In the

United States Court of Appeals

For the Seventh Circuit

____________

Nos. 03-1086 & 03-3664

DFS SECURED HEALTHCARE RECEIVABLES TRUST,

Plaintiff-Appellee,

v.

CAREGIVERS GREAT LAKES, INC.

and MARC LEESTMA

Defendants-Appellants.

____________

Appeals from the United States District Court for the

Northern District of Indiana, South Bend Division.

No. 3:99-CV-0569RM—Robert L. Miller, Jr., Chief Judge

____________

ARGUED JUNE 10, 2004—DECIDED SEPTEMBER 13, 2004

____________

Before CUDAHY, RIPPLE, and ROVNER, Circuit Judges.

CUDAHY, Circuit Judge. This appeal involves a state law

claim under Indiana’s Uniform Fraudulent Transfer Act

(IUFTA), Ind. Code §§ 32-18-2-1 et seq. It has long been argued by some that diversity jurisdiction should be limited

or even abolished. The proponents of this view argue that

the federal courts are overburdened, that they lack expertise in matters of state law and that in most cases, the

concern of hometown bias originally driving the estab-
2 Nos. 03-1086 & 03-3664

lishment of diversity jurisdiction represents no real threat

to the parties. While we express no opinion as to whether

diversity jurisdiction should be limited generally, we have

little doubt that this case would have been better brought

in an Indiana state court. This case raises numerous novel

questions of Indiana state law, upon which federal courts

can provide no more than conjecture as to how the Indiana

Supreme Court would hold. The appellee, in oral argument,

made it clear that it did not want us to certify any question to

the Indiana Supreme Court because of the inevitable delay

that would follow. However, it was the appellee that chose

to file its complaint in federal court and it was that complaint which sought novel remedies, never previously awarded

under Indiana law. R. at 36 (Cplt. ¶ 51). Therefore, although

we are not fans of delay, it is with limited sympathy that

ultimately we must certify several of the questions raised

in this appeal to the Indiana Supreme Court. See Stephan

v. Rocky Mountain Chocolate Factory, Inc., 129 F.3d 414,

418 (7th Cir. 1997).

I. BACKGROUND

On May 15, 1996, Caregivers Plus, Inc. (CPI), a provider

of home healthcare services to Medicare recipients and

others, entered into a “factoring” agreement with DFS Secured

Health Receivables Trust (DFS). App. at 63-115. Under this

agreement, DFS purchased “the right to receive the proceeds of collections of Healthcare Receivables payable by

Governmental Obligors when such collections [were] received

by [CPI]” in exchange for immediate cash payments of 71.5%

of the value of these receivables to CPI. Id. at 165. Additionally, under this agreement, CPI was obligated to pay DFS

2.5% interest for each month that receivables made payable

to DFS went unpaid. Id. Therefore, in addition to its 28.5%

discount on the value of the receivables DFS received, CPI

owed DFS 30% annual interest on unpaid receivables. Id. at
Nos. 03-1086 & 03-3664 3

165. A Monday night quarterback might think this a bad

deal for CPI, but it was still Sunday morning, and it

apparently looked serviceable to CPI at the time. 

By February 1997, however, CPI owed DFS approximately $600,000 under this agreement. Id. at 48. On April

4, 1997, DFS filed suit against CPI and its principal,

Claudette Harrison, in the Northern District of California

to collect the debt. Id. at 49. Before the lawsuit began,

Harrison admitted converting $250,000 in receivables that

should have been paid to DFS. Id. at 48-49. The parties executed a settlement agreement and the suit was dismissed

voluntarily without prejudice. Id. at 394. Following this

settlement, DFS continued to purchase CPI’s receivables

despite the fact that CPI was constantly in default. Id. at

166. By the end of 1998, CPI’s debt to DFS had grown to

approximately $1.7 million. Id. at 53. On February 16, 1999,

DFS again filed suit against Harrison, CPI and others in

the United States District Court for the Eastern District of

California and was granted a default judgment for approximately $1.7 million. Id. at 49-50, 346-47.

In the meantime, CPI had fallen into financial distress

and its officers were concerned that it would go under by

the end of 1998 due to its debts. Id. at 180. CPI’s financial

distress was due, in part, to changes in the Medicare program, including the Balanced Budget Act of 1997, which

changed the Medicare reimbursement method and led to a

35% drop in spending on home health care agencies that

year. Id. at 125. As a result, about one-third of Indiana’s

home health care agencies closed in 1998. Id. at 126. 

Harrison decided to sell CPI. Id. at 368-69. On December 4,

1998, Marc Leestma, an entrepreneur in the home health care

business, executed an asset purchase agreement (“APA”) for

the sale of essentially all of CPI’s assets (Medicare provider

number, files, furniture and computers) for $20,000. Id. at

349-54. The APA defined the “buyer” of CPI’s assets as
4 Nos. 03-1086 & 03-3664

“Marc Leestma or, at his option, a corporation to be formed by

him for purposes of this Agreement.” Id. at 349. Under the

terms of the APA, the buyer purchased CPI’s assets and

was also required to lease specific property, employ various

former CPI employees (including Harrison, whose new

salary with CGL was to be even higher than it was with

CPI) and assume CPI’s equipment leases. Id. at 349, 352.

Following execution of the APA, on December 8, 1998,

Leestma filed articles of incorporation for Caregivers Great

Lakes, Inc. (CGL), to be the “buyer” of CPI’s assets. Id. at

383. On January 8, 1999, CGL paid CPI $20,000 and the

transaction was complete. App. at 388. Leestma claims that

$20,000 represented the fair market value of CPI and was

consistent with other offers Harrison had received during this

time period. Id. at 194-95. A jury, however, ultimately

found that the fair value for CPI’s assets was actually

$470,000. Id. at 301. 

Because CGL had purchased CPI’s Medicare provider

number, Medicare made payments totaling $439,388 to CGL

for services provided by CPI prior to the asset purchase. Id. at

23. DFS claimed based on its May 15, 1996 agreement with

CPI that it should have received these reimbursements. On

October 1, 1999, DFS filed a complaint in the Northern

District of Indiana claiming fraudulent transfer under the

IUFTA, as well as, civil and criminal conversion. After a

hearing at which the district court found that DFS was the

lawful recipient of the Medicare receivables, CGL paid

these funds to DFS. Id. at 53. 

Nonetheless, DFS maintained its action, claiming that the

sale of CPI was a fraudulent attempt to shield CPI’s assets

from its creditors (DFS). After the district court dismissed

the conversion claims, trial began on May 14, 2001. At the

close of trial, the jury found that the “reasonably equivalent

value” of the assets transferred to CGL was $470,000

(rather than the $20,000 paid by CGL) and recommended
Nos. 03-1086 & 03-3664 5

punitive damages of $800,000 against Leestma and

$100,000 against CGL. Id. at 301. Because the remedy

sought was equitable in nature, the district court treated

the jury’s findings as advisory but ultimately adopted its

recommendation. Id. at 303, 305-08, 314. On January 9,

2003, after the district court ruled on various post-judgment

motions, CGL and Leestma filed a timely notice of appeal.

In this appeal, Leestma and CGL challenge four discrete

issues. First, Leestma argues that the district court erred

in finding that he could be personally liable under the

IUFTA. Second, Leestma argues that DFS did not constitute

a “creditor” under the IUFTA because (1) DFS did not obtain its judgment against CPI until after the asset transfer;

and (2) its contract with CPI was void since the sale of

Medicare receivables is illegal. Third, Leestma argues that

a money judgment is not available under the IUFTA when

the transferred assets are available for reconveyance. Finally, Leestma appeals the district court’s award of punitive

damages, arguing that such damages are not available under the IUFTA.

II. DISCUSSION

A. Leestma’s personal liability

Leestma argues that the district court erred in holding

him personally liable, because under the IUFTA, a judgment

may be entered only against a “first transferee” of fraudulently transferred assets or “a person for whose benefit the

transfer was made,” and Leestma claims to be neither. See

Ind. Code § 32-18-2-18(b)(1). According to Leestma, CGL—

the corporation he created to purchase CPI’s assets—was

the “first transferee” of those assets, and Leestma acted as

a mere agent of CGL. Therefore, he argues that because

DFS did not attempt to pierce the corporate veil of CGL, he

cannot be held personally liable.
6 Nos. 03-1086 & 03-3664

1 The IUFTA does not define the term “transferee.” The historical

notes to the IUFTA indicate that the relevant section is based on

§ 8 of the Uniform Fraudulent Transfer Act (UFTA). See UFTA

(U.L.A.) § 8, cmt. 1; see also Ernst & Young LLP v. Baker O’Neal

Holdings, Inc., No. 1:03-CV-0123-DFH, 2004 WL 771230, at *14

n.7 (S.D. Ind. March 24, 2004) (noting that Indiana has adopted the

UFTA). Section 8 of the UFTA is based on § 550 of the Bankruptcy

Code. Compare UFTA § 8, cmt. 2 with 11 U.S.C. § 550. In Bonded

Financial Services, this court was interpreting the term “transferee” in the context of § 550 of the Bankruptcy Code. See 838 F.3d

at 395.

We agree that a “transferee” is one with actual “dominion”

or “control” over the assets in question. See Bonded Fin.

Servs., Inc., 838 F.2d 890, 893-94 (7th Cir. 1988).1 “ ‘Control’

does not mean the ability to steal the money, or use it for

personal purposes in breach of duty.” In re Schick, 234 B.R.

337, 343 (Bankr. S.D.N.Y. 1999). A “transferee” must have

“the right to put the money to one’s own purposes,” rather

than merely being an “agent,” “possessor” or someone “who

touches the money.” Bonded Fin. Servs., Inc., 838 F.2d at 893-

99. 

On December 4, 1998, the parties entered into an APA,

under which the “buyer,” defined as “Marc Leetsma [sic] or,

at his option, a corporation to be formed by him for purposes of this Agreement,” agreed to purchase CPI’s assets

for $20,000. See App. at 349. The district court concluded

that because Leestma signed the APA in his own name, he

was not an agent and that he personally became the “first

transferee” of the assets. See Short App. at 15 (“Evidence

supports a finding that Mr. Leestma is personally liable for

buying fraudulently discounted assets—it was he who

signed the asset purchase agreement—so Mr. Lesstma [sic]

is not entitled to dismissal of the fraudulent transfer claim

against him.”) 

Of course, under Indiana law (and likely in any other

state), the mere fact that a person signs an agreement in
Nos. 03-1086 & 03-3664 7

2 It is not clear whether these attachments were executed contemporaneously with the APA (it appears that at least the typed

“Marc Leetsma [sic], President” line was present on December 4,

1998), but that is not relevant because they were incorporated by

reference into the APA, regardless whether they were executed

subsequently thereto.

his own name does not preclude a finding that he signs in

an agency capacity. See, e.g., Stepp v. Duffy, 654 N.E.2d

767, 773 (Ind. Ct. App. 1995). A fair reading of the APA suggests that the parties always intended that the buyer would

be CGL rather than Leestma personally. First, the APA’s

definition of “buyer,” which contemplates that no corporation had yet been established but that one might be, not

only suggests that Leestma could be signing as an agent for

a future corporation but also made it awkward for Leestma

to sign anything other than his name. See App. at 349. It

was not likely that Leestma would sign “Marc Leestma, as

president of the company which will be formed by him for

purposes of this agreement.” More importantly, however, the

APA incorporated by reference (and the asset transfer was

conditioned on executing) certain employment agreements

and a lease agreement, which were apparently attached to

it. Id. at 352 (“The transaction contemplated by this

agreement is conditioned upon the Buyer signing a five (5)

year employment contract . . . in the form of Exhibits ‘A-1’

and ‘A-2’ attached hereto.”) These agreements, which did not

include the same awkward “buyer” definition, were made out

by “Caregivers Great Lakes” (CGL) and signed by “Marc

Leestma, President.” Id. at 355-64, 371.2

 Therefore, viewing

the APA as a whole, it is clear that Leestma was signing as

an agent for CGL, and the parties intended that CGL be the

purchaser. Therefore, had a transfer taken place upon the

signing of the APA, CGL would be the “first transferee” and

Leestma, a mere agent. 

However, even if CGL were the “first transferee,” it would

not alter the outcome in this particular case, because CGL
8 Nos. 03-1086 & 03-3664

3 Leestma properly has not argued that CGL was a de facto corporation under Indiana law beginning on December 8, 1998, when

he signed and presumably filed CGL’s articles of incorporation.

See Ind. Enc. Corporations § 9 (defining a de facto corporation as

“one which exists for all practical purposes, but is not strictly speaking a legal corporation because of a failure to comply with some

legal formality in organization”). Such argument would be unavailing. Of course, if the transfer occurred on December 4, 1998,

which is implicit in the district court’s holding (though incorrect),

this argument would be of no help to Leestma because he would

have had control of the assets on December 4,1998—four days

before even de facto status. Regardless, we do not believe that

signing the articles of incorporation was enough to create a de

facto corporation under Indiana law, where the incorporator and

sole shareholder (Leestma) clearly intended that incorporation be

effective at a later date. See, e.g., Sunman-Dearborn Cmty. Sch.

Corp. v. Kral-Zepf-Freitag & Assocs., 338 N.E.2d 707, 709-10 (Ind.

Ct. App. 1975). The record leaves no doubt that Leestma’s intent was

always that CGL would become effective on January 1, 1999.

Moreover, de facto status would not shield an officer from liability

where, as here, he has been found to have engaged in fraud. See

id.; Jennings v. Dark, 92 N.E. 778, 783 (Ind. 1910); Aetna Life Ins.

Co. v. Weatherhogg, 4 N.E.2d 679, 682 (Ind. App. 1936).

was not legally incorporated until January 1, 1999. See id.

at 383 (articles of incorporation signed December 8, 1998,

but including a delayed effective date of January 1, 1999);

Ind. Code § 23-1-21-3(a); Ind. Enc. Corporations § 8 (“Unless

a delayed effective date is specified, a corporation’s existence

begins when the articles of incorporation are filed.”)

(emphasis added).3

 Therefore, there would be no need for

DFS to pierce the corporate veil, as CGL was not yet

wearing one. Leestma could be personally liable whether he

was the “first transferee” or not. 

Leestma may yet be saved, however, because although the

parties had signed the APA, that alone was not enough to

cause a “transfer” to occur in this case. An obvious implicit

requirement to being a “first transferee” is that a “transfer” of
Nos. 03-1086 & 03-3664 9

4 One might think that the logical way to decide when this

transfer was made would be by considering the IUFTA section

titled “when a transfer is made.” See Ind. Code § 32-18-2-16. This

approach is wrong, however, as that section is intended to be used

to determine when a cause of action arises and provides no useful

answer in this case. Cf. UFTA § 6, cmt. 1. According to this

section, a transfer is made with respect to an asset that is not real

property “when the transfer is so far perfected that a creditor on

a simple contract cannot acquire a judicial lien (other than under

this chapter) that is superior to the interest of the transferee.” Ind.

Code § 32-18-2-16. Although the term “perfected” is not defined,

the comments to the UFTA suggest that the parties are to look to

Article 9 of the Uniform Commercial Code (UCC) for guidance as

to the meaning of the term. See UFTA § 6, cmt. 1. The valuable

assets in this case would be considered “general intangibles”

under Indiana’s version of Article 9 of the UCC. See Ind. Code § 26-

1-9.1-102(a)(42); In re Leasing Consultants Inc., 486 F.2d 367, 371 n.5

(2d Cir. 1973) (noting that “general intangibles” include goodwill);

State St. Bank & Trust Co. v. Arrow Communications, Inc., 833 F.

Supp. 41, 48 (D. Mass. 1993) (noting that “general intangibles”

includes a “governmental license”); App. at 352 (defining the value

of the Company in relation to its goodwill and certification). In

order to perfect a security interest in such assets, a financing

statement must be filed with the state filing office. See Ind. Code

§ 26-1-9.1-310, cmt. z. There is no evidence that a filing statement

was ever filed in this case. Therefore, assuming that the applicable law would permit the transfer of a Medicare provider number

(continued...)

legal rights has taken place. See Rupp v. Markgraf, 95 F.3d

936, 941 (10th Cir. 1996) (“Determining the initial transferee of a transaction is necessarily a temporal inquiry; there

must be a transfer before there can be a transferee.”); see also

Ind. Code. § 32-18-2-10 (noting that a transfer must involve

the “disposing of or parting with an asset or an interest in

an asset”). Therefore, we must determine when a transfer

of legal rights occurred under the facts of this case. The

answer will lie with the parties’ intent.4
10 Nos. 03-1086 & 03-3664

4 (...continued)

to be perfected, “the transfer is considered made immediately

before commencement of the action.” Id. at 32-18-2-16(2). Clearly,

that result does not help us to determine when either Leestma or

CGL obtained legal control of these assets. 

The APA, signed on December 4, 1998, states that “[s]ubject to the terms and conditions hereinafter set forth, the

Company agrees to sell assign, transfer and deliver to the

Buyer at the Closing provided for hereafter, all of the . . .

assets.” App. at 349 (emphasis added). The APA further

states that “[t]he purchase price for the [a]ssets shall be . . . in

immediately available funds at the [c]losing.” Id. The

closing date was set under the APA for December 22, 1998.

Id. at 353. The APA, however, does not suggest that time

was of the essence. See Smith v. Potter, 652 N.E.2d 538, 542

n.4 (Ind. App. 1995) (“Indiana cases discussing time of the

essence clauses provide that courts do not generally view

time as being of the essence of a contract unless the terms

of the contract or the conduct of the parties make it so.”).

The text of this agreement therefore makes it clear that the

parties had entered into an executory agreement and that

ownership (the right to legally control the assets) would

transfer on December 22, 1998, or at such time as consideration was paid.

Further evidence that the parties did not intend an immediate transfer of assets comes from a letter dated December

15, 1998, in which CPI provided the requisite notice to

Department of Health and Human Services and indicated

that “a new corporation,” CGL was to be the new owner of

the Medicare provider number. App. at 385; see also 42 C.F.R.

§ 489.18(b) (“[a] provider who is contemplating or negotiating a change of ownership must notify” the Department of

Health and Human Services) (emphasis added). This letter,

dated eleven days after the APA was signed, stated that CPI

was “in the process of selling its assets” rather than that it
Nos. 03-1086 & 03-3664 11

5 We need not consider how this agreement might be interpreted

under the UCC, as the UCC does not apply to this contract for the

sale of a business containing predominantly intangible assets,

such as a governmental license and goodwill. See Insul-Mark

Midwest, Inc. v. Modern Materials, Inc., 612 N.E.2d 550, 553-54

(Ind. 1993) (applying the “predominant thrust” test to a contract

for the sale of “goods” and non-goods); Baker v. Compton, 455

N.E.2d 382, 387 (Ind. Ct. App. 1983) (same); Ogden Martin Sys. of

Indianapolis, Inc. v. Whiting Corp., 179 F.3d 523, 530 (7th Cir.

1999) (same); D.G. Porter, Inc. v. Fridley, 373 N.W.2d 917, 924

(N.D. 1985) (holding that the North Dakota UCC did not apply to

the sale of a bar business where the essential elements of the sale

involved goodwill, transfer of liquor license, assignment of a lease,

and transfer or assignment of insurance policies and contracts

related to the business); Foster v. Colorado Radio Corp., 381 F.2d

222, 226 (10th Cir. 1967) (finding that the sale of a license,

goodwill, real estate and a studio’s transmission equipment were

not movables and hence not “goods” within the meaning of UCC);

Stewart v. Lucero, 918 P.2d 1, 4-5 (N.M. 1996) (applying a “primary

purpose test” to a sale of a catalog business, where, although display items and some inventory was sold, the basis of the bargain

was the right to use the Sears name and a noncompetition agreement).

had sold its assets. App. at 385 (emphasis added). 

Because the APA was an executory contract not governed

by the UCC, neither Leestma nor CGL was given ownership

in or the legal right to control any asset under the APA

until the parties so intended.5 See First Nat’l Bank v.

Smoker, 286 N.E.2d 203 (Ind. Ct. App. 1972) (“Prior to the

adoption of the Uniform Commercial Code, ownership of

goods and the rights incident thereto were defined by the

location of title and the intention of the parties was the

primary test as to who had title.”); Webb v. Clark County,

87 Ind. App. 103, 159 N.E. 19, 20-21 (Ind. Ct. App. 1927)

(holding that an agreement which gives the buyer the right

to property in the future is executory and title does not pass
12 Nos. 03-1086 & 03-3664

6 The only evidence presented to suggest that Leestma or CGL

took physical possession of any asset before December 22 was the

following testimony from trial. Leestma was asked: “After you

signed the Asset Purchase Agreement on December 4th of 1998,

there was actually no closing. Was there?” Leestma responded: “I

think about the only thing that remained to be done was the

passing of the check, to pay the money.” Tr. Vol. 3 at 130. This is,

(continued...)

until the parties comply with terms of the contract);

Branigan v. Hendrickson, 46 N.E. 560, 561 (Ind. App. 1897)

(“In [the] case of [an] executory contract, the purchaser does

not become the owner; [the property to be sold is] not at his

risk. His remedy, if there be a breach, is confined to an

action for damages. Whether any particular contract is one

or the other is, generally, a question of fact depending upon

the intention of the parties, to be gathered from the terms

and stipulations of the agreement.”); Keck v. State ex rel.

Nat’l Cash-Register Co., 39 N.E. 899, 900-01 (Ind. App.

1895) (noting that petitioner “only contracted for an interest

at some time in the future, when he had complied with

certain conditions. Such an interest is not subject to levy

and sale”); see also Bradley v. Michael, 1 Ind. 551 (Ind. 1849);

Frame Station, Inc. v. Indiana Dep’t of State Revenue, 771

N.E.2d 129, 131 (Ind. Tax.Ct. 2002) (“The transfer of

property occurs when the buyer agrees to buy property from

a seller, pays the purchase price, and takes ownership and

possession of the property.”). 

Although the closing was originally scheduled by the APA

to take place on December 22, 1998, it appears that nothing

actually happened on that date. See Tr. Vol. 3 at 130. The

record is devoid of information about when any of the tangible assets were physically transferred but, in any case, it

is the legal right to control the asset, not physical possession,

which matters under Bonded Financial Services. See 838

F.2d at 893-94.6

 Moreover, the parties agreed in the APA
Nos. 03-1086 & 03-3664 13

6 (...continued)

at best, weak evidence that there was a physical transfer of assets

before December 22. If anything, it simply reinforces the idea that

the parties defined the closing as the time at which consideration

would be paid.

and at oral argument that the real value of this transaction

was in the intangible assets. App. at 352 (“The parties to

this Agreement acknowledge that the value of the Company

is its certification and good will.”). As we have noted, the

parties intended that the legal right to control the assets

would shift when value was paid. This occurred on January

8, 1999, when CGL issued a check. App. at 388. Therefore, it

is clear that CGL gained the right to control these assets on

January 8, 1999, and is thus the “first transferee.”

The fact that Leestma is not the “first transferee” under

the IUFTA, however, does not necessarily mean that the

only way he can be personally liable is by piercing CGL’s

corporate veil. Under Indiana state law, an officer or shareholder of a corporation can be held individually liable, without

the need to pierce the corporate veil, if he personally participates in the fraud. See State Civil Rights Comm’n v.

County Line Park, Inc., 738 N.E.2d 1044, 1050 (Ind. 2000)

(citing Gable v. Curtis, 673 N.E.2d 805, 809 (Ind. Ct. App.

1996) (“It is well-settled that a corporate officer cannot escape liability for fraud by claiming that he acted on behalf

of the corporation when that corporate officer personally

participated in the fraud.”)); Ind. Code § 23-1-26-3(b)

(Business Corporations Act) (“Unless otherwise provided in

the articles of incorporation, a shareholder of a corporation

is not personally liable for the acts or debts of the corporation

except that the shareholder may become personally liable by

reason of the shareholder’s own acts or conduct.”) (emphasis

added); Ind. Enc. Corporations § 120. This well-established

principle of Indiana law has been applied not just in

common law fraud actions, but in other statutory and
14 Nos. 03-1086 & 03-3664

7 We believe that Stepp, 654 N.E.2d 767, provides little insight

into this question. In Stepp, the question was raised as to whether an

officer of a corporation who was not a “transferor,” as required

under the Federal Odometer Act (FOA), could be held personally

liable for an FOA violation, given that he personally participated

in the fraud. Id. at 774. The court did not directly answer the

question because it found that the officer was liable under other

theories. However, even if there are some tea leaves to read from

Stepp, we believe that case is distinguishable. Under the relevant

section of the FOA, only a “transferor” can engage in fraudulent

conduct. See id. at 773 (noting that the FOA requires “any transferor to give . . . written disclosure to the transferee [of the cumulative mileage registered on the odometer].”) (emphasis added).

Therefore, the Indiana court may have felt that if the corporate

(continued...)

common law causes. See, e.g., Roake v. Christensen, 528

N.E.2d 789, 791 (Ind. Ct. App.1988) (finding defendant

individually liable for fraud in connection with his criminal

conversion in violation of Ind. Code § 35-43-4-3); Berghoff v.

McDonald, 87 Ind. 549 (Ind. 1882) (holding an agent

personally liable in an action of replevin for the unlawful

taking or detention); American Indep. Mgmt. Sys. v. McDaniel,

443 N.E.2d 98, 103 (Ind. Ct. App. 1982); Stoutco, Inc. v.

AMMA, Inc., 620 F. Supp. 657, 661 (D. Ind. 1985) (“In

Indiana, the law is also clear that a corporate officer or

shareholder is not shielded from liability on the basis of his

representative capacity when he participates in a tort

because an agent is liable for his own torts.”); In re Mills,

111 B.R. 186, 195 (Bankr. N.D. Ind. 1988) (“[W]hen a personal

debtor who, as an officer of a corporation, actually participates in the conversion of property which is subject matter

to the security interest of a third party, he is personally

liable to said party and thus the debt is nondischargeable

pursuant to § 523(a)(6).”). 

No court has yet considered whether this Indiana common

law rule can be applied to the IUFTA.7

 There is good reason
Nos. 03-1086 & 03-3664 15

7 (...continued)

officer was not a “transferor” in Stepp, she had no obligation to

disclose under that section of the FOA, and thus her failure to disclose could not represent personal participation in the fraud. In

contrast, the fact that a person is not a “first transferee” under the

IUFTA does not suggest that he has not engaged in fraudulent

conduct, but simply that no “judgment may be entered against

[him].” Ind. Code. § 32-18-2-18(b)(1). Moreover, unlike the IUFTA,

the FOA is a federal statute, not expressly intended to be interpreted according to Indiana common law principles of fraud. Cf.

Ind. Code § 32-18-2-20 (incorporating the principles of common

law fraud into the IUFTA). 

to believe it would apply, however. First, Indiana seems to

treat claims under the IUFTA as a type of fraud claim. See,

e.g., Fire Police City County Federal Credit Union v. Eagle,

771 N.E.2d 1188, 1191 (Ind. Ct. App. 2002) (treating a claim

under Ind. Code § 32-2-7-15 as a fraud claim); Bruce

Markell, The Indiana Uniform Fradulent Transfer Act

Introduction, 28 Ind. L. Rev. 1195, 1200 (1995) (“Indiana

statutes require a finding that fraud existed in connection

with a transaction challenged as a fraudulent transfer.”).

Second, the IUFTA itself expressly incorporates principles

of common law fraud by reference. Ind. Code § 32-18-2-20.

Finally, at least one other court has applied similar common law to find the president of a corporation personally

liable under another state’s version of the UFTA, despite

the fact that he was not a “first transferee.” See Firstar

Bank, N.A. v. Faul, No. 00-C-4061, 2001 WL 1636430, at *7

(N.D. Ill Dec. 20, 2001).

At least one state with a similar common law rule, however, has declined to hold an officer who personally participated in fraud liable under the UFTA. See Kondracky v.

Crystal Restoration, Inc., 791 A.2d 482, 483 (R.I. 2002).

While Kondracky did not specifically discuss or necessarily

consider what effect Rhode Island’s common law “personal

participation” rule would have on the UFTA, a Rhode Island

district court later felt constrained by Kondracky and held
16 Nos. 03-1086 & 03-3664

8 Leestma, in fact, concedes that veil piercing is permissible under

the UFTA. See Leestma Br. at 29.

that the common law would not expand liability under the

UFTA. See Rohm and Haas Co. v. Capuano, 301 F. Supp. 2d

156, 160-61 (D.R.I. 2004) (criticizing Firstar). The court in

Rohm also noted that “most courts have been reluctant to

extend the reach of fraudulent conveyance actions as to

include parties that are only participants in a fraudulent

transfer.” Id. at 161 (compiling cases).

We do not share the concerns of the Rhode Island District

Court, at least with respect to this case. The cases upon

which it relies do not involve officers, directors or shareholders of the “first transferee,” who personally participated in the

fraud. Instead, they involve novel claims of accessory,

conspiracy or aiding and abetting liability under the UFTA.

See Lowell Staats Mining Co. v. Phila. Elec. Co., 878 F.2d

1271, 1276 n.1 (10th Cir. 1989) (declining to extend UFTA

to find “aiding and abetting” liability against an agent of

the corporation, where it seems the agent was not an officer, director or shareholder); Mack v. Newton, 737 F.2d

1343, 1361 (5th Cir. 1984) (declining to extend UFTA to

individuals who participated in a conspiracy to commit a

fraudulent transfer); Thompson Kernaghan & Co. v. Global

Intellicom, Inc., No. 99 CIV. 3005(DLC), 1999 WL 717250,

at *2 (S.D.N.Y. Sept. 14, 1999) (declining to apply an accessory liability theory to a lawyer of “first transferee” who

helped set up the corporation involved). Therefore, these

cases are not on point. 

In contrast, we are aware of no case suggesting that “veil

piercing” is impermissible under the UFTA.8

 Liability for

officers or shareholders of a “first transferee” who personally

participated in the fraud is a substitute for “veil piercing,”

not an extension of who can be a “transferee” under the

UFTA. Moreover, the reasoning behind the general rule

that courts should avoid extending the parties who can be
Nos. 03-1086 & 03-3664 17

a “transferee” under the UFTA appears to be based, at least

in part, on the difficulty of proving damages. See Duell v.

Brewer, 92 F.2d 59, 61 (2d Cir. 1937) (“[C]ourts have generally held as to fraudulent conveyances that a person who

assists another to procure one, is not liable in tort to the

insolvent’s creditors . . . . The reasons ordinarily given are

the impossibility of proving any damages, which scarcely

seems sufficient; but the result is settled, at least for us.”)

(cited by Lowell Staats Mining Co., 878 F.2d at 1276). We

do not believe that there would be any such difficulty here,

where joint and several liability would clearly be appropriate. 

Finally, this case is somewhat unique in that, because

punitive damages were sought (rightly or wrongly), we have

an actual jury finding that Leestma personally participated

in fraudulent conduct, in addition to the general finding of

liability under the UFTA. App. at 312 (“In deciding the

issue of punitive damages, though, the jury found by clear

and convincing evidence that both defendants [Leestma and

CGL] acted with malice, fraud, gross negligence, or oppressiveness.”) (emphasis added); App. at 302 (verdict form).

Therefore, we see no reason that the rule should not be

extended in this case.

Nonetheless, given that we cannot avoid certifying two

other questions to the Indiana Supreme Court (see infra),

in an abundance of caution, we do so here as well. Therefore, we hereby certify to the Indiana Supreme Court the

question whether an officer or director of a “first transferee”

under the IUFTA who is found to have personally participated in the fraud can be held personally liable under

Indiana law on that basis alone.

B. DFS as “creditor”

The appellants’ second argument is that the district court

erred in finding DFS to be a “creditor” under the IUFTA.
18 Nos. 03-1086 & 03-3664

According to the appellants, DFS was not a “creditor” under

the IUFTA because (1) DFS did not obtain its judgment

against CPI until after the asset transfer; and (2) its

contract with CPI was void as the sale of Medicare receivables is illegal. Leestma Br. at 50-51. Both arguments are

without merit. 

We start with the appellants’ argument that DFS is not

a “creditor” because DFS did not obtain its judgment against

CPI until after the asset transfer. The appellants’ argument,

properly articulated, does not have to do with whether DFS is

a “creditor” as defined under section 4 of the IUFTA, but

whether DFS is a “present creditor” under section 15 of the

IUFTA (“Transfers fraudulent as to present creditors”).

Reply Br. at 21. Section 15 notes that “[a] transfer made or

an obligation incurred by a debtor is fraudulent as to a

creditor whose claim arose before the transfer was made or

the obligation was incurred” if certain specified conditions

are met. Ind. Code § 32-18-2-15 (emphasis added). 

Although DFS did not receive a court judgment until after

the asset transfer, the court judgment simply made official

the obligation with respect to which DFS had been trying to

recover long before the asset transfer. The appellants have

presented no evidence to suggest that this debt did not arise

before the fraudulent transfer. The IUFTA definition of a

“claim” makes it clear that a “claim” is a right to payment

“whether the right is reduced to judgment or not. . . .” Id. at

32-18-2-3. Therefore, the fact that DFS did not receive a

court judgment until after the asset transfer is not relevant

to the inquiry. 

Nor did the district court err in considering the court

judgment in deciding that DFS was a “present creditor”

under the IUFTA, given that the judgment evidenced the

pre-existing debt and the appellants presented no evidence

to the contrary. In fact, it appears that the appellants never

made the argument below that DFS’s claim did not arise
Nos. 03-1086 & 03-3664 19

before the transfer or that DFS was not a “present creditor.”

See Reply Br. at 20. This argument is raised for the first

time on appeal and is thus waived. See Murphy v. Keystone

Steel & Wire Co., 61 F.3d 560, 568 n.3 (7th Cir. 1995). In

any event, even if the appellants had properly made this

argument below, and had presented compelling evidence

that DFS’s claim (not just its judgment) arose after the

transfer, they would presumably still be liable under section

14 of the IUFTA which applies regardless of “whether the

creditor’s claim arose before or after the transfer was made

. . . if the debtor made the transfer . . . with the actual

intent to hinder, delay, or defraud any creditor of the debtor

. . . .” Ind. Code § 32-18-2-14 (emphasis added).

With respect to the appellants’ second contention, they

argue that DFS’s contract with CPI, in which DFS purchased “the right to receive the proceeds of collections of

Healthcare Receivables payable by Governmental Obligors

when such collections [were] received by Provider” is void

for illegality. App. at 115. Essentially, the appellants’ argument is that the “factoring” agreement violates 42 U.S.C.

§ 1395g(c) which states that “no payment which may be

made to a provider of services under this title . . . for any

service furnished to an individual shall be made to any

other person under an assignment or power of attorney . . . .”

See also 42 U.S.C. § 1396a(a)(32); 42 CFR § 424.73. Although

it is reassuring to see that at least one issue of federal law

managed to creep its way into this appeal, the appellants’

argument is without merit. 

On its face, this statute stands only for the proposition

that Medicare funds cannot be paid directly by the government to someone other than the provider, but it does not

prohibit a third party from receiving Medicare funds if they

first flow through the provider. Before this statute, health

care providers assigned their right to Medicare receivables

to third parties which then submitted incorrect and inflated

claims to be paid in their own names, creating administra-
20 Nos. 03-1086 & 03-3664

tive nightmares and overpayments in excess of one million

dollars. H.R. REP. NO. 92-231 (1972), reprinted in 1972

U.S.C.C.A.N. 4989, 5090. Therefore, Congress passed this

statute to remedy this problem by ensuring that payments

would be made directly to healthcare providers. However,

nothing suggests that Congress intended to prevent

healthcare providers from assigning receivables to a nonprovider. Id. (“[The] committee’s bill would not preclude a

physician or other person who provided the services and

accepted an assignment from having the payment mailed to

anyone or any organization he wishes, but the payment

would be to him in his name.”).

The appellants cite no case and we have uncovered none,

which interprets this statute to prohibit a provider’s assignment of Medicare or Medicaid receivables to a non-provider.

If anything, case law suggests the opposite. See, e.g., In re

Missionary Baptist Found. of Am., 796 F.2d 752, 759 (5th

Cir. 1986) (holding that a creditor could collateralize its

loan to the debtor by an assignment of the debtor’s accounts

receivable due from medical care payments under 42 U.S.C.

§ 1396(a)); Credit Recovery Sys., LLC v. Hieke, 158 F. Supp.

2d 689, 693 (D. Va. 2001) (“[T]he Court notes that neither

the Medicare nor Medicaid statutes expressly proscribe a

provider’s assignment of the general right to receive

Medicare or Medicaid receivables to a nonprovider. Indeed,

all the parties to this dispute agree that straight-forward

collateral arrangements (such as where a loan to a provider

is secured by Medicare receivables) do not run afoul of any

of the federal rules relating to the assignment of Medicare

and Medicaid claims.”); see also In re Am. Care Corp., 69

B.R. 66, 67 (Bankr. N.D. Ill. 1986) (same); Intermediary

Medicare Manual, Part Three, Ch. Five § 3488(C), Sept. 4,

2002, http://www.cms.hhs.gov/manuals/ 13_int/a3488.asp

(“These provisions preclude Medicare payment of amounts

due a provider or other person to a person or entity furnishing financing to the provider, whether the provider sells
Nos. 03-1086 & 03-3664 21

his/her claims to that person or entity or pledges them to

that person or entity as collateral on a loan.”) (emphasis

added). Further, the record suggests that Medicare was

aware of this agreement between DFS and CPI, at least

post facto, and other than disallowing a $380,000 claim for

the interest on the obligation, there is no evidence that it

expressed any disapproval of the arrangement. App. at 282.

Therefore, we remain unconvinced that this “factoring”

agreement between DFS and CPI was illegal. 

 In any case, it is doubtful that Leestma and CGL, nonparties to this fully executed contract, have standing at this

late date to argue that the contract is void for illegality. The

appellants draw our attention to “the general rule” stated

in Corpus Juris Secundum that “when for any reason the

judgment against the grantor is invalid the grantee may show

its invalidity in a proceeding to set aside the conveyance as

fraudulent.” Reply Br. at 22 (quoting 37 C.J.S. Fraudulent

Conveyances § 257). The appellants, however, cite no law

from Indiana, and it is not obvious that Indiana’s rule

would necessarily mirror the rule stated in Corpus Juris or

that it would apply specifically to “illegal” contracts. See

Stolz-Wicks, Inc. v. Commercial Television Serv. Co., 271

F.2d 586, 589 (7th Cir. 1959) (“In the absence of any express

holding in Indiana or Illinois, ‘the rule that the law will not

enforce an illegal contract has application only between the

immediate parties to the contract,’. . . is sound and applicable. Hence, it follows that one in possession of the fruits of

an illegal transaction to which he was not a party cannot

invoke the defense of illegality.”) (citation omitted). However, even if we were to treat Corpus Juris as gospel, the

appellants ignore the exception to “the general rule”

reported in Corpus Juris immediately subsequent:

Where the judgment against the debtor has been rendered in the regular course of judicial proceedings by a

court of competent jurisdiction and it cannot be objected

to on the ground that it was obtained by fraud or
22 Nos. 03-1086 & 03-3664

9 The cases from other jurisdictions upon which the appellants

rely are distinguishable in that they fit into the exception discussed in Corpus Juris. Reply Br. at 22, citing Reyburn v. Spires,

364 S.W.2d 589, 594 (Mo. 1963) (allowing the grantee “to challenge

the default judgment on the basis that it was fraudulently obtained”)

(emphasis added); Tanner v. Wilson, 17 S.E.2d 581, 584 (Ga. 1941)

(suggesting that the grantee “may defend an action against him by

showing defects in the proceedings”) (emphasis added); Davis v.

Davis, 25 P. 140 (Or. 1890) (“A grantee whose deed is attacked for

fraud by one claiming to be a judgment creditor of his grantor may

plead the statute of limitations against the debt before it becomes

merged in the judgment . . . .”) (syllabus by the court) (emphasis

added).

collusion, it is, whether rendered on default or after

contest, conclusive as to the relation of debtor and creditor between the parties and the amount of the indebtedness, and cannot be collaterally impeached by the

grantee of the debtor in a suit to set aside the conveyance as fraudulent.

37 C.J.S. Fraudulent Conveyances § 257 (emphasis added).

Here, the judgment against CPI was rendered in the course of

a judicial proceeding. The appellants do not argue that the

court that rendered the judgment lacked jurisdiction, that

there were defects in the proceedings or that the judgment

was obtained by fraud or collusion. Therefore the appellants

present no basis upon which the judgment can be attacked.

See Scott v. Indianapolis Wagon Works, 48 Ind. 75, 75-77

(Ind. 1874) (finding that in suit by a judgment creditor to

set aside fraudulent conveyance, a grantee cannot call a

judgment into question by raising matters which might

have been defenses to the action in which the judgment was

rendered); 14 Ind. Enc. Fraudulent Conveyances § 47

(“Matters which have no bearing on the issues in the suit to

set aside the conveyance as fraudulent cannot be urged as

a defense thereto.”) (citing Scott ).9
Nos. 03-1086 & 03-3664 23

10 During the pendency of this appeal, we remanded this case to

the district court “for the limited purposes of determining whether

voiding the transfer and reconveying the transferred assets would

provide adequate remedy in lieu of monetary damages.” In an

order dated July 12, 2004, the district court responded and indicated its belief that reconveyance would not provide an adequate

remedy because (a) reconveyance would simply shift the assets

from CGL to CPI (rather than DFS); (b) CPI may not remain in

existence and even if it does, it may not be in the home health

care business; and (c) DFS is not in the home health care business. In hindsight, it appears that our instructions may have been

unclear. Our question assumed that under the IUFTA a court

could order the assets to be conveyed directly to DFS or could be

held for DFS’s benefit—an assumption neither party contested on

appeal. See Leestma Br. at 33 (“[T]he assets were and are

available to be returned to CPI for the benefit of DFS”); DFS Br.

at 14-25. Therefore, we were simply asking for a factual finding as

(continued...)

Finally, as a technical matter, even if the appellants had

standing to attack the validity of this contract, this would

not change DFS’s status as a “creditor” under the IUFTA.

A “creditor” with a colorable claim cannot lose its status as

“creditor” under the IUFTA simply because the debtor or a

third-party has a legal defense to the claim. The statute

itself defines “creditor” as “a person who has a claim,” Ind.

Code § 32-18-2-4, and notes that a “claim” under the statute

“means a right to payment, whether the right is . . . disputed or undisputed . . . .” Id. at 32-18-2-3. Therefore, the

fact that the appellants may dispute the claim would not

change DFS’s status as a “creditor.”

C. Money damages under the IUFTA

The appellants next argument is that a money judgment

is not available under the IUFTA when the transferred

assets are available for reconveyance.10 Leestma Br. at 30.
24 Nos. 03-1086 & 03-3664

10 (...continued)

to whether the assets are available in substantially the same form

as they were when they were transferred. If they are, we see no

reason that the Court cannot order that they be transferred to DFS

or held for the benefit of DFS. The fact that DFS is not in the home

health care business is irrelevant because nothing would prevent

DFS from selling the assets at their discrete value. Surely the

market can better assess the value of these assets than can the

parties’ expert economists. However, we will not delay the case by

a second remand to the district court for further factual findings.

We thus assume for now that the assets are available in substantially the same form as they were when they were transferred. If

the Indiana Supreme Court determines that conveyance of the

assets to DFS is the preferred remedy, we may then remand to the

district court to further address this question as necessary. 

The IUFTA specifically discusses the “[r]emedies of a creditor” and notes that:

(a) In an action for relief against a transfer or an obligation under this chapter, a creditor, subject to the

limitations in section 18 of this chapter, may obtain any

of the following:

(1) Avoidance of the transfer or obligation to the

extent necessary to satisfy the creditor’s claim.

(2) An attachment or other provisional remedy

against the asset transferred or other property of

the transferee in accordance with the procedure

prescribed by IC 34-25-2-1 or any other applicable

statute providing for attachment or other provisional remedy against debtors generally.

(3) Subject to applicable principles of equity and in

accordance with applicable rules of civil procedure,

any of the following:

(A) An injunction against further disposition by

the debtor or a transferee, or both, of the asset

transferred, its proceeds, or of other property.
Nos. 03-1086 & 03-3664 25

(B) Appointment of a receiver to take charge of

the asset transferred or of the property of the

transferee.

(C) Any other relief the circumstances require.

(b) If a creditor has obtained a judgment on a claim

against the debtor, the creditor, if the court orders, may

levy execution on the asset transferred or its proceeds.

Ind. Code. § 32-18-2-17 (emphasis added). Although the

section specifically discusses only remedies which are equitable in nature, the catchall provision (allowing a creditor to

obtain “any other relief the circumstances require”) would

seemingly empower a court to provide monetary relief at its

discretion. See, e.g., Freeman v. First Union Nat’l, 329 F.3d

1231, 1234 (11th Cir. 2003) (citing Hansard Construction

Corp. v. Rite Aid of Florida, Inc., 783 So.2d 308 (Fla. Dist.

Ct. App. 2001) (“Despite the fact that the other remedies set

forth in the Act are equitable in nature, we find this

catchall provision sufficiently broad to encompass the monetary judgment sought by appellants.”)); Morris v. Askeland

Enters., Inc., 17 P.3d 830, 833 (Col. Ct. App. 2000) (“[A]

court acting in equity always retains the power to enter a

monetary award to implement its decree . . . .”); Profeta v.

Lombardo, 600 N.E.2d 360, 362 (Oh. Ct. App. 1991) (allowing money damages under the catchall provision of OUFTA);

see also Bruce Markell, The Indiana Uniform Fradulent

Transfer Act Introduction, 28 Ind. L. Rev. at 1223 (noting

that “[t]he remedies specified in [Section 17] are not exclusive”); but see Forum Ins. Co. v. Devere Ltd., 151 F. Supp.

2d. 1145, 1148 (C.D. Cal. 2001) (applying Cal. Civ. Code. §

3439.07(a)) (“Terms such as ‘liability’ and ‘damages’ do not

appear in the statute. . . . Thus, by its terms, UFTA allows

only equitable remedies such as avoidance, attachment, an

injunction, or appointment of a receiver.”); Mack, 737 F.2d

at 1361 (same under Bankruptcy Act of 1898).
26 Nos. 03-1086 & 03-3664

The next section of the IUFTA discusses a “[t]ransferee’s

defenses, liability, and protections” and notes that:

(b) Except as otherwise provided in this chapter, to the

extent a transfer is voidable in an action by a creditor

under section 17(a)(1) of this chapter, the creditor may

recover judgment for the value of the asset transferred,

as adjusted under subsection (c), or the amount necessary to satisfy the creditor’s claim, whichever is less . . . .

(c) If the judgment under subsection (b) is based upon

the value of the asset transferred, the judgment must

be for an amount equal to the value of the asset at the

time of the transfer, subject to adjustment as the equities may require.

Ind. Code. § 32-18-2-18 (emphasis added). Similarly, we find

no language in this section expressly limiting a court’s

ability to award monetary damages to the situation in which

the assets are unavailable for reconveyance. The appellants

argue that the phrase “[e]xcept as otherwise provided in

this chapter” should be read as referring to section 17, and

should thus be understood to mean that monetary damages

are not available if equitable relief is available under section

17. We do not find this to be a plausible reading of the

statute.

First, it is curious that, if the drafters intended this language in section 18 to mean that monetary damages are not

available where equitable relief is available under section 17,

they would not just have written “except as otherwise

provided in section 17” or “to the extent sufficient equitable

relief is unavailable.” Second, it seems odd that the drafters

would state “except as otherwise provided” rather than

“except as otherwise available.” The use of the word “provided” suggests that monetary relief could be awarded instead

of equitable relief, so long as the court has not awarded

equitable relief. Third, because section 17 allows for “any

other relief the circumstances require,” allowing monetary
Nos. 03-1086 & 03-3664 27

relief under section 18 “except as otherwise provided in

[section 17]” would seemingly provide no real limitation on

the court, and allowing monetary relief “except as otherwise

available in [section 17]” would seemingly mean that no

relief could ever be awarded under section 18. Finally,

under the appellants’ interpretation of the “except as otherwise provided” clause, if a court ordered that assets be

reconveyed under section 17, but the assets had seriously

depreciated in value since the time of the fraudulent transfer, the statute would seemingly not allow for an award of

any additional monetary damages to make up the difference. This would contradict the holding of even those cases

upon which the appellants rely. See, e.g., Robinson v.

Coughlin, 830 A.2d 1114 (Conn. 2003); In re McLaughlin,

183 B.R. 171, 177 (Bankr. W.D. Wis. 1995). 

Nonetheless, we are aware of no reported cases in which

monetary damages were awarded under the IUFTA, and

courts such as Robinson have held under their state version

of the UFTA that monetary damage awards are only

appropriate where reconveyance of the fraudulently transferred property is impossible or where the subject property

has depreciated in value. Policy considerations would support such a rule, as it would avoid speculation as to the

value of conveyed assets. See, e.g., In re Vedaa, 49 B.R. 409,

411 (Bankr. N.D. 1985) (noting in the context of the Bankruptcy Code that “it is clear that courts favor a return of the

property itself if at all possible so as to avoid speculation

over its value”). This case exemplifies the problem with such

speculation, in that it has been argued that these assets

range in value from $20,000 to $640,000 (the jury determined that they were worth $470,000). App. at 222, 295,

301. Therefore, we hereby certify to the Indiana Supreme

Court the question whether an award of monetary damages

under the IUFTA is only available where reconveyance of

the fraudulently transferred property is impossible or

where the subject property has depreciated in value, or

whether the nature of the award is at the court’s discretion.
28 Nos. 03-1086 & 03-3664

D. Punitive damages under the IUFTA 

Finally, the appellants appeal the district court’s award

of punitive damages, arguing that such damages are not

available under the IUFTA. Yet a straightforward reading

of the IUFTA’s catchall provision would seemingly allow for

punitive damages. See Ind. Code. § 32-18-2-17(c) (allowing

a court to award “any other relief the circumstances require”). Moreover, as noted earlier, the IUFTA incorporates

principles of state common law. Ind. Code § 32-18-2-20.

Under Indiana law, tortious conduct involving “malice,

fraud, gross negligence, or oppressiveness which was not

the result of a mistake of fact of law, honest error or judgment, overzealousness, mere negligence, or other human

failing” may be punished by an award of punitive damages.

Erie Ins. Co. v. Hickman, 605 N.E.2d 161, 162 (Ind. 1992).

In this case, the jury found that Leestma personally

engaged in such conduct, seemingly making punitive damages appropriate. App. at 302, 312. 

No Indiana court, however, has addressed the question

whether punitive damages can be awarded under the IUFTA,

and other states are split on the question. Compare Macris

& Assocs., Inc. v. Neways, Inc., 60 P.3d 1176, 1181 (Utah Ct.

App. 2002) (allowing punitive damages under Utah’s

UFTA); Volk Constr. Co. v. Wilmescherr Drusch Roofing Co.,

58 S.W.3d 897, 900 (Mo. Ct. App. 2001) (same under Missouri’s UFTA); Henderson v. Henderson, No. CV-00-53, 2001

WL 1719192, at *2 (Me. Super. 2001) (same under Maine’s

Uniform Fraudulent Conveyance Act); Locafrance United

States Corp. v. Interstate Distribution Servs., Inc., 451

N.E.2d 1222, 1225 (Ohio 1983) (same under Ohio’s Uniform

Fraudulent Conveyance Act), with Morris, 17 P.3d at 833

(finding punitive damages are not available under Colorado’s UFTA), and Northern Tankers Ltd. v. Backstrom, 968

F. Supp. 66, 67 (D. Conn. 1997) (same under Connecticut’s

UFTA).
Nos. 03-1086 & 03-3664 29

Leestma argues that the Indiana Supreme Court would

conclude that punitive damages are not recoverable under

the IUFTA because Indiana construes statutory remedies

narrowly and only allows for punitive damages when the

legislature expressly includes them in the statute. Leestma

Br. at 43-45. However, in none of the cases cited by Leestma

did the statute in question contain anything like the

catchall provision which is present in the IUFTA. See Forte

v. Connerwood Healthcare, Inc., 745 N.E.2d 796, 800 (Ind.

2001) (reversing an award of punitive damages under the

Child Wrongful Death Statute which “contained an exclusive list of damages recoverable by a child’s parent or

guardian”); Fleming v. Int’l Pizza Supply Corp., 676 N.E.2d

1051, 1058 (Ind. 1997) (declining to find individual liability

or punitive damages under Indiana’s Business Corporation

Laws, where the statute allowed only for appraisal); Watters

v. Dinn, 633 N.E.2d 280, 286 (Ind. Ct. App.1994) (declining

to create a civil remedy where the Act under which the

plaintiff was suing did not allow for a civil action); DeMayo

v. State ex rel. Dept. of Natural Resources, 394 N.E.2d 258,

261 (Ind. Ct. App. 1979) (reversing an award of monetary

damages where the statute only “authorized and empowered [the Indiana Department of Conservation] to bring in

any court of proper jurisdiction, actions by way of injunction, either prohibitive or mandatory, or both”). We do not

believe that these cases provide much insight into how

Indiana would decide this question and we therefore certify

to the Indiana Supreme Court the question whether

punitive damages are available under the IUFTA.

III. CONCLUSION

In conclusion, we certify the following three questions to

the Indiana Supreme Court:

(1) Can an officer or director of a “first transferee”

under the IUFTA who is found to have personally
30 Nos. 03-1086 & 03-3664

participated in the fraud be held personally liable under

Indiana law on that basis alone?

(2) Is an award of monetary damages under the IUFTA

available only where reconveyance of the fraudulently

transferred property is impossible or where the subject

property has depreciated in value? 

(3) Are punitive damages available under the IUFTA?

We invite, of course, the Justices of the Indiana Supreme

Court to reformulate our questions if they feel that course

is appropriate. We do not intend anything in this certification, including our statement of the questions, to limit the

scope of their inquiry. Further proceedings in this court are

stayed while the Indiana Supreme Court considers this

certification.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—9-13-04