Court Opinion

ID: 3206328
Source: CourtListenerOpinion
Date Created: 2016-05-24 19:00:49.429766+00
Date Added: 2024-06-11T14:28:46.458034
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                                No. 15-1338

MARTIN P. SHEEHAN, Trustee of the Bankruptcy Estate of AGS,
Inc.,

                  Plaintiff - Appellant,

           v.

ALLEN G. SAOUD,

                  Defendant - Appellee,

           and

GEORGIA D. DANIEL; FRED D. SCOTT; WEST VIRGINIA DERMATOLOGY
ASSOCIATES, INC.; ROBERT R. FRASER; CENTRAL WEST VIRGINIA
DERMATOLOGY ASSOCIATES, INC.,

                  Defendants,

UNITED STATES OF AMERICA,

                  Intervenor/Defendant.

Appeal from the United States District Court for the Northern
District of West Virginia, at Clarksburg.    Irene M. Keeley,
District Judge. (1:11-cv-00163-IMK-JSK)

Argued:   March 24, 2016                      Decided:   May 24, 2016

Before WILKINSON and NIEMEYER, Circuit Judges, and David C.
NORTON, United States District Judge for the District of South
Carolina, sitting by designation.
Affirmed by unpublished opinion.        Judge Norton wrote     the
opinion, in which Judge Wilkinson and Judge Niemeyer joined.

ARGUED: Martin Patrick Sheehan, SHEEHAN & NUGENT, P.L.L.C.,
Wheeling, West Virginia, for Appellant. Paul J. Harris, HARRIS
LAW OFFICES, Wheeling, West Virginia, for Appellee.  ON BRIEF:
Patrick S. Cassidy, CASSIDY, COGAN, SHAPELL & VOEGELIN, L.C.,
Wheeling, West Virginia, for Appellant.

Unpublished opinions are not binding precedent in this circuit.

                                2
NORTON, District Judge:

       This case is on appeal from a post-trial judgment awarded

by the Honorable Irene M. Keeley, United States District Judge

for the Northern District of West Virginia.                   For the reasons set

forth below, we affirm the district court’s ruling.

                                            I.

       Appellant Martin P. Sheehan (“Sheehan”) is the trustee of

the bankruptcy estate of AGS, Inc. (“AGS”).                     Appellee Allen G.

Saoud (“Saoud”) was a licensed doctor of Osteopathic Medicine,

specializing in dermatology, who owned and operated AGS as a

medical corporation in West Virginia.                    On January 25, 2005, the

United States filed charges against Saoud, alleging that between

May    1998   and    June    2004,    Saoud      submitted    unsupported     medical

billing claims to Medicare and Medicaid.                     Saoud entered into a

settlement agreement with the United States under which he was

required      to    pay    $310,800.58      in     penalties,      but   he   was    not

required      to   admit    liability.           The   settlement    agreement      also

excluded Saoud from participating in Medicare, Medicaid, and all

other federal health programs, for ten years.                        Thereafter, on

March 31, 2006, Saoud sold AGS to Georgia G. Daniel (“Daniel”),

a     nurse    practitioner          who    previously       worked      in    Saoud’s

dermatology practice, for $1,000,000.00.                   Under the terms of the

contract      between       Daniel    and       Saoud,    Daniel     would    not    be

                                            3
personally liable for AGS’s liabilities.         Daniel also would not

be personally liable to Saoud for the purchase price.

      After Saoud sold AGS to Daniel, various transfers were made

from AGS to Saoud and Daniel.      Relevant to this appeal, AGS paid

Saoud $50,000.00 in 2008. 1     Additionally, a certified copy of a

deed recorded in Harrison County, West Virginia shows that real

estate titled to AGS was sold to MedStar Real Estate Development

on March 23, 2005 for $460,000.00.          The proceeds of the sale

were not paid to AGS but rather to AGS Development Company,

another entity controlled by Saoud.        Further, Daniel received a

combined $418,675.00 from AGS in 2006, 2007, and 2008.

      On May 9, 2009, AGS filed for Chapter 7 bankruptcy relief.

The   Bankruptcy   Court   appointed   Sheehan   to   serve   as   Trustee.

Saoud signed the original petition for bankruptcy relief, in

which he identified himself as the President and Owner of AGS.

However, during a meeting of creditors held on June 18, 2009,

Saoud subsequently indicated that he had sold his stock in AGS

to Daniel.   Saoud confirmed that he was not an owner or officer

of AGS during a continued meeting of creditors held on August

18, 2009.    On May 12, 2010, Saoud claimed that Daniel signed a

      1 In the underlying action, Sheehan originally sought
$250,000.00 from Saoud, representative of the total value of all
transfers AGS made to Saoud after the sale to Danial. See J.A.
54–55. However, the only transfer subject to this appeal is the
2008 transfer of $50,000.00 from AGS to Saoud.
                                   4
corporate    resolution       authorizing            Saoud      to    file       a    bankruptcy

petition on behalf of AGS.               On August 23, 2010, Daniel testified

that she did not authorize Saoud to seek bankruptcy relief on

behalf of AGS and denied that the signature on the corporate

resolution was in fact hers.                 Saoud filed a motion to dismiss

the bankruptcy petition, and Sheehan opposed the motion.                                        On

November     11,     2010,    the    Bankruptcy            Court      for     the       Northern

District of West Virginia denied the motion to dismiss.

     In December 2012, a federal grand jury returned a twenty-

three count indictment charging Saoud with health care fraud,

concealing a material fact in a health care matter, corruptly

endeavoring to obstruct and impede the due administration of the

internal    revenue     laws,       making       a    false       oath      or       account    in

relation to a bankruptcy case, and making a false statement to a

federal     agent.       In    May       2013,       the     grand     jury          returned     a

superseding        indictment        containing            no     additional            charges.

Subsequently, on June 4, 2013, the grand jury returned a third

superseding indictment, which added new charges of health care

fraud and aggravated identity theft.                       On June 25, 2013, Saoud

was convicted after a jury trial of thirteen counts of health

care fraud, one count of aggravated identity theft, one count of

concealing a material fact in a health care matter, one count of

corruptly     endeavoring           to     obstruct             and    impede          the      due

                                             5
administration           of   the    internal         revenue      laws,      five    counts     of

making a false oath or account in relation to a bankruptcy case,

and one count of making a false statement to a federal agent.

Saoud was sentenced to ninety-nine months’ imprisonment on March

25, 2014, and received a fine of $2,630,000.00.                                      The Fourth

Circuit affirmed his convictions and sentence in December 2014.

United States v. Saoud, No. 14-4288, 2014 WL 7210734, at *1 (4th

Cir. Dec. 19, 2014).

        Sheehan,         in   his    capacity         as    trustee      of    AGS,     filed     a

complaint on October 13, 2011, in the United States District

Court       for    the    Northern        District     of    West     Virginia.          Sheehan

subsequently         filed     an    amended         complaint      on   October       6,   2014,

against Appellee Saoud, Daniel, Fred D. Scott (“Scott”), 2 Robert

R.   Fraser        (“Fraser”), 3         and   Central      West    Virginia         Dermatology

Associates, Inc. (“CWVDA”), asserting the following six causes

of   action:          Count     I    alleged      that      CWVDA     failed     to    complete

payments to AGS and remains indebted to AGS for $634,159.00;

Count II alleged that the agreements between Saoud, Daniel, and

Scott       were    voidable        as    fraudulent        transfers         pursuant      to   11

U.S.C. § 547, because the agreements constituted a scheme to

        2
       Scott practiced dermatology with Saoud at AGS, served as
director of CWVDA, and was involved in some of the transactions
at issue.
     3 Fraser is an accountant who prepared tax returns for
Daniel and CWVDA.
                                                 6
defraud AGS’s creditors by transferring AGS’s assets for less

than     reasonably    equivalent       value,   causing   AGS        to     become

insolvent; Count III alleged that the transfers were voidable by

a trustee in bankruptcy pursuant to the powers established under

11 U.S.C. § 544 and under the West Virginia Uniform Fraudulent

Transfer Act (“WVUFTA”), W. Va. Code §§ 41-1A-1 et seq.; Count

IV alleged that the actions outlined above constitute a civil

conspiracy to violate the WVUFTA and are actionable as a civil

conspiracy; Count V alleged that Fraser aided and abetted the

scheme to defraud AGS’s creditors under the WVUFTA; and Count VI

alleged    that    Saoud    committed    bankruptcy    fraud    and    used    the

United    States    mails    to   effectuate     his   scheme     to       defraud.

Sheehan sought to recoup the $50,000.00 that AGS paid to Saoud

in 2008, the $418,000.00 paid to Daniel after the sale, and the

$460,000.00 from the sale of certain real estate AGS owned.

       Daniel and Fraser settled with Sheehan and were dismissed

as defendants on May 15, 2012.              The district court therefore

dismissed Count V, against Fraser only, as moot.                On October 20,

2014, Sheehan filed a motion for summary judgment against Saoud,

and Scott filed a motion for summary judgment against Sheehan’s

claims and Saoud’s cross claims.            On January 28, 2015, the court

granted in part and denied in part Scott’s motion for summary

judgment and denied Sheehan’s motion for summary judgment.                     J.A.

                                        7
111–161.        The court granted Scott’s motion for summary judgment

as to Count IV, holding that a claim under the WVUFTA was based

in contract and not tort and therefore could not support a civil

conspiracy action.           J.A. 133, 158–59.                The court further found

that even if Sheehan had pleaded a tort, the factual allegations

contained in his amended complaint were “wholly inadequate” to

support     a     civil    conspiracy           claim.        J.A.     133–34.          Sheehan

thereafter       abandoned        Counts    I,       II,   and   VI    and    pursued      only

Counts III and IV.               J.A. 160, 187.              Sheehan sought to recoup

the   $50,000.00          that     AGS     paid      to    Saoud      in     2008    and    the

$460,000.00       from    the     sale     of    certain      real    estate      AGS    owned.

J.A. 314–315.         However, in light of the court’s ruling on the

statute of limitations issues relating to the money transfers,

as fully set forth below, the only question submitted to the

jury involved the real estate transfer.                       J.A. 340.

      A    jury    trial     was    held        on   March    2–3,     2015.        The    jury

returned    a     verdict    on     March       3,    2015.      The       jury   found    that

Sheehan did not “file suit within one year after he knew, or

reasonably could have discovered, the real estate transfer from

AGS   to        MedStar     Real     Estate          and      Development,          LLC,   for

$460,000.00 . . . .”              J.A. 230.          The jury unanimously found in

favor of Saoud.           The district court affirmed the verdict, J.A.

                                                 8
233, and Sheehan filed a notice of appeal on April 1, 2015.

J.A. 236.

                                         II.

       We review the denial of summary judgment de novo, applying

the same standards as the district court.               See Henson v. Liggett

Group, Inc., 61 F.3d 270, 274 (4th Cir.1995).                    In reviewing a

denial of summary judgment, we view all facts and reasonable

inferences drawn therefrom in the light most favorable to the

nonmoving party.          PBM Prods., LLC v. Mead Johnson & Co., 639
F.3d 111,   119–20     (4th   Cir.        2011).   Summary     judgment    is

appropriate if there is no genuine issue of material fact and

the movant is entitled to judgment as matter of law.                    Fed. R.

Civ. P. 56(a); Glynn v. EDO Corp., 710 F.3d 209, 213 (4th Cir.

2013).

       We review the denial of a motion for judgment as a matter

of law de novo, viewing the evidence in the light most favorable

to the nonmovant, and “draw[ing] all reasonable inferences in

her    favor    without    weighing      the     evidence   or   assessing    the

witnesses’ credibility.”          Ocheltree v. Scollon Prod., Inc., 335
F.3d 325, 331 (4th Cir. 2003) (quoting Anderson v. G.D.C., Inc.,

281 F.3d 452, 457 (4th Cir. 2002)).               Judgment as a matter of law

is proper only if “there can be but one reasonable conclusion as

                                          9
to the verdict.”           Id. (quoting Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 250 (1986)).

                                            III.

     Sheehan      raises        the   following          issues      on   appeal:           “(1)

whether    the   district       court       erred   when       it    concluded       that    the

doctrine    of    adverse       domination        did    not    toll      the   statute        of

limitations/repose         under      the    West   Virginia         Uniform     Fraudulent

Transfer Act; (2) whether the district court erred in applying

the statute of limitations/repose to find that evidence of a

transfer in 2008 was outside the statute of limitations/repose

because    it    was   a    payment     due    under       what      purported       to   be   a

contract signed in 2005; (3) whether the district court erred in

concluding that a cause of action for civil conspiracy under

West Virginia law could not be based on a violation of the West

Virginia Uniform Fraudulent Transfer Act even where plaintiff

attempted to prove a subjective violation of the statute with

‘actual intent to hinder, delay, or defraud.’”                            Appellant’s Br.

1.

                                              A.

     We turn first to Sheehan’s contention that the district

court   erred     when     it    concluded        that    the       doctrine    of    adverse

domination did not toll the statute of limitations or repose

under the WVUFTA.

                                             10
       As a threshold matter, Sheehan failed to properly preserve

this issue for appeal.                  During the Rule 50 hearing on March 2,

2015, Sheehan’s attorney had the following exchange with Judge

Keeley:

       Court: [M]y finding is that that is the transfer or
       that is the obligation and that those later payments
       are not the transfer and it certainly was, not only
       could, but was reasonably discovered by the Trustee,
       as pled in paragraph 18 of document 51 of the
       bankruptcy proceedings on 9/9/10, discovered at least
       at that point in time and therefore I am going to
       grant the motion under Rule 50 and dismiss that part
       of the claim and it will not carry to the jury.    So—
       and I’m ruling on that as a matter of law. So I think
       that what’s left and what goes to the jury is the real
       estate transaction, which is four hundred and sixty
       thousand dollars.    It goes to the jury.     Is there
       anything left? . . . Now in light of that, is the
       question of adverse domination still in the case?

       Mr. Cassidy:      We don’t need it.             We don’t need it now.

       The Court:      Okay.       So there’s no adverse domination.

J.A.   340–41.         Based       on    the   aforementioned      passage      from     the

hearing   and    the     court’s          entire     discussion    regarding       adverse

domination      with    Mr.    Cassidy,        Sheehan’s     trial      counsel,    it   is

clear that Sheehan abandoned his adverse domination arguments

prior to the trial, and the court never made a ruling in that

regard.    See J.A. 315–40.               Therefore, Sheehan failed to properly

preserve this issue for appeal.                     See In re Under Seal, 749 F.3d
276,   285–86    (4th    Cir.       2014)      (discussing       the    consequences     of

failing   to    preserve       a    claim      for    appeal);    see    also   Corti    v.

                                               11
Storage       Tech.       Corp.,   304 F.3d 336,   343     (4th    Cir.       2002)

(Niemeyer,         J.,    concurring)       (“[I]t    remains       the    law   of     this

circuit that when a party to a civil action fails to raise a

point at trial, that party waives review of the issue unless

there are exceptional or extraordinary circumstances justifying

review.”).

       However, even if Sheehan had properly preserved the issue

for appeal, the statute of repose would still have expired one

month     prior          to   Sheehan    filing       suit,     regardless        of     the

application of adverse domination.                    A creditor must bring suit

to enforce the provisions of the WVUFTA, W. Va. Code § 40–1A–

4(a)(1)–(2), within “four years after the transfer was made or

the obligation incurred, or, if later, within one year after the

transfer       or     obligation     was     or     could     reasonably      have      been

discovered by the claimant.”                  W. Va. Code § 40-1A-9 (emphasis

added).       Because Sheehan filed suit on October 13, 2011, October

13, 2007 is the latest date on which the alleged fraudulent

transfers could have occurred such that he may obtain relief,

unless Sheehan establishes that he could not reasonably have

discovered the alleged fraudulent transfer or obligation more

than    one    year       before   filing    suit.      Sheehan      argues      that    the

statute       of    limitations     should     be    tolled    by    the    doctrine      of

                                             12
adverse domination, giving him four years from the date on which

he was appointed to bring suit.

      “Adverse     domination     is   an       equitable   doctrine      that     tolls

statutes of limitations for claims by corporations against its

officers, directors, lawyers and accountants for so long as the

corporation       is   controlled          by     those     acting       against     its

interests.”       Clark v. Milam, 452 S.E.2d 714, 718 (W. Va. 1994)

(citing Int’l Rys. of Central Am. v. United Fruit Co., 373 F.2d
408, 412 (2d Cir. 1967)).           The adverse domination doctrine tolls

the statute “so long as there is no one who knows of and is able

and   willing     to    redress      the    misconduct          of   those   who    are

committing the torts against the corporate plaintiff.”                       Clark v.

Allen, 139 F.3d 888 (4th Cir. 1998) (quoting Milam, 452 S.E.2d

at 719).        “[T]he defendants have the burden of showing that

there was someone who had the knowledge, ability and motivation

to bring suit during the period in which defendants controlled

the corporation.”         Id. (quoting Hecht v. Resolution Trust Corp.,

635 A.2d 394,   408   (Md.      1994))      (internal         quotation     marks

omitted).

      Sheehan     cites    several     cases      from    the    Tenth    Circuit     in

support    of    his   appeal   and     relies      on    two    unpublished       Tenth

Circuit opinions as “particularly legally similar.”                       Appellant’s

Br. 15–16 (citing Wing v. Buchanan, 533 F. App’x 807 (10th Cir.

                                           13
2013); Wing v. Dockstader, 482 F. App’x 361 (10th Cir. 2012)).

Both       unpublished   opinions      involved    a    series     of   cases     that

stemmed from the collapse of VesCor Capital and the receiver’s

subsequent       attempts     to    recover     VesCor’s     alleged       fraudulent

transfers       to   investors.        Buchanan,       533   F.    App’x    at     809.

Analyzing statute of limitations issues in Buchanan, the court

recognized       that    under      Utah’s     Fraudulent    Transfer       Act, 4     a

plaintiff seeking to recoup transfers based on allegations of

actual fraud must file his complaint “within four years after

the transfer was made or the obligation was incurred or, if

later, within one year after the transfer or obligation was or

could reasonably have been discovered by the claimant.”                       Id. at

810.       At issue was when the discovery period began to run.                      Id.

The court applied the doctrine of adverse domination to hold

that the discovery period would not begin to run until the bad

actors controlling the entity were removed.                  Id.    The court held

that, based on the record, it could not determine how to apply

the discovery rule to the alleged fraudulent transfers.                       Id. at

811.       The court remanded the case back to the district court “to

determine       which    of   the    alleged    fraudulent        transfers      ‘could

       4
       The Utah Uniform Fraudulent Transfer Act and the WVUFTA
have the same statute of limitations and repose provisions.
                                         14
reasonably have been discovered’ by the bankruptcy trustee—thus

triggering the one-year statute of limitations.”                 Id.

       In   Dockstader,    applying   the     statute    of    repose     discussed

above, the court held that the receiver could not reasonably

have    discovered        any    fraudulent     transfer        prior      to     his

appointment.       482 F. App’x at 364.             The court recognized the

adverse     domination     doctrine   and     found     that     “[b]ecause       the

[r]eceiver was appointed on May 5, 2008 and filed this action

just over five months later,” the receiver’s claims were timely.

Id.    The Tenth Circuit’s holdings in Buchanan and Dockstader do

not support Sheehan’s position because even after recognizing

the doctrine of adverse domination, the court applied the one-

year statute of repose under Utah’s Fraudulent Transfer Act—the

same one-year statute of repose under the WVUFTA.

       Applying    the    same   reasoning     as     the     Tenth    Circuit     in

Buchanan     and   Dockstader,     Sheehan’s     claims       are     barred.      On

September 9, 2010, Sheehan filed an opposition to Saoud’s motion

to withdraw the bankruptcy petition in which he stated:

       The Trustee has identified several valuable causes of
       action to recover assets for the bankruptcy estate of
       AGS, Inc. These include actions to recover fraudulent
       and preferential transfers to Allen G. Saoud and
       Georgia Daniel.

J.A.    337.        The    district   court    held     that    the     statute    of

limitations could only be tolled until this date because Sheehan

                                       15
clearly had knowledge of the fraudulent transfers by that time.

The district court then applied the one-year statute of repose

outlined   above.     It     is   clear    that      not   only    could   Sheehan

reasonably have discovered the fraudulent transfers by September

9, 2010, but that he did in fact discover the alleged fraudulent

transfers as of that date.          Unlike the bankruptcy trustees in

Buchanan and Dockstader, Sheehan had knowledge of the alleged

fraudulent   transfers     more   than     a   year   before      he   filed   suit.

Thus, even if the doctrine of adverse domination were to apply,

the statute of repose expired one year after Sheehan’s September

9, 2010 filing in the Bankruptcy Court and one month before

Sheehan filed suit on October 13, 2011.

     Accordingly,     even   if   Sheehan      had    properly     preserved     the

adverse domination issue for appeal, he would not be entitled to

the relief requested.

                                          B.

     Sheehan   next    argues     that     the    district     court     erred   by

concluding that his action to recover the $50,000.00 payment

from AGS to Saoud in 2008 was barred by the four-year statute of

limitations because the payment was made in connection with the

2006 sale to Daniel.       Appellant’s Br. 17. 5

     5 Although Sheehan states in his brief that the transfer at
issue occurred in 2005, it is clear from the entirety of
Sheehan’s brief that he is referring to the March 31, 2006 sale
                                      16
     To enforce the provisions of the WVUFTA, the creditor must

bring suit “within four years after the transfer was made or the

obligation was incurred or, if later, within one year after the

transfer    or    obligation      was    or     could    reasonably    have     been

discovered by the claimant.”             W. Va. Code Ann. § 40-1A-9.             West

Virginia Code section 40-1A-6(d) provides that:

     A transfer is not made until the debtor has acquired
     rights in the asset transferred and an obligation is
     incurred.   If the obligation is oral, a transfer is
     made when the obligation becomes effective.    If the
     obligation is evidenced by a writing, the obligation
     becomes effective when the writing is delivered to or
     for the benefit of the obligee.

W. Va. Code Ann. § 40-1A-6(d) (emphasis added).                     The district

court found that the 2008 payment was made pursuant to AGS’s

obligation incurred on the 2006 sale instrument.                   Therefore, the

“transfer”—as      defined     under      the     WVUFTA—occurred      in       2006,

beginning   the    running   of    the    statute       of   limitations   at   that

time.   The district court found that even if the discovery rule

as outlined in the statute of repose applies, the clock stopped

running on September 9, 2010.              Once again, Sheehan’s knowledge

of the alleged fraudulent transfers by September 9, 2010, at the

latest, is evidenced by his filing with the bankruptcy court.

of AGS to Daniel, and therefore the 2008 payment of $50,000.00
to Saoud.    See Appellant’s Br. 17–19.     Further, during oral
argument, the parties clarified that the transfer in dispute is
indeed the $50,000.00 transfer from AGS to Saoud.
                                         17
See J.A. 337.        Therefore, because Sheehan did not file suit

until October 13, 2011, more than a month after the statute of

repose expired, the district court held that Sheehan’s WVUFTA

claims relating to the 2008 transfer were barred by the statute

of repose.

     The district court based its ruling on LaRosa v. LaRosa,

482 F. App’x 750 (4th Cir. 2012), an unpublished Fourth Circuit

opinion.     In LaRosa, two brothers loaned their cousin and his

wife (“the debtors”) $800,000.00.         Id. at 751.   The cousin was

the sole shareholder of a company called Cheyenne.             Id.   In

2001, Cheyenne entered into a loan agreement with a bank that

permitted Cheyenne to borrow up to $950,000.00 on a line of

credit.     Id. at 753.   The cousin pledged a series of securities

to secure the line of credit.       Id.     In 2003, the cousin’s son

drew down $700,000.00 on the line of credit with the bank, and

Cheyenne purchased over a million dollars in annuities with the

money.     Id.   The annuities were owned and controlled by Cheyenne

but the accounts were used to transfer money to the cousin’s son

according to a sham land renewal lease.        Id.   The district court

found the scheme fraudulent under the WVUFTA and awarded the

creditors $700,000.00.     Id.

     On appeal of the judgment, this Court addressed whether the

plaintiffs’ WVUFTA claim “based on a corporation’s drawdown on

                                   18
its line of credit and purchase of annuities was time-barred.”

Id. at 751.        This Court held that the “transfer” in question was

not the 2003 drawdown but rather the original establishment of

the line of credit in 2001.               Id. at 755.     Therefore, the Court

held that because the creditors did not file their claim within

four years of the establishment of the line of credit, their

claim was barred by the WVUFTA statute of repose.                        Id. at 753

(“Because the language and history of the statute of repose make

clear that it runs from the date of the security pledge, we

reverse the district court and hold that the Creditors’ WVUFTA

claim on the line of credit was time-barred.”).                         Judge Keeley

relied on this Court’s reasoning in LaRosa to hold that the 2008

transfer     was    an    obligation      incurred      under    the     2006    sales

contract.     J.A. 152; 339–40.           Therefore, because Sheehan did not

file suit until October 13, 2011, his claim was barred by the

four year statute of limitations.              Id.

     A     dissenting       opinion    in      LaRosa   interpreted        the   term

“transfer”       under    the    WVUFTA     differently    than    the     majority.

LaRosa,    482     F.    App’x   at   758–59.        Analyzing    the    statute    of

limitations provisions of the WVUFTA, the dissent stated the

following:

     By employing the definite article, the last clause,
     “within four years after the transfer was made,”
     refers back to the opening clause—“[a] cause of action
     with respect to a fraudulent transfer.”           West
                                          19
      Virginia’s statute, therefore, does not extinguish
      fraudulent transfer suits by reference to related, but
      nonfraudulent, transfers.   Instead, like any sensible
      statute of repose, the provision only bars causes of
      action for fraudulent transfers that have accrued.

LaRosa, 482 F. App’x at 759 (quoting W. Va. Code Ann. § 40-1A-

9).     Because there was no suggestion in the record that there

was any fraudulent intent or purpose in creating the line of

credit,     the    dissent        found      that     the     actionable       fraudulent

transfer occurred in 2003 when the $700,000.00 drawdown took

place.      Id.    Therefore, the creditors properly brought their

claim within the four-year statute of limitations.                          Id.

      Sheehan      argues       that      LaRosa     is      easily     distinguishable

because    the    sale    of     AGS    to   Daniel     in    2006    was     “of   dubious

legality”     because      an     “osteopath        cannot         transfer    a    medical

practice     to     a     non-osteopath            under      West     Virginia       law.”

Appellant’s Br. 20.              However, the district court never deemed

the sale illegal or voidable.                  Further, there is no indication

that the district court’s application of the holding in LaRosa

would be altered if the transfer was “illegal.”                          All fraudulent

transfers are “illegal”; thus, just because a transfer is made

pursuant to an illegal contract does not change the statute of

limitations analysis under the WVUFTA.

      On March 31, 2006, Daniel and Saoud executed a document in

which     Daniel        agreed     to        purchase        AGS     from     Saoud    for

                                              20
$1,000,000.00.        J.A. 62.      Under the purchase agreements, the

name,   corporate      standing,     disposable         medical       supplies,    and

goodwill     were    included;     however,       the   cash     in    the   account,

accounts receivable, equipment, and software were all excluded

from the sale.        Id.    Further, Daniel was not liable under the

agreement     for    “any    liabilities      that      have    been    incurred   by

[Saoud] while he has been President of [AGS] or any liabilities

that [AGS] currently has.”           Id.     A second document, also signed

by   Saoud   and    Daniel    on   March    31,     2006,      recognizes    Daniel’s

purchase of AGS and states:                “Daniel is also not responsible

personally for payback of the purchase price.”                   J.A. 63.

      Under the plain language of section 40A-1A-6, the statute

of limitations began to run in 2006.                     As stated above, “[a]

transfer is not made until the debtor has acquired rights in the

asset transferred and an obligation is incurred.”                      W. Va. Code §

40-1A-6(d).        If the obligation is evidenced by a writing, the

obligation becomes effective when the writing is delivered to or

for the benefit of the obligee.               Id.       Saoud and Daniel signed

documents transferring ownership in AGS to Daniel on March 31,

2006.   Under the March 31, 2006 sale documents, Daniel acquired

rights in AGS and AGS incurred an obligation to pay Saoud the

purchase price.        Sheehan does not dispute that the 2008 money

transfer was made pursuant to the March 31, 2006 sale documents.

                                       21
Because       the   obligation       was    evidenced     by    a   writing,    AGS’s

obligation became effective that day.                     Therefore, the alleged

fraudulent “transfer”—as defined under the WVUFTA—took place on

March 31, 2006.         The statute of limitations expired on March 31,

2010, and the statute of repose expired on September 9, 2011,

one month before Sheehan filed suit.

       Notably, if applied to this case, the dissent’s reasoning

in    LaRosa    would     also   not   alter      the   outcome,    because    Sheehan

alleged that Saoud’s 2006 sale of AGS to Daniel was fraudulent

in and of itself.           See Appellant’s Br. 18.              Therefore, unlike

the underlying facts in LaRosa, Sheehan alleges that both the

2008 money transfer and the 2006 sale were fraudulent.                          Thus,

the statute of limitations expired under the analysis of both

the    majority     and    dissent     in   LaRosa.       For   these   reasons,     we

affirm the district court’s ruling that Sheehan’s WVUFTA claims

are barred by the statute of repose.

                                             C.

       Lastly, Sheehan argues that the district court erred in

holding that a cause of action for civil conspiracy could not be

based    on    a    violation    of    the     WVUFTA.      Appellant’s       Br.   21.

Sheehan argues that the statute makes actionable a transfer made

with “actual intent to hinder delay or defraud creditors” and is

therefore a tort.         Id. (citing W. Va. Code § 40-1A-4(a)(1)).

                                             22
     First and foremost, because the district court had a valid

independent basis to support its ruling beyond holding that a

WVUFTA violation cannot support a civil conspiracy claim, it is

not necessary for the Court to decide this issue.                 In addition

to finding that the WVUFTA did not provide a basis for a civil

conspiracy   claim,     the   district    court   alternatively     held   that

Sheehan   failed   to   adequately   plead    fraud.     In   its   order   on

Scott’s and Sheehan’s motions for summary judgment, the district

court stated the following when it addressed Sheehan’s civil

conspiracy claim under Count IV:

     Following a careful weighing of the matter, the Court
     agrees with Scott that a violation of the WVUFTA
     sounds in contract; thus, Sheehan, by having relief on
     the WVUFTA, has failed to plead a tort.      Moreover,
     even if he had pleaded a tort by alleging a violation
     of the WVUFTA, Sheehan’s factual allegations are
     wholly   inadequate   regarding   how   and when   the
     defendants engaged in civil conspiracy.

J.A. 133–34 (emphasis added). 6      Addressing the same claim against

Saoud, the court stated as follows:

     [A] violation of the WVUFTA does not sound in tort as
     is required to establish a civil conspiracy claim
     under West Virginia law.      Therefore, Sheehan has
     failed to plead adequately the claim of civil

     6 Scott is not a party to this appeal. Although this quote
comes from the portion of the court’s order addressing Scott’s
motion for summary judgment, the court subsequently recognized
its prior discussion of the civil conspiracy claim and applied
the reasoning to its disposition of Sheehan’s motion for summary
judgment on Count IV. J.A. 158–59.
                                     23
       conspiracy     alleged       in   Count      IV      of    the   amended
       complaint.

J.A. 158–59.        Further, during the final pretrial conference on

February    18,     2015,     the    court       again      addressed        the   civil

conspiracy claim in Count IV, stating the following:

       Mr. Sheehan never pled a civil conspiracy and to the
       extent that you’re arguing here today that he did, I
       think you need to go take a look at the amended
       complaint and if you think he pled a plain vanilla
       fraud tort civil conspiracy, you ought to look at your
       facts there because under Rule 9 I would have kicked
       it out had anybody moved. . . . Had it been pled, it
       is woefully inadequate. It’s never been fixed. It’s
       not a claim that could ever go to trial.

J.A.   273–74.       Notably,       in   his     brief,     Sheehan     states     in   a

footnote:    “The District Court also found a procedural default

to be applicable.            That default is an independent basis for

decision    [sic]      and     is    not        contested        in   this     appeal.”

Appellant’s Br. 21 (emphasis added).                Sheehan does argue, on the

other hand, that the district court’s ruling with respect to the

adequacy of the pleadings was an exercise in judicial activism

because Saoud never moved to dismiss the complaint.                            However,

the court is not required to ignore an obvious failure to allege

facts setting forth a plausible claim for relief.                            Weller v.

Dep’t of Soc. Servs., 901 F.2d 387, 391 (4th Cir. 1990).                                In

such a circumstance, the court is authorized to dismiss a claim

sua sponte under Federal Rule of Civil Procedure 12(b)(6), as

long as there is notice and an opportunity to be heard.                              See
                                           24
United Auto Workers v. Gaston Festivals, Inc., 43 F.3d 902, 905–

06 (4th Cir. 1995) (affirming the district court’s sua sponte

dismissal of plaintiff’s claims); see also Saifullah v. Johnson,

1991 WL 240479 (4th Cir. Nov. 20, 1991) (unpublished) (“A court

may,   on   its   own   initiative,   dismiss   a   civil   complaint   for

failing to state a claim.”).           Therefore, the district court’s

alternative holding that Sheehan failed to adequately plead his

civil conspiracy claim, uncontested on appeal, was proper and

provides an independent basis for affirming the district court’s

ruling.

       Notwithstanding the foregoing, the Court will address the

merits of Sheehan’s arguments.         Sheehan argues that a violation

of the WVUFTA can support a civil conspiracy claim as sounding

in tort because the first prong deems fraudulent a transfer or

obligation incurred by a debtor “[w]ith actual intent to hinder,

delay or defraud any creditor of the debtor.”            W. Va. Code Ann.

§ 40-1A-4(a)(1).         West Virginia recognizes a cause of action

for civil conspiracy.        Kessel v. Leavitt, 511 S.E.2d 720, 753

(W. Va. 1998) (“The law of this State recognizes a cause of

action sounding in civil conspiracy.”).             “[A] civil conspiracy

is a combination of two or more persons by concerted action to

accomplish an unlawful purpose or to accomplish some purpose,

not in itself unlawful, by unlawful means.”           Dixon v. Am. Indus.

                                      25
Leasing Co., 253 S.E.2d 150, 152 (W. Va. 1979).                      “The cause of

action is not created by the conspiracy but by the wrongful acts

done by the defendants to the injury of the plaintiff.”                             Id.

Therefore,     civil    conspiracy       is    not    a   stand-alone       cause    of

action, but is rather “a legal doctrine under which liability

for a tort may be imposed on people who did not actually commit

a   tort     themselves      but   who   shared      a    common     plan   for     its

commission with the actual perpetrator(s).”                    Dunn v. Rockwell,

689 S.E.2d 255, 269 (W. Va. 2009) (citing Kessel, 511 S.E.2d at

754).      As such, courts in West Virginia dismiss civil conspiracy

claims when they are not supported by an underlying tort.                           See,

e.g., Long v. M & M Transp., LLC, 44 F. Supp. 3d 636, 652

(N.D.W. Va. 2014) (“[B]ecause the Court granted summary judgment

as to the deliberate intent and outrage claims, there is no

underlying      tort    to     support        the    civil    conspiracy          claim.

Accordingly, this claim fails as a matter of law.”).

       The   district     court    recognized        that    “case    law    in    West

Virginia is bereft of guidance as to whether [a conspiracy claim

for violation of the WVUFTA] sounds in contract or tort.”                           J.A.

132.    However, the district court looked for guidance elsewhere

and noted cases from other jurisdictions that have adopted the

Uniform Fraudulent Transfer Act and whose courts have held that

a violation of the act is not a tort.                        J.A. 132–33 (citing

                                         26
F.D.I.C. v. S. Prawer & Co., 829 F. Supp. 453, 455 (D. Me. 1993)

(“The Court is satisfied that violation of . . . Maine’s Uniform

Fraudulent     Transfers          Act . . . is         not     a   tort.”)).       After

carefully    weighing       the    matter,       the   district       court   determined

that a violation of the WVUFTA sounds in contract, and therefore

does not support a civil conspiracy claim.                     J.A. 133.

       The   WVUFTA    provides       two    separate         prongs    under   which   a

transfer made by a debtor may be deemed fraudulent as to the

creditor.       The        first    prong    provides          that     a   transfer    is

fraudulent    if   the      debtor    made       the   transfer        or   incurred   the

obligation “[w]ith actual intent to hinder, delay or defraud any

creditor of the debtor.”              W. Va. Code Ann. § 40-1A-4(a)(1).                  A

transfer may also be deemed fraudulent under the second prong if

the debtor made the transfer or incurred the obligation:

       Without receiving a reasonably equivalent value in
       exchange for the transfer or obligation and the
       debtor:   (i) Was engaged or was about to engage in a
       business or a transaction for which the remaining
       assets of the debtor were unreasonably small in
       relation to the business or transaction; or (ii)
       Intended to incur, or believed or reasonably should
       have believed that he (or she) would incur, debts
       beyond his (or her) ability to pay as they became due.

W. Va. Code Ann. § 40-1A-4(a)(2).                      Therefore, a plaintiff is

only    required      to    demonstrate      actual          intent    to   establish    a

fraudulent transfer under the first prong.

                                            27
     Although the Fourth Circuit has not addressed the issue,

courts   from    varying       jurisdictions        have   refused    to   recognize

violations     of    the   Uniform     Fraudulent      Transfer      Act   as   torts.

See, e.g., United States v. Neidorf, 522 F.2d 916, 917–18 (9th

Cir. 1975); Desmond v. Moffie, 375 F.2d 742, 743 (1st Cir. 1967)

(finding fraudulent conveyance claim under Massachusetts Uniform

Fraudulent     Conveyance      Act    to   be   a   contract   rather      than   tort

action   for        purposes     of    applying       appropriate      statute     of

limitations); S. Prawer, 829 F. Supp. at 456 (finding fraudulent

conveyance claim not to be a tort claim for purposes of the

Federal Tort Claims Act); Branch v. Fed. Deposit Ins. Corp., 825
F. Supp. 384 (D. Mass. 1993) (finding fraudulent conveyance claim

not to be a tort claim for purposes of the Federal Tort Claims

Act); Fed. Deposit Ins. Corp. v. Martinez Almodovar, 671 F. Supp.
851, 871 (D.P.R. 1987) (finding fraudulent conveyance claim not

to be a tort for purposes of choosing appropriate statute of

limitations); In re Fedders N. Am., Inc., 405 B.R. 527, 549

(Bankr. D. Del. 2009) (“Likewise, the authorities are also clear

that there is no such thing as liability for . . . conspiracy to

commit a fraudulent transfer as a matter of federal law under

the Code.”); Freeman v. First Union Nat’l Bank, 865 So. 2d 1272,

1277 (Fla. 2004) (“We simply can see no language in FUFTA that

suggests an intent to create an independent tort for damages.”).

                                           28
       However, a handful of courts from other jurisdictions have

recognized violations of the Uniform Fraudulent Transfer Act as

torts.      See, e.g., Alliant Tax Credit Fund 31-A, Ltd. v. Murphy,

2011 WL 3156339,    at     *8    (N.D.    Ga.   July   26,    2011)   (“Although

Plaintiffs’     claim     for    civil     conspiracy       does   not     furnish    an

independent cause of action on which to hold Defendants liable,

it can be used to establish some of Defendants’ liability for

fraudulent transfers under the UFTA.”); Valvanis v. Milgroom,

529 F. Supp. 2d 1190, 1203 (D. Haw. 2007) (“[T]he underlying

actionable     tort     for   the     conspiracy      claim   is    the    fraudulent

transfer of the Hawaii Property [under the HUFTA].”); Gutierrez

v. Givens, 1 F. Supp. 2d 1077, 1087 (S.D. Cal. 1998) (“The Court

finds that a triable issue of fact exists as to whether Colonial

may    be   found   liable      for    a   civil     conspiracy     to    violate    the

UFTA.”); In re Advanced Telecomm. Network, Inc., 2013 WL 414654,

at *3 (Bankr. M.D. Fla. Feb. 4, 2013) (“The Amended Complaint

properly pleads civil conspiracy against the Defendants to the

extent it alleges they knowingly agreed and aided the Allens in

violating       the      UFTA’s        constructive         fraudulent       transfer

provisions.”); In re Penn Packing Co., 42 B.R. 502, 505 (Bankr.

E.D. Pa. 1984) (Pennsylvania’s fraudulent conveyance act claim a

tort     for    purposes        of     choosing      Pennsylvania         statute     of

limitations); Banco Popular N. Am. v. Gandi, 876 A.2d 253, 263

                                              29
(N.J. 2005) (recognizing a claim for civil conspiracy for aiding

and abetting a fraudulent transfer under the UFTA); Double Oak

Const., LLC v. Cornerstone Dev. Int’l, LLC, 97 P.3d 140, 146

(Colo. App. 2003) (“[W]e conclude that a transfer in violation

of    CUFTA   is    a    legal        wrong    which      will    support      a    conspiracy

claim.”); McElhanon v. Hing, 728 P.2d 256, 263 (Ariz. Ct. App.

1985) aff’d in part, vacated in part, 728 P.2d 273 (Ariz. 1986)

(“[U]pon passage of the Uniform Fraudulent Conveyances Act, a

conveyance to defraud a general creditor became a legal wrong,

properly the subject of a suit for civil conspiracy.”).

       Further,     while       very     few    have      addressed      the       issue,    some

circuit    courts        have    recognized          a   cause    of    action      for     civil

conspiracy     based       on     a     violation         of   the     Uniform      Fraudulent

Transfer Act.           See, e.g., CNH Capital Am. LLC v. Hunt Tractor,

Inc., 568 F. App’x 461, 473 (6th Cir. 2014), as amended (July 2,

2014)    (recognizing       that        Kentucky         law   allows    recovery         from   a

transferee     or       transferor        for    civil         conspiracy      to     commit     a

fraudulent conveyance, but denying relief because defendant was

neither the transferee nor the transferor); Chepstow Ltd. v.

Hunt, 381 F.3d 1077, 1090 (11th Cir. 2004) (recognizing a cause

of action for civil conspiracy based on the UFTA under Georgia

law     against     non-transferee             defendants);          Forum     Ins.    Co.       v.

Comparet,     62    F.    App’x       151,     153   (9th      Cir.    2003)     (“California

                                                30
allows for a cause of action for conspiracy to commit fraudulent

transfers, and allows a plaintiff to recover legal damages on

such a cause of action.”).           However, in these cases, the circuit

courts   applied     the    law    as    already       decided    by    state    courts

recognizing such civil conspiracy claims.

      As outlined above, there are two prongs of the WVUFTA, only

one of which requires proof of fraudulent intent.                       Conceivably,

a plaintiff could adequately plead a violation of the WVUFTA

under the first prong with actual intent to hinder, delay, or

defraud,    sufficient        to   support         a   civil     conspiracy      claim.

However, a violation of the second prong would not be sufficient

to   support    a   civil     conspiracy       claim.       Therefore,     the    Court

cannot hold, as a matter of law, that a violation of the WVUFTA

can support a claim for civil conspiracy in all circumstances.

Further, the Court is reticent to expand the bounds of West

Virginia    policy    by    recognizing        a   civil    conspiracy     claim    for

violation of the WVUFTA for the first time.                       “Absent a strong

countervailing federal interest, the federal court . . . should

not elbow its way into this controversy to render what may be an

uncertain    and    ephemeral      interpretation          of   state   law.”      Time

Warner Entm’t–Advance/Newhouse P'ship v. Carteret-Craven Elec.

Membership Corp., 506 F.3d 304, 314 (4th Cir. 2007) (quoting

Mitcheson      v.   Harris,    955 F.2d 235,    238     (4th    Cir.    1992)).

                                          31
Therefore,       the         Court    declines        to        make     such     a     policy

determination to recognize that a violation of the WVUFTA sounds

in tort.

     Regardless,         even    if     the   court    were       to    recognize      that    a

violation       of     the     WVUFTA     sounds      in        tort,    Sheehan’s       civil

conspiracy claim would be barred by the statute of repose as

fully set forth above.                   In West Virginia, “the statute of

limitation for a civil conspiracy claim is determined by the

nature     of    the     underlying       conduct          on    which     the    claim       of

conspiracy is based.”            Dunn v. Rockwell, 689 S.E.2d 255, 269 (W.

Va. 2009).           Therefore, because the statute of limitations for

Sheehan’s WVUFTA claim expired, it necessarily must follow that

the statute of limitations for Sheehan’s civil conspiracy claim

has also expired.             Thus, the Court affirms the district court’s

dismissal of Sheehan’s claims for violation of the WVUFTA.

                                              IV.

     For the reasons set forth above, we conclude that Sheehan’s

WVUFTA and civil conspiracy claims are barred by the applicable

statute    of    limitations.            We    therefore          affirm    the       district

court’s dismissal of Sheehan’s claims.

                                                                                      AFFIRMED

                                              32