UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW HAMPSHIRE

United States of America

v. Civil No. 06-cv-172-PB

Adelaide M. Leroux

O R D E R

 Defendant objects to plaintiff’s ex parte petition to attach

two pieces of real estate located in Tuftonboro, New Hampshire. 

Background

The plaintiff was granted an ex parte attachment on

defendant’s two parcels in Tuftonboro. Defendant objected

promptly but the parties requested that the hearing be stayed

while plaintiff and defendant’s husband explored a resolution of

his delinquent taxes. The parties brought the matter forward for

hearing. 

The essential facts are that as of December 31, 1990,

defendant accrued a tax liability of $4,448,895 for 1990. Pl.

Exhibit A. The liability for those taxes matured on April 15,

1991. On March 18, 1991 Edward Leroux, Jr., the delinquent

taxpayer, transferred two pieces of real estate to defendant, his

wife, as “a gift” - i.e. without consideration. Pl. Exhibits C

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and D. Edward Leroux, after extensions, filed his 1990 income

tax return on or about October 14, 1991. Of the $4,448,895 due

he paid only $5,769 leaving an unpaid amount of $4,443,126. On

September 30, 1992, Mr. Leroux filed for bankruptcy alleging he

had $56,972,605 in assets and $84,896,192 in liabilities. Pl.

Exhibits E and F. 

The government filed a proof of claim in the bankruptcy

proceeding. Def. Exhibit A. The government and Mr. Leroux

entered into a stipulation (Def. Exhibit B) with respect to its

tax claim. The taxpayer filed his plan which was confirmed by

order. Def. Exhibits C and D. A final decree was entered in the

bankruptcy court. Def. Exhibit E. 

Discussion

Prejudgment attachments in federal court are determined by

the applicable law of the forum state. Fed. R. Civ. P. 64. In

New Hampshire, the statue controlling prejudgment attachments is

N.H. Rev. Stat. Ann. § 511-A. At the hearing “the burden shall

be upon the plaintiff to show that there is a reasonable

likelihood that the plaintiff will recover judgment including

interest and costs on any amount equal to or greater than the

amount of the attachment.” N.H. Rev. Stat. Ann. § 511-A:3. To

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sustain its burden “the plaintiff in an attachment proceeding

showing that he or she will ultimately prevail on the merits and

obtain judgment in the requested amount and that this showing

must be established by proof greater than proof by a mere

preponderance of the evidence.” Diane Holly Corp. v. Bruno &

Stillman Yacht Co., 559 F.Supp. 559, 560 (D.N.H. 1983). 

In this case, plaintiff’s claim is under New Hampshire’s

Fraudulent Conveyance Act, in particular N.H. Rev. Stat. Ann. §

545-A:5I: 

A transfer made or 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 the debtor

made the transfer or incurred the obligation

without receiving a reasonably equivalent

value in exchange for the transfer or

obligation and the debtor was insolvent at

that time or the debtor became insolvent as a

result of the transfer or obligation. 

The deeds establish and the parties agree that the transfer was

not for “reasonably equivalent value . . . .” The second element

of the claim requires that the “debtor was insolvent at that time

or the debtor became insolvent as a result of the transfer

. . . .” As to the second element, plaintiff’s counsel maintains

that when there is a transfer without consideration, the

transferee has the burden of proving solvency. Counsel cites In

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re Blatstein, 192 F.3d 88, 98 (3rd Cir. 1999). Counsel states

that there appears to be no New Hampshire cases on point. 

Blatstein was decided under Pennsylvania law. In contrast,

New Hampshire has consistently stated in many types of cases that

it is the plaintiff who always bears the burden of establishing a

prima facie case although the burden of going forward may shift. 

See Blethen v. Lawrence, 116 N.H. 840, 841 (1976). The

provisions of N.H. Rev. Stat. Ann. § 511-A:3 are consistent with

New Hampshire common law on burden of proof. 

Whatever New Hampshire might adopt in terms of burden

shifting under N.H. Rev. Stat. Ann. § 545-A:5I in the future, as

of this date the standard common law remains unchanged. 

Furthermore, and more importantly, whatever the burden of proof

at trial, for attachment purposes the plaintiff bears the burden

of proof on both elements to meet its likelihood of success on

the merits. 

The only evidence submitted on solvency is the unpaid tax

return seven months after the transfer and a bankruptcy schedule

eighteen months after the transfer. Neither is sufficient to

establish proof greater than proof by a mere preponderance that

the transferor was insolvent on March 18, 1991 or was made

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1The other arguments by the parties need not be resolved.

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insolvent by the transfer. 

In short, the plaintiff has failed to meet its burden of

proof as to insolvency on March 18, 2001.1 

The objection is sustained, the attachment is dissolved and

plaintiff is ordered to discharge the attachment in the Registry

of Deeds. 

SO ORDERED.

____________________________________

James R. Muirhead

United States Magistrate Judge

Date: March 9, 2007

cc: William S. Gannon, Esq.

 Paul D. Moore, Esq.

 Jeffrey D. Sternklar, Esq.

 Karen Wozniak, Esq.

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