Opinion ID: 2311050
Heading Depth: 3
Heading Rank: 2

Heading: The Transfer from Levitt to Park City

Text: The defendants argue that [s]ince the transaction to Levitt was not fraudulent, it follows that the subsequent transfer to Park City    and encumbrances by mortgage were likewise not fraudulent. They claim error in the trial justice's conclusion that Levitt's transfer to Park City was fraudulent even though it occurred five months after Levitt became aware that the Nisenzons  had an interest in the property. They argue that this finding assumes that Levitt acknowledged and agreed that the Nisenzons had a continuing interest in the property itself rather than just a claim [10] against Sadowski. However, we conclude that the trial justice was correct in finding that this transfer was fraudulent. Pursuant to § 6-16-4(a)(1), [a] transfer made    by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made    if the debtor made the transfer    [w]ith actual intent to hinder, delay, or defraud any creditor of the debtor. See also Warwick Municipal Employees Credit Union v. Higham, 106 R.I. 363, 368-69, 259 A.2d 852, 855 (1969) (the decisive question    with regard to fraudulent intent is    whether    a conveyance had the effect of depriving plaintiff of a right which would have been legally effective had the conveyance not been made). Here, because of his status as the first transferee in the property's initial fraudulent transfer, Levitt was a debtor vis-à-vis the Nisenzons when he transferred the property to Park City and encumbered it with mortgages. The trial justice found Levitt's testimony that he was not aware of plaintiff's interest in the property until March of 1989    [to be] unsupported and determined it to be clear that Levitt was aware of plaintiff's interest [in the property] when these actions [the transfers and the granting of mortgages] were schemed. Affording this credibility and factual determination the deference it is due, we conclude that the trial justice was not clearly wrong in finding that Levitt acquired the property for inadequate consideration in the initial transfer from Sadowski when he was insolvent or became insolvent in connection with the transfer. Pursuant to 6-16-8(b), a money judgment may enter against such a transferee. Thus, the Nisenzons had a claim against Levitt from the time of Sadowski's initial transfer of the property to him in September 1988. Moreover, as noted by the trial justice, even if Levitt had not been aware of the Nisenzons' claims until March 1989, he still transferred the property to Park City in August 1989 when he was concededly aware of their claims and of Sadowski's dire financial straits. Notwithstanding this knowledge, he then proceeded to encumber the property with mortgages that were more than three times his own valuation of the property's worth. For these reasons the trial justice was not clearly wrong in concluding that the Levitt-to-Park-City transfer was fraudulent because the evidence supports the conclusion that when Levitt transferred the property to Park City he was acting with actual intent to hinder, to delay, or to defraud the Nisenzons in their effort to collect the money that was owed to them.