FI LED U. S . COURT OF AP PE ALS E L E V E N T H C IR C U IT Jul y 11, 2008 T HOM AS K. KAHN CL E RK [ P UB L I S H] I N THE UN I TE D STATE S C OU RT OF APPE ALS F O R T H E E L E V E N T H C IR C U IT

________________________ N o. 07- 12910

________________________ D . C . D o c k e t N o s . 0 6 - 0 1 2 3 6 - C V- OR L - 1 9 & 0 3 - 0 4 9 2 6 - J AF B R U C E L E E J E N N I N G S , D e b to r .

_________________________________________________ B R U C E L E E J E N N I N G S , P la in tif f - A p p e lla n t, v ersu s B R A N D O N J A M E S M A X F I E L D , D e f e n d a n t- A p p e lle e .

________________________ A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f orthe M i ddl e D i s tr i c tof F l or i da

_________________________ ( Ju l y 11, 2008)Honora ble Marg aret C. Rodger s, United States District Judg e for the Northern District * of F lorida, sitting by

designation. 2 B ef ore B IR C H and F A Y , C i rc ui tJudg es , and R O D G E R S , D i stri ctJudg e. * P E R C U R I A M: B ru c e L e e J e n n in g s ( “J e n n in g s ” ) ap p e a ls f r o m a 1 3 J u n e 2 0 0 7 o r d e rin w hi ch the di stri ctcourtaf fi rm ed the bank rupt cycourt ’ s j ud gm entand o rderun der 1 1 U .S .C . § 7 2 7 ( a ) ( 2 ) ( A ) d e n y in g J e n n in g s ’s d is c h a r g e . A f te rh e w a s f

o u n d liab le i n a C a l i f orni a c i vi l a c t i on, butbe f or e da m a ge s ha d be e n a w a r de d, J e nni ngs tr a ns f e rr e d $130, 000 t o a bui l de ri n a nt i c i pa t i on of i m pr ove m e nt s t o be m a de on a hang arl ocat ed on hi s F l ori da prop erty. T he bank rupt cycourtand d i stri ctcourt f ound tha tJ e nni ngs m a de the tr a ns f e rw i th the i nt e ntt o hi nde r , de l a y , orde f r a ud c r e di t or s . J e nni ngs a r gue s tha tthe c our t s be l ow e rr e d i n de ny i ng hi s di s c ha r ge be c a us e he l a c ke d the r e qui s i t e f r a udul e nti nt e nt , a nd be c a us e the l e gi s l a t i ve h is to ry o f

th e B a n k ru p tc y C o d e s ta te s th a t ad e b to rm a y c o n v e r t n o n - e x e m p t a s s e ts to e x e m p t a s s e ts p r io rto f ilin g b a n k ru p tc y in o r d e rto m a k e f u ll u s e o f a v a ilab le e xe m pt i ons . A f

t e ra r e vi e w of

the r e c or d a nd the pa r t i e s ’ br i e f s , a nd ha vi ng the benefi tof oral ar gu m ent , w e c on cl ud e thatthe bank rupt cycourtand the di stri ct c our tdi d notc l e a r l y e rri n f i ndi ng tha tJ e nni ngs m a de thi s pa y m e ntw i th the i nt e nt t o h i n d e r , d e l a y , o rd e f

r a u d h i s c r e d i t o r s . A c c o r d i n g l y , w e A F F I R M.3 I . B AC KG RO UN D J e n n in g s is th e s o le s h a r e h o ld e ro f B .L . J e n n in g s , I n c . ( “B .L . J e n n in g s ” ) , a f ir e a r m s d is tr ib u to r . H e a ls o s e r v e d a s a c o n s u lta n t to B ry c o A r m s ( “B ry c o ” ) , a hand gu n m anufacturer , and w as i nv ol ved i n B ry co’ s dai l y opera t i on s. B ry co pr i m a r i l y s ol d i t s ha ndguns t o B . L . J e nni ngs . O n 6 A pr i l 1994, pl a i nt i f f - appe l l a nt B r a ndon J a m e s M a xf

i e l d ( “ M a xf

i e l d” ) w a s pa r a l y z e d i n a n a c c i de nt a l s hoot i ng i nvol vi ng a ha ndgun de s i gne d by J e nni ngs , m a nuf a c tur e d by B ry c o, a nd d istrib u ted b y B .L . Jen n in g s. T h e a cc id en t o cc u rr ed se v er al d ay s a fterB ry co ’s i nsurance pol i cyl apse d; nei ther J enni ng s nor B . L . Je nn i ng s m ai nt ai ned i nsurance. M a xf i e l d f i l e d a c i vi l a c t i on i n C a l i f orni a S upe r i orC our ta ga i ns tB ry c o a nd B . L . J e nni ngs i n M a y 2001, a nd he a dde d J e nni ngs a s a de f e nda nti n O c t obe r2001, a lle g in g th a t J e n n in g s h a d d e f e c tiv e ly d e s ig n e d th e h a n d g u n th a t in ju r e d h im . T he C a l i f

orni a c our tdi vi de d the c a s e i nt o thr e e pha s e s , the f i r s tt o de t e r m i ne l i abi l i ty, the se cond t o est abl i sh dam ages , and the thi rd t o add re ss j oi ntventure, e nt e rpr i s e , pa r tne r s hi p, a nd a l t e re go i s s ue s . T he l i abi l i ty pha s e w a s s e tt o be gi n on 17 M a r c h 2003. I n J a nua ry 2002, J e nni ngs m e tw i th a ba nkrupt c y a tt orne y i n B oc a R a t on, F l ori da. Je nn i ng s t es t i fi ed thatthe pu rpose of thi s m ee t i ng w as t o o bt ai n est at epl anni ng advi ce , bu the conceded thatno w i l l s or trustagre em ent s w er e pre pare dAfter further discussions with his attorney in Febr uary, J enning s purcha sed a $500,000 1 annuity on 5 March 2002. The ba nkruptcy court found this purchase w as a f raudulent transfer, beca use Jennings purchased theannuity with the intent to hinder, delay, or def raud his creditors. The ba nkruptcy court c oncluded that theseexpenditures were incur red “to make [the 2 house] more comfor

table for living purpose s, not to keep it out of the hands of creditors.” Ba nkr. Ct. Dkt. No. 145 at 21. 4 dur i ng the f

i r s tthr e e m onths of

2002. R . E xhs . 7, P l . ’ s E xh. 146 a t173. O n 29

1 J a n u a ry 2 0 0 2 , J e n n in g s m a d e a n o f f e rto p u r c h a s e a p r o p e r ty in S p ru c e C r e e k , a c o m m u n ity in D a y to n a B e a c h , F lo r id a , f o r$ 9 2 5 ,0 0 0 . T h e p r o p e r ty c o n ta in e d b o th a hous e a nd a ha nga ra dj a c e ntt o the hous e . T he of f e rw a s a c c e pt e d, a nd the tr a ns a c t i on c l os e d on 15 F e brua ry 2002. T he r e a f t e r , J e nni ngs s pe ntove r$84, 000 re furbi shi ng hi s hou se . 2 In N ov em ber or D ec em ber 200 2, Je nn i ng s dec i ded t o exp and the hang ar a dj a c e ntt o hi s hous e . H e hi r e d B a ke rB ui l de r s t o pe r f or m the c ons truc t i on. O n 10 M a r c h 2 0 0 3 , J e n n in g s s ig n e d a n o tic e o f c o m m e n c e m e n t to e n la r g e th e h a n g a r . T he ne xtda y , F r a nk B a ke r( “ B a ke r ” ) , the pr e s i de ntof B a ke rB ui l de r s , pr e pa r e d a c ons truc t i on c os ts um m a ry s he e t , w hi c h he ga ve t o J e nni ngs t o e xpl a i n the e xpe ns e s t o be i nc urr e d dur i ng the c ons truc t i on of the ha nga r . T he c ons truc t i on s um m a ry s he e tde s c r i be d a nd e s t i m a t e d the c os tof e a c h a s pe c tof

the pr oj e c ta nd e s t i m a t e d the t ot a l c os tof the pr oj e c ta tappr oxi m a t e l y $202, 000. J e nni ngs a nd B akerB ui l ders si gn ed a c on tra cton 31 M ar ch 20 03 , w hi ch prov i ded, i n p art , that5

“ c api t a l f orthe c ons truc t i on e xpe ns e s w i l l be pa i d i n i nc r e m e nt s of F i f ty T hous a nd D ol l ar s ( $5 0, 00 0) and a com pl et e a cc ou nt i ng of tho se fund s w i l l be pres ent ed before any addi t i on al capi t al w i l l be fund ed. ” R . E xh s. 5, P l . ’ s E xh . 85 at2. A fe w d ays l at er, Jen n i n g s g av e B ak er B u i l d ers a ch eck i n th e am o u n to f $ 5 , 0 0 0 as a prepay m enton the fi rs t$5 0, 00 0 d ue un der the contra ct . T hatam ou ntw as su ff icien t t o allo w B ak erB u il d er s b eg in in it ial w o rk o n th e p roject. R .E x h s.5 , P l. ’s E x h . 9 1 a t 3 2 . O n 21 A pr i l 2003, the C a l i f orni a c our tc onc l ude d the l i abi l i ty pha s e of the tr i a l a nd f

ound J e nni ngs 15 pe r c e ntl i abl e , B . L . J e nni ngs 10 pe r c e ntl i abl e , a nd B ry c o 10 pe r c e ntl i abl e . R . E xhs . 4, P l . ’ s E xh. 22 a t5. O n 23 A pr i l 2003, J e nni ngs tr a ve l e d t o E ur ope , a w a r e of the l i abi l i ty ve r di c ta ga i ns thi m . H e r e turne d f r om E ur ope on 4 M a y 2003 a nd e xpe c t e d t o s e e tha tthe s i t e pr e pa r a t i on w or k f orthe hang arexpansi on proj ec tw as com pl et e, bu ti tw as no t . Je nn i ng s w as “ very a nxi ous ” t o m ove the pr oj e c ta l ong, s o e i the rtha te ve ni ng orthe ne xtda y , J e nni ngs c a lle d B a k e rto a s k w h y th e w o r k h a d n o t b e e n d o n e . R 6 - 8 0 a t 6 9 . B a k e rto ld J e nni ngs tha t“ [ B a ke r ] ha dn’ tobl i ga t e d hi m s e l f a nd tha tI ha dn’ tgi ve n hi m the f unds t o go f

orw a r d. ” I d. B a s e d upon the i rt e l e phone c onve r s a t i on, J e nni ngs concl ud ed “ the re as on [] that[B aker ] hadn ’ tdo ne w ork o n the ho use w hi l e I w as g o n e, o r sh o u l d I say th e h an g ar p ro j ect , w as b ecau se h e h ad n ’ trecei v ed m o n eysIn a su bs e qu e nt o rde r date d 2 5 September 2 00 3, theba nk ru ptcy c ourt awa rde d M axfie ld 3 pre- judgment interest and c osts, increa sing thedamag es aw ard to $24,492,578.47. R.Exhs.4 at Pl.’s Ex h. 25. 6 s u f f ic ie n t to s ta r t d o in g th e c o n c r e te w o r k .” I d . a t 6 9 - 7 0 . O n 5 M a y 2003, J e nni ngs w i thdr e w $130, 000 f r om hi s a c c ounta tB a nk of A m e r i c a t o pur c ha s e a $130, 000 c a s hi e r ’ s c he c k pa y abl e t o B a ke rB ui l de r s . T he c ontr a c tdi d notr e qui r e pa y m e nt s t o be m a de us i ng c a s hi e r ’ s c he c ks , butJ e nni ngs expl ai ned thathe hand -del i vere d the ca shi er ’ s c heck t o B aker , because he w ant ed to “s a v e a w e e k o rs o o f w a itin g f

o rc h e c k s to c le a r .” B a n k r . C t. D k t. N o . 7 5 a t 8 2 . A s o f th a t d a te , B a k e rB u ild e r s h a d s p e n t le s s th a n $ 7 0 0 o n th e h a n g a rp r o je c t, le a v in g u n to u c h e d m o s t o f th e $ 5 ,0 0 0 p r e p a y m e n t J e n n in g s d e liv e r e d p r e v io u s ly in A p r il. R .E x h s .5 , P l.’s E x h . 8 9 a t 1 . I n f a c t, B a k e rB u ild e r s w o u ld n o t b e g in c le a r in g th e h a n g a rp r o p e r ty u n til J u n e , a t ac o s t o f ap p r o x im a te ly $ 3 ,0 0 0 . O n 7 M a y 2003, the C a l i f orni a c our te nt e r e d a da m a ge s ve r di c tof appr oxi m a t e l y $50 m i l l i on. O n 13 M a y 2003, the C a l i f orni a c our te nt e r e d a j udgm e nta ga i ns tJ e nni ngs i n the a m ountof $21, 250, 650. 31. O n 14 M a y 2003, 3 J e n n in g s , B ry c o , a n d B .L . J e n n in g s , a n d o th e rd e f e n d a n ts in th e C a lif

o rn ia litig a tio n f

ile d v o lu n ta ry C h ap te r1 1 b a n k ru p tc y p e titio n s . O n 9 A p ril 2 0 0 4 , th e b an k ru p tcy c o u rt h eld a h ea rin g o n M ax field ’s obj ec t i on t o Jenni ng s’ s c l ai m ed exem pt i on s. A cc ordi ng t o Jenni ng s’ s t es t i m on y a tThis a pp e arsto c omp or

t w ithJenning s’ s te stimony at trial in theba nk ru ptcy c ourt , 4 wh e rehestate d th at hearrive d at th e$1 30 ,0 00 fi gureby c alculatingwh at it

would c os t to complete the w alls, roof, a nd windows, so that the hang ar w ould not be damag ed by wind and rain. R6-80 at 70. 7 the he a r i ng, he a nd B a ke rne got i a t e d the $130, 000 pa y m e nta s a w a y f orJ e nni ngs “to s a v e m o n e ya n d m o v e th e p r o je c t f o rw a r d .” R .E x h s .7 , P l.’s E x h . 1 4 7 a t 9 1 . J e n n in g s te s tif

ie d th a t: [ B a k e r ] a n d I h a d a m e e tin g , a n d . . . it w a s d e c id e d th a t, if I w o u ld pay hi m the m on eythathe w as abou tre ady t o spend , he coul d . . . get th e p r o je c t g o in g if

h e h a d th e m o n e y in h is h a n d , a n d h e c o u ld nego t i at e bett erpri ci ng and b e pre pare d t o m ov e the proj ec tforw ar d f a s t e r , a n d p o s s i b l y e v e n g e ts o m e d i s c o u n t s o n o u rwo r k b e c a u s e we w e r e w e l l f

unde d a nd r e a dy t o go. Id. at91 -92. W hen Jenni ng s w as as ked w hy he di d n otpay a ny m ore than $ 1 3 0 ,0 0 0 , h e s a idth a t “w h a t [ B a k e r ] a n dI n e g o tia te d w a s o n ly 1 3 0 .” I d . a t 9 2 . B a k e rw a s d e p o s e d o n 2 7 J u ly 2 0 0 4 , a n d h is d e p o s itio n te s tim o n y d ir e c tly c o n tr a d ic te d J e n n in g s ’s te s tim o n y a t th e A p r il h e a r in g b e f o r e th e b a n k ru p tc y c o u r t. B a k e rte s tif

ie d th a t J e n n in g s in d e p e n d e n tly d e te r m in e d th e $ 1 3 0 ,0 0 0 f ig u r e , w ith n o in p u t fro m B ak er . R .E x h s.5 , P l. ’s E x h . 9 1 at 3 6 -3 8 . In co n tras t t o Je n n in g s’s 4 te s tim o n y th a t h e a n d B a k e rn e g o tia te d th e $ 1 3 0 ,0 0 0 p a y m e n t, B a k e rte s tif ie d th a t, a f t e rthe i ni t i a l $50, 000 pa y m e ntc a l l e d f orby the c ontr a c t , he e xpe c t e d t o r e c e i ve addi t i on al m on eyon l y a ft erhe had spentthe fi rs t$5 0, 00 0 and prov i ded an ac coun t i ng of the expend i tures t o Jenni ng s. Y etbefore the si t e had been cl ea re d8

a n d th e p e r m it h a d b e e n is s u e d , J e n n in g s p a id B a k e rth e f ir s t tw o in s ta llm e n ts in f u ll a n d m o r e th a n h a lf

o f th e th ir d in s ta llm e n t. A c c o r d in g to B a k e r , J e n n in g s to ld B ak er: “ ‘ H ey, I g o t–I’ m g o i n g t o C al i fo rn i a, I m i g h tn o tb e b ack fo r tw o m o n th s, I ’ m goi ng t o gi ve y ou $130, 000. ’ ” I d. a t37. A s t o J e nni ngs ’ s r a t i ona l e f orpa y i ng $ 1 3 0 ,0 0 0 , B a k e rs u r m is e d : “m a y b e b e c a u s e h e d id n ’t h a v e $ 1 5 0 ,0 0 0 o rw h a te v e r . I m e a n, I don’ tknow how he gott o the 130 f i gur e buthe thoughttha tw oul d be e nough m one y t o c a rry m e dur i ng the t i m e pe r i od he w oul d be a w a y . ” I d. a t37- 38. B a ke rde ni e d tha the e ve rs ugge s t e d t o J e nni ngs tha tJ e nni ngs w oul d s a ve a ny m on eyby prepay i ng the $1 30 , 00 0 and deni ed thathe re qu es t ed Je nn i ng s t o p ay $ 1 3 0 ,0 0 0 f

o ra n y r e a s o n . I d . a t 4 5 - 4 6 . T h e b an k ru p t cy co u rth el d a tri al o n M ax fi el d ’ s o b j ect i o n i n Ju l y an d A u g u st 20 05 . A ttri al , Je nn i ng s t es t i fi ed thathe kn ew thatthe contra ctw i th B akerB ui l ders req u i red o n l y an i n i t i al p aym en to f $ 5 0 , 0 0 0 , b u th e g av e B ak er $ 1 3 0 , 0 0 0 b ecau se he “ di d n otw antt o b e burdened w i th the m anagem entof cost s a nd supervi si on of a h a n g a r ” w h ile p r e p a r in g f o rth e d a m a g e s p h a s e o f th e C a lif

o rn iatr ia l. B a n k r . C t. D k t. N o . 7 5 a t 8 3 . H e a ls o w a n te d to in d ic a te to B a k e rth a t h e w a s “s in c e r e in g e ttin g [ th e ] h a n g a rs ta r te d ” a n d to e n s u r e th a t B a k e rw o u ld b e ab le to b e g in co n stru ctio n o n th e h an g ar . Id . at 8 2 . T h e b an k ru p tcy c o u rt d en ied Je n n in g s’s r e que s tf ora di s c ha r ge unde r11 U . S . C . § 727( a ) ( 2) ( A ) ba s e d on hi s $130, 0009

tr a ns f e rt o B a ke rB ui l de r s . T he di s tr i c tc our ta f f i r m e d, a nd thi s appe a l f ol l ow e d. I I . DI S CUS S I ON O n app ea l , the part i es di sput e w hether J enni ng s m ade the $1 30 , 00 0 tra nsfe r t o B akerB ui l ders w i th i nt entt o h i nd er , del ay , or defr aud h i s c re di t ors, and w hether the re cord cont ai ns suff i ci entevi dence t o d eny J enni ng s adi sc harge und er§ 72 7(a) (2)( A ) bec ause of thattra nsfe r. Je nn i ng s c on t ends thatthe tra nsfe r w as m a de i n or de rt o ut i l i z e the hom e s t e a d e xe m pt i on a va i l abl e t o hi m unde rF l or i da l aw , no tt o k ee p the m on eyfr om hi s c re di t ors, and h e m ai nt ai ns thatsuch a tra nsfe r i s pe r m i s s i bl e “ e ve n i f

i ti s m a de pr i ort o ba nkrupt c y w i th the i nt e ntt o ke e p the m one y f r om c r e di t or s . ” A ppe l l a nt ’ s B r . a t21. J e nni ngs ’ s pos i t i on c r e a t e s appa r e nt te n s io n b e tw e e n th e B a n k ru p tc y C o d e ’s le g is la tiv e h is to ry , w h ic h s ta te s th a t it is n o t f r a u d u le n t f

o ra d e b to rto c o n v e r t n o n - e x e m p t a s s e ts to e x e m p t a s s e ts p r io rto f ilin g b a n k ru p tc y , a n d o u rap p lic a tio n o f § 7 2 7 ( a ) ( 2 ) ( A ) o f

th e B a n k ru p tc y C o d e in thi s c a s e . H ow e ve r , a nys uc h t e ns i on i s r e s ol ve d by ourc onc l us i on tha ta de bt or c a n c onve r tnon- e xe m pta s s e t s t o e xe m ptunl e s s he i s m ot i va t e d t o m a ke s uc h a c o n v e r s io n b y a n a c tu a l in te n t to h in d e r , d e la y , o rd e f r a u d h is c r e d ito r s . A s th e T e n th C ir c u it h a s s ta te d , “[ o ]n e o f th e m o r e d if

f ic u lt is s u e s in ba nkrupt c y l a w i s de c i di ng w he n, i f e ve r , a n i nt e ntt o de f

r a ud c r e di t or s c a n be show n b y the debt or’ s c on vers i on of no nexem ptas se t s t o exem ptas se t s. ” I n re10

W arre n, 51 2 F . 3d 12 41 , 12 49 (10th C i r. 20 08 ). T hi s quest i on i s e ven m ore di ff i cul tw here , as here , the debt or has a tt em pt ed t o u t i l i ze a s t atut ory hom es t ea d exem pt i on . S ee In re S m i l ey , 86 4 F . 2d 56 2, 56 8 (7th C i r. 19 89 ) ( no t i ng that de bt or ’ s i nt e ntt o de f

r a ud c r e di t or s w a s noti m m e di a t e l y appa r e ntbe c a us e he a tt e m pt e d t o a va i l hi m s e l f of l e ga l e xe m pt i ons ) . B oth the ba nkrupt c y c our ta nd the di stri ctcourtfoun d thatJe nn i ng s i nt ended t o h i nd er , del ay , or defr aud h i s c re di t ors b y tr a n s f e rr in g $ 1 3 0 ,0 0 0 to B a k e rB u ild e r s b e f o r e it w a s d u e u n d e rth e c o n tr a c t. A c c o r d in g ly , th e c o u r ts b e lo w d e n ie d J e n n in g s a d is c h a r g e u n d e r§ 7 2 7 ( a ) ( 2 ) ( A ) . W e r e v ie w f

o rc le a re rr o rth e b a n k ru p tc y c o u r ts ’s f a c tu a l d e te rm in a tio n th a t a de bt ori nt e nde d t o hi nde r , de l a y , orde f r a ud a c r e di t or . I n r e W i ne s , 997 F . 2d 852, 8 5 6 ( 1 1 th C ir . 1 9 9 3 ) . W e m u s t a c c e p t th e b a n k ru p tc y c o u r t’s f a c tu a l f in d in g s if th e y a r e a f

f irm e d b y th e d is tr ic t c o u r t, u n le s s th e y a r e c le a r ly e rr o n e o u s . I d . D eferen ce t o th e b an k ru p t cy co u rt ’ s fi n d i n g s i s “ p art i cu l arl y ap p ro p ri at e” b ecau se the i nt e ntde t e r m i na t i on w i l l of t e n de pe nd on tha tc our t ’ s “ a s s e s s m e ntof the debt or’ s c re di bi l i ty. ” I n r e K r e hl , 86 F . 3d 737, 743 ( 7th C i r . 1996) . “ W he n the di s tr i c tc our tha s a f

f i r m e d the ba nkrupt c y c our t ’ s f i ndi ngs . . . w e w i l l appl y the c l e a r l y e rr one ous doc tr i ne w i th pa r t i c ul a rr i gor . ” I n r e W i ne s , 997 F . 2d a t856 ( q u o ta tio n a n d c ita tio n o m itte d ) . T h e B a n k ru p tc y C o d e f a v o r s d is c h a r g e o f

a n h o n e s t d e b to r ’s o b lig a tio n s .11

In re S t . L aure nt , 99 1 F . 2d 67 2, 68 0 (11 th C i r. 19 93 ). T he general po l i cythat pr ovi s i ons de ny i ng s uc h a di s c ha r ge a r e c ons true d l i be r a l l y i n f a vorof the de bt or a nd s tr i c t l y a ga i ns tthe c r e di t orappl i e s onl y t o the hone s tde bt or . I d. I nde e d, the l e gi s l a t i ve hi s t ory t o the 1978 r e vi s i on of the C ode s t a t e s tha t“ [ a ] s unde rc urr e nt l a w , the de bt orw i l l be pe r m i tt e d t o c onve r tnon[ - ] e xe m ptpr ope r ty i nt o e xe m pt p r o p e r ty b e f

o r e f ilin g a b a n k ru p tc y p e titio n . T h e p r a c tic e is n o t f r a u d u le n t a s to c r e d ito r s , a n d p e r m its th e d e b to rto m a k e f u ll u s e o f th e e x e m p tio n s to w h ic h h e is e nt i t l e d unde rthe l a w . ” H . R . R e p. N o. 595 95th C ong. , 1s tS e s s . 361 ( 1977) re pri nt ed i n 1 97 8 U . S . C od e C on g. & A dm i n. N ew s 596 3, 63 17 (c i t at i on om i tt ed); S . R e p . N o . 9 8 9 , 9 5 th C o n g . 2 d S e s s . 7 6 , r e p r in te d in 1 9 7 8 U .S . C o d e C o n g . & A d m in . N e w s 5 7 8 7 , 5 8 6 2 . H o w e v e r , th e r e a r e lim ita tio n s to a d e b to r ’s ab ility to a voi d hi s de bt s . A de bt orc a n be de ni e d a di s c ha r ge unde r§ 727( a ) ( 2) ( A ) of the B a n k ru p tc y C o d e w h e r e p r o p e r ty o f th e d e b to ris tr a n s f

e rr e d b y th e d e b to ro rw ith the de bt or ’ s pe r m i s s i on w i thi n one y e a rof the f i l i ng of the ba nkrupt c y pe t i t i on, a nd the tr a ns f

e rw a s m a de w i th the i nt e ntt o hi nde r , de l a y , orde f r a ud a c r e di t or . 11 U . S . C . § 727( a ) ( 2) ( A ) . A pa r ty w ho obj e c t s t o a di s c ha r ge ha s the bur de n t o pr ove the obj e c t i on by a pr e ponde r a nc e of the e vi de nc e . G r oga n v. G a rne r , 498 U . S . 279, 28 9-91 , 11 1 S . C t . 65 4, 66 1 (19 91 ). T o succe ss ful l y obj ec tt o a di sc harge und er§ 727( a ) ( 2) ( A ) , a c r e di t orm us te s t abl i s h ( 1) tha tthe a c tc om pl a i ne d of w a s done12

w ith in o n e y e a rp r io rto th e d a te th e p e titio n w a s f ile d , ( 2 ) w ith a c tu a l in te n t to hi nde r , de l a y , orde f

r a ud a c r e di t or , ( 3) tha tthe a c tw a s tha tof the de bt or , a nd ( 4) tha tthe a c tc ons i s t e d on tr a ns f e rr i ng, r e m ovi ng, de s tr oy i ng, orc onc e a l i ng a ny of th e d e b to r ’s p r o p e r ty . 1 1 U .S .C . § 7 2 7 ( a ) ( 2 ) ( A ) . O n c e th e c r e d ito rh a s m e t th is bur de n, “ [ t ] he de bt orm us tbr i ng f orw a r d e nough c r e di bl e e vi de nc e t o di s s ua de the c our tf r om e xe r c i s i ng i t s j ur i s di c t i on t o de ny the de bt ordi s c ha r ge ba s e d on the evi dence pres ent ed by the obj ec t i ng party” In re P re vatt , 26 1 B . R . 54 , 58 (B ankr. M .D . F la . 2 0 0 0 ) . S i n ce i ti s u n l i k el y th ata d eb t o r w i l l ad m i tth ath e i n t en d ed t o h i n d er, d el ay, or defr aud h i s c re di t ors, the debt or’ s i nt entm aybe es t abl i shed by ci rc um st ant i al e v id e n c e o rin f

e rr e d f r o m th e d e b to r ’s c o u r s e o f c o n d u c t. In re K re hl , 86 F . 3d at 743. C our t s ha ve i de nt i f i e d s e ve r a l i ndi c i a of

f r a ud tha tt e nd t o s how tha ta de bt or had an actual i nt entt o d ef raud hi s c re di t ors. T hey i ncl ud e: ( 1 ) th e la c k o rin a d e q u a c y o f c o n s id e r a tio n f

o rth e p r o p e r ty r e c e iv e d ; ( 2) the na tur e of

the r e l a t i ons hi p be tw e e n the tr a ns f e r ora nd the tr a n s f e r e e ; (3 ) w h eth er th e tran sfero r ret ai n s p o ssessi o n , co n tro l , b en efi t s, o r u se o f th e p r o p e r ty in q u e s tio n ; (4 ) w h eth er th e tran sfer resu l t ed i n i n so l v en cy; ( 5) the c um ul a t i ve e f

f e c tof the de bt or ’ s tr a ns a c t i ons a nd c our s e of c onduc ta f

t e rthe ons e tof

f i na nc i a l di f

f i c ul t i e s orthr e a tof

s ui tby c r e di t or s ; a nd ( 6) the ge ne r a l c hr onol ogy a nd t i m i ng of the tr a ns f

e ri n que s t i on. I n r e M a rr a m a , 4 4 5 F .3 d 5 1 8 , 5 2 2 ( 1 s t C ir . 2 0 0 6 ) .13

T he evi dence adduced atthe heari ng on M axfi el d’ s obj ec t i on es t abl i shed tha tni ne da y s be f

or e f i l i ng f orba nkrupt c y , a nd a f

t e rha vi ng be e n f

ound l i abl e f

or M a xf i e l d’ s i nj ur i e s , J e nni ngs ha nd- de l i ve r e d B a ke rB ui l de r s a c a s hi e r ’ s c he c k f or $130, 000. J e nni ngs i nde pe nde nt l y de t e r m i ne d thi s a m ount , w hi c h w a s $85, 000 m o r e th a n th e c o n tr a c t o b lig a te d J e n n in g s to p a y a t th e tim e , a n d w h ic h w a s w e ll in ex cess o f th e v al u e o f th e serv i ces B ak er B u i l d ers yeth adren d ered . P erh ap s m o st i m por t a ntt o the ba nkrupt c y c our tw a s J e nni ngs ’ s t e s t i m ony a tthe A pr i l 2004 he a r i ng. J e nni ngs ha d t e s t i f i e d tha the ne got i a t e d the t e r m s a nd purpos e s of the a c c e l e r a t e d pa y m e ntw i th B a ke r , butJ e nni ngs ’ s t e s t i m ony w a s c ontr a di c t e d by B a ke r , a nd the ba nkrupt c y c our tf ound J e nni ngs ’ s non- f

r a udul e nte xpl a na t i ons f or the tra nsfe r t o b e notcr edi bl e. S peci fi ca l l y, the bank rupt cycourtdi sc re di t ed Je nn i ng s’ s s t at em ent s that(1) the $1 30 , 00 0 tra nsfe r w as m ade t o ensure the hang ar pr oj e c tw oul d s t a r ti m m e di a t e l y ; ( 2) J e nni ngs w oul d s a ve m one y on the c os tof the ha nga rpr oj e c tby pr e pa y i ng a l a r ge rpor t i on of the t ot a l pr oj e c tc os t ; ( 3) he a nd B a ke rne got i a t e d the t e r m s of the a c c e l e r a t e d pa y m e ntof $130, 000; a nd ( 4) J e n n in g s m a d e th e p a y m e n t s o th a t h e w o u ldn o t b e b u r d e n e d b y th e p r o je c t w h ile att endi ng hi s tri al i n C al i forni a. F urther, the bank rupt cycourtdet erm i ned that J e nni ngs be ga n “ s e r i ous l y c ont e m pl a t i ng” f i l i ng f orba nkrupt c y a f

t e rthe da t e of the l i abi l i ty ve r di c t , 21 A pr i l 2003, a nd di s c ount e d J e nni ngs ’ s t e s t i m ony tha the14

deci ded t o fi l e f

or bank rupt cyon l y a ft erthe C al i forni a c ou rt ’ s e ntryof the dam ages v e r d ic t o n 7 M a y 2 0 0 3 , tw o d a y s a f te rth e tr a n s f

e ra t is s u e h e r e . B a n k r . C t. D k t. N o. 14 5 at20 . S i nce the bank rupt cycourtdi d n otbel i eve J enni ng s’ s proff er ed expl anat i on s f

or hi s $13 0, 00 0 p ay m entt o B akerB ui l ders , the bank rupt cycourt c o n c lu d e d th a t J e n n in g s in te n d e d “to k e e p th e m o n e y o u t o f th e h a n d s o f

h is c r e d ito r s r a th e rth a n to ju m p s ta r t o rto s a v e m o n e y o n th e p r o je c t.” I d . A l tho ug h the bank rupt cycourtw as att ent i ve t o the t i m i ng of the tra nsfe r a t i ssu e, i tw as Jen n i n g s’ s l ack o f can d o r i n h i s t est i m o n y, n o tth e seq u en ce o f ev en t s, thatw as of para m ou nti m po rt ance t o the bank rupt cycourt ’ s det erm i nat i on that J e n n in g s m a d e th e tr a n s f e rw ith th e in te n t to h in d e r , d e la y , o rd e f r a u d h is c r e d ito r s . T he ba nkrupt c y c our tpoi nt e d outtha tthe t i m i ng a nd c i r c um s t a nc e s s urr oundi ng J e nni ngs ’ s pa y m e ntt o B a ke rB ui l de r s c onf i r m e d i t s s us pi c i ons tha tthe pa y m e nt w a s m o tiv a te d b y c o n c e rn s o th e rth a n th e p a c e a n d c o s t o f th e h a n g a rp r o

je c t. H o w e v e r , th e b a n k ru p tc y c o u r t d id n o t r e ly s o le ly o n th e c ir c u m s ta n c e s to d et erm i n e Jen n i n g s’ s i n t en t . Id . at1 9 -2 1 . T h e d i stri ctco u rtag reed , fi n d i n g “ fi rst a nd f or e m os t ” tha tJ e nni ngs ’ s “ l e s s tha n c a ndi d . . . t e s t i m ony ” r e ga r di ng the tr a ns f e rc ons t i tut e d s uf

f i c i e nte xtr i ns i c e vi de nc e upon w hi c h t o ba s e a f i ndi ng of ac tual fr audu l enti nt ent . D i st . C t . D kt . N o. 21 at11 . In addi t i on , the di stri ctcourt foun d thatthe re cord evi dence s up po rt ed the bank rupt cycourt ’ s det erm i nat i on that15

“ the t i m i ng of

the tr a ns a c t i on a nd J e nni ngs ’ [ s ] uni l a t e r a l de c i s i on c onc e rni ng the a m o u n t o f

f u n d s to tr a n s f

e rp o in te d to a w r o n g f

u l in te n t.” I d . W e c on cl ud e thatthe bank rupt cycourtdi d n otcl ea rl y e rri n fi nd i ng that M ax field p re se n ted su ff icien t ev id en ce in su p p o rt o f h is o b jectio n to b arJe n n in g s’s di s c ha r ge ba s e d on the $130, 000 tr a ns f e rt o B a nke rB ui l de r s . J e nni ngs di d not a tt e m ptt o c onc e a l f

r om hi s c r e di t or s the tr a ns f e rt o B a ke rB ui l de r s , butthe ba nkrupt c y c our tf

ound tha thi s i nnoc e ntbus i ne s s - r e l a t e d e xpl a na t i ons f orthe tra nsfe r w er e notcr edi bl e a nd concl ud ed thathe m ade the tra nsfe r w i th actual i nt e ntt o hi nde r , de l a y , orde f r a ud hi s c r e di t or s . T he ba nkrupt c y c our tw a s i n the bestpo si t i on t o ass es s J enni ng s’ s c re di bi l i ty a nd di sbel i eved hi s t es t i m on y. A ft er o u rr e v ie w o f

J e n n in g s ’s te s tim o n y , w e f in d th a t th e b a n k ru p tc y c o u r t h a d a m p le j us t i f i c a t i on f ordoi ng s o, a nd w e a r e notappr opr i a t e l y s i tua t e d t o s e c ond- gue s s the b a n k ru p tc y c o u r t’s d e c is io n r e g a r d in g J e n n in g s ’s c r e d ib ility . W e a gree w i th the court s bel ow thatJe nn i ng s’ s l ac k o f c ando r i s of gre at s i gni f i c a nc e i n de t e r m i ni ng hi s i nt e nt , be c a us e w e do notthi nk tha tthe s e que nc e of e ve nt s pr e c e di ng the tr a ns f e ri s s uf f i c i e nt , by i t s e l f

, t o e s t abl i s h tha tJ e nni ngs in te n d e d to h in d e r , d e la y , o rd e f r a u d h is c r e d ito r s b y in c r e a s in g th e v a lu e o f h is prot ec t ed ho m es t ea d. E ven tho ug h the t i m i ng of Je nn i ng s’ s tra nsfe r c oi nci ded w i th the C al i forni a c ou rt ’ s ver di ct s on l i abi l i ty a nd dam ages , the bank rupt cycourtS i n ce we h av e d et erm i n edth atth e r ec o rdev i d en ces u p p o rt s a f i n di n g th atJ enn i n gs 5 intended to def

raud his creditors, we express no opinion as to whether the discha rg e would have be e n p roper i f Jenning s h a d intende d o nly to hinder o r de lay

hisc re ditor s. 16 beca m e c on vi nced thatJe nn i ng s i nt ended t o shi el d h i s m on eyfr om cr edi t ors because J enni ng s’ s proff er ed “ i nn ocent ” e xp l anat i on s f or the tra nsfe r w er e co n trad i ct ed b y B ak er. A ft er d i scred i t i n g Jen n i n g s’ s n o n -frau d u l en tm o t i v at i o n s, the bank rupt cycourtre as on abl y c on cl ud ed thatJe nn i ng s m usthave been m ot i va t e d by a n i nt e ntt o hi nde r , de l a y , orde f r a ud hi s c r e di t or s . W e not e our agre em entw i th the bank rupt cycourtthatJe nn i ng s’ s des i re t o m ov e the proj ec t a l ong m a y ha ve j us t i f

i e d c om pl e t i ng the i ni t i a l $50, 000 pa y m e ntr e qui r e d by the c ontr a c t , butnota $130, 000 pa y m e nt ; a s B a ke rt e s t i f i e d a thi s de pos i t i on, the c ontr a c tw oul d ha ve r e qui r e d J e nni ngs t o m a ke the i ni t i a l $50, 000 pa y m e nts oon a f te rth e c o n tr a c t w a s e x e c u te d . W e f in d th a t J e n n in g s ’s d e c is io n to f a ls if y h is m ot i ve s f

orpr e pa y i ng a n a ddi t i ona l $85, 000 i s i ndi c a t i ve of hi s a c tua l f

r a udul e nt i nt entand i s a n add i t i on al pi ec e of e vi dence l ea di ng us t o con cl ud e thatthe ent i re tr a n s f e rw a s m a d e w ith th e in te n t to p r e v e n t th e m o n e y f r o m r e a c h in g h is c r e d ito r s . W h e n c o n s id e r in g th e tim in g a n d s e q u e n c e o f e v e n ts in th is c a s e a lo n g w ith J e n n in g s ’s te s tim o n y , w e c o n c lu d e th a t th e r e c o r d p r o v id e s a m p le e v id e n c e to s u p p o r t th e b a n k ru p tc y c o u r t’s ju d g m e n t th a t J e n n in g s tr a n s f e rr e d $ 1 3 0 ,0 0 0 to B ak er B u i l d ers w i th actu al i n t en tt o h i n d er, d el ay, o r d efrau d h i s cred i t o rs. 517

S i nce J enni ng s a tt em pt ed t o t ake a dv ant age of the F l ori da ho m es t ea d e xe m pt i on, w e ha ve c a r e f ul l y e xa m i ne d the r e c or d t o de t e r m i ne tha ts uf f i c i e nt e v id e n c e s u p p o r ts th e b a n k ru p tc y c o u r t’s c o n c lu s io n th a t J e n n in g s in te n d e d to defr aud h i s c re di t ors. S ee In re S m i l ey , 86 4 F . 2d at56 9. W e r ec og ni ze that J e nni ngs c l a i m s t o ha ve m a de thi s tr a ns f e ri n or de rt o t a ke f

ul l a dva nt a ge of

the F l ori da ho m es t ea d exem pt i on , bu tw e a gree w i th the bank rupt cycourtthat Je nn i ng s’ s a ctual i nt entw as t o u t i l i ze the ho m es t ea d exem pt i on i n o rdert o h i nd er , del ay , or defr aud h i s c re di t ors. T he t extof the C od e e xp re ss l y provi des f or a deni al of a debt or’ s di sc harge w here the debt or tra nsfe rs prop erty w i thi n o ne ye ar be f or e f i l i ng a pe t i t i on w i th i nt e ntt o hi nde r , de l a y , orde f r a ud hi s c r e di t or s . S uc h a de ni a l i s appr opr i a t e i n thi s c a s e , be c a us e w e c onc urw i th the ba nkrupt c y a nd d is tr ic t c o u r ts ’s c o n c lu s io n th a t J e n n in g s in te n d e d to h in d e r , d e la y , o rd e f r a u d h is cr edi t ors throu gh the tra nsfe r of m on eyi nt o h i s hom es t ea d, no tsi m pl y t o con vert n o n -e x em p t ass ets to ex em p t ass ets. T h er ef o re , w e c o n clu d e th at Je n n in g s’s fr audu l enti nt entw arra nt ed the deni al of di sc harge und er§ 7 27 (a )( 2)(A ). I I I . CONCL US I ON J e n n i n g s ap p e a l s f

r o m th e d e n i a l o f

h i s d i s c h a r g e u n d e r§ 7 2 7 ( a ) ( 2 ) ( A) base d o n the grou nd s thathe m ade a$1 30 , 00 0 tra nsfe r w i th the i nt entt o “ hi nd er , del ay , or defr aud a cre di t or. ” W e c on cl ud e thatthe re cord cont ai ns am pl e e vi dence18

of J e nni ngs ’ s a c tua l i nt e ntt o de f r a ud hi s c r e di t or s by m a ki ng a pr e m a tur e pa y m e nt on a c ontr a c tf

ori m pr ove m e nt s t o pa r tof hi s F l or i da hom e s t e a d. J e nni ngs uni l a t e r a l l y de t e r m i ne d the a m ountof the pa y m e nt , w hi c h gr e a t l y e xc e e de d the a m ountthe n due unde rthe c ontr a c t , J e nni ngs r e a l i z e d no s a vi ngs a nd r e c e i ve d no othe rbe ne f

i ta s a r e s ul tof

the pa y m e nt , a l m os tno w or k ha d be e n done on the p r o je c t w h e n th e p a y m e n t w a s m a d e , a n d J e n n in g s c o u ld n o t c o n v in c in g ly e x p la in the r a t i ona l e be hi nd hi s de c i s i on t o m a ke the pa y m e nt . A c c or di ngl y , the ba nkrupt c y c our tc orr e c t l y de ni e d J e nni ngs a di s c ha r ge be c a us e he i nt e nde d the tran sfer t o h i n d er, d el ay, o r d efrau d h i s cred i t o rs. A FFI R M ED .