Opinion ID: 200889
Heading Depth: 2
Heading Rank: 3

Heading: Fleet's Legal Action to Adjudicate its Right to Relief

Text: 30 Valente also claims that Fleet may not avail itself of the relief provided by Rhode Island law because it failed to bring an action to determine whether he actually engaged in fraud until it filed its motion for the turnover of funds in the bankruptcy court. He also claims that its motion was time-barred. We will consider each of these objections in turn.
31 Valente's claim that Fleet has failed to seek some sort of judicial inquiry to support its claim of fraud and his retention of a beneficial interest in the property reflects the untenable premise that the turnover proceeding in the bankruptcy court did not properly serve that purpose. Ideally, Fleet should have initiated its case by filing a complaint under the rules governing adversary proceedings, Part VII of the Federal Rules of Bankruptcy Procedure, rather than by filing a motion under the rule that governs contested matters, Fed. R. Bankr.P. 9014. However, the standard of proof in these two types of proceedings is the same, the procedural rules are similar, and the proceedings provided Valente with more than adequate notice and an opportunity to be heard. See, e.g., Trust Corp. v. Patterson (In re Copper King Inn, Inc.), 918 F.2d 1404, 1406-07 (9th Cir.1990) (disposing as harmless error the bankruptcy court's failure to hold proceedings under Part VII when the parties had adequate notice and opportunity to be heard); In re Swizzlestick, L.L.C., 253 B.R. 264, 267 (Bankr.W.D.Mo.2000) ([T]he Court will not elevate the form of the proceeding in which a lien issue is to be considered, if the substance of the hearing on that issue is such that the objecting party has been afforded due process.). Valente was not prejudiced by Fleet's decision to proceed by motion. See Fed. R. Bankr.P. 9005 (stating that the harmless error rule, Fed.R.Civ.P. 61, applies in bankruptcy cases). 32 As we have already noted, Fleet provided sufficient evidence in an adversarial setting to establish that Valente retained an equitable interest in the property. See supra Section III.A. For the bankruptcy court, the application of Rhode Island's resulting trust doctrine would have been an appropriate and familiar role. See, e.g., Young v. United States, 535 U.S. 43, 50, 122 S.Ct. 1036, 152 L.Ed.2d 79 (2002) (describing bankruptcy courts as courts of equity that `appl[y] the principles and rules of equity jurisprudence') (quoting Pepper v. Litton, 308 U.S. 295, 304, 60 S.Ct. 238, 84 L.Ed. 281 (1939)); Bessette v. Avco Fin. Servs., Inc., 230 F.3d 439, 445 (1st Cir. 2000) (stating that a bankruptcy court has the power to fashion an equitable remedy so long as the court acts consistent with the Code and does not alter the Code's distribution of other substantive rights). The bankruptcy court erred in not providing this equitable relief. 33
34 Valente claims that Fleet's action is barred by the UFTA's four year statute of limitations. However, we have already concluded that this case is not governed by the UFTA. Since Valente's equitable interest in the Middletown property arose out of his fraudulent conduct, we conclude that Rhode Island's statute of limitations for fraudulent actions should apply. See Goya, 233 F.3d at 46 (relying upon New York's statute of limitations regarding fraudulent actions to conclude that the plaintiff's action was not time-barred); New Amsterdam Cas. Co. v. Waller, 323 F.2d 20, 26 (4th Cir.1963) (applying the state limitations period governing fraud in a fraudulent transfer case); 37 Am.Jur.2d Fraudulent Conveyances and Transfers § 180 (observing that the general rule holds that barring an express statute of limitations, fraudulent transfers are generally governed by the state's limitations period for fraudulent actions). That limitations period is ten years. See R.I. Gen. Laws § 9-1-13(a) (Except as otherwise specially provided, all civil actions shall be commenced within ten (10) years next after the cause of action shall accrue, and not after.); Jones v. Moretti, 711 A.2d 1156, 1157 (R.I.1998) (Actions for fraud in Rhode Island are subject to the ten-year statute of limitations contained in G.L.1956 § 9-1-13(a).). Since Valente's fraudulent conduct occurred in June 1992 and Fleet filed its turnover motion on May 25, 2000, Fleet's motion was not time-barred. 7