Opinion ID: 2974066
Heading Depth: 2
Heading Rank: 3

Heading: Reduction for Living Expenses

Text: Karen Morriss’s argument—that she was entitled to a reduction in liability for the amounts she spent on living expenses—fails for the same reason as the defendants’ argument that their liability should have been reduced for amounts transferred to Steve Morriss’s companies. Nothing in the Uniform Act suggests that, once a person is found to be a transferee or to have participated in a conspiracy to engage in a fraudulent transfer of assets, that person’s liability is governed by -9- Nos. 04-6334/6335 Tareco Props. v. Morriss what she spends the proceeds on. Although the district court could have equitably reduced Karen Morriss’s liability, as the court did in Dahar, 318 B.R. at 27-28, if it had found that she paid for family or living expenses that Steve Morriss would have otherwise paid if the fraudulent transfers had not occurred, Karen Morriss did not meet her burden of proving that she was entitled to a reduction. She did not show what family and living expenses she paid that would otherwise have been paid by Steve Morriss. The cases on which Karen Morriss relies provide no support for her argument. In Hamilton v. Zimmerman, for example, the court stated that a debtor cannot be held liable to creditors for the expenses incurred in supporting his family. 37 Tenn. (5 Sneed) 39, 1857 WL 2547, at  (Tenn. 1857). The court went on to hold, however, that the debtor could not use his family expenses as a pretext for fraud. Id. Hamilton is thus consistent with the district court’s ruling in this case. Once the district court ruled that all of the conveyances were made “to hinder, delay, or defraud” creditors, § 66-3-305, the defendants became liable regardless of what they later decided to spend the money on. The district court thus properly found that Karen Morriss was not entitled to a reduction in liability for the portion of the fraudulently conveyed money that she spent on family and living expenses.