SE Property Holdings, LLC v. Braswell et al

Filing 120

ORDER granting 98 Motion for Partial Summary Judgment; denying 99 Motion for Summary Judgment. As to Counts One & Four, this action remains set for Pretrial Conference on 7/25/2017. The parties are to submit their proposals regarding Counts Two & Three in their Joint Pretrial Document. Signed by District Judge William H. Steele on 6/7/2017. (tgw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
SE PROPERTY HOLDINGS, LLC,
Plaintiff,
v.
GEORGE S. BRASWELL, et al.,
Defendants.

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PUBLISH
CIVIL ACTION 13-0267-WS-N

ORDER
This fraudulent transfer action comes before the Court on plaintiff’s Motion for Partial
Summary Judgment (doc. 98) and defendants’ Motion for Summary Judgment (doc. 99). Both
of these overlapping Rule 56 Motions have been briefed, with considerable duplication of
argument along the way, and are now ripe for disposition.
I.

Nature of the Action.
This case is one of a number of fraudulent transfer actions that SE Property Holdings,

LLC (“SEPH”), is pursuing in this District Court against guarantors of multimillion dollar loans
made by SEPH’s predecessor for the development and financing of certain real estate projects in
Orange Beach, Alabama, known as Bama Bayou and Marine Park. When the projects failed and
the loans went into default, the guarantors declined to pay, thereby embroiling SEPH and the
guarantors in many years of litigation spanning numerous cases and courts, including this
District Court and the Mobile County Circuit Court, as well as probate and bankruptcy courts.
In this particular action, SEPH filed its First Amended Complaint (doc. 22) against
defendants, George S. Braswell and Vennie T. Braswell, alleging that George Braswell
(“Braswell”) executed guaranties exceeding $1.1 million on loans made by SEPH’s predecessor
for the Bama Bayou / Marine Park project. After the borrowers defaulted on those loans,
Braswell transferred certain real property to his wife, Vennie Braswell (“Mrs. Braswell”), on or
about May 19, 2009. In particular, the Complaint alleges that Braswell conveyed to Mrs.
Braswell the couple’s primary residence in Baldwin County (purportedly valued at between $1

million and $2.5 million, with a mortgage balance of $600,000) and a Baldwin County
condominium unit (purportedly valued at $500,000, with no outstanding mortgage balance).
SEPH maintains that both transfers violate the Alabama Uniform Fraudulent Transfer Act, Ala.
Code §§ 8-9A-1 et seq. (the “AUFTA”), in multiple respects.
The First Amended Complaint alleges three distinct AUFTA causes of action against the
Braswells. In Count One, SEPH brings a claim of actual fraudulent transfer, in violation of
Alabama Code § 8-9A-4(a), based on allegations that Braswell made the subject transfers with
the intent of hindering, delaying or defrauding SEPH’s predecessor. In Count Two, SEPH
asserts a claim of constructive fraudulent transfer, in violation of Alabama Code § 8-9A-4(c),
based on allegations that Braswell’s remaining assets after the transfers were unreasonably small
and he believed or should have believed that he would be called upon to pay debts beyond his
ability to pay. In Count Three, SEPH advances a claim of constructive fraudulent transfer, in
violation of Alabama Code § 8-9A-5(a), predicated on an allegation that Braswell was insolvent
at the time of, or as a result of, the subject transfers. Finally, in Count Four, SEPH brings a
claim of civil conspiracy, alleging that the Braswells conspired with each other in effecting the
subject asset transfers, all to SEPH’s detriment in being deprived of assets that could have been
used to collect on Braswell’s guaranty obligations.
II.

Factual Background.1
A.

The Loans and Guaranties.

Between 2005 and 2007, SEPH’s predecessor (Vision Bank) entered into a series of four
commercial loan agreements whereby it loaned $21 million to entities called Bama Bayou, LLC

1

The Court remains mindful of its obligation under Rule 56 to construe the record,
including all evidence and factual inferences, in the light most favorable to the non-movant. See
Skop v. City of Atlanta, GA, 485 F.3d 1130, 1136 (11th Cir. 2007). As to each cross-motion for
summary judgment, then, the record will be viewed in the light most favorable to the nonmovant. Also, federal courts cannot weigh credibility at the summary judgment stage. See
Feliciano v. City of Miami Beach, 707 F.3d 1244, 1252 (11th Cir. 2013) (“Even if a district court
believes that the evidence presented by one side is of doubtful veracity, it is not proper to grant
summary judgment on the basis of credibility choices.”). Therefore, the Court will “make no
credibility determinations or choose between conflicting testimony, but instead accept [nonmovant]’s version of the facts drawing all justifiable inferences in [non-movant]’s favor.”
Burnette v. Taylor, 533 F.3d 1325, 1330 (11th Cir. 2008).

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(formerly known as Riverwalk, LLC) and Marine Park, LLC. (Corbitt Aff. (doc. 101, Exh. A), ¶
5.) Those loans were fully funded by Vision Bank and its participant banks. (Id., ¶ 7.)
In connection with each of those loans, George Braswell executed a limited continuing
guaranty in favor of Vision Bank. (Corbitt Aff., ¶ 6.) First, on or about March 10, 2005, he
executed a guaranty with respect to Vision Bank’s $6 million loan to Riverwalk, LLC in March
2005. (Id., ¶ 6 & Exh. A-2.) In that guaranty, Braswell agreed to be liable for up to $315,000 in
principal of the note, as well as 100% of all interest on the loan accruing at any time, and 100%
of collection costs, expenses, and reasonable attorney’s fees. (Id., Exh. A-2 at ¶ 14.) Second, on
or about May 20, 2006, Braswell executed a guaranty with respect to Vision Bank’s $5 million
loan to Riverwalk LLC in June 2006. (Corbitt Aff., ¶ 6 & Exh. A-3.) In that guaranty, he agreed
to be liable for up to $280,000 in principal of the note, as well as 100% of all interest on the loan
accruing at any time, and 100% of collection costs, expenses, and reasonable attorney’s fees.
(Id., Exh. A-3 at ¶ 14.) Third, on or about September 25, 2007, Braswell executed a guaranty
with respect to Vision Bank’s $5 million loan to Bama Bayou, LLC in September 2007. (Corbitt
Aff., ¶ 6 & Exh. A-4.) In that guaranty, he agreed to be liable for up to $280,000 in principal of
the note, as well as 100% of all interest on the loan accruing at any time, and 100% of collection
costs, expenses, and reasonable attorney’s fees. (Id., Exh. A-4 at ¶ 14.) And fourth, on or about
December 17, 2007, Braswell executed a guaranty with respect to Vision Bank’s $5 million loan
to Marine Park, LLC in March 2007. (Corbitt Aff., ¶ 6 & Exh. A-5.)2 In that guaranty, he
agreed to be liable for up to $280,000 in principal of the note, as well as 100% of all interest on
the loan accruing at any time, and 100% of collection costs, expenses, and reasonable attorney’s
fees. (Id., Exh. A-5 at ¶ 14.)

2

It bears noting that, while SEPH (as Vision Bank’s successor by merger) holds the
Bama Bayou loans, notes and guaranties, the Marine Park, LLC note was transferred to FNB
Bank, which is not a party to these proceedings, sometime after May 19, 2009. (Corbitt Aff., ¶
7.) SEPH’s objective in this this litigation is to facilitate collection of the Bama Bayou loans and
guaranties, not the Marine Park loan and guaranty, which it no longer holds and which it has no
direct interest in enforcing. Nonetheless, the Marine Park guaranty is pertinent to the issues
presented on summary judgment, inasmuch as Vision Bank held the Marine Park debt at the time
of the challenged transfers, and Braswell’s obligations under that guaranty bear on his solvency
or lack thereof when those transfers occurred.

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B.

The Defaults and SEPH’s Collection Efforts.

Plaintiff’s evidence is that, even though the loans had been fully funded, Bama Bayou,
LLC and Marine Park, LLC defaulted under the loans and notes sometime prior to January 2009.
(Corbitt Aff., ¶¶ 7-8.) Vision Bank subsequently demanded payment from the borrowers and
guarantors, including Braswell. (Id., ¶ 8.) When payment was not forthcoming, Vision Bank
sued Bama Bayou, Marine Park, Braswell, and others in the Circuit Court of Mobile County,
Alabama, on January 16, 2009 (the “Bama Bayou Action”). (Id.) The Bama Bayou Action
remains pending today. To date, it has not gone to trial; indeed, the Court’s understanding is that
no trial setting is in place at this time.
On March 20, 2009, as part of its collection activities, Vision Bank foreclosed on
multiple parcels of real property that secured its loans to Bama Bayou and Marine Park,
purchasing such property via credit bids. (Id., ¶ 9.) In the wake of those foreclosure sales, large
deficiencies remained on the Bama Bayou and Marine Park loans. Indeed, plaintiff’s
calculations are that, as of February 21, 2017, Braswell owes SEPH the sum of $875,000 in
principal on the Bama Bayou / Riverwalk guaranties, as well as $9,294,012.19 in interest on
those loans (exclusive of attorney’s fees and costs of collection). (Id., ¶ 16.)
C.

The Challenged Transfers.

As noted, SEPH’s claims herein focus on a pair of real property transfers made by
Braswell to his wife, Mrs. Braswell, who is not a signatory on the subject guaranties and is not
directly indebted to SEPH on the Bama Bayou / Riverwalk loans. Both of the challenged
transfers occurred on May 19, 2009, some four months after Vision Bank commenced the Bama
Bayou Action against Braswell to collect on the underlying debt.
The first transfer from Braswell to Mrs. Braswell was of real estate described as “Unit
1001, The Sands at Romar Beach, a condominium, located in Baldwin County, Alabama.” (Doc.
101, Exh. G, at 1.) The Warranty Deed executed by Braswell conveyed and transferred to Mrs.
Braswell his entire ownership interest in that condo unit, in exchange for a listed consideration of
$10.00 cash. (Id.) Braswell confirms that his wife paid him no other consideration for that
conveyance. (Braswell Dep. (doc. 101, Exh. H), at 28.) Braswell listed the value of that beach
condo during the relevant time period as being $500,000. (Doc. 101, Exh. K at Exh. 2; doc. 105,
Exh. B.)

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The second transfer from Braswell to Mrs. Braswell was of real estate described as “Lot
73, of Sandy Creek Farms, Phase I.” (Doc. 101, Exh. F, at 1.) This property was the couple’s
primary residence. (Braswell Dep., at 143.) As with the Romar Beach condo, the only
consideration furnished by Mrs. Braswell to her husband in exchange for this conveyance was
$10.00 cash. (Id.) Braswell listed the value of the Sandy Creek Farms residence during the
relevant time period as being $1 million, but a January 2008 appraisal valued it at $1,365,000.
(Doc. 101, Exh. J at Supp. Exh. 3a; doc. 105, Exh. B.)
George Braswell executed deeds conveying both of these properties to Vennie Braswell
on May 19, 2009. (Doc. 24, ¶¶ 6, 8, 14.) Whether coincidentally or otherwise, this was
precisely one day before Vision Bank foreclosed on the mortgaged real property securing its
loans to Bama Bayou.
Defendants’ evidence is that these transfers were made in the ordinary course of estate
planning activities with their attorney, Mort Swaim. In particular, defendants show that Braswell
first met with Swaim for estate-planning purposes in February 2008. (Doc. 10, Exh. 23.) When
Braswell consulted with Swaim again in May 2009, he did so for the stated purpose that he
“wanted to update his estate plan.” (Swaim Dep. (doc. 100-1, Exh. 5), at 68.) Defendants’
evidence is that the transfers of Braswell’s interest in the Sandy Creek Farms residence and the
Romar Beach condo to Mrs. Braswell were made pursuant to Swaim’s advice that they “balance
their assets for estate-planning purposes.” (Id. at 179.) According to Swaim, “the moment
[Braswell] went above one million, … he had a tax problem. So I wanted to hit the … two main
assets that I was aware of, which was this house and this condo.” (Id. at 28-29.) In his
deposition, Braswell testified that the goal of these transfers was to “[r]educe taxes.” (Braswell
Dep. (doc. 100-1, Exh. 6), at 157.)
D.

Braswell’s Assets and Liabilities Following the Transfers.

Notably, as of May 19, 2009, Braswell’s liabilities were far beyond the $875,000 in
principal he owed on the Bama Bayou / Riverwalk guaranties, the $280,000 in principal he owed
on the Marine Park guaranty, and the accrued interest and costs of collection on all of those
loans.3 Indeed, Braswell was also indebted to Vision Bank in the amount of $900,000 in

3

Plaintiff’s uncontroverted calculations of accrued interest on those four loans as
of May 19, 2009, are as follows: (i) $205,833 in interest on the March 2005 loan to Riverwalk;
(Continued)
-5-

principal and $21,621 in interest pursuant to a guaranty that he had executed in September 2007
for a loan to Sundance, LLC. (Corbitt Aff., ¶¶ 12, 15.) Braswell and others had also signed a
$2,500,000 promissory note in 2003 and a $3,100,000 promissory note in 2004 as part of the
consideration for Braswell and nine other individuals to purchase stock in a company called Gulf
World, Inc. (Doc. 101, Exhs. D & E; Hardy Dep. (doc. 101, Exh. C), at 10.) No more than
$50,000 in principal was ever paid on those notes, even though the full balance was due and
owing as of January 1, 2007. (Hardy Dep., at 13-15, 18-19.) Braswell was individually liable
for the full amount of the Gulf World notes.
Given the importance of the relative magnitudes of Braswell’s assets and liabilities at the
time of the subject transfers to the legal issues joined in these proceedings, it is no surprise that
each side has retained a Certified Public Accountant to serve as an expert witness herein. As
defendants correctly point out, “[t]he two expert CPAs agreed on the value of many assets and
liabilities; but they disagreed on the value of a few, resulting in a difference of opinion as to
Braswell’s solvency before and after the transfers.” (Doc. 100, at 7.) On the asset side of the
ledger, there are only two significant differences between the experts’ competing valuations.
Both witnesses agree that Braswell’s assets immediately after the May 19, 2009 transfers were
approximately $1.4 million, plus (i) the value of his interest in Gulf World, Inc., and (ii) the
value of his “Gulf World, Inc. right of contribution.” (Doc. 101, Exh. J, at Supp. Exh. 3a; doc.
101, Exh. K, at Exh. 2.) Plaintiff’s expert (Stacy Cummings) places a value of $190,000 on
Braswell’s interest in Gulf World, Inc., whereas defendants’ expert (Mark Pawlowski) values
that interest at $700,000. Moreover, plaintiff assigns no value to Braswell’s “right of
contribution,” whereas defendants’ expert assigns it a value of $5,169,230. (Id.)
On the liability side, both experts agree that as of May 19, 2009, Braswell had at least
$6.1 million in liabilities, including the Gulf World promissory notes (in the amounts of $3.1
million and $2.5 million, as discussed supra) as well as more than $500,000 in a HELOC
through Regions Bank. (Doc. 101, Exh. J at Supp. Exh. 3a; doc. 101, Exh. K at Exh. 2.)
However, Cummings (SEPH’s expert) also lists among Braswell’s liabilities some $1.155
(ii) $211,111 in interest on the June 2006 loan to Riverwalk; (iii) $167,006 in interest on the
September 2007 loan to Bama Bayou; and (iv) $246,426 in interest on the Marine Park loan.
(Corbitt Aff., ¶ 14.)

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million in principal for the Riverwalk / Bama Bayou / Marine Park guaranties, as well as
$830,000 in interest on those associated loans, $900,000 for the Sundance guaranty, and $21,621
in interest on the Sundance loan. By contrast, Pawlowksi (the Braswells’ expert) lists none of
these items among Braswell’s liabilities. (Id.) These and other differences give rise to a $2.9
million discrepancy between the two experts’ liability calculations for Braswell as of the
applicable transfer date.4
III.

Summary Judgment Standard.
Summary judgment should be granted only “if the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Rule
56(a), Fed.R.Civ.P. The party seeking summary judgment bears “the initial burden to show the
district court, by reference to materials on file, that there are no genuine issues of material fact
that should be decided at trial.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991).
Once the moving party has satisfied its responsibility, the burden shifts to the non-movant to
show the existence of a genuine issue of material fact. Id. “If the nonmoving party fails to make
'a sufficient showing on an essential element of her case with respect to which she has the burden
of proof,' the moving party is entitled to summary judgment.” Id. (quoting Celotex Corp. v.
Catrett, 477 U.S. 317 (1986)) (footnote omitted). “In reviewing whether the nonmoving party
has met its burden, the court must stop short of weighing the evidence and making credibility
determinations of the truth of the matter. Instead, the evidence of the non-movant is to be
believed, and all justifiable inferences are to be drawn in his favor.” Tipton v. Bergrohr GMBHSiegen, 965 F.2d 994, 999 (11th Cir. 1992) (internal citations and quotations omitted).
“Summary judgment is justified only for those cases devoid of any need for factual
determinations.” Offshore Aviation v. Transcon Lines, Inc., 831 F.2d 1013, 1016 (11th Cir. 1987)
(citation omitted).

4

Cummings also lists a second Regions Bank HELOC loan from Regions Bank
amidst Braswell’s liabilities, in the amount of $523,467. (Doc. 101, Exh. J at Supp. Exh. 3a.)
Pawlowski does not, noting that there is “some confusion” in the matter and explaining that his
research has identified “only one line of credit account opened up” with Regions Bank, not two.
(Doc. 101, Exh. K at 4.) That discrepancy need not be resolved definitively on summary
judgment, because the insolvency analysis is unchanged with or without a second $500,000
HELOC liability.

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Here, both sides have moved for summary judgment on certain AUFTA causes of action.
It is well-settled that “[t]he applicable Rule 56 standard is not affected by the filing of crossmotions for summary judgment.” Page v. Winn-Dixie Montgomery, Inc., 702 F. Supp.2d 1334,
1345 (S.D. Ala. 2010) (citations omitted); see also Murray v. Holiday Isle, LLC, 620 F. Supp.2d
1302, 1307 (S.D. Ala. 2009) (same). The Eleventh Circuit has explained that “[c]ross-motions
for summary judgment will not, in themselves, warrant the court in granting summary judgment
unless one of the parties is entitled to judgment as a matter of law on facts that are not genuinely
disputed.” United States v. Oakley, 744 F.2d 1553, 1555 (11th Cir. 1984) (citation omitted); see
also Wermager v. Cormorant Tp. Bd., 716 F.2d 1211, 1214 (8th Cir. 1983) (“the filing of cross
motions for summary judgment does not necessarily indicate that there is no dispute as to a
material fact, or have the effect of submitting the cause to a plenary determination on the
merits”). Nonetheless, “cross-motions may be probative of the absence of a factual dispute
where they reflect general agreement by the parties as to the dispositive legal theories and
material facts.” Page, 702 F. Supp.2d at 1345 (citations omitted); see also Murray, 620 F.
Supp.2d at 1307. Such is the case here.
IV.

Analysis.
As noted, SEPH has brought three fraudulent transfer claims against the Braswells

pursuant to the AUFTA, as well as a fourth claim for civil conspiracy. The Braswells move for
summary judgment on all claims, whereas SEPH seeks summary judgment solely on the two
constructive fraudulent transfer causes of action found in Counts Two and Three. The contours
of each statutory cause of action differ; however, they also share certain common elements. In
particular, each AUFTA claim requires that there be a creditor/debtor relationship between
SEPH and Braswell at the time of the subject transfers. See Ala. Code §§ 8-9A-4(a), 8-9A-4(c),
8-9A-5(a) (each defining circumstances in which a “transfer made by a debtor is fraudulent as to
a creditor”). Likewise, each constructive fraudulent transfer claim (i.e., Counts Two and Three)
requires proof that “the debtor made the transfer without receiving a reasonably equivalent
value.” See Ala. Code §§ 8-9A-4(c), 8-9A-5(a). Accordingly, the Court will begin by
addressing these common elements, then move on to a claim-by-claim analysis.5

5

For purposes of this discussion, the Court is mindful of the Alabama Supreme
Court’s admonition that transfers of property between family members during litigation against
(Continued)
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A.

The “Creditor/Debtor Relationship” Element.

As indicated, the AUFTA only classifies as fraudulent certain transfers “made by a debtor
… as to a creditor.” Ala. Code. §§ 8-9A-4(a), 8-9A-4(c), 8-9A-5(a). The statute defines
“creditor” as “[a] person who has a claim.” Ala. Code § 8-9A-1(4). The term “debtor” is
defined as “[a] person who is liable on a claim.” Ala. Code § 8-9A-1(6). And the AUFTA
defines “claim” as “[a] right to payment, whether or not the right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal,
equitable, secured, or unsecured.” Ala. Code § 8-9A-1(3).
Plaintiff’s evidence on this element is both straightforward and undisputed. Indeed,
SEPH has made an uncontroverted showing of each of the following facts: (i) SEPH’s
predecessor loaned $16 million to Bama Bayou, LLC (including loans to that entity under its
former name of Riverwalk, LLC) between March 2005 and September 2007; (ii) Braswell
executed limited continuing guaranties on those loans in the total principal amount of $875,000,
plus 100% of all interest and collection costs that accrue; (iii) Bama Bayou defaulted under all
three loans and notes; (iv) SEPH’s predecessor demanded payment from borrowers and
guarantors; (v) despite their promises in the notes and guaranties, neither Braswell nor any other
borrower or guarantor paid those principal amounts, interest and collection costs; and (vi) after
the default, SEPH’s predecessor filed suit against debtors and guarantors (including Braswell) in
state court in January 2009. These record facts constitute an affirmative showing that Braswell
executed binding, enforceable guaranties in SEPH’s favor, then failed or refused to pay upon

the transferor must be scrutinized with particular care. See, e.g., Cox v. Hughes, 781 So.2d 197,
205 (Ala. 2000) (“[c]onveyances of property between family members in the face of a pending
suit against the grantor must undergo especially careful scrutiny”) (citations omitted); Reese v.
Smoker, 475 So.2d 506, 508 (Ala. 1985) (“The Court recognizes that conveyances of property
between family members in the face of a pending suit against the transferor must be carefully
scrutinized.”); Waddle v. Great Southern Phosphate Co., 63 So. 462, 463 (Ala. 1913) (“Where
the contract is between near relations, as between husband and wife, father and son, and the like,
it will be subjected to a closer scrutiny … than if the parties to it were strangers. … Such
purchases are so often made a cover for a debtor’s property, are so frequently resorted to for the
purpose of withdrawing his property from the reach of his creditors and preserving it for his own
use, and they hold forth such temptations for fraud, that they require close scrutiny.”).

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demand when the borrowers defaulted. Such facts would establish that, as of May 19, 2009,
Braswell was a “debtor” and SEPH’s predecessor was a “creditor” for AUFTA purposes.
In response, defendants argue that a two-page order entered in the Bama Bayou Action on
October 16, 2016 “established there is no debt.” (Doc. 104, at 11.) The October 16 Order set
aside the March 2009 foreclosure sales on the grounds that Vision Bank’s credit bids upon
foreclosure were “so grossly inadequate as to shock the judicial conscience.” (Doc. 100-2, at
Exh. 1.) On the basis of that finding, the October 16 Order concluded as follows:
“[T]he Court finds the extremely low bids at the foreclosure sale raise the
presumption of unconscionableness and the grossly inadequate prices coupled
with substantial evidence of misconduct justifies setting aside the foreclosure sale.
The Court hereby sets aside the foreclosure sale and declares the foreclosure
deeds null, void and of no force and effect.”
(Id.) Nowhere in the October 16 Order did Judge Stewart declare the underlying debt to be
wiped away, the underlying notes and guaranties to be void or otherwise unenforceable, or Bama
Bayou, Braswell or any other guarantor not to be liable on SEPH’s claims. Rather, the October
16 Order simply set aside the foreclosure sales. On its face, that Order said nothing that would
alter SEPH’s status as a “creditor” for AUFTA purposes and Braswell’s status as a “debtor” for
AUFTA purposes, as of the May 2009 transfers at issue here.
Notwithstanding the facially narrow ruling in the October 16 Order, defendants posit that
its effect is to “eliminate[e] all alleged debt.” (Doc. 104, at 11.) According to defendants, the
October 16 Order must mean that Judge Stewart found Thomas Bealle’s appraised values of the
foreclosed parcels to be accurate and correct. That being the case, defendants reason, Bealle’s
valuations are such that Bama Bayou’s assets exceed its liabilities; in other words, defendants’
position is that the value of SEPH’s collateral (the parcels of real estate on which it has the right
to foreclose) exceed the value of the debt, so there is no debt. (Id. at 11-13.) The argument
suffers from multiple flaws. First, the October 16 Order lacks findings of fact that assign
specific valuations to the subject parcels. Second, the October 16 Order is devoid of any
findings of fact or conclusions of law that Bama Bayou, Braswell or any other guarantor is not
indebted to SEPH.6 The October 16 Order did nothing more than set aside the foreclosure sales.
6

This is so, despite the fact that certain debtors urged Judge Stewart “to simply
credit the fair value of the property, which should have been bid at the foreclosure sale, against
the debt.” (Doc. 108, Exh. B, at 3.) Their stated position was that “[a] conclusion by the court
(Continued)
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This Court will not credit the Braswells’ attempts to read into that ruling more cataclysmic
factual and legal determinations than it actually made.
Third, and more broadly, defendants’ argument presupposes that SEPH was obligated to
pursue foreclosure of the mortgages as a necessary prerequisite to accrual of liability for
Braswell. This notion is incorrect, as a matter of law. Under Alabama law, a mortgagee such as
SEPH is not legally obligated to foreclose on the property before it may sue a guarantor for the
debt. See, e.g., Triple J Cattle, Inc. v. Chambers, 551 So.2d 280, 282 (Ala. 1989) (“Upon a
default by the mortgagor, the mortgagee has three remedies, and he may pursue any one or all of
them until the debt is satisfied. … He is not required to foreclose the mortgage first, but may
bring his action on the note alone.”).7 And defendants identify no provision in the guaranties
signed by Braswell or the underlying loans and promissory notes that would restrict SEPH’s
remedies or compel it to foreclose first.8 Thus, even if the Braswells are correct that foreclosure

that the fair value of the property exceeded the debt on the date of the foreclosure would effect a
release of all the Counterclaim Plaintiffs from any deficiency.” (Id. at 5.) Judge Stewart neither
endorsed that reasoning nor granted such a remedy. She did not find that the debtors were due a
credit for the fair value of the property, and she did not release borrowers or guarantors from any
deficiency; to the contrary, the Bama Bayou Action is still pending today, more than seven
months after entry of that October 16 Order. By contrast, if the Braswells’ reasoning were
correct, the October 16 Order would have terminated the Bama Bayou Action because there
would no longer be any outstanding debt for SEPH to collect. Defendants are asking this Court
to construe the October 16 Order in a manner that even its author has not.
7

See also Whitney Bank v. Point Clear Development, LLC, 2012 WL 2277597, *5
(S.D. Ala. June 18, 2012) (“Alabama courts have expressly declined to impose any such
mandatory duty of foreclosure in the mortgage context.”); In re Phillips, 439 B.R. 892, 896
(N.D. Ala. 2010) (under Alabama law, “the creditor may elect to file suit to collect the debt and
reduce his claim to a judgment lien without first foreclosing the mortgage”).
8

To the contrary, the underlying mortgages describe the bank’s remedies as
cumulative, not exclusive. See, e.g., doc. 101, Exh. A-6 at § 2.15 (“No right, power, or remedy
conferred upon or reserved to the Lender by this Mortgage is intended to be exclusive of any
other right, power or remedy, but each and every such right, power and remedy shall be
cumulative and concurrent, and shall be in addition to any other right, power and remedy given
hereunder, or under the Note, or under the Loan Documents ….”). Likewise, the guaranties
executed by Braswell provided that his guaranty obligations were unaffected by the existence of
any security or the bank’s resort to other remedies. See, e.g., doc. 101, Exh. A-2 at § 4 (“It is the
intent hereof that the obligations of the Guarantor shall be and remain unaffected … by the
existence or non-existence, validity or invalidity of any pledge, assignment or conveyance given
(Continued)
-11-

sales on the collateral would eliminate the Bama Bayou debt to which Braswell’s guaranties are
related, neither Alabama law nor the relevant contract documents oblige SEPH to conduct those
foreclosure sales as a condition precedent to suing Braswell for the deficiency.
For all of the foregoing reasons, the Court finds that there are no genuine issues of
material fact as to the existence of a creditor/debtor relationship between Vision Bank and
Braswell at the time of the challenged transfers. Taking the evidence in the light most favorable
to defendants, Braswell was a “debtor” for AUFTA purposes and SEPH’s predecessor was a
“creditor” for AUFTA purposes as of May 19, 2009. The Court therefore finds as a matter of
law that plaintiff has satisfied the creditor/debtor element of each AUFTA cause of action
asserted in the Complaint.
B.

The “Reasonably Equivalent Value” Element.

Another common element of certain AUFTA claims asserted herein is the “reasonably
equivalent value” requirement. In each of the constructive fraudulent transfer claims set forth at
Counts Two and Three, the plaintiff must show that “the debtor made the transfer without
receiving a reasonably equivalent value in exchange.” Ala. Code. §§ 8-9A-4(c), 8-9A-5(a). The
AUFTA provides that “[v]alue is given for a transfer if, in exchange for the transfer, property is
transferred or an antecedent debt is secured or satisfied, but value does not include an
unperformed promise to furnish support to the debtor.” Ala. Code § 8-9A-3(a). Notably, in the
AUFTA constructive-fraud context, Alabama courts distinguish between “valuable
consideration” (which does not give rise to a constructive fraudulent transfer) and merely “good
consideration” (which can). See, e.g., McPherson Oil Co. v. Massey, 643 So.2d 595, 596 (Ala.
1994) (“[T]he law infers constructive fraud when it appears that an indebted grantor has
conveyed property to a family member without receiving valuable consideration.”); Reese v.
Smoker, 475 So.2d 506, 508 (Ala. 1986) (“The term ‘constructive fraud’ is generally used in
referring to those instances where a grantor, indebted at the time, conveys property on a good as
distinguished from a valuable consideration.”).

as security; or … by resort on the part of the Bank to any other security or remedy for the
collection of said Indebtedness ….”).

-12-

In evaluating whether valuable – as opposed to simply good – consideration has been
given, the Uniform Fraudulent Transfer Act (“UFTA”) as adopted in Alabama and other
jurisdictions contemplates that courts must examine the nature and adequacy of the consideration
from the standpoint of the creditor, not that of the debtor or the transferee of the subject property.
In that regard, Comments to the UFTA clarify that “[v]alue is to be determined in light of the
purpose of the Act to protect a debtor’s estate from being depleted to the prejudice of the
debtor’s unsecured creditors. Consideration having no utility from a creditor’s viewpoint does
not satisfy the statutory definition.” Uniform Fraudulent Transfer Act 1984, § 3, comment 2
(emphasis added). Courts have embraced this principle. As one federal court applying
Alabama’s version of the UFTA explained, “Whether a debtor received reasonably equivalent
value is to be determined in light of the AUFTA’s purpose – to protect creditors. … Accordingly,
the value of consideration given for an alleged fraudulent transfer is determined from the
standpoint of the debtor’s creditors.” Kaye v. Lone Star Fund V (U.S.), L.P., 453 B.R. 645, 667
(N.D. Tex. 2011) (citations omitted).9
To establish reasonably equivalent value, defendants do not suggest that Mrs. Braswell
transferred any valuable property to Braswell in exchange for the transfers of the Sandy Creek
9

See also In re TransTexas Gas Corp., 597 F.3d 298, 306 (5th Cir. 2010) (“To
measure reasonably equivalent value, we judge the consideration given for a transfer from the
standpoint of creditors. … The proper focus is the net effect of the transfers on the debtor’s
estate, [and] the funds available to the unsecured creditors.”) (citations omitted); In re Sergio,
552 B.R. 9, 21 (Bankr.D. Mass. 2016) (“[A] determination of whether indirect benefits suffice as
fair consideration turns on whether the debtor’s net worth has been preserved and creditors’
interests have not been injured as a result of the transfers.”) (citation omitted); In re David Cutler
Industries, Ltd., 502 B.R. 58, 73 (Bankr.E.D. Pa. 2013) (for UFTA purposes, “the court
determines whether value was received from the vantage of the creditor,” and the “touchstone”
of the “reasonably equivalent value” analysis is “whether the parties exchanged comparable
realizable commercial value”) (citation omitted); In re Blixseth, 489 B.R. 154, 184 (Bankr.D.
Mont. 2013) (“in the context of the California Fraudulent Transfer Act … reasonably equivalent
value must be determined from the creditors’ standpoint, not from the debtor’s”); ASARCO LLC
v. Americas Mining Corp., 396 B.R. 278, 337 (S.D. Tex. 2008) (under Delaware’s version of
UFTA, “[t]he determination of whether the debtor received REV should be made from the
standpoint of the debtor’s creditors, by looking at the net effect of the transfer on the unsecured
creditors”); In re 3dfx Interactive, Inc., 389 B.R. 842, 863 (Bankr.N.D. Cal. 2008) (“Because the
policy behind fraudulent conveyance law is to preserve assets of the estate, reasonably equivalent
value is determined from the standpoint of the estate’s creditors, it is not determined from the
defendant’s perspective.”).

-13-

Farms house and the Romar Beach condo. They do not, and cannot reasonably, contend that the
$10 paid by Mrs. Braswell to Braswell in each transaction comes anywhere close to establishing
“reasonably equivalent value.” They do not even purport to rely on love, affection and
emotional support as furnishing the requisite consideration. Indeed, they do not identify any
meaningful consideration whatsoever flowing from transferee to transferor in exchange for the
real property at issue.
In lieu of anything that might qualify as valuable consideration for AUFTA purposes,
defendants assert that “[i]n exchange for the transfers, Mr. Braswell received the value of large
tax savings – money that does not have to be paid to the IRS.” (Doc. 104, at 24.) The trouble
with this argument is that it does not comport with the AUFTA’s definition of “value.” The
above-cited authorities unambiguously establish that (i) “reasonably equivalent value” or lack
thereof is examined from the standpoint of the debtor’s creditors, given the statutory objective of
protecting creditors; and (ii) consideration having no utility from a creditor’s viewpoint does not
satisfy the statutory definition of “value.” Braswell’s May 2009 transfers of real property to his
wife depleted his assets to a considerable degree, with no countervailing benefit or utility to his
creditors. Rather than helping these creditors, Braswell’s transfers actually harmed them by
vastly reducing the hard assets available to satisfy his burgeoning liabilities pursuant to the Bama
Bayou, Marine Park, and Sundance guaranties.10 Thus, inasmuch as AUFTA value is assessed
from a creditor’s perspective, defendants’ reliance on “tax savings” and “estate planning” cannot
and do not furnish the necessary reasonably equivalent value or valuable consideration necessary
to pass muster under the constructive fraudulent transfer provisions of the AUFTA.
Defendants’ rejoinder is twofold. First, the Braswells contend that “tax savings”
constitute reasonably equivalent value pursuant to In re Northlake Foods, Inc., 715 F.3d 1251
(11th Cir. 2013) and In re McFarland, 619 Fed.Appx. 962 (11th Cir. Oct. 16, 2015). In doing so,
defendants selectively quote snippets from those decisions (which arise under federal bankruptcy
10

By defendants’ expert’s reckoning, if Braswell’s speculative, contingent “right of
indemnification” as to Gulf World debt is excluded, his total assets plummeted from $4,042,745
to $2,177,745 on May 19, 2009 after he transferred the Sandy Creek Farms house and the Romar
Beach condo to Mrs. Braswell. (Doc. 101, Exh. K at Exh. 2.) By contrast, his liabilities
exceeded $6 million on that date, according to the defense expert’s calculations. (Id.) Under the
circumstances, any suggestion by defendants that Braswell’s asset transfers had any conceivable
utility or value to his creditors is unsupportable.

-14-

law, rather than the UFTA) for the proposition that “reasonably equivalent value” for a transfer
exists where the transfer “confers an economic benefit on the debtor.” (Doc. 104, at 24.)
Defendants also correctly point out that “[t]he concept of reasonably equivalent value does not
require a dollar-for-dollar transaction.” (Id.) Because the challenged transfers meant that
Braswell benefited by “money that does not have to be paid to the IRS” in future estate taxes
when he passes away, defendants reason, there must be reasonably equivalent value under the
AUFTA. (Doc. 110, at 12.)
Examining those quotations in context, however, leads to a different conclusion. In
Northlake Foods, the Eleventh Circuit recognized that “[t]he purpose of voiding transfers
unsupported by reasonably equivalent value is to protect creditors against the depletion of a
bankrupt’s estate,” but also acknowledged that a transfer should not be voided where “the
debtor’s net worth has been preserved, and the interests of the creditors will not have been
injured by the transfer.” 715 F.3d at 1255-56 (citations omitted). Notwithstanding defendants’
arguments about tax savings and estate planning, the summary judgment record unambiguously
establishes that Braswell’s hard assets and net worth fell precipitously as a result of the contested
transfers. Far from his net worth being “preserved” by the tax savings, the calculations of
defendants’ own expert show that it was greatly depleted. Moreover, such depletion of
Braswell’s net worth harmed his creditors because the value of his assets available for them to
collect was well below the value of Braswell’s liabilities. Defendants have not identified a single
decisional authority under which “estate planning” has been deemed reasonably equivalent value
for purposes of a fraudulent transfer analysis. On its face, “tax savings” would not appear to fall
within the AUFTA’s definition of value. See Ala. Code § 8-9A-3 (“[v]alue is given for a transfer
if, in exchange for the transfer, property is transferred”) (emphasis added). And the Eleventh
Circuit has explained that “[w]e scrutinize the value of transfers more closely where, as here, the
transfer was made to an insider,” such as a spouse. McFarland, 619 Fed.Appx. at 975; see also
In re Advanced Telecommunication Network, Inc., 490 F.3d 1325, 1336-37 (11th Cir. 2007)
(“courts are to scrutinize the value of transfers much more closely in situations such as this one,
which involve transfers to insiders”). Braswell’s one-sided transfers to his wife for no valuable
consideration cannot withstand such close scrutiny from a valuation standpoint.
For all of these reasons, the Court concludes on this record as a matter of law that
Braswell did not receive a reasonably equivalent value for AUFTA purposes when he transferred

-15-

the Romar Beach condo and Sandy Creek Farms residence to Mrs. Braswell in May 2009. His
net worth was not preserved and creditors’ interests were badly impaired by the transfers.
Therefore, this element of Counts Two and Three is satisfied.11
C.

Defendants’ Rule 56 Motion as to Count One (Ala. Code § 8-9A-4(a)).

Having addressed the common elements, the Court now evaluates the summary judgment
motions on a claim-by-claim basis. Defendants (but not plaintiff) have moved for summary
judgment on Count One of the First Amended Complaint, which is a cause of action under the
AUFTA for actual fraudulent transfer, pursuant to Alabama Code § 8-9A-4(a). That section
provides that “[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 with actual
intent to hinder, delay, or defraud any creditor.” Ala. Code. § 8-9A-4(a). Thus, to prevail on
Count One, SEPH must prove “[t]hat the plaintiff is a creditor of the debtor;” and “[t]hat the
debtor transferred an asset or an interest in an asset with the actual intent to injure, delay or
defraud the plaintiff or any other creditor of the debtor.” 1 Ala. Pattern Jury Instr. Civ. § 18.22
(3d ed.). The Court has already found that the record affirmatively establishes SEPH’s status as
a creditor of Braswell; therefore, that element is satisfied as a matter of law.
With regard to the second element, the law is clear that the debtor must have made the
subject transfers with the actual intent to hinder, delay or defraud creditors. See, e.g., In re
Earle, 307 B.R. 276, 296 (Bankr. S.D. Ala. 2002) (“when the ‘actual fraud’ fraudulent transfer
statutes are at issue, proof of an actual intent to delay or defraud without any legitimate
11

In so concluding, the Court has considered defendants’ repeated argument that the
impact of Braswell’s transfers on SEPH is irrelevant for purposes of the “reasonably equivalent
value” element because that element is solely concerned with unsecured creditors, rather than
secured creditors like SEPH. (See doc. 104, at 25; doc. 110, at 12-13.) As an initial matter,
defendants do not identify any security that Braswell gave for the subject guaranties; therefore, it
is unclear how SEPH might properly deemed a “secured creditor” as to debtor Braswell (as
opposed to some other debtor or borrower). Besides, the uncontroverted facts are that no value
was given for the subject property transfers from Braswell to Mrs. Braswell. Any consideration
that might have been given had no value and no utility from the perspective of SEPH and
Braswell’s other creditors, whether secured or unsecured. And, following the transfers,
Braswell’s assets were far less than they had been, relative to his liabilities. Quibbling over the
semantics of whether SEPH should be termed a “secured” or an “unsecured” creditor cannot
obscure the conclusion that no reasonably equivalent value was given in exchange for Braswell’s
May 2009 transfers of real estate to his wife.

-16-

supervening purpose is necessary before a court may conclude that a transfer is a fraudulent
one”). Actual intent is a multifactor query. See, e.g., Aliant Bank v. Davis, 198 So.3d 508, 512
(Ala.Civ.App. 2015) (“The trial court considers several factors in determining whether the debtor
possessed the requisite intent, including to whom the transfer was made, the amount of assets
transferred, and the financial condition of the debtor before and after the transfer.”) (citation
omitted). Indeed, the AUFTA recites a non-exhaustive list of 11 factors that may be considered
in determining actual intent for purposes of a § 8-9A-4(a) claim.12 These circumstantial indicia
of intent are sometimes called “badges of fraud.” See, e.g., In re Vista Bella, Inc., 511 B.R. 163,
194 (Bankr. S.D. Ala. 2014) (“Actual intent to hinder, delay, or defraud creditors is ordinarily
established by circumstantial evidence. … That evidence is typically gathered by a court’s
consideration of certain badges of fraud … in Ala. Code § 8-9A-4(b)”). “No specific
combination of badges is necessary for a finding of actual intent.” Id. “[I]t is clear that actual
intent to hinder, delay, or defraud is a heavily fact-dependent question.” Id. at 195.
In their summary judgment filings, the Braswells assert that the intent element should be
decided in their favor as a matter of law because “only three factors favor SEPH’s assertion of”
actual fraud and “there is ‘significantly clear’ evidence of a ‘legitimate supervening purpose’
(estate planning) to find no intent to defraud.” (Doc. 100, at 27-28.) The Court disagrees. The
record reasonably supports two competing narratives, to-wit: (i) Braswell transferred the house
and condo to his wife as a valid estate planning device to reduce estate taxes; or (ii) Braswell
transferred the house and condo to his wife for the purpose of rendering those assets inaccessible
to Vision Bank and other creditors to which he was then indebted to the tune of millions of
dollars. Construing the record in the light most favorable to SEPH (the nonmovant), facts
supporting a reasonable inference of actual fraudulent intent by Braswell include that the
12

The enumerated factors include whether “(1) The transfer was to an insider; (2)
The debtor retained possession or control of the property transferred after the transfer; (3) The
transfer was disclosed or concealed; (4) Before the transfer was made the debtor had been sued
or threatened with suit; (5) The transfer was of substantially all the debtor’s assets; (6) The
debtor absconded; (7) The debtor removed or concealed assets; (8) The value of the
consideration received by the debtor was reasonably equivalent to the value of the asset
transferred; (9) The debtor was insolvent or became insolvent shortly after the transfer was
made; (10) The transfer occurred shortly before or shortly after a substantial debt was incurred;
and (11) The debtor transferred the essential assets of the business to a lienor who transferred the
assets to an insider of the debtor.” Ala. Code § 8-9A-4(b).

-17-

transfers were made to an insider (Mrs. Braswell); that Braswell retained custody and control of
the real estate even after the transfers occurred; that Vision Bank had sued Braswell shortly
before the transfers were made; that Braswell failed to disclose the transfers to Vision Bank even
though he had promised to do so; that Braswell received only $10 from Mrs. Braswell as
consideration for each transfer; that Braswell may have been or may have become insolvent as a
result of those transfers; and that the timing of Braswell’s follow-up meeting with his estate
planning attorney to effectuate the transfers is particularly suspect given its temporal proximity
to the filing of the Bama Bayou Action against him and the bank’s foreclosure sales in that
action.
Given these record facts, the well-settled legal directive on summary judgment review
that all evidence and factual inferences must be construed in the light most favorable to the
nonmovant, and the highly fact-specific nature of the actual intent inquiry, the Court declines
defendants’ invitation to find an absence of intent to defraud as a matter of law at this stage of
the proceedings. Genuine issues of material fact abound as to whether Braswell carried out the
May 2009 transfers to Mrs. Braswell with the actual intent to hinder, delay or defraud Vision
Bank or other creditors. As such, defendants’ Motion for Summary Judgment is properly denied
as to Count One.13
13

In arguing otherwise, defendants maintain that summary judgment is appropriate
on this claim because “only three factors favor SEPH’s assertion” of actual fraudulent intent.
(Doc. 100, at 27.) However, the Braswells cite no authority (and the Court is aware of none)
holding that fraudulent intent or lack thereof is determined by mechanically counting the number
of badges of fraud on each side of the ledger, or that each badge of fraud must receive identical
weight. More fundamentally, there are significant factual disputes as to several badges of fraud
that the Braswells say are in their favor; thus, it is far from clear at this time that a majority of the
badges point against a determination of fraudulent intent. Also, defendants’ reliance on In re
Earle, 307 B.R. 276 (Bankr. S.D. Ala. 2002), is misplaced because Earle is distinguishable. For
example, in Earle, “[t]here was no evidence that Mrs. Earle either had been sued or threatened
with suit prior to the transfer.” Id. at 292. Here, by contrast, there is undisputed evidence of
same. Also, the Earle determination was made after a trial in which the court concluded as
follows: “The Court watched Mrs. Earle testify and closely evaluated her credibility and the
Court finds that she did not intend to hinder, delay, or defraud creditors in forming the trust.” Id.
at 294 (emphasis added). Of course, the undersigned can make no such credibility
determinations at the summary judgment stage. For these and other reasons, Earle does not
support the Braswells’ argument that the highly fact-specific inquiry into actual intent must be
resolved in their favor on Rule 56 review.

-18-

D.

Cross-Motions as to Count Two (Ala. Code § 8-9A-4(c)).

In Count Two, SEPH brings an AUFTA claim against the Braswells for constructive
fraudulent transfer, in violation of Alabama Code § 8-9A-4(c).14 That section provides, in
relevant part, that
“A transfer made by a debtor is fraudulent as to a creditor … if the debtor made
the transfer without receiving a reasonably equivalent value in exchange for the
transfer and the debtor … [w]as 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.”
Ala. Code § 8-9A-4(c)(1). The three elements of a constructive fraudulent transfer claim under §
8-9A-4(c) as pursued by SEPH on summary judgment are that “[p]laintiff is a creditor of the
debtor,” “the debtor transferred an asset … without receiving a reasonably equivalent value in
exchange for the transfer,” and “[t]he debtor was engaged or was about to engage in a business
transaction for which the remaining assets of the debtor were unreasonably small in relationship
to the business or transaction.” 1 Ala. Pattern Jury Instr. Civ. § 18.21 (3d ed.).15
14

As to both of SEPH’s constructive fraud claims, Alabama law “infers constructive
fraud when it appears that an indebted grantor has conveyed property to a family member
without receiving valuable consideration.” McPherson Oil Co. v. Massey, 643 So.2d 595, 596
(Ala. 1994); see also Champion v. Locklear, 523 So.2d 336, 338 (Ala. 1988) (“Once constructive
fraud is alleged in a family transaction, as it has been here, the grantee has the burden of proving
the bona fide character of the underlying transaction.”); London v. G.L. Anderson Brass Works,
72 So. 359, 364 (Ala. 1916) (“when an insolvent or embarrassed husband procures a conveyance
to be made to his wife, a presumption will be indulged against her which requires her to
affirmatively show that the consideration was paid by her”); Strategic Well-Site Materials &
Logistics, LLC v. Frac Master Sands, LLC, 2013 WL 1282053, *3 (N.D. Ala. Mar. 25, 2013)
(same). “In order to meet the requisite burden of proof, the grantee/spouse is not limited to
showing that the consideration that actually passed was sufficient, but may also present evidence
of circumstances, salaries, financial contributions from other sources and relevant matters
tending to prove that the ownership which was transferred was supported by adequate
consideration.” Champion, 523 So.2d at 338 (citation omitted).
15

Both § 8-9A-4(c) and the Alabama Pattern Jury Instructions frame the third
element in two alternatives. That element may be satisfied where the plaintiff shows either that
the debtor’s remaining assets were unreasonably small (as discussed supra) or that the debtor
“[i]ntended 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.” Ala. Code § 8-9A-4(c)(2). On
summary judgment, SEPH invokes only the “unreasonably small” alternative; therefore, that is
the only formulation of a § 8-9A-4(c) cause of action addressed here. The Court does not decide,
and expresses no opinion as to whether, SEPH could or could not prevail on the § 8-9A-4(c)(2)
(Continued)
-19-

The Court has already determined, supra, that both the creditor/debtor and reasonably
equivalent value elements are satisfied with respect to Braswell’s May 2009 transfers.
Therefore, the only remaining question for the cross-motions as they relate to Count Two is
whether the third element (i.e., whether Braswell’s remaining assets were unreasonably small) is
satisfied here. For fraudulent transfer purposes, the “unreasonably small assets” test “denotes a
financial condition short of insolvency,” where the challenged transfers “leave the transferor
technically solvent but doomed to fail.” In re Fidelity Bond and Mortg. Co., 340 B.R. 266, 295
(Bankr.E.D. Penn. 2006) (citations omitted).16 Comments to the UFTA specify that the
“unreasonably small” requirement “focuses attention on whether the amount of all the assets
retained by the debtor was inadequate, i.e., unreasonably small, in light of the needs of the
business or transaction in which the debtor was engaged or about to engage.” Uniform
Fraudulent Transfer Act 1984, § 4, Comment 4.
To show that Braswell’s remaining assets were inadequate in relationship to his business
transactions, SEPH enumerates his pending business transactions as of May 19, 2009. In
particular, SEPH cites record evidence that, as of that date, Braswell owed $1,985,376 to Vision
Bank on his Bama Bayou / Marine Park guaranties (Corbitt Aff., ¶ 14); $921,621 to Vision Bank
on his Sundance guaranty (Id., ¶ 15); and $5.6 million on the two Gulf World promissory notes

theory, which would remain available for SEPH to pursue at trial if genuine issues of material
fact were to preclude granting summary judgment on either side’s Rule 56 Motion as to Count
Two.
16

See also In re Adelphia Communications Corp., 652 Fed.Appx. 19, 21 (2nd Cir.
June 15, 2016) (“The test for whether assets are ‘unreasonably small’ focuses on reasonable
foreseeability … and is satisfied if at the time of the transaction the debtor had such minimal
assets that insolvency was inevitable in the reasonably foreseeable future.”); ASARCO, 396 B.R.
at 396 (term “unreasonably small assets” references “inability to generate sufficient profits to
sustain operations”); In re Chin, 492 B.R. 117, 129 (Bankr. E.D.N.Y. 2013) (remaining assets
are “unreasonably small” if debtor “is technically solvent but doomed to fail”) (citation omitted);
In re Yellowstone Mountain Club, LLC, 436 B.R. 598, 657 (Bankr. D. Mont. 2010) (“In
analyzing whether a debtor was left with unreasonably small assets following the transaction at
issue, the test is aimed at transfers that leave the transferor technically solvent but doomed to
fail.”) (citation and internal marks omitted); Weintraut v. Commissioner of Internal Revenue,
2016 WL 4040793, *85 (T.C. July 27, 2016) (for purposes of “unreasonably small asset
requirement, …we must evaluate whether at the time of [the] transfers it had the ability to
generate enough cash to pay its debts and remain financially stable”).

-20-

(doc. 101, Exhs. D & E).17 Defendants’ counterargument is to make a conclusory statement that
“Braswell had sufficient assets relative to all of these businesses.” (Doc. 104, at 26; doc. 110, at
13.)
In support of this blanket assertion about the adequacy of Braswell’s assets, defendants
propound four arguments. First, they posit that Braswell “participated in paying the Sundance
Settlement Note and even paid more than his share.” (Doc. 104, at 26; doc. 110, at 13.) By
defendants’ own admission, however, the “Sundance Settlement Note” was “negotiated in
February 2012” (id. at 16), nearly three years after the relevant time period for the § 8-9A-4(c)
analysis. That Braswell may have participated in paying a Sundance settlement several years
later tells us nothing about whether his assets were unreasonably small relative to his ongoing
business transactions (including the Sundance guaranty, which had not yet been negotiated down
to a settlement note) as of May 19, 2009. Second, defendants state that “Judge Stewart
determined the value of the property securing the Bama Bayou loans exceeded the loan
amounts.” (Doc. 104, at 26; doc. 110, at 13.) As discussed in § IV.A., supra, however, this
assertion is incorrect. Judge Stewart made no such determination, and certainly never made any
ruling to extinguish Braswell’s guaranty obligations. Third, defendants cite Comment 2 of
Section 2 of the UFTA and contend that “this particular issue is a bona fide dispute being
litigated in State Court.” (Doc. 104, at 26; doc. 110, at 13.) But that citation is unhelpful here,18
17

With respect to these activities, defendants do not challenge SEPH’s assertion that
these “ongoing transactions” qualify as business transactions in which Braswell was engaged for
purposes of a § 8-9A-4(c) constructive fraud analysis. (See doc. 104, at 26; doc. 110, at 13.)
Nor, for purposes of the Count Two analysis, do defendants appear to contest plaintiff’s
calculations of the amounts Braswell owed under those ongoing business transactions as of the
May 19, 2009 transfer date. (See doc. 104, at 26; doc. 110, at 13.) To be sure, in sections of
their summary judgment briefs not directly addressing § 8-9A-4(c), defendants advance an
argument that those liabilities should be discounted for an insolvency analysis. They have not
maintained that similar discounting is necessary for purposes of the “unreasonably small”
element of § 8-9A-4(c). Even if they had, that assertion is addressed in § IV.E., infra, and will
not be duplicated here.
18

The UFTA’s § 2 creates a presumption of insolvency when a debtor is generally
not paying his or her debts as they become due. See Uniform Fraudulent Transfer Act 1984, §
2(b). Comment 2 to § 2 clarifies that in determining whether the debtor is paying his or debts as
they become due for purposes of that presumption of insolvency, a court should take into account
“the existence of bona fide disputes or other special circumstances alleged to constitute an
explanation for the stoppage of payments.” Id. at Comment 2. But SEPH has not invoked the
(Continued)
-21-

and defendants provide no other explanation for why they think a “bona fide dispute” matters for
the “unreasonably small” factor.
Fourth, defendants say the “repurchase of the Gulf World Marine Park proved its value
exceeded the amount owed under the Notes.” (Doc. 104, at 26; doc. 110, at 13-14.) Defendants’
oblique reference to a “repurchase” is, apparently, that in April 2010 the creditors of the $5.6
million in promissory notes that Braswell and others had signed in 2003 and 2004 to buy stock in
Gulf World, Inc. repurchased the assets of that entity. (Hardy Dep. (doc. 100, Exh. 4), at 23-24.)
Pursuant to the April 2010 repurchase, those creditors released Braswell and the other debtors
from the $5.6 million in defaulted promissory notes (as to which Braswell and the other
signatories had paid, essentially, zero principal in the intervening six or seven years). (Id. at 31,
34.)19 Defendants’ point is, apparently, that Gulf World Marine Park must have been very
valuable for the creditors to buy the park back from Braswell and other debtors instead of suing
them for $5.6 million. But to say that Gulf World Marine Park had value in April 2010 is not to
say that Braswell’s remaining assets were adequate relative to his ongoing business obligations
as of the May 19, 2009 property transfers to his wife. Indeed, defendants’ own expert valued
Braswell’s interest in Gulf World, Inc. at just $700,000 as of May 2009. (Doc. 101, Exh. K at

presumption of insolvency; indeed, insolvency is not even an element of Count Two, which
seeks to hold the Braswells liable under § 8-9A-4(c). Whether a bona fide dispute would or
would not overcome the presumption of insolvency is thus inconsequential for purposes of the
Count Two analysis, particularly with respect to the “unreasonably small” element. At any rate,
the Court is applying no presumption of insolvency for any aspect of the cross-motions for
summary judgment as they relate to Count Two. Defendants’ “bona fide dispute” argument and
reliance on Comment 2 to § 2 of the UFTA is, therefore, unavailing.
19

These tangential facts take us fairly far afield from the limited summary judgment
inquiry. Nonetheless, as the Court understands it from reviewing the record, the sequence of
events was as follows: Two individuals, Ron Hardy and Brad Miller, owned a marine park
facility in Panama City, Florida, known as Panama City Gulf World. In 2003 and 2004,
Braswell and nine other individuals purchased that facility from Hardy and Miller, pursuant to
which each of Braswell and the other buyers signed $5.6 million in promissory notes. By the
terms of those notes, Braswell and the other signatories each promised to pay the full amount to
Hardy and to Miller. But Braswell and his colleagues fell behind on interest payments, and made
no or almost no principal payments at any time. In lieu of suing Braswell or the other makers of
the notes for the full $5.6 million amount (as they were legally entitled to do), Hardy and Miller
worked out a deal to repurchase the park and release the notes in April 2010.

-22-

Exh. 2.) By contrast, Braswell was on the hook for the full past due amount owed on the subject
promissory notes at that time.
The broader point is this: As discussed supra, on May 19, 2009, Braswell was engaged
in ongoing business transactions for which he faced direct personal liability in excess of $8.5
million (including $5.6 million for the Gulf World notes, $1,985,376 on the Bama Bayou /
Marine Park guaranties, and $921,621 on the Sundance guaranty). But his assets after
transferring the Romar Beach condo and the Sandy Creek Farms house to Mrs. Braswell were,
even by defendants’ own expert’s reckoning, no more than $7,346,975. (Doc. 101, Exh. K, at
Exh. 2.)20 Again, the third element of Count Two, as framed by SEPH in its Rule 56 Motion, is
whether, as of May 19, 2009, Braswell was engaged in business transactions for which his
remaining assets were unreasonably small in relationship to those transactions. This is not the
same as a solvency/ insolvency query; indeed, the case law is clear that this element may be
satisfied even when the transferor is technically solvent. The critical inquiry is whether
Braswell’s assets following the challenged real estate transfers were adequate in light of the
needs of the transactions in which he was engaged.
Construing record evidence in the light most favorable to defendants, the Court answers
this question in the negative. As of May 19, 2009, Braswell had committed himself to business
ventures whereby he had personally guarantied or otherwise promised to pay more than $8.5
million for which he could reasonably be expected to be held individually accountable at any
time. Neither he nor his joint venturers had ever paid any meaningful principal on the $5.6
million Gulf World notes. He had already been sued for the nearly $2 million he owed on the
Bama Bayou / Marine Mark guaranties. And he was on the hook for nearly $1 million in unpaid
principal and interest on the Sundance guaranty. Even under the most generous possible reading
of the summary judgment record, Braswell’s assets immediately after the transfers topped out at
20

That figure includes an “asset” described as “Gulf World, Inc. right of
indemnification (contribution),” which defendants’ expert values at $5,169,230. By including
that line item and valuation as one of Braswell’s assets for purposes of this analysis, the Court
makes no findings endorsing or adopting it. In the context of the § 8-9A-4(c) discussion, it is
unnecessary to resolve the parties’ summary judgment arguments on this point. Even if that
“asset” is included, Braswell’s assets were unreasonably small relative to his ongoing business
activities once he transferred $1.5 million or more in personal real estate holdings to Mrs.
Braswell.

-23-

$7.3 million, more than $5.1 million of which was tied up in a speculative, conjectural “right of
contribution” as to which Braswell’s ability to collect anything from his co-venturers (who, like
him, had paid negligible principal on the Gulf World notes in the previous six years despite a
balloon payment deadline of January 2007) was suspect, at best.21 On this record, giving
defendants the benefit of all reasonable record inferences, the Court finds as a matter of law that
Braswell’s remaining assets as of the transfer date were inadequate in light of the needs of the
business transactions in which he was engaged at that time. That is to say, Braswell’s remaining
assets were unreasonably small in relationship to the business transactions and financial
obligations he had voluntarily incurred and under which he was then laboring. This element of
Count Two is satisfied.
For all of the foregoing reasons, the Court finds that there are no genuine issues of
material fact and that SEPH is entitled to entry of judgment in its favor as a matter of law on
Count Two, its constructive fraudulent transfer claim pursuant to Alabama Code § 8-9A-4(c).
The record unambiguously reflects that a creditor/debtor relationship existed, that Braswell did
not receive reasonably equivalent value in exchange for his transfers of the Romar Beach condo
and the Sandy Creek Farms house to Mrs. Braswell, and that upon completing those transfers
Braswell’s remaining assets were unreasonably small in relationship to the ongoing business
transactions in which he was then engaged and committed. Defendants are liable on Count Two.
Accordingly, plaintiff’s Motion for Partial Summary Judgment is granted as to Count Two, and
defendants’ corresponding Motion for Summary Judgment on Count Two is denied.
E.

Cross-Motions as to Count Three (Ala. Code § 8-9A-5(a)).

Count Three of SEPH’s First Amended Complaint asserts an AUFTA claim against the
Braswells for constructive fraudulent discharge, in violation of Alabama Code § 8-9A-5(a). That
subsection provides as follows: “A transfer made by a debtor is fraudulent as to a creditor whose
claim arose before the transfer was made if the debtor made the transfer without receiving a
reasonably equivalent value in exchange for the transfer and the debtor was insolvent at the time
or the debtor became insolvent as a result of the transfer.” Ala. Code § 8-9A-5(a). To prevail on
21

Certainly, the $5.1 million amount was not then (and potentially not ever)
available to meet Braswell’s financial needs and obligations for those ongoing business
transactions in which he was engaged.

-24-

Count Three, SEPH must establish the following elements: (i) that SEPH is a creditor of
Braswell; (ii) that SEPH’s claim against Braswell arose before the May 19, 2009 transfers
occurred; (iii) that Braswell made those transfers without receiving a reasonably equivalent value
in exchange; and (iv) that Braswell was insolvent at the time or became insolvent as a result of
the transfers. 1 Ala. Pattern Jury Instr. Civ. § 18.20 (3d ed.).22
The first and third elements have already been examined in detail in §§ IV.A. and IV.B.,
supra. Pursuant to that analysis, the Court has determined that SEPH was a creditor of Braswell
as of May 19, 2009, and that Braswell did not receive a reasonably equivalent value in exchange
for those real property transfers to his wife. Thus, those elements are satisfied for summary
judgment purposes. As for the second element, there can be no reasonable dispute that SEPH’s
claim against Braswell arose before the May 2009 transfers. After all, uncontroverted record
evidence establishes that Braswell executed guaranties in favor of Vision Bank in 2005, 2006
and 2007. The borrower (Riverwalk/Bama Bayou) defaulted. Vision Bank demanded payment
from Braswell and others. When no such payment was forthcoming, Vision Bank filed suit
against Braswell in state court in January 2009. Braswell transferred his ownership interest in
the Romar Beach condo and the Sandy Creek Farms house to Mrs. Braswell approximately four
months later. Given this unrebutted factual showing, no reasonable finder of fact could conclude
that SEPH’s claim did not arise before the subject transfers were made. This element of Count
Three is satisfied.23
22

See also SE Property Holdings, LLC v. Center, 2016 WL 7493623, *6 (S.D. Ala.
Dec. 30, 2016) (“To prevail on Count Three, then, SEPH must prove each of the following
elements: (i) that SEPH is a creditor of Charles and Belinda Trammell; (ii) that SEPH’s claim
against Charles and Belinda Trammell arose before the transfers were made; (iii) that Charles
and Belinda Trammell made the transfers without receiving a reasonably equivalent value in
exchange; and (iv) that the Trammells were insolvent at the time or became insolvent as a result
of the transfers.”); Lord Abbett Municipal Income Fund, Inc. v. Southern Farms, Inc., 2015 WL
9474287, *8 (M.D. Ala. Dec. 1, 2015) (“Under § 8-9A-5(a), Lord Abbett must establish (1) that
its claim arose before the transfers were made, (2) that RDG-II made the transfers without
receiving reasonably equivalent value in exchange, and (3) that RDG-II was insolvent at the time
of the transfers or became insolvent as a result of the transfers.”).
23

On summary judgment, the Braswells concede that “SEPH’s Claim Arose Before
Transfers.” (Doc. 104, at 23.) Nonetheless, they suggest that this element is not satisfied
because “SEPH does not have a ‘claim’ against the Braswell’s [sic] …. Although the claim
arose before the transfers, it was extinguished before the transfers as well.” (Id.) This statement
(Continued)
-25-

The fourth and final element of Count Three is that the plaintiff must establish that “the
debtor was insolvent at the time or the debtor became insolvent as a result of the transfer.” Ala.
Code § 8-9A-5(a). The AUFTA 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.” Ala. Code § 8-9A-2(a). And
the statute defines an “asset” as “[p]roperty of a debtor.” Ala. Code § 8-9A-1(2). In applying
these concepts to Braswell’s balance sheet as of May 19, 2009, the parties have sparred at length
about many particular valuations and entries contained in their dueling accountants’ expert
reports. However, SEPH’s Motion for Partial Summary Judgment streamlines the analysis by
focusing on a single, potentially dispositive line item. In particular, SEPH correctly observes
that the Braswells’ expert witness, Mark A. Pawlowski, CPA/ABV, CVA, has valued Braswell’s
assets at $7,346,975 immediately after the May 19, 2009 transfers, and his liabilities at
$6,130,756. (Doc. 101, Exh. K at Exh. 2.) If we accept all of Pawlowski’s (and hence,
defendants’) calculations at face value, then upon completing the transfers Braswell’s assets
exceeded his liabilities by the sum of $1,216,219, or $7,346,975 minus $6,130,756. What that
means is that, if the summary judgment record does not reasonably support Pawlowski’s
inclusion of $1,216,220 in assets, or his exclusion of $1,216,220 in liabilities, or some
combination of the two that equals or exceeds that amount, then Braswell was insolvent within
the plain meaning of the AUFTA definition on May 19, 2009.
The entry on the Pawlowski balance sheet which SEPH highlights for scrutiny in its
Motion for Partial Summary Judgment is his listing of an asset for Braswell labeled “Gulf World,
Inc. right of indemnification (contribution)” and valued at $5,169,230. (Doc. 101, Exh. K at
is both factually and legally incorrect. There is no record evidence supporting a reasonable
inference that SEPH’s claim against Braswell to make good on his guaranty obligations was
“extinguished” prior to May 19, 2009. To the contrary, that claim has never been extinguished,
even to this day. It remains active and pending in the Bama Bayou Action in Mobile County
Circuit Court. Judge Stewart has never entered a ruling erasing or extinguishing the debt, much
less finding that Braswell owes no contractual obligations to SEPH under the subject guaranties.
Nor has there been a judicial finding that “[t]he value of the Bama Bayou assets exceed the
liabilities.” (Id.) Even if there had been such a finding, it would not support defendants’
“extinguishment” argument because the Braswells have identified nothing (and the Court is
aware of nothing) in Alabama law, the subject guaranties, or anywhere else would obligate
SEPH to seek satisfaction of the Bama Bayou / Marine Park debt by foreclosing on the
mortgaged property antecedent to pursuing collection remedies against Braswell individually.

-26-

Exh. 2.) This entry relates to Braswell’s $5.6 million liability on the Gulf World promissory
notes he and others made in 2003 and 2004. (Doc. 101, Exh. D & E.) As discussed supra,
uncontroverted record evidence confirms that neither Braswell nor the other signatories paid any
substantial principal on those notes between 2003 and May 2009, and that they missed a number
of interest payments and the January 2007 balloon payment. (Hardy Dep. (doc. 101, Exh. C), at
13-23.) There is no dispute that the creditors (Hardy and Miller) had the contractual right to sue
any one of the makers of those notes for the entire $5.6 million principal amount. (Hardy Dep.
(doc. 104, Exh. C), at 57 (“if I have to repossess it or if it doesn’t get paid, then they all have to
be individually responsible for the total amount”).) Stated differently, the makers’ repayment
obligations on the Gulf World notes were joint and several, such that each of them was
responsible for the entire unpaid balance of $5.6 million. The Gulf World notes were unpaid and
could have been declared in default as of May 19, 2009. As such, Hardy and Miller could have
sued Braswell individually for the entire $5.6 million balance at that time. However, it is
undisputed and agreed among the parties that, in that scenario, Florida law would have conferred
upon Braswell a right of contribution from the other makers of the notes. See Fla. Stat. §
673.1161(2) (generally, “a party having joint and several liability who pays the instrument is
entitled to receive from any party having the same joint and several liability contribution in
accordance with applicable law”).24 In other words, if Braswell had “paid the instrument,” he
would be entitled to receive contribution from the other eight (or in the case of one of the notes,
nine) makers.
Defendants’ position is that this right of contribution belongs on Braswell’s balance sheet
as an asset valued at $5,169,230 as of May 19, 2009. In his report, defendants’ accountant
Pawlowski explains the reasoning for doing so as follows:
“[S]hould Mr. Hardy and Mr. Miller pursue the notes against any of the
individuals on the note each of those individuals would have a right to
indemnification (contribution) from the other shareholders on the note. In my
24

Defendants do not explain their reliance on Florida law for the “right of
contribution” analysis; however, the Court observes that one of the subject promissory notes lists
a location of Panama City, Florida (doc. 101, Exh. E) and that the notes were executed in
connection with the makers’ purchase of a marine park facility in Panama City, Florida. Plaintiff
has not maintained that a different state’s law applies, much less suggested that the analysis
would be materially different under any such jurisdiction’s authority.

-27-

opinion, this would be an asset on the personal financial statement of George S.
Braswell. … I have calculated the indemnification to be valued at $5,169,230
(which is the $5,600,000 Hardy/Miller notes net of George S. Braswell’s interest
of $430,770 - $5,600,000 time 7.692307%).”
(Doc. 101, Exh. K, at 3.)25 Thus, while it is undisputed that Braswell personally had a $5.6
million liability on the two Gulf World promissory notes and that Hardy and Miller could have
sued Braswell alone to collect that amount, defendants’ theory is that if Braswell had paid the
instrument he would have then had an asset in the form of a statutory right of contribution
against the other makers of the notes. The legitimacy or illegitimacy of that “asset” is the
difference between solvency and insolvency on Braswell’s financial statement, as prepared by
Pawlowski.
SEPH persuasively argues that inclusion of that “right of contribution” asset is improper
for AUFTA insolvency purposes. The pertinent analysis necessarily focuses on a debtor’s assets
and liabilities at the time of the challenged transfers, that is, as of May 19, 2009. See Ala. Code
§ 8-9A-5(a) (reciting element of constructive fraudulent transfer that “the debtor was insolvent at
the time or the debtor became insolvent as a result of the transfer”) (emphasis added). The right
of contribution was not an “asset” (i.e., property of the debtor, Braswell) on May 19, 2009 for the
simple reason that he held no right of contribution on that date. Under the Florida indemnity
statute on which defendants rely, Braswell’s right of contribution from the notes’ other makers
would arise only after he “pays the instrument.” Fla. Stat. § 673.1161(2). Braswell had not paid
a penny of the instrument (much less $5.1 million over and above his fair share, whether defined
as his percentage of ownership or a pro rata fraction of the notes) as of May 19, 2009. Hardy
and Miller had not initiated collection activities against him under the Gulf World notes. He
could not have sued anybody for $5.1 million that day even if he had wanted to do so. None of
those facts are in dispute. Inasmuch as (i) Braswell had paid $0 toward the Gulf World notes as
of May 19, 2009; (ii) Braswell had not been personally sued under the Gulf World notes as of
25

In summary judgment briefing, defendants argue that “[u]nder Florida law,
stockholders’ right to contribution is divided equally among the signers of the Notes, and not
apportioned according to their percentage of ownership.” (Doc. 104, at 17.) Yet that statement
flies in the face of Pawlowski’s stated methodology in calculating the value of that “asset” by
netting out Braswell’s percentage of ownership in Gulf World, as opposed to his equal share of
the Gulf World notes. Defendants have not reconciled the discrepancy.

-28-

May 19, 2009; and (iii) the Florida statute conferred upon Braswell a right to contribution from
other makers only after he “paid the instrument;” he held no then-actionable right of contribution
from other makers of the Gulf World notes as of May 19, 2009, much less an “asset” valued at
$5,169,230. What’s more, inclusion of that line item in Braswell’s assets presupposes that he
would (or even could) pay the entire $5.6 million obligation under the notes,26 and that he would
(or could) recover the full amount net of his fair share from all of the other makers.27 Those
assumptions are devoid of any factual basis in the record. And defendants have failed to
discount these amounts to account for any of these contingencies. Thus, the resulting $5.169
million “asset” listed on Braswell’s balance sheet according to Pawlowski is unsupported by any
record facts and is entirely speculative and conjectural. On this showing, no reasonable finder of
fact could conclude that Braswell possessed any right of contribution from anybody as of May
19, 2009, much less that such a right was fairly valued at $5.169 million for purposes of an
AUFTA insolvency analysis.
For the foregoing reasons, the Court agrees with plaintiff that the “right of contribution”
was not an asset held by Braswell as of May 19, 2009, and that it therefore does not count in the
AUFTA insolvency analysis.28 Moreover, even if were properly counted as an asset, defendants’
26

Under defendants’ own citations of authority, Braswell would have had a right to
contribution of $5.1 million from the other makers only if he first paid off the entire $5.6 million
promissory notes. But the record unambiguously establishes that he was incapable of paying that
amount; after all, Pawlowski’s calculations show that, as of May 19, 2009, Braswell’s total assets
(excluding the right to contribution) were $2,177,745 (or $7,346,975 - $5,169,230). So Braswell
could not have “paid the instrument” in its entirety even if he had wanted to, so as to trigger a
right to contribution in the amount of $5.1 million that defendants claim as the valuation of that
“asset.”
27

Recall that each of the other eight or nine makers would only be liable in
contribution up to his proportional share. Defendants identify no evidence that any of those
makers (much less all of them) had sufficient resources to reimburse him their equitable shares
via contribution even if he had sued them. Such a result seems highly questionable given the
undisputed record evidence that these same makers had been delinquent in making interest and
principal payments on the Gulf World notes when they became due.
28

On summary judgment, defendants argue that Braswell’s right of contribution
qualifies as a “claim” within the meaning of Alabama Code § 8-9A-1(3). (See doc. 104, at 17.)
That may be so, but a “claim” is significant only for the debtor/creditor element of an AUFTA
cause of action. See Ala. Code § 8-9A-1(4) (defining “creditor” as “a person who has a claim”);
Ala. Code § 8-9A-1(6) (defining “debtor” as “a person who is liable on a claim”). The statute’s
(Continued)
-29-

$5.169 million valuation of that asset lacks any reasonable basis in fact, but is instead grounded
in layers upon layers of speculation unsupported by record evidence (i.e., that Hardy and Miller
would sue Braswell; that Braswell would or could pay the entire $5.6 million notes so as to
create a right of contribution in the amount of $5.1 million; that each of the other makers of the
notes would or could reimburse him for their prorated shares in the notes; etc.). On this record,
no reasonable finder of fact could conclude that Braswell possessed a “Gulf World Inc. right of
indemnification (contribution)” valued at $5,169,230 as of March 19, 2009. That asset is
properly excluded from Braswell’s balance sheet. When the value of that asset is backed out,
even using Pawlowski’s calculations, the sum of Braswell’s debts was greater than all of his
assets at a fair valuation, as of March 19, 2009. Therefore, Braswell was insolvent as a matter of
law. That element of § 8-9A-5(a) is satisfied.29

definitions of “asset” and “property” make no reference to “claims,” so defendants’ insistence
that the right to contribution satisfies the statutory definition of a “claim” does not advance their
position.
29

Even if the inclusion of the Gulf World right of contribution as an asset on
Braswell’s financial statement were legally or factually supportable (which it is not), and even if
a reasonable finder of fact could conclude on this record that such “asset” was fairly valued at
$5,169,230 for purposes of an insolvency analysis (which it could not), summary judgment
would remain appropriate on Count Three. Here is why: Recall that the Braswells’ expert
witness calculated the difference between Braswell’s assets and liabilities as being
approximately $1.2 million on May 19, 2009. In order to reach that outcome, Pawlowski did not
list (or assigned a value of $0 to) Braswell’s guaranty obligations to Vision Bank for the Bama
Bayou / Marine Park loans among his liabilities. Such a result is both legally and factually
untenable. As of May 19, 2009, those loans were in default and Vision Bank had sued Braswell,
not only to recover the $1,155,000 in principal guaranties that Braswell had made on those
defaulted loans, but also to recover 100% of all accrued interest (payment of which Braswell had
also guaranteed) which totaled more than $800,000 as of that date. SEPH’s evidence shows all
of these facts, and plaintiff correctly points out that Braswell “has submitted no evidence that this
debt is not owed.” (Doc. 108, at 12; see also id. at 8 (“Defendants have not presented any
evidence to rebut SEPH’s evidence that Braswell owed Vision Bank $1,985,376 on May 19,
2009.”).) If this $1.9 million is added to Braswell’s liabilities on Pawlowski’s ledger, then even
if all of defendants’ calculations are otherwise accepted at face value, Braswell was insolvent for
§ 8-9A-5(a) purposes on May 19, 2009 after the real estate transfers to his wife, because the sum
of his debts was greater than the sum of his assets at a fair valuation. Defendants’ only
arguments against including those liabilities in the Braswell insolvency analysis are that (i) the
October 2016 Order in the Bama Bayou Action eliminated the debt (which, as the undersigned
has already addressed supra, is not so), and (ii) those liabilities are contingent and therefore must
(Continued)
-30-

In short, the Court finds no genuine issues of material fact as to Count Three. The
summary judgment record conclusively establishes that SEPH has met all elements of an
AUFTA cause of action for constructive fraudulent transfer pursuant to Alabama Code § 8-9A5(a), inasmuch as SEPH was a creditor of Braswell as of May 19, 2009, SEPH’s claim against
Braswell arose prior to the subject transfers, Braswell made those transfers without receiving a
reasonably equivalent value in exchange, and Braswell was insolvent or became insolvent as a
result of those transfers. Defendants are liable on Count Three. Accordingly, plaintiff’s Motion
for Partial Summary Judgment is granted as to Count Three, and defendants’ countervailing
Motion for Summary Judgment on Count Three is denied.
F.

Defendants’ Rule 56 Motion as to Count Four (Conspiracy).

Finally, Count Four of the First Amended Complaint asserts a common-law claim for
civil conspiracy, alleging that “Vennie Braswell conspired with George Braswell in effecting
said fraudulent transfers by planning and actively participating in said transfers.” (Doc. 22, ¶
51.) Defendants move for summary judgment on this cause of action for the stated reasons that
(i) “SEPH has failed to produce evidence to support either actual fraud or constructive fraud
claims,” and (ii) “there is no evidence that [Mrs. Braswell] planned with Mr. Braswell to transfer
assets.” (Doc. 100, at 34.) Neither argument is meritorious on Rule 56 scrutiny. First, as
addressed extensively supra, SEPH has indeed produced considerable evidence to support its
claims of actual and constructive fraudulent transfer against the Braswells; therefore, Count Four
is not legally infirm for want of evidence of an underlying tort.30

be discounted (but defendants have neither made any showing that Braswell is not liable to
SEPH in the Bama Bayou Action in the specified amount nor offered any evidentiary or
technical basis for performing the “discounting” that they say should happen). On this record,
the Court finds that a § 8-9A-5(a) insolvency analysis must account for Braswell’s guaranty
obligations to SEPH on May 19, 2009, and that doing so leads inexorably to a finding that
Braswell was insolvent on that date even if defendants’ expert calculations are accepted as true
and correct in all other respects (including the aforementioned $5.1 million right of contribution).
This is an alternative basis for the Court’s determination that SEPH is entitled to summary
judgment on Count Three.
30

To be clear, the Court agrees with defendants that, under Alabama law, a
common-law conspiracy claim requires an underlying wrong. See, e.g., Freeman v. Holyfield,
179 So.3d 101, 106 (Ala. 2015) (“liability for civil conspiracy rests upon the existence of an
underlying wrong and if the underlying wrong provides no cause of action, then neither does the
(Continued)
-31-

Second, defendants’ contention that no evidence links Mrs. Braswell to any fraudulent
transfer scheme is incorrect. Braswell transferred more than $1 million in assets to his wife after
he had been sued, without receiving reasonable value, and in a manner that left him with
insufficient assets to pay for his ongoing business transactions and debts. Perhaps a reasonable
finder of fact could conclude at trial that Mrs. Braswell was unaware of these machinations. But,
on this record, the evidence does not compel such a finding. After all, “[t]he existence of the
conspiracy must often be inferentially and circumstantially derived from the character of the acts
done, the relation of the parties, and other facts and circumstances suggestive of concerted
action.” Turner v. Peoples Bank of Pell City, 378 So.2d 706, 708 (Ala. 1979); see also Eidson v.
Olin Corp., 527 So.2d 1283, 1285 (Ala. 1988) (“By its very nature, the existence of a conspiracy
must often be inferred from circumstantial evidence and the relationship of the parties, as
opposed to direct evidence.”). Notwithstanding Mrs. Braswell’s denial of knowledge of her
husband’s investments, obligations and liabilities, and the paucity of direct evidence of a
conspiracy, the circumstantial evidence and relationship of the Braswells are suggestive of
concerted action; therefore, a triable issue of fact remains, and summary judgment is
inappropriate. Defendants’ Motion for Summary Judgment is denied as to Count Four.
V.

Conclusion.
For all of the foregoing reasons, it is ordered as follows:
1.

Defendants’ Motion for Summary Judgment (doc. 99) is denied;

2.

Plaintiff’s Motion for Partial Summary Judgment (doc. 98) is granted;

3.

The Court finds as a matter of law that defendants are liable to plaintiff on Counts
Two and Three, which assert claims of constructive fraudulent transfer in
violation of Alabama Code § 8-9A-4(c) and § 8-9A-5(a);

4.

As to Counts One and Four, this action remains set for Final Pretrial Conference
on July 25, 2017 at 10:00 a.m., with jury selection to follow on August 1, 2017;
and

conspiracy”). But SEPH has made a substantial showing that the Braswells engaged in
actionable underlying wrongs, so as to support viable fraudulent transfer actions against them.
As such, Count Four is not subject to dismissal for lack of a predicate tort.

-32-

5.

With respect to remedies for Counts Two and Three, the parties must submit their
respective (or, if possible, joint) proposals for how that issue should be addressed
(i.e., via separate hearing, during the trial, via written submissions, etc.) as part of
their Joint Pretrial Document, and that matter will be discussed at the Final
Pretrial Conference.

DONE and ORDERED this 7th day of June, 2017.
s/ WILLIAM H. STEELE
UNITED STATES DISTRICT JUDGE

-33-