Opinion ID: 2054217
Heading Depth: 1
Heading Rank: 3

Heading: cuic's challenge to smith's judgments authorizing recovery of collateral: respective rights and prorities of the judgment lien creditor and the delaware receiver

Text: We turn now to Smith's efforts to satisfy its judgment (Appeal Nos. 93-CV-61, 93-CV-726). CUIC contends the trial court erred in (1) refusing to give effect to the Delaware Chancery Court's November 17 Seizure and Injunction Order, (2) granting Smith's motion for judgment of recovery against First American Bank, and (3) ruling that Smith was entitled to void the sale of CUIC's Connecticut Avenue building to its parent holding company, CUG, and further ruling that, in any event, Smith could pierce the corporate veil to execute on the building in CUG's hands. To address CUIC's contentions, we must answer the following question: To what extent does the appointment of a receiver for a Delaware insurance company by a chancery court in Delawarea state which has enacted the Uniform Insurers Liquidation Act (UILA) [24] prevent a judgment creditor from executing on the insurance company's property located in the District of Columbia?
We begin our analysis with two Supreme Court cases dealing with Article IV, § 1 of the Constitution: the Full Faith and Credit clause. In Clark v. Williard, 292 U.S. 112, 54 S.Ct. 615, 78 L.Ed. 1160 (1934) ( Clark I ), Williard, trustee of a syndicate, filed suit in a Montana court against Federal Surety, an Iowa insurance company, to recover damages due upon a bond. Shortly after Williard brought suit but before he had obtained a judgment, an Iowa court issued a decree of dissolution against Federal Surety, adjudging the Iowa Commissioner of Insurance, E.W. Clark, to be the successor to said company. Williard then obtained a judgment against Federal Surety in the Montana court and began efforts to satisfy the judgment by filling a petition for leave to execute against securities and moneys owned by Federal Surety, which had been discovered in Montana. Clark, the foreign liquidator, opposed Williard's petition, asserting his title as successor to the dissolved corporation. The Montana trial court agreed with Clark and ruled that Federal Surety's assets should be liquidated and ratably distributed subject only to liens existing at the date of dissolution in Iowa. Williard appealed, and the Montana Supreme Court reversed, ruling that Clark was not the successor to the corporate personality but was merely a chancery receiver with a title (if any) created by the Iowa decree. Id. at 117, 54 S.Ct. at 617. The court then held that, as against such a receiver, creditors in Montana were at liberty to levy attachments and executions, irrespective of their right to enforce such a levy against a statutory successor. Id. The United States Supreme Court reversed and remanded, holding that the Supreme Court of Montana denied full faith and credit to the statutes and judicial proceedings of Iowa in holding . . . that [Clark] was a receiver deriving title through a judicial proceeding, and not [a statutory successor]. Id. at 121, 54 S.Ct. at 619. The Court, however, remanded the case for the Supreme Court of Montana to determine whether Montana had a local policy whereby an insolvent foreign corporation in the hands of a liquidator with title must submit to the sacrifice of its assets or to their unequal distribution by writs of execution. Id. at 129, 54 S.Ct. at 622. According to the Supreme Court, if Montana had such a policy, then the Montana courts could allow Williard, the judgment creditor, to execute against the assets of Federal Surety. If, on the other hand, Montana law provided that a court-appointed Montana liquidator was entitled to priority over judgment creditors, then the Montana courts would be required to accord that same priority to Clark, the foreign liquidator, and thus could not allow Williard to execute against Federal Surety's assets. On remand, the Montana Supreme Court held that the local policy of Montana permitted attachments and executions against insolvent corporations, foreign and domestic, and that this rule prevailed against statutory successors clothed with title to the assets, just as much as it prevailed against corporations themselves or against chancery receivers. [25] Clark again appealed to the United States Supreme Court, which affirmed the Montana Supreme Court in Clark v. Williard, 294 U.S. 211, 55 S.Ct. 356, 79 L.Ed. 865 (1935) ( Clark II ). The Court held in Clark II that, although [e]very state has jurisdiction to determine for itself the liability of property within its territorial limits to seizure and sale under the process of its courts, id. at 213, 55 S.Ct. at 357, the Full Faith and Credit Clause establishes that: Iowa may say that one who is a liquidator with title, appointed by [Iowa] statutes, shall be so recognized in Montana with whatever rights and privileges accompany such recognition according to Montana law. For failure to give adherence to that principle were reversed and remanded when the case was last before us. Iowa may not say, however, that a liquidator with title who goes into Montana may set at naught Montana law as to the distribution of Montana assets, and carry over into another state the rule of distribution prescribed by the statutes of the domicile. Id. at 215, 55 S.Ct. at 358. Thus, under Clark I and Clark II, the District of Columbia must (1) recognize the status of a foreign receiver, as established by foreign law, and (2) accord that foreign receiver the same rights and privileges against judgment creditors, seeking to levy against assets in the District of Columbia, that the District would accord the same kind of receiver if appointed locally in the District of Columbia. We therefore must determine the rights, under District of Columbia law, to which a District of Columbia receiver of an insurance company is entitled vis-a-vis judgment creditors.
CUIC contends that District of Columbia law gives an insurance company receiver an absolute priority over a lien asserted in the District, even when the lien was created before the receiver was appointed. [26] CUIC argues, in the alternative, that if the law of the District of Columbia does not give insurance company receiverships priority over pending liens, this court as a matter of policy should afford such priority to insurer receiverships by giving effect to the principles incorporated in Delaware's version of the Uniform Insurer Liquidation Act (UILA). See supra note 24. [27] Specifically, this would mean (among other things) that, upon the commencement of a so-called delinquency proceeding against a troubled insurer requiring appointment of a receiver, any action to attach, garnishee, or execute upon the debtor's property would be stayed automatically pending further order of the court, and that any lien obtained within four months of the commencement of the proceeding would be held void. DEL.CODE ANN. tit. 18, § 5919 (1989). Smith argues, to the contrary, that under District of Columbia law, a judgment creditor who has attached the debtor's assets in a bank, or has recorded a judgment lien against the debtor's real property, has priority over the claims of a subsequently appointed receiver for the debtor. Smith also disagrees with CUIC's alternative contention that we should give effect to Delaware's version of the UILA. Smith stresses that the District of Columbia, having adopted neither the UILA nor even the UILA'S reciprocality provisions, must be said to have rejected UILA principles. CUIC and Smith point to different case law to support their respective arguments. CUIC contends that Huffines, 63 App.D.C. at 224, 71 F.2d at 345, is controlling here. In that case, Huffines brought suit against American Security & Trust Co. to set aside a sale of property on the ground that Huffines, who held a second deed of trust on the property, had not received adequate notice of the sale. Before the sale, the National Benefit Life Insurance Company, an insurance company in receivership, owned the property subject to two deeds of trust; American Security held the first deed of trust while Huffines held the second. The notes secured by American Security's first deed of trust had been overdue and unpaid, and American Security had therefore petitioned for the court's permission, in the insurance company's receivership proceeding, to sell the property to satisfy the notes. The court granted American Security's request, and the sale proceeded at public auction. Huffines subsequently argued on appeal that the sale should be set aside because, as holder of the second deed of trust, he had received inadequate notice of the sale. The United States Court of Appeals for the District of Columbia Circuit concluded, first, that Huffines' notice would not have been adequate if the property had been sold at a judicial sale, but that his notice would have been adequate, under the terms of his deed of trust, if the sale essentially had been private, in execution of American Security's deed of trust. The court then concluded that the sale had been of the latter type, made by the trustee under the authority and according to the terms of the deed of trust, Huffines, 63 App.D.C. at 227, 71 F.2d at 348, and that the notice Huffines had received, therefore, had been adequate. The court further stated that American Security had petitioned the court for permission to conduct the sale only because National Benefit Life Insurance Co., the owner of the property, was in receivership. See id. The court then added that, even though the receiver had taken charge of the property, American Security's petition had not made the sale a judicial sale. See id. The court elaborated: This conclusion is not inconsistent with the action of the trust company and trustee under the first deed of trust in applying to the court in the receivership case for leave to proceed with a sale of the property. It was provided by the terms of the decree entered by the lower court in that case, as well as by the established principles of the law, that, after the court had taken possession through its receiver of the property of the defendant in the case, it was not permissible for a creditor holding a lien upon any of the impounded property to begin or carry on proceedings for the sale thereof for the payment of his debt. Only by permission of court could such a sale be made. In this instance the creditor and the trustee who otherwise would have made sale of the property under the authority of the deed of trust without the intervention of the court, were compelled to apply to the court wherein the receivership case was pending for leave to make sale of the property for the purpose of paying the indebtedness secured by the deed of trust. The application for such permission was made by the trustee to the court and was granted. Whereupon the trustee was free to make sale of the property under and according to the terms of the deed of trust and this he did. This action did not convert the sale into a judicial or court sale. The sale was not made by the court, nor by officers acting under its orders. No application was made to the court for an order confirming the sale when made. No proceedings were had such as would be necessary were the sale a judicial sale (section 95 and § 521 et seq. D.C.Code 1924 [D.C.Code 1929, T. 25, § 206, and § 191 et seq.]; Rules of the Supreme Court of the District of Columbia, Equity Rules 68 et seq.). The entire proceeding was had under and according to the deed of trust alone. Moreover, it was unnecessary that Huffines should be made a party in the receivership case. No relief was sought against him in that case. The only result secured by the action of the trust company and the trustee in the receivership case was simply an order permitting them to proceed under the deed of trust free from the control of the court. This permitted of a sale as if no receivership proceeding had been had and no receiver appointed. Id. Relying on this language, CUIC argues that under District of Columbia law, if a judgment creditor has attached, or recorded a judgment lien against, the property of an insurance company in receivership, the creditor cannot take the property without permission of the court wherein the receivership case was pending, id., even if the attachment or lien had been created before the insolvency order was issued. CUIC then argues that, by virtue of such authority, CUIC's Delaware receiver was entitled to claim priority over Smith's postjudgment liens, even though they predated the receivership. According to CUIC, therefore, the trial court should not have granted Smith's motions for judgment of recovery and for summary judgment, respectively allowing Smith to execute on CUIC's assets in the bank and voiding CUIC's sale of its Connecticut Avenue building to CUG and authorizing Smith to execute upon it. Before turning to Smith's counterargument, it is important for us to note that CUIC merges  and thus confusestwo issues. It is one thing to say that a judgment lien creditor may not dispose of the debtor's property until a receivership court grants permission; it is quite another thing to say that the receiver has a paramount claim to the property even though the creditor obtained a judgment lien before the receiver was appointed. Under Huffines, the fact that the receivership court had authority to withhold permission for a secured creditor to sell the mortgaged property apparently amounted to no more than authority to grant a temporary stay of the exercise of the creditor's rights, in order to give the debtor some breathing room in dealing with all the creditors; it did not mean, in addition, that the receiver could seize the property for the insolvent's estate over the claim of a prior secured creditor. Indeed, the Huffines opinion made clear that the receivership court was ultimately obliged to grant permission for the sale under the deed of trust free from the control of the court[,] ... as if no receivership proceeding had been had and no receiver appointed. Id. In other words, whatever legal basis there may have been for requiring receivership court permission for the sale, [28] Huffines established that the receivership court itself must recognize the right of the creditor to execute upon the security interest by way of a private sale. This means, in effect, that under District of Columbia law, a court supervising an insurance company receivership ultimately must enforce the substantive rights of judgment lien creditors whose liens attached before appointment of the receiver.
The question then becomes, who has priority: the judgment lien creditor or the receiver? Smith contends that this court's decision in Herman, 190 A.2d at 650, recognizes Smith's priority over the Delaware receiver. In Herman, Siney and Oney, the creditors, obtained default judgments in the Municipal Court against the Union Storage and Transfer Company. The court issued writs of garnishment to reach funds in Union Storage's bank, and the creditors filed motions for condemnation of the funds held by the bank to satisfy the judgments. Before the court held a hearing on the condemnation motions, the United States District Court for the District of Columbia appointed Herman as Union Storage's receiver. Herman filed an opposition to the condemnation of the garnisheed funds, but the trial court granted the creditors' motions. On appeal, this court affirmed: A receiver derives his authority from the act of the court appointing him . . . and the utmost effect of his appointment is to put the property from that time into his custody.... The Municipal Court first acquired jurisdiction over the property by garnishment which vested that court with power to hear and determine all controversies relating thereto and disabled the District Court from exercising like power. The receiver was appointed in a suit to which the appellees were not parties and after the garnishment had been completed in the Municipal Court. The appointment of a receiver, therefore, did not divest the lien acquired by the garnishment. Id. at 651-52 (footnote omitted) (quoting Union Nat'l Bank of Chicago v. Bank of Kansas City, 136 U.S. 223, 236, 10 S.Ct. 1013, 1017, 34 L.Ed. 341 (1890)). Relying on Herman, Smith contends that District of Columbia law gives priority to a judgment lien creditor over a receiver, where the receiver was appointed after the judgment creditor's lien on the property had attached. Smith argues, therefore, that the trial court correctly granted judgment of recovery in favor of Smith against CUIC's assets held by First American and, further, properly ruled that Smith could execute on CUIC's Connecticut Avenue building, either by voiding the transfer of that building to CUG as a fraudulent conveyance or by piercing the corporate veil and recovering the property from CUG itself. We agree with Smith that, as to priority of claims, Herman is controlling here. Interpreting substantive law, Herman confirms that a judgment creditor's claim to property to satisfy a debt will have priority over a subsequently appointed receiver's claim to that property if a court already has assumed jurisdiction over the property for the creditor's benefit by authorizing, for example, an attachment or garnishment. But this rule of law suggests two unanswered questions on this record. First, if a judgment creditor (Smith) (1) obtains a writ of garnishment from the court and levies on the garnishee, or (2) records the judgment with the Recorder of Deeds and thereby creates a lien against the realty, will that judgment creditor (Smith) have sufficiently invoked court protection in the District of Columbia, within the meaning of Herman, to give its lien priority over claims by the debtor's (CUIC's) subsequently appointed receiver in a foreign jurisdiction (Delaware)? Second, if the answer to the first question is Yes, i.e., if Herman gives the judgment lien creditor's (Smith's) claims priority over those of the Delaware receiveris that priority affected by the Huffines requirement that even a secured creditor must obtain permission from a receivership court before seizing or selling the collateral? These questions suggest a possibility that neither party entertains: that both Herman and Huffines may be applicable here instead of one or the other.
We begin with the first question: whether, under Herman, Smith has priority over the Delaware receiver's claim to CUIC's bank accounts at First American and to CUIC's Connecticut Avenue building.
The threshold issue under Herman is a legal one: what steps must a judgment creditor take in order to obtain a valid lien on a debtor's property that is entitled to priority over a subsequently appointed receiver? We note initially that the procedure for acquiring a lien on personal property in the hands of a garnishee is different from the procedure for acquiring a lien on real property. In order to reach personal property of a debtor held by a third party, a judgment creditor mustfollowing entry of judgmentrequest the court to issue a writ of attachment. See D.C.Code § 16-542 (1989). The judgment creditor must then serv[e] the garnishee with a copy of the writ of attachment and of the interrogatories accompanying the writ. D.C.Code § 16-546 (1989). Service of the writ on the garnishee creates a valid lien in favor of the judgment creditor on the debtor's property held by the garnishee. Obtaining the property held by the garnishee, however, is an entirely separate matter, which typically involves the following additional procedures. Upon receipt of the writ of attachment, the garnishee is required to file answers to the interrogatories that accompany the writ. Within twenty-eight days following receipt of the garnishee's answers, the judgment creditor must request condemnation of the funds held by the garnishee. JOSEPH SPERLING, POSTJUDGMENT EXECUTION IN THE SUPERIOR COURT OF THE DISTRICT OF COLUMBIA 3 (3d ed. 1990) (hereafter SPERLING ON POSTJUDGMENT EXECUTION). If the garnishee fails to answer the interrogatories accompanying the writ, or if the garnishee answers the writ but fails to send money to the judgment creditor, the judgment creditor should file a motion for judgment of recovery against the garnishee, see supra note 8. See D.C.Code § 16-556 (1989); Super.Ct.Civ.R. 69-I(e). Thus, although steps in addition to serving a writ of attachment may be required to obtain the property of the debtor held by the garnishee, the judgment creditor has a valid lien as of the date the writ is served on the garnishee. In contrast, in order to reach a debtor's real property, a judgment creditor mustfollowing entry of a judgment in the debtor's favorfile[] and record[] [the judgment] in the office of the Recorder of Deeds of the District of Columbia. D.C.Code § 15-102(a) (1989). [29] The act of filing the judgment with the Recorder of Deeds shall constitute a lien on all the freehold and leasehold estates, legal and equitable, of the defendants bound by such judgment. Id. To execute against the debtor's realty, the lienholder must show proof to the clerk of the court that the judgment was recorded, and the clerk will then issue a writ of fieri facias and send the writ to the marshal. SPERLING ON POSTJUDGMENT EXECUTION at 13. The writ of fieri facias can be used to lev[y] on all legal leasehold and freehold estates of the debtor in land. D.C.Code § 15-311 (1989). [30] Thus, the judgment creditor's lien on the debtor's real property is valid as of the date the judgment is recorded in the office of the District of Columbia Recorder of Deeds, even though further court procedures may be required to obtain or sell the debtor's realty to satisfy the lien (just as a motion for judgment of recovery may be necessary to recover funds from a garnishee).
The next legal question under Herman is more subtle: whether the fact that the Municipal Court had assumed jurisdiction over the property by issuing writs of garnishment, before the District Court receiver was appointed, was critical to establishing the creditors' priority over the claims of the receiver. This question is important in determining how narrowly or broadly Herman is to be understood. Municipal Court involvement in Herman issuance of writs of garnishment was necessary for creation of the creditor's garnishment lien on the debtor's funds in the bank. In contrast, as explained above, no court is involved (beyond entry of the judgment itself) in creating a judgment lien on real estate, although the court, of course, may have to be involved in the judgment creditor's eventual enforcement of the lien. [31] We believe that the Municipal Court's involvement was indispensable to creation of a judgment lien in Herman because the court's issuance of the garnishment writs, upon application, was essential to creation of the creditors' lien on the debtor's bank accounts; indeed, there was no other way of obtaining a judgment lien on those particular assets. But the fact that the court was essential to creation of the judgment lien on a bank account does not mean that the court is equally essential to creating judgment liens on other kinds of collateral. For example, a creditor's recording of a judgment lien with the Recorder of Deeds serves the same purpose, as a matter of law, as the court's issuance, accompanied by service, of a writ of garnishment on a garnishee; creation of a judgment lien through such recordation is no less complete than creation of a judgment lien through service of a court-issued garnishment writ. In fact, in either case, creation of the lien is initiated by interaction between the creditor (or its attorney) and the court's or Recorder's office staff; the transaction is ministerial, not discretionary. Thus, in the case of a garnishment, the court acts administratively; it does not perform a truly judicial function until it rules on a motion for judgment of recovery. Looked at in this way, the court's issuance of a writ of attachment or garnishment and the Recorder's entry of a judgment on its record are similar acts to accomplish identical purposes. In sum, the court's role under Herman, was indispensable to creation of the particular kind of judgment lien at issue in that case, but a court's involvement is not necessarily required to create all judgment liens. We conclude the fundamental message of Herman is that the act of creating a judgment lien, whatever kind of action is required, is the critical act for determining whether a judgment lien creditor has priority over the claim of the debtor's receiver. If the creditor has obtained a judgment lien before a receiver is appointed for the debtor, Herman stands for the proposition that the lien creditor will prevail. See Maxi Sales Co. v. Critiques, Inc., 796 F.2d 1293, 1297 n. 2 (10th Cir.1986) (general rule of law is that appointment of a receiver does not determine any rights nor destroy any liens. The receiver merely becomes an assignee of the insolvent, having exactly the same rights that he [or she] had.); Martin v. General Amer. Casualty Co., 226 La. 481, 76 So.2d 537, 541 (1954) (a receiver cannot enjoin the execution of a judgment wherein the seizure occurred prior to his [or her] appointment); Kluckhuhn v. Ivy Hill Ass'n, Inc., 55 Md. App. 41, 461 A.2d 16, 20 (1983) (A receiver takes property subject to claims that existed against it prior to the receivership.); National Surety Corp. v. Sharpe, 236 N.C. 35, 72 S.E.2d 109, 123 (1952) (receiver takes the property of the insolvent debtor subject to the mortgages, judgments, and other liens existing at the time of his [or her] appointment); DeAngelis v. Commonwealth Land Title Ins. Co., 467 Pa. 410, 358 A.2d 53, 55 (1976) (Having already shown that the aid of a receiver is extended only in behalf of creditors who have fully exhausted their remedy at law, it follows necessarily that the jurisdiction will not be exercised in favor of mere general creditors, whose rights rest only in contract and are not yet reduced to judgment, and who have acquired no lien upon the property of the debtor. ); First S. Properties, Inc. v. Vallone, 533 S.W.2d 339, 343 (Tex.1976) (a receivership destroys no prior vested right). [32] We therefore turn to Herman 's application to the facts of this case.
We first consider Smith's judgment of recovery against First American Bank (Appeal No. 93-CV-61). Under Herman, if [t]he receiver was appointed in a suit to which the [judgment creditor was] not [a party] and after the garnishment had been completed[,]... [t]he appointment of a receiver ... [does] not divest the lien acquired by the garnishment. Herman, 190 A.2d at 652. Smith served its first writ of attachment and interrogatories on First American on November 13, 1992, and the Delaware Chancery Court issued its Seizure and Injunction Order four days later, on November 17. Accordingly, the Delaware Chancery Court's Seizure and Injunction Order, which effectively appointed a receiver for CUIC, did not divest the lien Smith had already acquired through its November 13 attachment of funds held by First American. [33] CUIC disputes the amount of money the trial court awarded to Smith in its judgment of recovery. CUIC contends that Smith's recovery should not exceed $319,423.62, in contract with the $516,577.24 the court ordered, because First American's initial response to Smith's writ of attachment was limited to the smaller amount. CUIC argues that First American amended its answer to say it was holding $516,577.24 only because Smith obtained a second writ of attachment, which Smith served on the bank on December 8, after the Delaware Chancery Court had issued its Seizure and Injunction Order. According to CUIC, the difference in amounts between First American's first and second responses$197,153.62represents the amount that was subject to Smith's second writ of attachment, which does not have priority over CUIC's receiver because it was served after the receiver's appointment. CUIC therefore asserts that Smith's judgment of recovery should be reduced to $319,423.62 to exclude the additional $197,153.62 that First American added to its initial response. It is possiblealthough Smith does not suggestthat the entire $516,577.24 was in CUIC's bank accounts at First American on November 13, when Smith served its first writ of attachment on the bank, and that First American's initial response that it was holding $319,423.62 was merely an error, which it later attempted to correct by amending its response. Without regard to that possibility, Smith argues that the first writ, served on November 13, legally intercepted all funds that came into the seized accounts before entry of Smith's judgment of recovery against First American on January 5, 1993, even if they were not in the account on November 13, and, accordingly, that the court properly ordered judgment of recovery against First American in the amount of $516,577.24. Smith adds that it served the second writ of attachment and interrogatories on First American on December 8 merely out of an abundance of caution in order to avoid any possible question as to Smith's entitlement to the additional funds. We agree with CUIC that Smith's November 13 garnishment writ covers only those funds held by First American on November 13 and that any funds the bank received thereafter belong to CUIC's receiver, not to Smithas elaborated below. After entry of a judgment, [a]n attachment shall be levied upon credits of the defendant, in the hands of a garnishee, by serving the garnishee with a copy of the writ of attachment and of the interrogatories accompanying the writ, and a notice that any property or credits of the defendant in his [or her] hands are seized by virtue of the attachment. D.C.Code § 16-546. The garnishee must file an answer to the interrogatories in the writ and send a copy of the answer to the defendant and the judgment creditor. See D.C.Code § 16-552(a) (1989); Super.Ct.Civ.R. 69-I(d). After the garnishee answers the writ, the judgment creditor may file a motion for judgment of recovery, and a judgment shall be entered against [the garnishee] for the amount of credits admitted or found, not exceeding the amount of the plaintiffs judgment, and costs, and execution shall be had thereon not to exceed the credits in his [or her] hands. D.C.Code § 16-556(a); see also Super.Ct.Civ.R. 69-1(e). This leaves the following question: Does a writ of attachment cover funds owed to the judgment debtor that come into the hands of the garnishee after service of the writ? It appears that as a general rule, apart from statutory provisions to the contrary, an attachment or garnishment can have no effect on property subsequently coming into the hands of the defendant or garnishee. 6 AM.JuR.2d Attachment and Garnishment §§ 94, 461 (1966); see Everson v. Atlas Tie Co., 73 Idaho 91, 92-93, 245 P.2d 773, 774-75 (1952) (only those debts owing at time of service of notice of garnishment are subject to garnishment, and debts arising by reason of subsequent transactions between garnishee and creditor are not bound by garnishment); Dufield v. Davis, 152 Kan. 404, 103 P.2d 778, 780 (1940) (attachment lien covers only actual interest of debtor in property existing at time of levy and does not extend to subsequently acquired interest); North-western Nat'l Bank of Bloomington-Richfield v. Delta Studios, Inc., 289 Minn. 202, 184 N.W.2d 3, 4 (1971) (garnishment summons attaches and binds only personal property, money, or indebtedness owed defendant and in garnishee's possession at time summons is served); Johnson v. Dutch Mill Dairy, Inc., 237 Minn. 117, 54 N.W.2d 1, 3 (1952) (deposits made in principal defendant's bank account after service of garnishment summons on bank were not impounded by such garnishment, but were subject to subsequent garnishment by defendant's creditors); Holly v. Dayton View Terrace Improvement Corp., 25 Ohio Misc. 57, 53 O.O.2d 393, 263 N.E.2d 337, 342-43 (Ohio Ct.Com. Pleas 1970) (it is also generally held that an attachment covers only the interest of the defendant in the property levied on existing at the time of the levy and that it does not extend to property previously transferred or to an interest in property subsequently acquired by the defendant). In some cases, however, usually by virtue of particular statutory provisions, a garnishment is regarded as binding effects or credits of the defendant coming into possession of or owning by the garnishee after service of the writ. 6 Am.Jur.2d Attachment and Garnishment § 461; see International Bedding Co. v. Terminal Warehouse Co., 146 Md. 479, 126 A. 902, 905 (1924) (contrary to general rule, attachment in Maryland binds all property or credits of debtor in hands of garnishee or which may come into garnishee's hands after laying attachment and before trial); Flat Iron Mac Assoc. v. Foley, 90 Md.App. 281, 600 A.2d 1156, 1159-60 (1992) (writ of garnishment included property which came into garnishee's possession after service but prior to judgment); Steer v. Dow, 75 N.H. 95, 71 A. 217 (1908) (same). We perceive no sound basis for rejecting the general rule and accordingly conclude that the District of Columbia follows that rule: a writ of garnishment covers only the property of the debtor in the hands of the garnishee at the time the writ is served. [34] Applying this ruling to the facts of this case, we conclude that the writ of garnishment Smith served on First American on November 13 covered only those funds that First American was holding for CUIC on that date. Based on our review of the record, however, we cannot determine the amount of money that First American was holding for CUIC on November 13. The record does not reveal whether First American amended its response to Smith's writ of attachment because of an error in its first response or because additional funds were deposited into CUIC's accounts after its first response. We therefore cannot determine whether First American was holding $319,423.62 or $516,577.24 on November 13; we must remand to the trial court for further proceedings to sort out Smith's proper recovery.
We next consider Smith's judgment lien on the Connecticut Avenue building (Appeal No. 93-CV-726). CUIC contends that the trial court erred in granting summary judgment in favor of Smith and in ruling that (1) Smith had a valid, enforceable judgment lien on the building located at 1714 Connecticut Avenue, N.W. because CUIC's transfer of that building to its parent company, CUG, was a fraudulent conveyance and in ruling, further, that (2) Smith was entitled to pierce the corporate veil to execute on the building in CUG's hands. CUIC argues that there were genuine issues of material fact as to whether CUIC had fraudulent intent in transferring the building to CUG, and as to whether such fraudulent intent provided a sufficient basis for disregarding the corporate separateness of CUIC and CUG and thus permitting Smith to pierce the corporate veil.
Super.Ct.Civ.R. 56(c) (1993) requires the trial court to grant summary judgment if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. The moving partyhere Smithhas the burden of clearly demonstrating the absence of any genuine issue of material fact and entitlement to judgment as a matter of law. See Holland v. Hannan, 456 A.2d 807, 815 (D.C.1983). To survive a summary judgment motion, the opposing partyhere CUICneed only show that there is sufficient evidence supporting the claimed factual dispute to require a jury or judge to resolve the parties' differing versions of the truth at trial. Nader v. de Toledano, 408 A.2d 31, 42 (D.C.1979) (quoting International Underwriters, Inc. v. Boyle, 365 A.2d 779, 782 (1976)). If the offered evidence and related inferences would permit the factfinder to find for the nonmoving party under the appropriate burden of proof, the motion for summary judgment must be denied. See id. Our standard of review of a trial court summary judgment order is the same as that applied by the trial court when it considers the motion in the first instance. See Government Employees Ins. Co. v. Group Hosp. Medical Servs., Inc., 602 A.2d 1083, 1086 (D.C.1992); Taylor v. Eureka Inv. Corp., 482 A.2d 354, 357 (D.C. 1984). In granting summary judgment here, the trial court necessarily concluded as a matter of law that, on the facts seen in the light most favorable to CUIC, there were no genuine issues of material fact as to whether the transfer of the building was a fraudulent conveyance or whether Smith was entitled to pierce the corporate veil. We begin by examining the applicable legal principles.
A conveyance or assignment ... of an estate or interest in land or its rents and profits ... with the intent to hinder or defraud persons having just claims or demands, of their lawful suits, damages, or demands, is void as against the persons so hindered or defrauded. D.C.Code § 28-3101 (1991); see also J.R. Beaton Co. v. Berberich, 77 U.S.App.D.C. 377, 378, 135 F.2d 831, 832 (1943) (vital question in determining whether debtor's conveyances are fraudulent is good faith of transaction). D.C.Code § 28-3101 also provides that [t]his section does not affect the title of a purchaser for value, unless it appears that he [or she] had previous notice of the fraudulent intent of his [or her] immediate grantor. According to D.C.Code § 28-3101, therefore, the transfer of CUIC's building to CUG was a fraudulent conveyance if (1) it was accomplished with the intent to hinder or defraud Smith in exercising its right of execution, and (2) either CUG was not a purchaser for value or CUG had previous knowledge of the fraudulent intent of CUIC.
The trial court concluded, based on undisputed facts of record and without holding a hearing, [35] that as a matter of law (1) the conveyance was intended to hinder or defraud Smith of its right to execute on its judgment against CUIC; (2) CUG had notice of CUIC's fraudulent intent; and (3) even if CUG did not have notice of CUIC's fraudulent intent, CUG was not a purchaser for value of the building. [36] As elaborated below, the evidence in the record clearly supports the trial court's first two conclusionsthat the conveyance was intended to hinder or defraud Smith and that CUG had notice of CUIC's fraudulent intentand thus summary judgment on these two issues was appropriate. There was, however, a genuine issue of material fact as to the evidence surrounding the trial court's conclusion that CUG was not a purchaser for value of the building, and the trial court therefore erred in concluding to the contrary. [37] Nontheless, because the trial court ruled correctly on the first two issuesCUIC's intent to defraud and CUG's notice of CUIC's fraudulent intentand because those rulings together are sufficient to establish a fraudulent conveyance, the trial court's summary judgment was entirely proper. In the first place, the trial court correctly concluded that CUIC had fraudulent intent within the meaning of the statute. The question of fraudulent intent is a question of fact and not of law. D.C.Code § 28-3101; see also Snider v. Kelly, 77 U.S.App. D.C. 363, 364, 135 F.2d 817, 818 (1943), and appellate courts do not usually sustain grants of summary judgment on the issue of fraudulent intent. See Estate of Lane v. Lane, 631 P.2d 103, 106 (Alaska 1981); Credit Union of Amer. v. Myers, 234 Kan. 773, 676 P.2d 99, 106 (1984); Farmers Prod. Credit Ass'n v. Taub, 121 A.2d.2d 681, 504 N.Y.S.2d 448, 449 (1986). Summary judgment on the issue of fraudulent intent may be appropriate, however, where all the facts point[] to a finding of intent with no inference of a pure motive possible. Jones v. Central Nat'; Bank of St. Johns, 547 N.E.2d 887, 891 (Ind.Ct.App. 1989); see also AYR Composition, Inc. v. Rosenberg, 261 N.J.Super. 495, 619 A.2d 592 (App.Div.1993) (defendants' transfer of assets was fraudulent conveyance as matter of law, and summary judgment was appropriate where trial court's conclusion that defendants had fraudulent intent was based on analysis of facts in light of New Jersey statutory factors). In evaluating claims of fraudulent intent, courts often discuss the badges of fraud in the case. See Leonardo v. Leonardo, 102 U.S.App.D.C. 119, 123, 251 F.2d 22, 26 (1958) (the term `badge of fraud' means any fact tending to throw suspicion upon the questioned transaction); Estate of Lane, 631 P.2d at 106 (badges of fraud are circumstantial evidence of intent); Jones, 547 N.E.2d at 890 (facts must be taken together to determine how many badges of fraud exist and if they constitute a pattern of fraudulent intent). The following badges of fraud, among others, support the conclusion that a transferor had fraudulent intent: [L]ack of consideration for the conveyance, a close relationship between the transferor and transferee, pendency or threat of litigation, financial difficulties of the transferor, and retention of the possession, control, or benefit of the property by the transferor. Kelley v. Thomas Solvent Co., 725 F.Supp. 1446, 1457 (W.D.Mich.1988). Finally, under § 28-3101, creditors must prove fraud as a matter of fact . . . by clear and convincing evidence. District-Realty Title Ins. Corp. v. Forman, 518 A.2d 1004, 1008 (D.C.1986). Accordingly, our inquiryregarding the trial court's conclusion that, as a matter of law CUIC had fraudulent intentis whether the trial court correctly ruled that a reasonable jury could only conclude that the undisputed facts of record proved by clear and convincing evidence that CUIC had fraudulent intent in transferring its building to CUG. See Nickens v. Labor Agency of Metro. Washington, 600 A.2d at 813, 816 (D.C.1991) (A motion for summary judgment should be granted if (1) taking all reasonable inferences in the light most favorable to the nonmoving party, (2) a reasonable juror, acting reasonably, could not find for the nonmoving party, (3) under the appropriate burden of proof.). CUIC stated in its Opposition to Smith's Motion for Summary Judgmentand, as the trial court concluded, it is therefore undisputedthat CUIC had transferred its building to CUG in order to protect[] its assets from attachment by Smith. CUIC contends, however, that it did not have fraudulent intent because the transfer was the means to a non-fraudulent end: To preserve CUIC as a going concern to allow CUIC to fulfill its obligations to its policyholders and to all its creditors, including Smith. [38] We conclude, as a matter of law, that the undisputed fact that CUIC transferred its building to CUG to protect the building from Smith is clear and convincing evidence of CUIC's fraudulent intent. Although CUIC also may have had non-fraudulent motives i.e., CUIC may have wished to preserve its assets for the benefit of all its creditorsthe simple fact that it transferred the building to keep it out of Smith's reach is a sufficient ground for an unassailable conclusion that CUIC had fraudulent intent. See Kelley, 725 F.Supp. at 1455 (company's deliberate effort to put assets out of the reach of creditors meets the standard of intent to defraud); Klein v. Rossi, 251 F.Supp. 1, 2 (E.D.N.Y. 1966) (fraudulent purpose includes a solvent person's deliberate effort to stave off creditors by putting property beyond their reach even when the purpose of that is not to cheat them of ultimate payment but only to wrest from them time to restore the debtor's affairs). Next, we conclude that the trial court's second conclusionthat CUG had notice of CUIC's fraudulent intentwas supported by undisputed record evidence that, as the trial court noted, many of the people involved in the transfer of the building were officers in both CUIC and CUG. In its Opposition to Smith's Motion for Summary Judgment, CUIC did not dispute the fact that officers in both CUIC and CUG were involved in the transfer of the building. Instead, CUIC contended that [s]ince CUIC's intent was not fraudulent, CUG cannot be said to have notice of any fraudulent intent of CUIC. This response effectively conceded CUG's notice of CUIC's intent, however legally characterized. In sum, because the trial court correctly concluded as a matter of law, based on undisputed record evidence, that CUIC had fraudulent intent when it transferred its Connecticut Avenue building to CUG and, further, that CUG had notice of CUIC's fraudulent intent, we conclude that the trial court properly granted summary judgment in Smith's favor on the issue of the fraudulent conveyance. Because we sustain the fraudulent conveyance ruling, we need not address the trial court's additional ruling that Smith could pierce the corporate veil to execute on the building in CUG's hands. The transfer to CUG was invalid, and thus ineffective. Smith may execute on the building in CUIC's, the judgment debtor's, hands. See Tipp v. United Bank of Durango, Colorado, 23 Ark.App. 176, 745 S.W.2d 141, 143 (1988) (creditor of the grantor [may] elect[] to treat a fraudulent conveyance of the debtor's property as void, and institut[e] legal process to subject the property to his [or her] debt); Texas Sand Co. v. Shield, 381 S.W.2d 48, 54 (Tex.1964) ([W]hen the creditor obtains a judgment against the debtor, and properly records and indexes an abstract of such judgment, the creditor acquires a lien upon the land just as though no transfer had been made if the conveyance is found to be fraudulent). CUIC further contends, however, that the trial court erred in ruling that Smith has a valid, enforceable judgment lien upon the building, dating from November 4, 1992, because the court should have given effect to the Delaware court's Seizure and Injunction Order and invalidated Smith's lien. For the reasons already discussed regarding priority of Smith's judgment of recovery vis-a-vis CUIC's receiver, we disagree. Smith obtained its judgment lien on the building on November 4, thirteen days before the Delaware court issued the November 17 Seizure and Injunction Order. We therefore conclude, under Herman, that [t]he appointment of [CUIC's] receiver ... did not divest [Smith's judgment] lien. Herman, 190 A.2d at 652. Accordingly, as the trial court concluded, Smith may enforce or foreclose upon the . . . lien in partial satisfaction of its judgment.