Opinion ID: 2458558
Heading Depth: 4
Heading Rank: 1

Heading: The wrong legal test was applied to the fraudulent conveyance claim.

Text: Shaffer argues that the superior court erred in its legal analysis of the statute governing fraudulent conveyance claims, AS 34.40.010. This statute provides in relevant part: [A] conveyance . . . of an estate or interest in land . . . made with the intent to hinder, delay, or defraud creditors or other persons of their lawful suits, damages, forfeitures, debts, or demands, . . . with the like intent, as against the persons so hindered, delayed, or defrauded is void. The superior court relied on dicta from a footnote in Asher v. Alkan Shelter, LLC [5] to conclude that under Alaska law, any fraudulent conveyance requires four elements: (1) an unlawful agreement, (2) the specific intent of each participant in the scheme to hinder, delay or defraud a creditor of a participant in the scheme, (3) acts taken in furtherance of the unlawful agreement, and (4) damages caused by those acts. The footnote in Asher in turn relies on a 1993 case, Summers v. Hagen. [6] But when the four elements in Summers are read in the context of the facts of the case, it is clear that they are meant to be the elements of conspiracy to fraudulently convey, not the elements of fraudulent conveyance. We summarized the correct approach to fraudulent conveyance claims in Nerox Power Systems, Inc. v. M-B Contracting Co. [7] : The prohibition against fraudulent conveyances has been codified in Alaska law. The intent to defraud through a conveyance is a question of fact usually to be proved by circumstantial evidence. Many circumstantial factors can indicate the existence of fraud. Badges of fraud must be viewed within the context of each particular case.[ [8] ] Typical badges of fraud include: (1) inadequate consideration, (2) transfer in anticipation of a pending suit, (3) insolvency of the transferor, (4) failure to record, (5) transfer encompasses substantially all the transferor's property, (6) transferor retains possession of the transferred premises, (7) transfer completely depletes transferor's assets, and (8) relationship of the parties. [9] Nerox, not Asher, accurately captures the elements required for a simple fraudulent conveyance claim under Alaska law. A fraudulent conveyance claim does not require plaintiffs to prove the four elements from Summers. We thus analyze Bellows's fraudulent conveyance claim under the badges of fraud analysis summarized in Nerox.