Opinion ID: 2546870
Heading Depth: 3
Heading Rank: 3

Heading: Liability Under the Uniform Fraudulent Transfer Act

Text: ¶ 22 The district court relied on the Uniform Fraudulent Transfer Act, Utah Code Ann. §§ 25-6-1 to -13 (1998), as its third basis for extending liability to Tremco. [5] Section 25-6-5 defines a fraudulent transfer as one made with actual intent to hinder, delay, or defraud any creditor of the debtor or one made without receiving a reasonably equivalent value in exchange for the transfer or obligation. Id. § 25-6-5(1)(a)-(b). The last situation requires either that the debtor's remaining assets be unreasonably small in relation to the business or transaction or that the debtor intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due. Id. § 25-6-5(1)(b)(i)-(ii). The district court accepted BYU's arguments that Tremco defrauded BYU by asserting control over SoftSolutions and aiding a fraudulent transfer of SoftSolutions' assets to STC. It failed to explain, however, how the Uniform Fraudulent Transfer Act renders Tremco liable for the SoftSolutions judgment. ¶ 23 Under the Uniform Fraudulent Transfer Act, a creditor who has shown that its debtor fraudulently transferred assets, and who has obtained a judgment against that debtor, may, by court order, levy execution on the asset transferred or its proceeds. Id. § 25-6-8(2). In this case, the assets at issue (DSearch technology licenses) were transferred from SoftSolutions to STC, with SoftSolutions receiving no value for the transfer. The assets were owned by STC when WordPerfect acquired STC's stock. The proceeds from the stock sale went to shareholders KWD Associates, L.C.; AST Associates, L.C.; and Julee Associates, L.C. BYU has not claimed that Tremco received any proceeds of the sale, and Tremco specifically denies having done so. Because Tremco did not transfer the assets, did not receive the assets, and did not receive proceeds from the transfer, section 25-6-8(2) does not provide a vehicle pursuant to which BYU can recover from Tremco. See id. The district court failed to articulate any additional reasoning or authority supporting the conclusion that Tremco is liable to BYU under the Uniform Fraudulent Transfer Act. We therefore conclude that the district court erred in relying on the Uniform Fraudulent Transfer Act as a basis for granting summary judgment to BYU.