Opinion ID: 1497850
Heading Depth: 1
Heading Rank: 2

Heading: Actual Intent to Hinder, Delay or Defraud

Text: The court did not err in finding that Proia had actual intent to hinder, delay or defraud the FDIC's predecessor in interest. Whether a conveyance is fraudulent is a question of fact. Watson v. Watson, 221 Conn. 698, 607 A.2d 383, 388 (1992). We will not overturn the trial court's findings unless they are clearly erroneous. Morin Bldg. Products Co. v. Atlantic Design & Constr. Co., 615 A.2d 239, 241 (Me.1992). A factual finding is clearly erroneous only if there is no competent evidence in the record in support of it. Dupuis v. Pierre's School of Beauty Culture, Inc., 642 A.2d 854, 855 (Me.1994). A transfer by a debtor is fraudulent if it is made with actual intent to hinder, delay or defraud any creditor of the debtor.... 14 M.R.S.A. § 3575(1)(A). The following factors may be considered in analyzing the fraud issue: A. The transfer or obligation was to an insider; B. The debtor retained possession or control of the property transferred after the transfer; C. The transfer or obligation was disclosed or concealed; D. Before the transfer was made or obligation was incurred, the debtor sued or threatened with suit; E. The transfer was of substantially all the debtor's assets; F. The debtor absconded; G. The debtor removed or concealed assets; H. The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred; I. The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred; J. The transfer occurred shortly before or shortly after a substantial debt was incurred; and K. The debtor transferred the essential assets of the business to a lienor who had transferred the assets to an insider of the debtor. 14 M.R.S.A. § 3575(2)(A)-(K). The court may consider factors other than the foregoing, and any combination of factors may support a determination of actual intent. Id. comment. See also U.F.T.A. § 4 comment (1984) (stating that in considering the listed factors a court should evaluate all relevant circumstances and take into account all indicia negativing as well as suggesting fraud). The court found that the FDIC established by clear and convincing evidence [2] that the transfer of property was to an insider, Proia retained possession of the property in question, he was threatened with suit prior to the transfer, the transfer was for less than the reasonably equivalent value of the asset, and the transfer occurred shortly after a substantial debt was incurred. These findings of fact are supported by competent evidence in the record. For purposes of the Act, an insider is defined as, inter alia, an individual who is a relative of the debtor. 14 M.R.S.A. § 3572(7)(A)(1). Relative is defined as an individual within the third degree of consanguinity as determined by the common law. 14 M.R.S.A. § 3572(11). Proia transferred his interest in the Westport Island property to the Trust, of which he was the sole trustee and a fifty percent beneficiary. His children were the beneficiaries of the remaining fifty percent of the trust. Proia clearly transferred the property to insiders. See Clark v. Bank of Bentonville, 308 Ark. 241, 824 S.W.2d 358, 362-63 (1992) (conveyance by debtor of property to son as trustee of trust to which debtor, as beneficiary, was entitled to whatever amounts he deemed convenient found fraudulent). Proia retained possession of the property in question after the transfer. He testified that he spends quite a bit of time on the island. Although he does not live there full-time, he is gradually moving toward doing so. He intends the island to be his primary residence in the future. The record shows that Michael Carr, cotrustee of the 354 Waverly Trust, received default notices on the loan prior to Proia's transfer of Westport Island. These notices demanded payment within fifteen days and threatened foreclosure if such payment were not received. The court simply did not believe Proia's claim that he was unaware of the default and threatened foreclosure. That credibility determination was the court's to make. Bailey v. Sears, Roebuck & Co., 651 A.2d 840, 843 (Me.1994). There was no consideration for the transfer of Westport Island to the Trust. Proia had purchased the property in 1984 for $60,000. He mortgaged the property in March of 1990 to secure a debt for $125,000. The property clearly had value. See Citizens State Bank of Hayfield v. Leth, 450 N.W.2d 923, 926 (Minn.Ct.App.1990) (debtor's transfer of land to a revocable family trust made without receipt of reasonably equivalent value when sold for ½ value). Finally, Proia and his first wife were divorced approximately two months prior to the establishment of the Westport Island Trust. The divorce judgment required Proia to pay his ex-wife $250,000. Therefore, Proia had incurred a substantial debt shortly before the transfer of the island to the Trust. See Commerce Bank of Lebanon v. Halladale A Corp., 618 S.W.2d 288, 292 (Mo.App. 1981) (finding that incurrence of substantial debts to other creditors during time period immediately proceeding or following challenged transfer was one indicia of fraud).