FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DZ BANK AG DEUTSCHE ZENTRALGENOSSENSCHAFT BANK,

FRANKFURT AM MAIN, New York

Branch,

Plaintiff-Appellant,

v.

LOUIS PHILLIPUS MEYER; LYNN

MEYER,

Defendants-Appellees.

No. 15-35086

D.C. No.

2:14-cv-00869-

JLR

OPINION

Appeal from the United States District Court

for the Western District of Washington

James L. Robart, Senior District Judge, Presiding

Argued and Submitted May 19, 2017

Seattle, Washington

Filed August 24, 2017

Before: Michael Daly Hawkins, Ronald M. Gould,

and Richard A. Paez, Circuit Judges.

Opinion by Judge Paez
2 DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFT BANK V. MEYER

SUMMARY*

Bankruptcy

The panel reversed the district court’s decision affirming

the bankruptcy court’s judgment in favor of a creditor in the

creditor’s adversary proceeding alleging that the debtors

fraudulently transferred assets in order to place the assets out

of the creditor’s reach, and that the debt therefore was nondischargeable under 11 U.S.C. § 523(a).

The panel held that the bankruptcy court correctly found

that, under the Washington UniformFraudulent Transfer Act,

the debtors engaged in fraudulent transfers and, therefore,

actual fraud, to the creditor’s detriment. The bankruptcy

court erred, however, in limiting relief to the value of the

assets that were directly traceable to the creditor’s security

interest. The panel held that the non-dischargeable debt

resulting from the fraudulent transfers was the full amount

that the creditor would have recovered if it had been able to

execute against the debtor’s ownership interest in the closelyheld corporation from which the debtor transferred the assets.

COUNSEL

D. Alexander Darcy (argued) and Michael W. Debre III,

Askounis & Darcy PC, Chicago, Illinois, for PlaintiffAppellant.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.
DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFT BANK V. MEYER 3

Marc S. Stern (argued), Seattle, Washington; for DefendantsAppellees.

OPINION

PAEZ, Circuit Judge:

This case arises from a dispute between DZ Bank AG

Deutsche Zentral-Genossenschaftsbank (“DZ Bank”), as

creditor, and Louis and Lynn Meyer (“the Meyers”),1as

debtors. DZ Bank filed an adversary action against the

Meyers in bankruptcy court, alleging that the Meyers had

fraudulently transferred assets in order to place them out of

the bank’s reach. The bankruptcy court agreed, but limited

the judgment to the value of the assets that were directly

traceable to DZ Bank’s security interest. The district court

affirmed, reasoning that DZ Bank could not recover the value

of the other assets because those assets were not the property

of the Meyers, but rather, were the property of Louis Meyer’s

closely-held corporation. We have jurisdiction pursuant to

28 U.S.C. § 1291, and we reverse.

I.

In January 2008, Louis Meyer was the sole member and

1 At oral argument, Appellees’ counsel represented to the court that

the Meyers are no longer married. For the sake of convenience, however,

we continue to refer to Appellees as “the Meyers.”
4 DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFT BANK V. MEYER

manager of Choice Cash Advance LLC (“Choice”).2 Choice

purchased five insurance agencies and their books of business

in a sale arranged by Brooke Credit Corporation and its

associated entities (collectively, “Brooke”). As part of the

purchase, Brooke loaned Choice $1,771,715.20. The loan

itself was financed pursuant to a credit and security

agreement that Brooke entered into with a third-party entity,

whose agent was DZ Bank. Under the terms of that

agreement, Brooke granted DZ Bank a security interest in,

among other things, its right, title, and interest to the Choice

loan. Choice executed a promissory note for the $1.7 million

and gave Brooke a blanket security interest in all of its assets,

including intangibles. The Meyers personally guaranteed the

note, as well.

In October 2008, Brooke defaulted on its obligations

under the agreement with DZ Bank, and multiple Brooke

entities filed for bankruptcy. Then, DZ Bank and Brooke

entered into an agreement to transfer Choice’s note and the

Meyers’ personal guarantee to DZ Bank. Choice formally

acknowledged the assignment and agreed to pay the

$1,728,834.65 balance that remained on the promissory note

to DZ Bank. Over the next two years, however, Choice and

DZ Bank entered into several forbearance agreements after

Louis Meyer, on behalf of Choice, repeatedly requested loan

modifications.

During the same time period, the Meyers executed an

elaborate series of transfers and sales in an effort to place

their assets beyond the reach of their creditors. In October

2 We take this factual background from the bankruptcy court’s

amended findings of fact and conclusions of law, following trial of DZ

Bank’s adversary action.
DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFT BANK V. MEYER 5

2008, Louis Meyer caused Choice to transfer assets valued at

$123,200 to Meyer Insurance (“MI”), a closely-held

corporation in which he owned 100% of the shares.

In 2010, Louis Meyer purchased Insurance Choices 4 U,

Inc. (“IC4U”) for $200 from a family friend. The Meyers

also set up the Meyer Irrevocable Trust, presumably for

estate-planning purposes. Their daughter was designated as

trustee, and they were listed as beneficiaries. In December

2010, Louis Meyer caused MI to transfer its assets to IC4U

for no consideration, and then arranged for the Meyer Trust

to purchase 100% of IC4U’s stock. At that time, MI’s assets

had a fair market value of $385,000 of which $123,200 was

attributable to the assets originally transferred from Choice. 

IC4U agreed to pay $385,000 back to Louis Meyer,

personally, over time. There was testimony that this

agreement was to repay him for a shareholder loan, but the

bankruptcy court found that “[t]here was no evidence at trial

. . . of any underlying loan documents or any accounting for

that loan.”

In January 2011, IC4U transferred its assets to Connect

Insurance Agency, Inc. (“Connect”) in exchange for paying

IC4U all commissions Connect received from the transferred

insurance policies for nine months. Together, these transfers

left Choice, MI, and IC4U all insolvent. And within a few

months, Choice and the Meyers had defaulted on the note and

their personal guarantee.

In August 2011, DZ Bank filed an action against Choice

and the Meyers. After the complaint was filed, the Meyers

filed for bankruptcy. As a result, the district court stayed DZ

Bank’s action against the Meyers. But the district court

permitted proceedings to go forward against Choice,
6 DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFT BANK V. MEYER

eventually entering a final judgment of $1,710,469.93 in

favor of DZ Bank in March 2013. As Choice was insolvent,

however, DZ Bank could not collect on the judgment.

As a result, DZ Bank filed an adversary action against the

Meyers in bankruptcy court alleging that the transfer of assets

out of MI was a fraudulent transfer under the Washington

Uniform Fraudulent Transfer Act (“WUFTA”),3see Wash.

Rev. Code § 19.40.041, and therefore non-dischargeable

under 11 U.S.C. § 523(a). See Husky Int’l Elecs., Inc. v. Ritz,

136 S. Ct. 1581 (2016). Among other exceptions from

dischargeability, § 523(a) excepts debts obtained by “actual

fraud.” See 11 U.S.C. § 523(a)(2)(A). As the Supreme Court

has recently explained, the term “‘actual fraud’ is broad

enough to incorporate a fraudulent conveyance.” Husky,

136 S. Ct. at 1587.

In Washington, under WUFTA, a conveyance is

fraudulent when made by a debtor “[w]ith actual intent to

hinder, delay, or defraud any creditor of the debtor.” See

Wash. Rev. Code § 19.40.041(a)(1). WUFTA defines a

transfer as “every mode, direct or indirect” of disposing of an

asset, id. § 19.40.011(12), which, in turn, is defined as the

“property of a debtor,” id. § 19.40.011(2). The statute defines

“property” as “anything that may be the subject of

ownership.” Id. § 19.40.011(10).

3

In April 2017, the Washington state legislature passed a bill

amending WUFTA and renaming it the Washington Uniform Voidable

Transactions Act (“WUVTA”). See S.B. 5085, 65th Leg., Reg. Sess.

(Wash. 2017). Although WUVTA took effect on July 23, 2017, we

continue to refer to the WUFTA version of the statute in this opinion, as

it is the law that governs the subject transactions. See id. (“[WUVTA]

does not apply to a transfer made or obligation incurred before the

effective date . . . .”).
DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFT BANK V. MEYER 7

Although the bankruptcy court ruled in favor of DZ Bank

on its fraudulent transfer claim, it ultimately limited the

judgment to $123,200, which was the portion of the $385,000

that was traceable to DZ Bank’s security interest in the assets. 

DZ Bank appealed, arguing that the bankruptcy court

erroneously limited the amount of its non-dischargeable debt. 

But the district court affirmed the bankruptcy court’s

determination that DZ Bank could not maintain a fraudulent

transfer claim as to MI’s “non-collateral assets,” albeit on a

slightly different ground. The court reasoned that DZ Bank

could only recover assets that were the “property of [the]

debtor[s],” see id. § 19.40.011(2)—i.e., legally titled in the

Meyers’ name. Since the assets were legally titled in MI’s

name, WUFTA did not apply. For WUFTA to apply, DZ

Bank was required to obtain a ruling that MI was the alter ego

of the Meyers, which it failed to do. On the facts of this case,

we disagree with both courts.

II.

We review the bankruptcy court’s findings of fact for

clear error and its conclusions of law de novo. In re Kimura,

969 F.2d 806, 810 (9th Cir. 1992). As the issue presented is

purely legal, our review is de novo.

III.

A.

The Washington Supreme Court has explained that “the

overriding purpose of the UFTA is to provide relief for

creditors whose collection on a debt is frustrated by the

actions of a debtor to place the putatively satisfying assets

beyond the reach of the creditor.” Thompson v. Hanson,
8 DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFT BANK V. MEYER

219 P.3d 659, 665, as amended (Mar. 26, 2010), republished

as modified at 239 P.3d 537 (Wash. 2009); see also Husky,

136 S. Ct. at 1586–88 (discussing the history of “actual

fraud”). This “overriding purpose,” Hanson, 219 P.3d at 665,

can be traced to “the beginning of English bankruptcy

practice,” Husky, 136 S. Ct. at 1587. Since then, “courts and

legislatures have used the term ‘fraud’ to describe a debtor’s

transfer of assets that . . . impairs a creditor’s ability to collect

the debt.” Id.

B.

With WUFTA’s purpose in mind, we look to what other

courts have concluded when faced with similar circumstances

under the UFTA. Thompson v. Hanson, 174 P.3d 120, 126

(Wash. Ct. App. 2007) (“Because an explicit purpose of the

UFTA is uniformity among the States that have adopted it,

the interpretation of other courts also provides guidance.”),

aff’d, 239 P.3d 537 (Wash. 2009); see also Wash. Rev. Code

§ 19.40.903 (“[WUFTA] shall be applied and construed to

effectuate its general purpose to make uniform the law . . .

among states enacting it.”). In Wiand v. Lee, for example, the

defendants argued that “transfers of funds from the

receivership entities could not have been transfers of ‘assets’

because assets under FUFTA[, Florida’s statute identical to

WUFTA,] must be [the] ‘property of a debtor,’ and the funds

. . . transferred were property of the corporations.” 753 F.3d

1194, 1203 (11th Cir. 2014) (quoting Fla. Stat. § 726.102(2),

(12)). The Eleventh Circuit rejected that argument,

explaining that FUFTA did not require the debtors,

themselves, to have legal title to the assets transferred. 

Florida law required only that the assets “could have been

applicable to the payment of the debt due.” Id. (emphasis
DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFT BANK V. MEYER 9

removed) (quoting Nationsbank, N.A. v. Coastal Utils., Inc.,

814 So.2d 1227, 1229 (Fla. 4th Dist. Ct. App. 2002)).

A Minnesota court interpreting Minnesota’s identical

version of WUFTA in Reilly v. Antonello rejected a corporate

officer’s argument that it was the corporation, not the officer,

that legally diluted the corporation’s shares and thereby

reduced the officer’s ownership from 100% to 2%. 

852 N.W.2d 694, 701 (Minn. Ct. App. 2014). The court

refused to “ignore[] the reality that [the officer] was

exclusively responsible for the actions of the corporation and

that he fraudulently transferred assets to the detriment of his

creditors.” Id. The court reasoned that “[t]o allow a sole

director, officer, and shareholder to mask his fraudulent

actions behind the facade of a closely held corporation would

defy the plain meaning and intent of the Minnesota Uniform

Fraudulent Transfer Act.” Id.

In In re Nickeson, a South Dakota bankruptcy court

interpreting that state’s version of UFTA, which is also

identical to WUFTA, held similarly. See Bankr. No. 13-

10137, Adversary No. 14-1004, 2014 WL 6686524, at *11

(Bankr. D.S.D. Nov. 25, 2014). There, a sole shareholder and

director of a farming corporation caused the corporation to

dilute its shares, reducing the shareholder’s ownership from

100% to 20%. Id. Refusing to “reward . . . [the] pervasive

disregard for corporate formalities,” the court rejected the

shareholder’s argument that it was the corporation that

diluted its own shares. Id.

These cases are instructive. If MI had retained the

$385,000 in assets, DZ Bank would have been able to enforce

any judgment against the Meyers, prior to their filing for

bankruptcy protection, by executing against Louis Meyer’s
10 DZ BANK AG DEUTSCHE ZENTRAL-GENOSSENSCHAFT BANK V. MEYER

100% ownership interest in MI to satisfy $385,000 of its

claim. See Wash. Rev. Code § 6.17.090 (“All property, real

and personal, of the judgment debtor that is not exempted by

law is liable to execution.”). When Louis Meyer indirectly

transferred all of MI’s assets to another corporation, he, as in

Wiand, Antonello, and Nickeson, depleted the value of his

assets to the detriment of his creditors. His shares in MI

became worthless as a result of his actions as MI’s sole owner

and shareholder, while, even after filing for bankruptcy, he

continued to receive payments fromIC4U. In other words, he

prevented DZ Bank from collecting $385,000 of the debt he

owed.

Although the bankruptcy court correctly found that the

Meyers engaged in fraudulent transfers and, therefore, actual

fraud, to DZ Bank’s detriment, the court limited relief to

$123,200—the amount of the collateralized debt. This was

error. The bankruptcy court should have granted relief for the

full $385,000 that DZ Bank would have recovered if it had

been able to execute against Louis Meyer’s ownership

interest in MI. See 4 Collier on Bankruptcy ¶ 523.08[2] (16th

ed. 2016) (“[A] nondischargeability claim based on a[]

scheme in which a debtor fraudulently transfers assets of one

closely held corporation to other closely held companies,

purposefully intended to hinder, delay, or defeat the

collection of a debt, constitutes actual fraud under section

523(a)(2)(A).”). The amount of the non-dischargeable debt

resulting from the fraudulent transfers is therefore $385,000,

which DZ Bank is entitled to recover.

REVERSED and REMANDED.