TARGET CORPORATION v.
Kennon AMERSON d/b/a South Coast Builders et al.; Green et al. v. Kennon Amerson d/b/a South Coast Builders et al.
In these companion cases, Charlotte and Micah Green and Target Corporation appeal from a verdict in which the jury concluded that the Greens and Target conspired to convey a piece of real property with the intent of defrauding Kennon Amerson d/b/a South Coast Builders and South Georgia Coast Builders, LLC (collectively, “Amerson”), a judgment creditor of the Greens. The Greens and Target assert that (1) Amerson failed to present any evidence of fraud and, therefore, they are entitled to judgment as a matter of law (i.e., that the trial court erred in denying their motions for directed verdict); and (2) Amerson's judgment lien was improper and the trial court erred in failing to rule on that issue. And because we agree that the evidence is insufficient to sustain the jury's verdict of fraudulent conveyance as a matter of law, we reverse the judgment.
The facts of this case are essentially uncontroverted. In January 2007, the Greens contracted with Amerson, a general contractor, for the construction of their home in McIntosh County, Georgia (the “Property”). Thereafter, a dispute between the parties arose, and in December 2007, Amerson filed suit against the Greens.
At all times relevant to this case, Charlotte Green was employed by Target. And in the fall of 2008, Charlotte—who transferred to Georgia for the purpose of opening a distribution center—was approached by her manager and asked if she would be willing to relocate to North Carolina to open yet another distribution center. Charlotte had not tendered her name for consideration when Target announced the job opening, but her manager nonetheless asked her to consider taking the position based upon her success in opening the Georgia facility. She expressed some interest in the move, and agreed to discuss the matter further with her husband. Charlotte also informed her manager (during this same conversation) that she was engaged in ongoing litigation with Amerson, indicating that she would need to explore what impact, if any, the litigation would have on her ability to relocate.
Before making a final decision to accept the position in North Carolina, Charlotte consulted with Target's relocation department, a team dedicated to providing assistance to Target's relocating employees. And this consultation resulted in an agreement to appraise the Greens' Property in order to assess the feasibility of such a move. Specifically, the relocation department placed the Greens in contact with Target's relocation agent, Plus Relocation Services, Inc. (“Plus Relocation”), with whom Target contracted for the real-estate component of its relocation packages—i.e., to aid employees in establishing the value of their homes, to assist them in selling their homes, and/or to facilitate Target's buyout of their homes, so as to allow employee relocation without extensive delay.1 Then, in November 2008, Plus Relocation obtained two separate appraisals on the Greens' Property; and, after averaging the two, it determined the fair-market value of the Property to be $356,000.2
And while the appraisal value of the Property was nearly $26,700 less than the payoff price (due to an outstanding construction loan), Charlotte, nevertheless, decided to pursue the relocation. She then accepted the position, and was directed to report to work in North Carolina in February 2009.
In accordance with its standard relocation package, Target offered to purchase the Property from the Greens at the appraised fair-market value after the house was listed but failed to sell in 60 days. Then, in January 2009, Plus Relocation, on behalf of Target, ordered a title search on the Property and determined it to be free and clear of all liens and encumbrances (other than the Greens' construction loan). The Greens were also informed that the delivery of an unencumbered title was a prerequisite to any sale.
But before the relocation was complete, the case between the Greens and Amerson went to a jury trial and, on February 5, 2009, Amerson obtained a money judgment against the Greens. The Greens filed a motion for new trial and subsequently appealed the judgment.3
Immediately after the trial, Charlotte informed both Target and Plus Relocation of the judgment. And acting upon the advice of her legal counsel, she also informed them that the judgment was a monetary one against the Greens personally and did not impede the Greens' ability to convey unencumbered title to the Property.
On March 26, 2009, Amerson filed its judgment lien on the general-execution docket in McIntosh County during the pendency of the Greens' motion for new trial. Then, on March 30, 2009, Plus Relocation, on behalf of Target, ordered a revised title search on the Property in preparation for its purchase of the Property. Apparently due to the lag between the time of filing and the time it takes to appear on the docket, Amerson's lien was not discovered during the revised title search, and the title analysis indicated that title on the Property remained clear.
Thus, unaware of the judgment lien, Plus Relocation, on behalf of Target, purchased the Property on May 4, 2009 for $356,000.4 And because Target's purchase price was less than the payoff value of the construction loan, the Greens—who had already moved to North Carolina—paid the remaining loan balance of nearly $26,700 at closing.
The Greens relinquished all possession and control of the Property to Target at the time of the closing and, indeed, have not returned to the Property since moving to North Carolina several months prior to the closing. Then, on September 1, 2009, when Target attempted to sell the Property, it discovered for the first time Amerson's judgment lien. Target was thereafter precluded from effecting a third-party sale.
Target filed a petition to quiet title on the Property5 and, on the same day, Amerson filed the instant action. In that complaint, Amerson alleged that (1) the Greens fraudulently transferred the Property to Target for the purpose of avoiding its judgment and requested that the sale be set aside, and (2) Amerson should be awarded bad-faith damages and attorney fees for the Greens and Target's alleged deceitful conduct. And during the ensuing trial, the Greens and Target twice moved for directed verdict, contending that (1) the evidence was insufficient as to establish the essential elements of fraud, so as to support a finding of fraudulent conveyance and (2) Amerson's judgment lien was improper because it was filed during the pendency of the Greens' motion for new trial in their litigation with Amerson. The trial court denied both motions.6
The jury returned a verdict in favor of Amerson on the fraudulent-conveyance claim, finding that the warranty deed from the Greens to Target should be set aside, that the Greens and Amerson acted with bad faith, and that Amerson was entitled to attorney fees against Target. No ruling was made as to the validity of the judgment lien.
On appeal, the Greens and Target assert that the trial court erred (1) in allowing the issue of fraudulent conveyance to go to the jury, and not granting their motions for directed verdict, and (2) in failing to rule upon the validity of the judgment lien.
1. With respect to the Greens and Target's argument that the trial court erred in denying their motions for directed verdict on the claim of fraudulent conveyance, we note that a directed verdict is proper only if “there is no conflict in the evidence as to any material issue and the evidence introduced, with all reasonable deductions therefrom, ․ demand[s] a particular verdict.”7 Amerson, of course, bore the burden at trial of presenting sufficient evidence to establish fraud,8 and we review the trial court's denial of the Greens and Target's motions for directed verdict using the any evidence standard.9 With these guiding principles in mind, we turn now to merits of this enumeration of error.
The Georgia Uniform Fraudulent Transfers Act10 (“UFTA”) proscribes transfers made “[w]ith actual intent to hinder, delay, or defraud any creditor of the debtor.”11 OCGA § 18–2–74(b) lists several factors-also called “badges of fraud”12 —that “consideration may given [to], among other factors,” in determining whether a fraudulent transfer has been made with actual intent to defraud a creditor:
(1) [t]he transfer or obligation was to an insider; (2)[t]he debtor retained possession or control of the property transferred after the transfer; (3)[t]he transfer or obligation was disclosed or concealed; (4)[b]efore the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit; (5)[t]he transfer was of substantially all the debtor's assets; (6)[t]he debtor absconded; (7)[t]he debtor removed or concealed assets; (8)[t]he value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred; (9) [t]he debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred; (10)[t]he transfer occurred shortly before or shortly after a substantial debt was incurred; and (11)[t]he debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor.13
Amerson contends that this case implicates evidence of fraud as set forth in factors 1, 2, 3, 4, 5, 6, 7, 9 and 10. We disagree.
(a) Without citing to any authority or record evidence, Amerson asserts that Target, as Charlotte's employer, is an “insider” within the meaning of OCGA § 18–2–74(b)(1). As defined in the UFTA, however, an “insider” includes an individual debtor's relatives, partners or partnerships, or “[a] corporation of which the debtor is a director, officer, or person in control.”14 The record contains no evidence that Charlotte was “a director, officer, or person in control” at Target. To the contrary, Charlotte testified that, at no time during the relevant time period, was she employed in an executive or managerial position with any authority or control over Target's actions with respect to the direction of money or the purchase/sale of the Property.15 It follows, then, that Amerson failed to set forth any evidence to support its assertion that Target was an “insider” within the meaning of OCGA § 18–2–74(b)(1) .16
(b) In support of its contention that the Greens retained possession or control of the Property after the sale to Target (thus implicating OCGA § 18–2–74(b)(2)), Amerson notes that, although the closing took place on May 4, 2009, the Greens did not transfer the warranty deed to Target until January 7, 2010. To be sure, a delay in transferring the warranty deed might, in some circumstances, support an inference of fraud.17 But here, the uncontroverted evidence shows that the Greens left the Property in March 2009 and never again returned. Moreover, following the closing, the Greens completely relinquished all control over the Property, and Plus Relocation assumed responsibility for the upkeep and payment of all taxes and maintenance.
Additionally, while the delay in transferring title to the Property might seem unusual at first blush, Target explained that, as was the case with most corporate relocations, its customary practice dictated that it not assume title to properties it purchased. Instead, a title is generally held by a third-party title company until the property is sold, at which time title is transferred directly to the buyer in order to reduce the expenses of the transaction. Here, however, Target obtained title to the Greens' Property in January 2010 after its attempted third-party sale failed, in order to dispute Amerson's lien. It follows, then, that Amerson failed to set forth any evidence to support its assertion that the Greens retained possession or control of the Property after the sale to Target within the meaning of OCGA § 18–2–74(b)(2).
(c) Amerson also maintains that the fact its judgment was obtained prior to the transfer of the Property from the Greens to Target connotes a badge of fraud under OCGA § 18–2–74(b)(4).18
Again, we certainly recognize that there are circumstances in which the timing of a conveyance will necessarily raise suspicions as to a debtor's intentions.19 That said, the uncontroverted evidence presented at trial was that the Greens-acting with the assistance of the same counsel who represented them at trial and supported their account of events—understood Amerson's judgment to be against them personally and not as a burden on the Property. And Target, who informed Charlotte that a clear title was a prerequisite to its buyout, conducted two title searches prior to the closing, neither of which reflected Amerson's lien. Thus, while Amerson's judgment does predate the conveyance, it is not sufficient, by itself and under these particular circumstances, to support a finding of actual intent to defraud.20
(d) Amerson further contends that OCGA § 18–2–74(b)(5) is implicated in the case sub judice because the Property was the Greens' sole remaining asset in Georgia. But even if this is true, it does not necessarily mean that “[t]he transfer was of substantially all the debtor's assets.” The transfer of the Property from the Greens to Target does not equate to the Greens having no remaining assets or income subject to collection in North Carolina (from which Amerson could collect on its judgment).21 Indeed, the Greens were not asked about any remaining assets or property at trial, nor was any evidence presented as to the absence of such assets.22 As such, Amerson cannot establish that the transfer of the Property represented “substantially all the [the Greens'] assets” from a silent record. Amerson's reliance on this particular badge of fraud is, therefore, misplaced.
(e) With respect to OCGA § 18–2–74(b)(6), Amerson alleges that the Greens “absconded” to North Carolina. But Amerson has presented absolutely no evidence that the Greens concealed their move to North Carolina or that their decision to move was in any way an attempt to avoid Amerson's judgment. Instead, the record shows that Charlotte accepted the North Carolina position and was in the process of moving prior to the entry of Amerson's judgment. And while it is certainly true that the underlying litigation was pending at the time of Charlotte's decision to relocate, it is undisputed that Target solicited Charlotte for the transfer and that she declined to submit her name when the position was originally posted. As such, there is simply no evidence to support a finding that Charlotte requested an out-of-state transfer fearing an adverse judgment, or that she was attempting to “abscond.” Sometimes a corporate relocation really is just a corporate relocation.
(f) Amerson also asserts that, by moving to North Carolina, the Greens “removed or concealed assets,” supporting an inference of fraud under OCGA § 18–2–74(b)(7). But Amerson conceded at trial that no evidence of concealment existed. And thus again, at its core, Amerson relies on nothing more than the Greens' decision to move to North Carolina and the fact that Amerson had a judgment against them as “evidence” that the relocation was motivated by an actual intent to defraud Amerson. But in the absence of any other evidence to support such a finding, these facts alone are insufficient.23
(g) Additionally, Amerson argues that the Greens were insolvent following the conveyance of the Property to Target because they have yet to pay the judgment against them, thus evincing fraud within the meaning of OCGA § 18–2–74(b)(9). But to prove that the Greens were insolvent under the UFTA, Amerson was required to establish that, at the time of the conveyance, “the sum of [their] debts [was] greater than all of [their] assets, at a fair valuation,”24 or that the Greens were “generally not paying [their] debts as they [became] due.”25 Amerson did neither at trial.
Again, the record is devoid of any evidence as to the value of the Greens' debts or assets, or of any evidence that the Greens were not paying their debts as they became due (other than Amerson's judgment). Thus, even if we were inclined to entertain Amerson's argument that a failure to pay its judgment, in and of itself, could demonstrate that the Greens were “generally not paying” their debts,26 Amerson still cannot make a showing of insolvency within the meaning of the statute in the absence of additional evidence as to the value of Amerson's debt within the context of the Greens' total liabilities.27
(h) Finally, Amerson maintains that the Greens' conveyance of the Property to Target shortly after Amerson obtained its judgment constitutes a badge of fraud under OCGA § 18–2–74(b)(10). To be sure, as previously noted, the timing of events can, in some circumstances, give rise to an inference that a conveyance was designed to defeat the rights of a creditor. But under the facts of the case sub judice, no such inference is permissible.
The law is well established that the question of intent in a fraudulent conveyance case is generally one for the jury.28 But no matter how willing we are to commit to the jury “the solution of every question of fact,” when the determination of the issue “rests not on direct proof, but on circumstances, there exists a point where the inferences to be drawn cannot, as a matter of law, be sufficient to support a verdict.”29 That point was reached in this case.
The undisputed evidence reveals that the Property was conveyed to Target for purposes of Charlotte's corporate relocation, and the record presents absolutely no evidence from which a jury could infer that the conveyance was motivated by some nefarious intent to defeat Amerson's right to collect his judgment. It follows, then, that the Greens and Target were entitled to a directed verdict, and the trial court erred in denying their motions for same.30
2. In light of our holding in Division 1, it is unnecessary for us to address the second enumeration of error.
ANDREWS, P. J., and McMILLIAN, J., concur.