Court Opinion

ID: 160640
Source: CourtListenerOpinion
Date Created: 2010-08-14 06:48:37+00
Date Added: 2024-06-11T17:15:30.019464
License: Public Domain

F I L E D
                                                                 United States Court of Appeals
                                                                         Tenth Circuit
                    UNITED STATES COURT OF APPEALS
                                                                         JAN 19 2001
                             FOR THE TENTH CIRCUIT
                                                                    PATRICK FISHER
                                                                             Clerk

    LAND O’LAKES INC.,

               Plaintiff-Appellee,

    v.                                                  No. 99-7147
                                                  (D.C. No. 98-CV-548-S)
    LARRY D. SCHAEFER; ELAINE M.                        (E.D. Okla.)
    SCHAEFER,

               Defendants-Appellants,

         and

    KING-BOSWELL ENTERPRISES,
    L.L.C.; GUARANTY NATIONAL
    BANK,

               Defendants.

                             ORDER AND JUDGMENT         *

Before TACHA , Chief Judge, EBEL , and BRISCOE , Circuit Judges.

*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
      Defendants Larry and Elaine Schaefer appeal the district court’s entry of

summary judgment against them on Land O’Lakes’ (LOL) claim for fraudulent

conveyance and on their counterclaims for intentional infliction of emotional

distress, invasion of privacy, abuse of process, and tortious interference with

contract and prospective business advantage. We have jurisdiction pursuant to

28 U.S.C. § 1291 and Fed. R. Civ. P. 54(b). We affirm.   1

      This diversity action arises out of LOL’s attempts to collect an Iowa

judgment it obtained against Larry Schaefer for breach of several grain contracts.

LOL obtained the judgment on March 11, 1998 in the amount of $127,125.00 plus

ten percent interest per annum and costs. During the course of the Iowa

litigation, LOL learned that Larry owned a substantial amount of farmland in

McCurtain County, Oklahoma. Therefore, in addition to filing judgment liens

against Larry’s property in Iowa, LOL also filed its judgment with the McCurtain

County District Court on April 6, 1998, and with the McCurtain County Clerk’s

Office on April 20, 1998. LOL attempted to collect the judgment in Iowa by

garnishing Larry’s bank accounts and levying against the assets of his used

automobile business, but LOL was able to recover only about $1,500 from these

1
       After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.

                                          -2-
efforts. On July 27, 1998, LOL conducted a debtor’s examination of Larry to find

other assets from which it might satisfy its judgment. When asked about the

Oklahoma farmland at this examination, Larry testified that he had never owned

any farmland in Oklahoma, but that his wife owned some. He further testified

that he had not given his wife any property in the past three years.

      Contrary to this testimony, Larry had a contract for deed on 1,275 acres of

farmland in Oklahoma which he entered into with ReliaStar Life Insurance Co. in

November 1990. The final payment was due on or before January 2, 1998, and

ReliaStar was to deliver a warranty deed for the property to Larry upon receipt of

final payment. Larry also owned 115 acres of Oklahoma farmland that he had

purchased from ReliaStar in April 1991. Sixteen days after entry of LOL’s

judgment against him, Larry transferred all the Oklahoma farmland to his wife,

Elaine, via two quitclaim deeds. Larry admittedly received no consideration for

this transfer. Several days after receiving the property from Larry, Elaine

contracted to sell the 1,275 acre parcel to King-Boswell Enterprises for

$573,750.00. The closing took place on April 28, 1998. ReliaStar issued a

special warranty deed on the property to Elaine, who then issued a warranty deed

to King-Boswell. Larry and Elaine also executed quitclaim deeds on the property

to King-Boswell at closing.

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      When LOL learned of the transfers, it brought this action against the

Schaefers, King-Boswell, and its mortgagee, Guaranty National Bank, under

Oklahoma’s Uniform Fraudulent Transfers Act (UFTA), Okla. Stat. tit. 24,

§§ 112-123, contending that the transfers were fraudulent. LOL sought to have

the transfers to Elaine and to King-Boswell set aside or, in the alternative, to have

judgment entered against Elaine, King-Boswell, and Guaranty National in the

amount of its Iowa judgment against Larry.

      The Schaefers asserted a counterclaim against LOL based on LOL’s

allegedly tortious conduct in attempting to collect its Iowa judgment. The

Schaefers did not indicate the legal theory upon which they based their

counterclaim until they responded to LOL’s motion for summary judgment. Then,

they contended that their counterclaim was founded primarily on a legal theory of

invasion of privacy, but that it also was intended to state claims for intentional

infliction of emotional distress, abuse of process, and tortious interference with

contract and prospective business advantage.    2
                                                    King-Boswell and Guaranty

National asserted a cross-claim against Elaine for breach of the warranties of her

2
       Although the district court subsequently agreed with LOL’s contention that
the allegations of the counterclaim did not encompass claims for either invasion
of privacy or intentional infliction of emotional distress, the court determined that
the point was moot because the Schaefers’ allegations and evidence did not
support their counterclaims under any of the legal theories they advanced.

                                          -4-
deed to King-Boswell. They sought to recover from her any monies they might be

required to pay LOL, plus their attorney fees and costs associated with the suit.

      The district court granted summary judgment to LOL against the Schaefers

on LOL’s claim for fraudulent conveyance and on the Schaefers’ counterclaims.

The court reserved ruling on the appropriate remedy under the UFTA until it

resolved LOL’s claim against King-Boswell and Guaranty National. LOL,

King-Boswell, and Guaranty National subsequently entered into a stipulation

pursuant to which LOL dismissed its claim against King-Boswell and Guaranty

National without prejudice and the latter parties dismissed their cross-claim

against Elaine. Thereafter, LOL moved the court to enter judgment against Elaine

in the amount of its Iowa judgment against Larry, pursuant to Okla. Stat. tit. 24,

§ 120(B). The district court granted LOL’s motion and entered judgment against

Elaine in the amount of $161,749.19. In accordance with Rule 54(b), the court

expressly determined there was no just reason for delay and that final judgment

should enter on the claims between the Schaefers and LOL.

      The Schaefers now appeal, arguing that (1) the court erred in ruling that the

transfers at issue were fraudulent as a matter of law; (2) even if the transfers were

fraudulent, the court erred in entering judgment against Elaine; and (3) the court

erred in ruling against the Schaefers on their counterclaims. We review the

district court’s grant of summary judgment de novo applying the same standard as

                                         -5-
the district court under Fed. R. Civ. P. 56(c).    Simms v. Okla. ex rel. Dep't of

Mental Health & Substance Abuse Servs.        , 165 F.3d 1321, 1326 (10th Cir.),    cert.

denied , 528 U.S. 815 (1999).

       Summary judgment is proper if the moving party shows “there is no

genuine issue as to any material fact and that the moving party is entitled to a

judgment as a matter of law.” Fed. R. Civ. P. 56(c). “When applying this

standard, we view the evidence and draw reasonable inferences therefrom in the

light most favorable to the nonmoving party.”       Simms , 165 F.3d at 1326. “When

the moving party has carried its burden under Rule 56(c), . . .the nonmoving party

must come forward with specific facts showing that there is a       genuine issue for

trial .” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.      , 475 U.S. 574, 586-87

(1986) (quotations and citation omitted). Conclusory and self-serving affidavits

are insufficient to meet this burden.     Murray v. City of Sapulpa , 45 F.3d 1417,

1422 (10th Cir. 1995).

       “The purpose of the [UFTA] is to allow a creditor the opportunity to

invalidate the transfer of assets made by a debtor if the transfer has the effect of

placing assets out of the reach of present and future creditors.”      Burrows v.

Burrows , 886 P.2d 984, 988 (Okla. 1994). The UFTA provides that “[a] transfer

made or obligation incurred by a debtor is fraudulent as to a creditor . . . if the

debtor made the transfer or incurred the obligation . . . with actual intent to

                                             -6-
hinder, delay, or defraud any creditor of the debtor[.]” Okla. Stat. tit. 24,

§ 116(A)(1). The UFTA sets forth a variety of factors, so-called badges of fraud,

that the court may consider in determining the debtor’s actual intent.   Id.

§ 116(B). “A single [badge of fraud] may stamp the transaction as fraudulent,

and, when several are found in combination, strong and clear evidence on the part

of the upholder of the transaction will be required to repel the conclusion of

fraud.” Payne v. Gilmore , 382 P.2d 140, 143 (Okla. 1963) (quotation omitted);

see also Taylor v. Rupp (In re Taylor)   , 133 F.3d 1336, 1339 (10th Cir. 1998)

(“When one or more of these badges [listed in the UFTA] are present fraudulent

intent can be inferred.”).

       LOL presented undisputed evidence of numerous badges of fraud

associated with Larry’s transfer of the Oklahoma property to Elaine. The

Schaefers contend that one of the badges of fraud upon which LOL and the

district court relied–that Larry was insolvent at the time of the transfer or was

rendered insolvent as a result of the transfer–was disputed by Larry’s affidavit

setting forth his liabilities and assets. The UFTA provides that “[a] debtor is

insolvent if the sum of the debtor’s debts is greater than all of the debtor’s assets

at a fair valuation,” and that “[a] debtor who is generally not paying his debts as

they become due is presumed to be insolvent.” § 114(A), (B). The district court

held that Larry’s testimony at his debtor’s examination, coupled with

                                            -7-
documentary evidence presented by LOL, established that around the time of the

transfer, Larry generally was not paying his debts as they came due. Therefore,

Larry was presumptively insolvent under the UFTA.

      Larry did not present any evidence to dispute the fact that he was generally

not paying his debts as they came due. Instead, he prepared and presented a

financial statement purporting to list his assets and liabilities as of May 1, 1998,

which showed that the sum of his debts was not greater than the sum of his assets

after he transferred the Oklahoma property to Elaine. Even if this financial

statement were sufficient to create an issue of fact as to whether the transfer of

the Oklahoma property to Elaine actually rendered Larry insolvent,    3
                                                                          it did not

controvert the numerous other badges of fraud established by the evidence and

relied on by the district court.

      Further, the Schaefers failed to present any probative evidence of a reason

for the transfer other than one to hinder, delay, or defraud LOL in its collection

efforts. Larry’s statement that he transferred the property to Elaine to assist her

in obtaining financing was not only conclusory and without support in the record,

but it was contrary to the evidence of record. “[C]onclusory allegations without

specific supporting facts have no probative value.”     Nichols v. Hurley , 921 F.2d

3
      Much of the information in this financial statement was unsupported by any
evidence and some of it contradicted Larry’s earlier testimony at the debtor’s
examination.

                                           -8-
1101, 1113 (10th Cir. 1990) (quotation omitted). On the record before it, the

district court did not err in holding that LOL was entitled to judgment on its claim

against the Schaefers for fraudulent conveyance.

      The Schaefers contend that even if the conveyance of the property was

fraudulent, the district court erred in imposing judgment against Elaine as a

remedy for the fraud. Sections 119 and 120 of Oklahoma’s UFTA set forth the

remedies available to a creditor who establishes that a transfer of property was

fraudulent. Section 120(B) provides that, to the extent that the transfer is

voidable, “the creditor may recover judgment for the value of the asset transferred

. . . or the amount necessary to satisfy the creditor’s claim, whichever is less,” and

the judgment may be entered against “the first transferee of the asset or the person

for whose benefit the transfer was made,”     id. § 120(B)(1). A transfer is not

voidable “against a person who took in good faith and for a reasonably equivalent

value or against any subsequent transferee or obligee.”     Id. § 120(A).

      The undisputed evidence established that Elaine did not take the Oklahoma

property for a reasonably equivalent value. Nor was there any evidence that she

took the property in good faith. Therefore, the transfer of property to Elaine was

voidable under the UFTA and, as such, one of the remedies available to LOL was

a judgment against Elaine for the lesser of the value of the property transferred or

the amount necessary to satisfy LOL’s claim. The undisputed evidence

                                            -9-
established that the Oklahoma property transferred to Elaine was worth far more

than LOL’s judgment against Larry. Therefore, the district court properly entered

judgment against Elaine for the amount necessary to satisfy LOL’s judgment

against Larry. We are not persuaded by the Schaefers’ contentions on appeal that

the district court’s entry of judgment violated due process or was improper either

because of LOL’s allegedly inequitable conduct or Larry’s alleged solvency.

      Finally, the Schaefers contend that there was sufficient evidence in the

record for their counterclaims to survive summary judgment. The district court

concluded that the Schaefers’ allegations were “wholly insufficient to support any

of the legal theories on which the counterclaims are brought.” Appellants’ App.,

Vol. II at 801. Based upon our review of the parties’ briefs, the record, and the

pertinent law, we conclude that the district court was correct. The Schaefers

failed to come forward with specific facts which, if proven, would have

established any of their claims.

      Accordingly, the judgment of the district court is AFFIRMED.

                                                    Entered for the Court

                                                    Mary Beck Briscoe
                                                    Circuit Judge

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