Opinion ID: 2458558
Heading Depth: 4
Heading Rank: 2

Heading: There is a genuine issue of material fact as to whether Bellows and Hanson engaged in a fraudulent conveyance.

Text: The superior court concluded in dicta that under a badges of fraud analysis, Shaffer raised no genuine issues of material fact regarding defendants' fraudulent intent. By contrast, Shaffer argues on appeal that [t]here are many factual issues related to whether the transfer of the Ring Island property was a fraudulent conveyance. Shaffer provides a detailed summary of evidence suggesting that the transfer displayed several badges of fraud. In reviewing a summary judgment determination, we draw all factual inferences in favor of the non-moving party. [10] Alaska applies a lenient standard for withstanding summary judgment. [11] Applying that standard to the evidence before the superior court, we find several genuine issues of fact that relate materially to the badges of fraud. We list three examples. First, there is a genuine issue of material fact as to whether the transfer was made for inadequate consideration, the first badge of fraud listed above. The superior court treated inadequate consideration as irrelevant to the analysis of defendants' badges of fraud, explaining that no consideration was ever intended and that the transfer was clearly a gift. This appears to be either a factual inference in Bellows's favor, accepting the notion that he made the conveyance as a gift solely out of love and affection for Hanson, in which case the inference is inappropriate in the summary judgment context; or it is the incorrect statement that debtors can as a rule evade this badge of fraud simply by claiming to make gifts. The factual issue of whether Bellows transferred the property for inadequate consideration is thus material to the badges of fraud analysis. Second, there is a genuine issue of material fact as to whether the transfer was undertaken while Bellows was in or approaching insolvency, [12] the third badge of fraud above. The superior court recognized that there may or may not be evidence that Bellows was in financial distress. But the superior court treated potential evidence of Bellows's financial status as irrelevant: [W]hether or not Mr. Bellows is insolvent doesn't seem to me to have any effect on the fraudulent intent in this transaction. Again,. . . the land continues to be subject to your option in the event of a sale. So the option itself has not been frustrated or diminished. But if Bellows's insolvency could have resulted in the forced sale of his property, then there would be a great difference between the title being in Bellows's name or Hanson's. In the former case, Shaffer might end up purchasing the property in a forced sale; in the latter case, a forced sale would be unnecessary and Bellows might continue to use the property indefinitely with his sister's permission. The genuine issue of fact recognized by the superior court regarding Bellows's solvency is thus material to the badges of fraud analysis. The revelation by Bellows's attorney, immediately after the superior court delivered its oral decision, that Mr. Bellows is trying to do some refinancing on something, and that [i]t's verging on being a big problem for him, further underscores the extent to which the early termination of this case may have obscured factual matters regarding Bellows's solvency that are relevant to the analysis of the badges of fraud. Third, there is a genuine issue of material fact as to whether Bellows retained possession of the property, the sixth badge of fraud above. The superior court appears to have weighed the facts in Bellows's favor on this point, concluding that Bellows did not retain possession because [t]he obvious[ ] evidence in the record is that Mr. Bellows has visited the property two times within one year and may have left some personal property on it from years before. But as Shaffer notes, some evidence suggested that Bellows never resided on the property, and that he continued to use it after the transfer of title very much as he did before. There is thus a genuine issue of material fact regarding Bellows's retained possession of the property. In light of the above, we conclude that Shaffer raised genuine issues of material fact as to whether Bellows and Hanson engaged in a fraudulent conveyance under AS 34.40.010 according to the badges of fraud analysis set out in Nerox. We thus reverse the superior court's dismissal on summary judgment of Shaffer's fraudulent conveyance claim and remand for further proceedings. We note that on remand Shaffer may assert any arguments the evidence supports regarding the badges of fraud, not just those mentioned above.