1

By or de r o f th e Ba nk

ru ptc yAp pe lla te Pa ne l, t

he pr e c e de nti al e

ffe c t of thi s d e c isi on is l im ite d to the case and parties pursuant to 6t h Cir. BAP LBR 8013-1( b) . See also 6th Cir. BAP LBR 8010- 1 (c).
F ile Nam e: 09b0001n.06

BA NK RU P TC Y A P P ELLA TE P AN EL OF THE SI XT H C IR CU IT
I n r e : EL I Z AB ET H A

NNDI RK S,
Debtor.

______________________________________ RUTH A. SL ONE, Tr

ustee, Pla int if f - Ap pe lla

nt,

v. TI MOTHY DI RKS,

Def endant - Appellee

.

______________________________________ ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) No. 08-8031

Appea l from the United States B ankruptc y Court for the Souther

n District of Ohio, Western Division at Day ton. Ba nkruptcy Case No. 06- 30529; Adv. No. 06-3295. Argued: Novembe r 18, 2008
Dec ided and F iled: J anuar y 16, 2009
B e fo re : Mc I VO R, PA RSO NS, and SHE A- STO NU M, B ank ru ptc y Ap pe llate Pane l Judg e s.

____________________ CO UN SEL
ARG UED: Stephen D. B randt, Da y ton, Ohio, for Appe llant. J eff rey R. McQuiston, L AW OFF I CE, Day

ton, Ohio, for Appe llee. O N B RI E F: Stephen D. B randt, Da y ton, Ohio, for Appellant. Jeffre y

R. McQuiston, L AW OFF I CE, Day ton, Ohio, for Appe llee.2 ____________________ OP IN ION

____________________ MARCI B. McI VOR, Ba

nkruptcy Appellate Panel J udg e. The chapte r 7 trustee appea ls the bankruptc y

court’s or der g ranting judgme nt in favor of the def endant on the tr

ustee’s pr efe rential a

nd fra udulen t co n v ey ance claims. For the following rea sons, we AF FI RM the decision of the ba nk ru ptc y c ourt

. ISSU ES ON AP P EAL The issues pre sented in this appea l are : (1) whe ther the bankruptc y court violated the Rooke r-Feldman doctrine, the Full Fa ith and C r e d i tA c t , 2 8 U

. S

. C

. § 1 7 3 8 , an d t h e p ar o l e v i d e n c e r

u l e b y c o n c l u d i n g t h a t

i tw a s n o tb o u n d b y a marital debt provision in a st ate court judgme nt of di vorce , and by considering

evidenc e inconsistent wi th t he state c ourt

or de rs ; (2) whe ther the ba

nkruptcy court e rr ed i n d i s missing the cha pter 7 trustee ’s fra

udulent transfe r cla im broug ht under § 548 o f t h e Ba n kruptcy Code and the O hio Uniform Fr audulent Transf er A ct, Ohio Revised Code § 1336.01, et seq ., based on the court’s f inding that the debtor

rec eived r easona

bly equivalent va lue in exchang e for her tra nsfer o f h er i ntere st in the marital residenc e to her

former husband; and (3 ) w he the r t

he ba nk ru ptc y c ourt e rr e d in c on c lud ingthat th e De bto r’ s tr ans fe r o f h e r i nte re st in t he mari ta l r e sid e nc e wa s n ot “ on a c c ount of an antec e de nt d e bt” and , c on se qu e ntl y , n ot a pref ere nce unde r § 547 of the B ankruptc y Code.

JU RI SDI CT ION AND STANDARD OF RE VI EW
The Six th Circuit Bankru p t cy Appellate Pane l has jurisdiction to decide this appea l. The Un ite d St a te s D istri c t Court fo r the Sou the rn Di str ic t of Oh io ha s a uth or ize d a

pp e a ls to the Pane l,

an d n ei t h er p ar t y timely

elec ted to have this appe al hea rd by the district court. A f

inal order of a bankruptc y

court may

be appe aled by

rig ht under 28 U.S.C. § 158(a) (1). An order is f inal if it “ends3

the litigation on the mer its and leave s nothing for the cour t to do but e x ecute the judg ment.” Mi dla nd As ph alt Cor p. v . U nit e d S tat es, 489 U.S. 794, 798, 109 S. Ct. 1494, 1497 (1989) ( citations and interna l quotation marks omitt ed ). T h e bankr uptcy court’s judg ment resolved the underlying adver sary proce eding on its merits and is a fina l, appea lable orde r. Lyon v. Eiseman ( In re Forbe

s ), 372 B.R. 321, 325 (B .A.P. 6th Ci r. 2007).
The ba nkruptcy court’s c onclusions of law ar e re viewed de novo

. Riverv iew Trenton R.R. Co. v. DSC, Ltd. (

In re DS C, Lt

d .), 486 F.3d 940, 944 ( 6th Cir. 2007). “Unde r a de novo standard of re view, the revie wing court decides an issue independe ntly of, and without defer ence to, the trial court’s de termination.” Me nn inge r v . A c c re dit e d H om e Le nd e rs ( In re M orgeson ), 371 B .R. 798, 800 (B .A.P. 6th Ci r. 2007). The cour t ’s finding s of fa ct ar e re viewed unde r the c lear ly err oneous standard. In re DSC, Ltd. , 4 8 6 F. 3 d at 9 4 4

. “A fi n d i n g o f fa ct i s cl ea rl y erro n eo u s ‘w h en al t h o u gh there is evidence to support it, the reviewingcourt on the e ntire evide nce is lef t with the definite and firm conviction that a mistake has bee n committed.’” Id. (q u o t i n g Anderson v. City of Be s s eme r City , 470 U.S. 564, 573, 105 S. C t. 1504, 1511 (1985)).

F AC TS On Aug ust 15, 2003, Elizabeth Ann Dir ks (“De btor”) a

nd her the n husband, Timothy Dirks (“D efe ndant”) , purcha s ed rea l property located in Miamisburg , Ohio for their marital re sidence , taking title in both t heir names. On May 21, 2004, the Def

endant f iled for divorc e fr om the Debtor in t he Do me sti c Re la tio ns Di vis ion of the Com mon P lea s Co ur t of Mo ntg ome ry

Cou nty , O hio (“D omestic Relations Court”). The parties’ only signific ant m arital a sset was their r esidenc e, which was stipulated to have a value of $183,000, sec ured by a joint mortga g e debt in t h e am o unt of $134,896.23 owed to Washin g ton Mutual Bank. T he par ties’ re maining ma

rital debt totaling $ 1 5 , 0 9 6

. 2 9 w a s u n s e c u r e d , w it h$ 1 1 , 4 7 3

. 7 8 o w e d

b y th e D e f e n d an t a n d th e r e ma in in g $ 3 ,622.51 owed by the Debtor

. On Oc tob e r 1 8, 20 05 , th e Do me sti c Re la tio ns Court fi le d a De c isi on , n ot in g t he p art ie s’ ag ree ment that the Def

endant would have 30 day s to buy out the Debtor’ s interest in the marital residenc e and r emove he r name from the mortg ag e. The Dec ision fu rt h er p ro v ided that if theTh e $9 ,1 50 dis burs e d to Cha se B ank pa id t he ba lanc e ow e d o n th e De fe nd ant’ s a uto mob ile 1 loa n in fu ll. At tr ia l, t he De fe nd ant t e sti fi e d th at he ha d to pa y his ve hic le lo an in fu ll i n o rd e r t o qualify for the r efina

nced loa n. The $6,793 pay

ment to Ca

pital One paid in full the De fenda nt’s portion of the unsec ured 2 marital debt, whic h had bee n consolidated on the Capital One cre dit card. 4 De fe nd ant w a s una

ble to re fi na

nc e the mor

tg a g e or the pa rt ie s w e re un a

ble to r e a c h a

n a g re e me nt, then the prope rty

would be li sted with a specified real estate ag ent and the ne t proce eds divided upon

s al e. Additionally , the Dec ision stated the ag ree ment of the pa rties that “[e]ach par

ty shall be responsible for

debts in his or her own na me unless otherw ise ag ree d.” (A ppellant’s Ape . at 86.)
On October

21, 2005, the Domestic Relations Court enter ed an a g ree d order p ro v i d i n g:

“ [De fe nd ant] i s sp e c if

ic a lly a uth or ize d to re fi na

nc e the mor

tg a g e on [the mari ta l r e sid e nc e ] an d to pay [Debtor] t he sum of $11,500, as a g ree d betwee n the par ties, for he r intere st in said rea l estate,

and [De bto r] s ha ll e xec ute and de liv e r a Qu it- Cla im D e e d a s to sa id re a l est a te c on c ur re nt w ithsa id ref inancing .” (A

ppellant’s Ape . at 89.) As contemplated by the t erms of the order, the De fenda nt subsequently

ref inance d the mortg ag e on the Miamisburg proper ty and on October 25, 2005, g ave the Debtor

a chec k in the amount of $11,500, with the Debtor in r eturn de livering a quit claim dee d to the Def endant tra nsfer ring her inter est in the marital re sidence . The Defenda nt rec orded the deed on November

7, 2005. The De fenda

nt’s ref inance d loan was in the a

mount of $167,000, from which was disbursed $134,896.23 to Washing ton Mutua l, $11,500 to the Debtor, $9,150 to Chase B ank, 1 and $6,793 to Capital One B ank. After settlement cha

rg es we re de ducted, De fenda nt rec eived 2 $1,325.58 from the r efina nced loa n.
On November 22, 2005, the Domestic Relations Court e ntere d a fina l judgment of divorce , which included the following provision:

Th e pa rt ie s r e pr e se nt the re are no joi nt d e bts . E a c h p art y sh a ll b e re sp on sib le for a nd timely pay any debts in his or her ow n name. Ne ither par ty shall incur any debt in the name of

the other. (Appe llant’s Ape. at 81.)5

Debtor f iled a voluntary

petition f or relief under chapte r 7 of the Ba nkruptcy Code on Marc h 16, 2006. After

being appointed ch ap t er 7 truste e, Ruth A. Slone (“Tr ustee” ) filed a

n adver sary complaint ag ainst the Def endant to avoid a

nd rec over the transfe r of the D ebtor’s inter est in the Mia mis burgpr op e rt

y purs ua nt t o § § 5 44 , 5 47 , 5 48 and 55 0 o f t he B ank ru ptc y Code and

the Oh io Uniform F raudule nt Transfe r Ac t. A trial was he ld on March 27, 2008, at the conc lusion of which the bankr uptcy court re ad its opinion int o the re cord. A s to the Trustee’ s pref ere nce c laim, the court

c on c lud e d th a t D e bto r’ s tr ans fe r o f h e r i nte re st i n th e mari ta l r e sid e nc e wa s a n equ it abl e pr op e rt

y division, rathe r t han a transfe r on account of a n antec edent de bt as requir ed for a pre fer ential transf

er under 11 U

. S. C. § 5 4 7 ( b ) ( 2 )

. T o th e e xte n t, a s ar g u e d b y th e T r u s te e , th a t th e tr an s f

e r c o uld be deeme d to be on ac count of an antecede nt debt create d by the agr eeme nt betwee n the Debtor and the Def endant that she would sell her inter est for $11,500, the co u rt conclude d that the transf er w as made in exchang e for contempora neous new value pursuant to 11 U.S.C. § 547(c)(1) and, ther efor e, excepted fr om avoidance

. Reg ardingthe Trustee ’s fra udulent t ra n sfer

claim, the cour

t observed that in determining wh e the r r e a so na

bly e qu iva le nt v a lue wa s g ive n fo r the tr ans fe r, it wa s “ no t bo un d b y the Do me sti c Relations Court’s determination as to w ho is responsible for w hat debt.” ( Appellant’s Ape . at. 68- 69 .) Ra the r, the c ourt

no te d th a t it

“ mus t si mpl y

c omp are the va lue of

the pr op e rt

y tr ans fe rr e d w ith that of the prope rty

rec eived.” (Appe llant’s Ape. at 69.) I n order to arrive at the value of the proper ty t ra n s fe rre d by

the Debtor , the cour

t concluded that it was proper to reduc e the pa

y off

a mou nt b y on e -h a lf of the mari ta l de bt sin c e the se lia bil iti e s w e re inc ur

re d b y the pa rt ie s d ur ingthe ir marria g e. The court a lso deducted the cost of a hy pothetical rea l e state commission, i.e., 7% of the stipulated value of the proper ty . Under the cour t’s calc ulations, starting w ith a value of $183,000, deductingthe mortg ag e of $134,896, a rea l estate commission of $12,810, and the mar ital debt of $1 5, 09 6, le ft

a ba lanc e of

$2 0, 19 8, wi th t

he De bto r’ s o ne -h a lf

int e re st b e ing$1 0, 09 9. B a se d on thi s calc ulation and observingthat the terms of the divorce wer e nego t i ated at arm’s leng th with the assistance of compe tent attorney s, the bankruptc y court concluded that the $11,500 re ceive d by the Debtor for the transfe r of her interest in the prope rty

was re asonably

equivalent to the va lue of the interest tra

nsfer red.The Trustee argued in he r trial brie f filed in the ba nkruptcy court that the Rooke r-Feldman 3 doctrine ha d no applicability to the prese nt case

. 6 An or de r w a s e nte re d in

fa vo r o f t he De fe nd ant o n a ll c la ims on Ap ri l 1, 20 08

. I t is fr om t his

or de r t hat th e Tr us te e a pp e a ls.

DI SCU SSIO N
On appea l, the Trustee argues that by ignor ing the order s entere d by the Domestic Relations Court, and by considering evidenc e inconsist ent wit h those order s, the bankruptc y court violated the Rooke r-Feldman doctrine, the Full Fa ith a nd Credit Act, and the parol evidenc e rule. The Tr ustee 3

a lso c on te nd s th a t th e ba nk ru ptc y c ourt err e d in

c on c lud ingthat th e De bto r’ s tr ans fe r w a s n ot a pref ere nce or a fraudulent convey ance under the Ba nkruptcy Code, and wa s not a fra udulent transfe r
un de r t he Oh io U nif

or m F ra ud ule nt T ra ns fe r A c t.
The Rooker-Feldm an Do c tr ine
The Rooke r-Feldman doctrine is a jurisdictional ma ndate that provides that l o we r f ed era l courts lac k subject matter jur isdiction to revie w appeals from st ate court judgme nts. The doctrine is derived f

rom two Supreme Court ca ses, Rooke r v. Fidelit y T rust Co. , 263 U.S. 413, 44 S. Ct. 149 (1923), a nd District of Columbia Cour t o f Appeals v. Fe ldman , 460 U.S. 462, 103 S. C t. 1303 (1983), in which the losing pa rties in state cou rt ac t ions turned to fede ral c ourt for r elief f rom the state c ourt

jud g me nts , in

e ff e c t se e kin g to “ a

pp e a l” the ir

state c a se s to a

fe de ra l di str ic t c ourt

. Ha mi lto n v . H

e rr ( In re Hamilton ), 540 F.3d 367, 371 (6th Cir. 2008). The doctrine is a nar row one , confine d to case s out of which the na me ar ises. Exx on Mobil Corp. v. Saudi Basic Indus. Corp. , 544 U.S. 280, 284, 125 S. Ct . 1517 (2005). The Rooke r-Feldman do c tr ine do e s n ot b ar f e de ra l c ourt s from dec iding a

n independe nt claim, even if doing so r equire s the fede ral co u rt t o deny a leg al conclusion of the state court. Sill v. Sweeney ( In re Swee ney ), 276 B.R. 186, 195 (B .A.P. 6th Ci r. 20 02 ; se e als o In re Ham ilton , 540 F.3d at 372 (“[T]he R o o k er -F eldman doctr ine provides no protec tion in area s where Congr ess has e x plicitly endowe d fede ral c ourts with jurisdiction.”).7

The Rooke r-Feldman doctrine ha s no application in the prese nt a ppeal. Neither the Debtor nor the De fenda

nt who wer e the pa

rties to the di v o rc e ac t i on soug ht fede ral c ourt revie w of a ny jud g me nt o r o rd e r i ssu e d b y the Do me sti c Re la tio ns Court

. Th e Tr us te e wa s n ot a

pa rt y to t he state court a ction, and eve n if she had been, by her ow n admission she did not seek modification in the bankruptc y

court of a ny Domestic Relations Court judgme nt or order

. The bankruptc y court did not sit as a cour

t of appe als fo r t h e state c ourt, but instead ruled on a n independe nt leg al issue not addre ssed in the s t at e court proce eding s. The Rooke r-Feldman doctrine did not depr ive the ban kr u p tc y c o u rt o f ju

r is d ic ti o n to an a ly

ze in d e p e n d e n tl y th e matt e r s b r o u g h t b e f o r e it b y the Trustee

. F ull F ait h and C r e dit
The F ull Faith and Cre dit statute require s fede ral c ourts to give state cour t judgments the same pre clusive ef

fec t they would be g iven by

the ren d ering state. Marrese v . Am. Acad. of Orthopaedic Surgeons , 470 U.S. 373, 380, 105 S. Ct. 1327, 1332 (1985). I n the instant appea l, the prec lusive eff

ect in fe dera l court of the state cour t judgment of divorce is determined by Ohio law. Ohio law recog nizes both issue and cla im preclusion. Claim preclusion re quires proof of the fo llo wi nge le me nts : (1) a prior fina l, valid decision on the merits by a court o f co m p et ent jurisdiction; (2) a second a ction involving the same par ties, or t h ei r privies, a s the first; (3) a second a ction raising claims that wer e or could have been liti g ated in the first action; and (4) a sec ond action a ri s i n g o u t of the transa ction or occ urre nce that was the subject matter of

the pre vious action. Corzin v. Fordu (

In re Fordu ), 201 F.3d 693, 703-04 (6th Cir. 1999). I ssue pre clusion, on the other hand, applies w hen a f

act or issue: (1) wa s actua lly

and d i re ctly

litigated in the pr ior ac tion, (2) was pa ssed upon and de te rm ine d b y

a c ourt of c omp e te nt j ur isd ic tion, and (3) wh e n th e pa rt y a g a ins t whom issue prec lusion is as s er t ed wa s a par ty in privity

with a par

ty to the prior action. Id. at 7 0 4 (q u o t i n g Thompson v. W ing , 637 N.E.2d 917, 923 (Ohio 1994) ).8

Under Ohio law, cla im preclusion req u i re s an i d entity of par ties, i.e., the par

ties to the subsequent action must be identical to or in privity with the parties to the or igina l suit. Alternatives Unlimited-Spec ial, Inc. v. O hio Dept. of Ed. , 861 N.E.2d 163, 175 (Ohio 2006) . I n this case, the Trustee was ne ither a pa

rty to the state cour

t divorce pr ocee d i n gs n o r wa s s h e in privity with the Debtor in the state court proc eeding s. I n re Fordu , 2 0 1 F.3d at 704-06 (the trustee in bankruptcy repr esents the inter ests of cr editors and wa s not in privity with the debtor in d eb t o r’ s s t ate c ourt

m ar i t a l d i s s o l u t i o np r o c e e d i n g )

. T h u s , t h e p r i n c i p l e s o f c l a i m p r e c l u s i o nd o n o ta p p l y.
Wit h respe ct t o i s s u e prec lusion, Ohio law require s that a fa ct or issue must have be en actua lly and nec essar ily

litigated in the pr ior ac tion. I n the prese nt a ppeal, the parties ag ree d to the pr op e rt y sett le me nt p ro vis ion s in the div or c e de c re e and

did no t li tig a te tho se pr ov isi on s. Ev e n if they had litigated those provisions, the standard use d by bankruptc y

courts to deter

mine whether

a tr ansfe r w a s su

pp or te d b y re a so na bly e qu iva le nt v a lue is n ot t

he sta nd ard us e d b y Oh io d ome sti c relations courts in making proper ty divisions. Id. at 707-08. I ssue pre clusion bars the r elitigation of an issue w hich was a ctually and nec essar ily

litigated in an earlier a ction. The issue a ddresse d by the Do mes ti c Re latio ns Court wa s n ot t he same a s th e iss ue de te rm ine d b y the ba nk ru ptc y c ourt

. Acc ording ly , neither issue nor claim pre clusion apply in the prese nt case ; theref ore, the bankruptc y court wa s not obligate d to affor d full faith and c redit to the state c ourt judg ment of divorce

. The P ar ol E vid e nc e Rul e
The Trustee asser

ts that the bankruptc y court violated the parol evidenc e rule by considering extrinsi c evide nce that contradic ted the express terms of the judgme nt of divorce . The pa rol evidenc e rule is one of

substantive law desig ned to protec t the integ rity of final, written a g ree ments. Glazer v. L ehman Bros., Inc. , 394 F.3d 444, 455 (6th Cir. 2005). The Six th Circuit summ arized the rule as fo llo ws : The pa rol evidenc e rule , as is now universa lly rec og nized, is not a rule of evide nce but is o n e o f s u

b s ta n ti v e la w
. I t d o e s n o t e xc lu d e e v id e n c e f o r an y o f the re asons ordinarily requiringexclusion, based on the probative value of such evidence or the policy of i ts admission. The rule as applied to contra cts is simpl y that as a matter of substantive l aw , a ce rt ain ac t, the act of embodying the complete ter ms of an ag ree ment in a writing (the “ integ ration”) , become s the contra ct of the pa rties. The point then is, not how the ag ree ment is to be proved, be cause as a matter of law the9

wr iti ngis the a g re e me nt. Extr ins ic e vid e nc e is exc lud e d b e c a us e it c ann ot s e rv e to prove w hat the ag ree ment was, thi s b ei n g d eter mined as a matter of law to be the writing itself

. T h e ru le comes into oper ation when ther e is a sing le and f inal memorial of the unde rstanding of the pa rties. When t h at t akes pla ce, pr ior and contempora

neous neg otiations, oral or written, a re e x cluded; or, a s it is som etimes sa id, the wr itt e n mem or ia l supe rs e de s the se pr ior or c on te mpo ra

ne ou s n e g oti a tio ns
. Id

. at 4 5 5 -5 6 (q u o t i n g Galmish v. Cicchini , 734 N.E.2d 782, 788-89 ( Ohio 2000)).
Ohio law contr ols the parol evide nce ques tion in the inst ant appe al. Under Ohio’s par ol evidenc e rule : Th e int e nt o f the pa

rt ie s to a c on tr a c t is pr e su me d to re sid e in t he langua g e the y

c ho se to e mpl oy in the a g re e me nt. A co ur t will re so rt to e xtri ns ic e vid e nc e in i ts e ff or t to g ive e ff e c t to the pa

rt ie s’ int e nti on s on ly wh e re the langua g e is u nc le ar o r a

mbi g uo us , or whe re the circu m s tance s surrounding the ag ree ment invest the lang uag e of the co n t ra ct wi t h a s p ec i al m ea n i n g. Kelly v. Me d. Life Ins. Co. , 509 N.E.2d 411, 413 (Ohio 1987) (interna l citation omitt ed).
Th e pa ro l e v i d e n c e r

u l e h a s n o a

p p l i c a b i l i t y i n t h e p r e s e n t c a s e
. T h e p ar o l e v i d e n c e ru le would apply

i f t h e T rust ee’ s claims require d the bankr uptcy court to interpr et the judg ment of divorce or rule on w hether the judg ment of divorce complied wit h state l aw. However , the Trustee ’s

c la ims re quir e d th e ba

nk ru ptc y c ourt to d e te rm ine wh e the r t

he De bto r’ s tr ans fe r o f h e r i nte re st i n proper ty to the Def

endant f or $11,500 wa s either a

pref ere nce or a fr audulent tra n s fe r u nder the B ank ru ptc y Cod e . T he ba

nk ru ptc y c ourt c ou ld a dmi t any

te sti mony th at wa s p ro bativ e on the se issues. The bankruptc y court did not err in consideringevidenc e that supplemente d the terms of the state cour t judgment of

divorce

. P r e fer e nt ialTr ans fer- 1 1 U .S. C. § 5 47 (b )
The Trustee also argues t hat t he bankruptcy court commit ted reversible e rror in holding that the Debtor ’s transf

er of her inter est in th e m ar i t al residenc e wa s not a pref ere ntial transfe r under § 5 47 (b ) o f t

he B ank ru ptc y Cod e wh ic h p ro vid e s: (b ) E xce pt a s pr ov ide d in su bs e c tio ns (c ) a

nd (i ) o f t his se c tio n, the tr

us te e may a vo id an y t r an s f e r o f ani n t e r e s to f

t h e d e b t o r

i n p r o p e rt y– (1) to or f or the be nefit of a

cre ditor;10 (2) f or or on a ccount of

an ante cede n t d eb t o wed by the debtor be fore such transfe r wa s made; (3 ) m a de wh ile the de bto r w a s in so lve nt; (4) made

– (A) on or within 90 day s befor e the date of the fil ing of the petition; or (B ) betwe en ninety day s and one y ear befor e the date of the f iling of the petition, if such cr ed i t o r at t he time of such tr ansfe r wa s an insider; and (5) that enable s such cre ditor to r ece ive more than s u ch creditor would rec eive if– (A) the case wer e a c ase unde r cha pter 7 of this title; (B ) the tra

nsfer had not bee n made; and (C) such cre ditor rec eived pa y ment of such de bt to the ext ent provided by

the provisions of this tit le. The Tr ustee must establish all five statutory elements of a

pref ere nce by a pre pondera

nce of the

e vid e nc e be fo re the tr ans fe r m ay be a vo ide d. 11 U. S.C. § 5 47 (g ); AB B V e c to G ra y , I nc . v . F irs t Nat’l Bank

( In re Robinson Bros. Drilling, Inc. ), 9 F .3d 871, 874 (10th Cir. 1993).
The ba nkruptcy court he ld that the Debto r’ s t ransfer, whic h the cour t concluded w as “a

n equitable division of prope rty under the divorce decr ee,” did not meet the requireme nt of § 547(b)( 2) that the transf

er be “for or on acc ount of an antec edent debt owed by the debtor be fore such transf er was made .” The Trustee argues that the bankr uptcy court e rre d in this conclusion. Accor ding to the Trustee , upon the filing of the divorce complaint, the Def endant had a c ontinge nt claim ag ainst the De bto r f or a po rt ion of the pa rt ie s’ mari ta l de bt. Th e Tr us te e state s th a t th is c on tin g e nt c la im beca me “liquidated” when the pa rties re ache d an agr eeme nt as t o the t erms of the Debtor’ s sale of he r i nte re st. Al te rn a tiv e ly , th e Tr us te e a sse rt s th a t a g re e me nt by the pa rt ie s w a s th e ante c e de nt d e bt.
Th e B ank ru ptc y Cod e do e s no t de fi ne the ph ra se “ ante c e de nt d e bt, ” bu t th e te rm “ de bt” is define d to mean li ab i l i t y

on a cla im. 11 U.S.C . § 101(12). “ Claim” is defined in § 101(5) of the Cod e to m e an th e ri g ht t o p ay me nt o r the ri g ht to a

n e qu ita ble re me dy

fo r b re a c h o f p e rf

or manc e if such bre ach g i v es ri se to a rig ht to pay ment. A debt is “a

ntece dent” if it wa s incurre d befor e theThe recor d does contain a letter dated March 4, 2005, from the Defe ndant’s attorne y to the 4 Debtor’ s attorney , setting forth an offe r for the Def endant to pay

the Debtor

the sum of $10,180.02 for he r intere st in the m arital re sidence . The letter indicates that the of

fer ed pric e had be en re duced by the sum of $1,454.48, the t o t al o f t wo checks alleg edly forg ed by

the Debtor . There is no subsequent letter

in the rec ord acc epting or reje cting this off er or evidenc ing a

ny ty pe of se ttlement betwee n the par

ties. The attorney

for the D ebtor testified that he could not re call how the $11,500 su m w a s arr ive d a t, and de nie d that th e a mou nt w a s a “ sw e e the art

de a l” that g a ve the De fe nd ant a dis pr op or tio nate sh are of

the a sse ts. 11 transfe r took place

. W

hittaker v. Banc Ohio Nat’l Bank ( In re Lamons ), 121 B.R. 748, 750 (Bankr

. S.D. Ohio 1990).
The Pane l does not need to a ddress the issue of whether t h e mer e filing of a divorc e
c omp la int c re a te s a c on tin g e nt o bli g a tio n b e tw e e n th e div or c ingpa rt ie s. Th e re is n o in dic a tio n in the re cord that the Debtor quit c laimed her interest in the marital prope rty to satisfy an ante cede nt de bt or to se ttl e any c la im that th e De fe nd ant h a d a g a ins t he r. Ra the r, a ll the or de rs of the Do me sti c 4 Re la tio ns Court

ind ic a te d th a t th e De bto r w a s si mpl y se lli nghe r i nte re st i n th e mari ta l r e sid e nc e to the Def endant, in lieu of the ir jointly selling the proper

ty and splitting the proc eeds. The Trustee admits as m uch in her

Appellant’s br ief, whe rein she obse rves that the O ctober 21, 2005 order

“ fa c ili ta te d th e c omp le tio n o f t he pa rt ie s’ a g re e me nt w he re by

de fe nd ant p ur c ha se d D e bto r’ s in te re st in the m arital re sidence .” The Domestic Relations Court order s clea rly g ave the Debtor the option of se lli ngthe pr op e rt

y and sp lit tin g the pr oc e e ds if the pa rt ie s we re un a

ble to a g re e on

a pr ic e . T hu s, the log ical infe renc e from the fac t that the Debtor a nd the Def

endant a g ree d upon a pric e whe reby the Debtor

would sell her inter est to the Def endant is that she be lieved she w as re ceivingas much or more tha

n she would re ceive in a sale to a third party . Rather than a transfe r on ac count of a

n antec edent de bt, the transfe r wa s a sale of a property interest in exchang e for

the pay ment of $11,500, the su m th a t th e pa

rt ie s a g re e d u

po n a s th e va lue of

he r i nte re st. Ac c or din g ly , we fi nd no e rr or in the bankr uptcy court’s c onclusion that the transfe r at iss ue wa s not on acc ount of an a ntece dent debt and that, ther efor e, the Tr

ustee fa iled to establish all of t he elements of a pr efe renc e under § 547(b). Be ca u s e n o pref

ere nce w as established, the bankruptc y court’s f indings on the c ontemporane ous exchang e for

new va lue def

ense unde r § 547(c )(1) need not be revie wed.12

F r audul e nt Tr ans fer- 1 1 U .S. C. § 5 48 (a )( 1) (B ) a nd Ohi o Re v. Co de § 1 33 6. 04 (A )( 2) (a ) a nd ( b)
Th e Tr us te e ’s fi na l argume nt o n a pp e a l is that th e Deb to r rece ive d le ss t ha n r e a so na bly equivalent va lue in exchang e for the t ransf er of her inter est in the marital prope rty in violation of the B ank ru ptc y Cod e and

the Oh io U nif

or m F ra ud ule nt T ra ns fe r A c t. Se c tio n 5 48 (a )( 1) (B ) o f t

he B ank ru ptc y Cod e pr ov ide s in

pe rt ine nt p art : (a )( 1) Th e tr

us te e may a vo id a ny tr ans fe r (i nc lud ing any tr ans fe r to or fo r t he be ne fi t o f ani n s i d e r

u n d e r ane mp l o ym e n tc o n tr a c t ) o f an i n t e r e s t o f

t h e d e b t o r

i np r o p e rt y, or any obligation (including a ny obligation to or for the be nefit of a n insider under an employ

ment contra ct) incur

red by the debtor, th at was ma de or inc urre d on or within 2 y ear s befor e the date of the filing of the pe tition, i f the de btor voluntarily or i n v o l u n t ar i l y–

. . . . (B )(i) r ece ived less than a r easona bly equivalent value i n exchang e for such transfe r or oblig ation; and (ii)(I ) wa s insolvent on the date that s u ch t ransfer wa s made or suc h obligation was incurr ed, or be came insolvent as a re sult of such transfe r or obligation[ .]
Simi larly , under the Ohio Uniform F raudule nt Transfe r Ac t, the party attempting r ecove ry under a constructive fraud theory must prove that the debtor transfer red a n interest in prope rty

for less than re asonably

equivalent va lue in exchang e for the transf

er, a nd eit h er (1 ) t h e debtor

was eng ag ed or w as about to eng ag e in a business or tr ansac ti o n for whic h the re maining a ssets of the debtor we re unr easona

bly small in relation to the business or transa ction; or (2) the debtor intende d to i nc ur , o r b e lie ve d o r r e a so na bly sh ou ld h a ve be lie ve d that he wo uld inc ur , d e bts be y on d h is a

bil ity to pay as they beca me due. Ohio Rev. Code § 1336.04( A)(2) (a) and (b)

. To deter mine rea sonably

equivalent va lue, the cour t first considers whether a

debtor re ceive d any value for the exchang e. In re W ilkinson , 196 Fe d. Appx. 337, 341 (6th Cir. 2006). I f value was
rec eived, the c ourt then dete rmines whethe r the va lue re ceive d was re asonably equivalent to the value surre ndere d. Id ; see also In re Fordu , 201 F.3d at 707-08 (the test used to de termine whe ther

a trans fe r w a s su

pp or te d b y re a so na bly e qu iva le nt v a lue fo c us e s o n whe the r t he re is r e a so na

ble equivalenc e betwe en the va lue of prope rty surre ndere d and that which w as re ceive d in exchang e). Attention is paid to the value re ceive d by t h e d eb t o r o n t h e date of the tra nsfer , not on the value13

g iven by the transf

ere e. In re W

ilkinson , 19 6 F e d. Ap px. a t 34 1- 42

. Th e c a lc ulatio n o f r e a so na bly equivalent va lue is f

act specific and, thus, the bankruptc y court’s f indings may

be re verse d on appea l only if clea rly err oneous. Id. at 341. The me thodology used in as s es s i n g v al ue is an issue of la w revie wed de novo

. Id. at 342.

“ Re a so na bly e qu iva le nt v a lue ” is not de fi ne d in the B ank ru ptc y Cod e , a lth ou g h “ va lue ” is define d as “pr operty , or satisfac tion o r s ecur ing of a pre sent or ante cede nt debt of the de btor.” 11 U.S.C. § 548(d)(2)( A). “ [T] he debtor need not collect ‘a dollar-f or-dollar equivalent to re ceive

rea sonably

equivalent va lue.’” Barber v. Golden Seed Co., Inc. , 129 F.3d 382, 387 (7th Cir. 1997) (q u o t i n g Matter of Fairchild Aircraft Cor p. , 6 F.3d 1119, 1125- 26 (5th Cir. 1993)). B oth dir ect a nd i n d i re ct benef

its are c onsidered w hen eva luating r easona ble equivale nce. Me e k

s v . D on Ho war

d Cha rit ab le Re ma ind

e r Tr us t ( In re S. Health C

are of Ark., Inc

. ), 309 B .R. 314, 319 (B.A .P. 8th C ir. 2004). B efor e indirec t benef its may be conside red, how ever , the value of t h e b en ef

i t m u st be tang ible. Id. ; see also Dayton Tit le Agenc y, Inc . v. W

hite Family Cos . (

In re Day ton Tit le Agenc

y, Inc .) , 29 2 B .R. 85 7, 87 4- 75 (B ank r. S.D

. Oh io 20 03 ) (a

pp lying same pr inc ipl es u nd er Ohio Fr audulent Tra

nsfer Act).
The Tr ustee contends that the bankruptc y court e rre d by dividing the mar ital debt in half and by su btr a c tin g a

fi c tio na l r e a l e state c omm iss ion . T he ba nk ru ptc y c ourt re a so ne d in

thi s re g ard

that: The Court be lieves that it wa s proper to reduc e the pa

y off amount due to the Deb t o r by

one half of the mar ital debt since these liabiliti es we re inc urre d by the parties dur ing the ir marr iag e. By paying mor e than ha lf of the mar ital debt Def endant confe rre d a bene fit onto Debtor which benef it was adjusted by the equal division of the de bt i n th e c omp utatio n o f t he pa y of f a mou nt. The Court also believe s under the c ircumstance s of this case, the deduction of a hy pothetical re al estate commission or sa l e cost is appropriate. The e vidence ref lects that the De btor had the option of a cce pting the $11,500.00 of fer ed by Def endant or subject the re sidence to sale with a s plit of the net proce eds. De btor c ho se to a c c e pt t

he $1 1, 50 0. 00 rathe r t

ha n s ub je c t th e re sid e nc e to s a le . T his , in thi s Court ’s min d, wa s an a c kn ow le dg me nt t hat th e De bto r re c og nize d that he r t a ke ho me from any sale would have nece ssarily been lower if the residenc e wa s sold to recove r the De fe nd ant’ s and

De bto r’ s in te re sts in the Pr op e rt y du e to i nc ur

ri nga re a l e state commission and other sale c osts in selli ng the re sidence . Fur ther, the Def

endant a nd Debtor e ven ag ree d as to what re al estate ag ent would be used to sell the residenc e.14

I f th e T r u s te e s u c c e e d e d

to th e D e b to r ’ s in te r e s t i nth e r e s id e n c e , th e o n ly w ay the Tr us te e c ou ld r e c ov e r t

he De bto r’ s in te re st i n th e pr op e rt y wo uld have be e n to se ll the property and incur sale costs, including a real estate commissi on. Thus, under the c ir c ums tanc e s o f t

his c a se , th e Court

fi nd s th e de du c tio n of a hy po the tic a l r e a l e state commission or sale cost is appropr iate in d et er m i ning w hether the Def endant convey ed re asonably

equivalent va lue to the Debtor

. (Appe llant’s Ape. at 69-70.)
Th is Pa ne l f ind s no e rr or in t

he mann e r i n w hic h th e ba nk ru ptc y c ourt de te rm ine d r e a so na

bly equivalent va lue. With respect to t he bankruptcy court’s deduction of one-half of the marital de bt in determining the value of the Debtor ’s i ntere st in the parties’ residenc e, the mar ital debt was a joint obligation of both the Debtor a nd the Def

endant even though the majority of the de bts were incurre d in the Def

endant’ s name. See Lem aster v. Lemaster , 2005-Ohio-2513 , 2 0 0 5 W L 1207571, at *2 (O hio App. Ma

y 20 , 2 00 5) ; My e rs v . M

y e rs , No. L -99-1168, 2000 WL331573, at *3 (Ohio App. Mar. 31, 2000) (whe ther c reated by one or b o t h s p o u s es during mar riag e, mar ital debt is joint obligation of bot h ). W h ile undeniably the bankr

uptcy court’s de duction was c ontrary to the Do me sti c Re la tio ns Court ’s or de rs that e a c h p art y wo uld be re sp on sib le so le ly fo r t he de bts in t

he ir name, a s previously

discussed, in Fordu the Six th Circuit held that the bankruptc y co u rt was not bo u n d by the manner

in which the domestic re lations court allocated prope rty in determining

rea sonably

equivalent va lue under

§ 548(a) (1)( B)

. Simi larly , the bankr

uptcy court’s de duction of a hy

pothetical re al estate ag ent’s commission was not er

rone o u s
. I n deter

mining re asonably

equivalent va lue under

§ 548(a) , the “pr oper f

ocus is on th e n e t e f

f e c t o f th e tr an s f

e r s o nth e d e b to r ’ s e s tate , th e f u n d s a v a il a

b le to th e u n secur ed

cr editors.” See I

n re Fordu , 2 0 1 F. 3 d

at 7 0 7 (q u o t i n g Harman v. First Am. Bank ( I n r e J effrey Bigelow D esign Group, Inc .), 956 F .2d 479, 484 (4th Cir. 1992)). I f the tra nsfer wer e to be se t aside

and the De bto r’ s in te re st in the re a lty br ou g ht b a c k into h e r b ank ru ptc y e state , th a t in te re st w ou ld have to be liquidated, with the additional expense of a r ealtor or an auc tioneer r educingthe net value to the estate. A ccor dingly , we f ind no error

in this reg ard. Considering all the fa cts and c ircumstance s in this case, we conclude that the ban k ruptcy court’s de terminat i o n that the Debtor rec eived r easona

bly equivalent va lue in exchang e for her15

transfe r of he r intere st in the marital residenc e wa s not clear ly err oneous. As noted by

the cour t, the value g iven by

Def endant wa s based on a

n arm’s le ng th neg otiation, between pa rties who we re repr esente d by

“ver y able a nd well re specte d, competent lega l counsel.” (Appe llant’s Ape. at 71.) Se e Ra le igh v . H

as k e ll ( In re Ha sk

e ll), No . 9 6 B 14 60 2, 19 98 WL80 95 20 , at *8 (B ank r. N. D. I ll. Nov. 19 . 1 99 8) (a

rm s le ng th t

ra ns a c tio n is imp or

tant e le me nt i n d e te rm inatio n o f r e a so na ble equivalenc e). In ag ree ing to the sale to the De fenda nt, the Debtor w as able to quickly liquidate for cash he r in t er es t in the rea lty , without waiting on the va g arie s of the re al estate marke t. Also, the Debtor w as re lease d from any liability under the mortg ag e. When these indi rec t benef its are a dded to the actua l cash pa

y ment rec eived by the Debtor , and in light of the clea rly err oneous standar d of revie w, we a

re c ompelled to aff

irm the bankruptc y

court on this issue.
CO NC LU SION
Ba sed on the for eg oing, the Panel AF FI RMS t he bankr uptcy court’s or der g ranting judgme nt in f a vo r o f t he De fe nd ant o n th e Tr

us te e ’s pr e fe re nti a l and

fr a ud ule nt c on ve y anc e c la ims

.