that it is apparent that they intended to carry on as partners outside the confines of corporation law and you'll see the deposition testimony in this case that that's exactly what occurred in this case the key case in terms of second they'll know this is a very analogous case in which you're reaching back in levels and you have a someone who has no control that's ault ultimately responsible for a judgment and we walked through it in detail in our in our brief on page twenty nine the defendant he was totally controlled by one of the partners or by an individual gordon fundi m there was a partnership that also owned it under total control of the individual and yet a member of the partnership was ultimately responsible to pay the judgment in that case under missouri law even though they had no control it was totally controlled by another individual thank you