SE Property Holdings, LLC v. Center et al

Filing 122

Order granting in part denying in part the 90 MOTION for Partial Summary Judgment filed by SE Property Holdings, LLC. The parties are ordered by 1/5/2017 to show cause why they have not conducted a mediation session to date. This action remains set for Pretrial Conference on 1/10/2017. The Joint Pretrial Document is due by 1/6/2017. Signed by Chief Judge William H. Steele on 12/30/2016. (tgw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
SE PROPERTY HOLDINGS, LLC,
Plaintiff,
v.
TAMMY T. CENTER, et al.,
Defendants.

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CIVIL ACTION 15-0033-WS-C

ORDER
This matter comes before the Court on plaintiff’s Motion for Partial Summary Judgment
(doc. 90). The Motion has been briefed and is ripe for disposition.
I.

Background.
A.

Nature of the Case.

Plaintiff, SE Property Holdings, LLC (“SEPH”), brought this fraudulent transfer action
seeking to have certain transfers of property made by Charles Trammell and Belinda Trammell
(collectively, the “Trammells”) set aside and declared null and void under Alabama law.
Plaintiff’s position is that the Trammells owe it millions of dollars pursuant to certain guaranties
they executed in favor of SEPH’s predecessor during the period of 2005-2007. When the
borrowers defaulted on their loan repayment obligations, SEPH looked to the Trammells to make
good on their guaranty commitment. Between 2011 and 2013, and after SEPH demanded
payment from and filed suit against them, the Trammells transferred ownership of various assets
(including a house on Lake Martin, a beach condominium unit in Baldwin County, tens of
thousands of shares of UPS stock, and ownership interests in limited liability companies) to
LLCs and other family members. Plaintiff maintains that, as a result of these transfers, the
Trammells were left with assets valued far less than their debts.
Based on these allegations, SEPH has asserted claims under the Alabama Uniform
Fraudulent Transfer Act, Ala. Code §§ 8-9a-1 et seq., against the Personal Representative of the

Estate of Charles H. Trammell (the “Estate”),1 Belinda R. Trammell, Amy T. Brown, Tammy T.
Center, Trammell Family Orange Beach Properties, LLC (“Trammell Orange Beach”), and
Trammell Family Lake Martin Properties, LLC (“Trammell Lake Martin”).2 As pleaded in the
First Amended Complaint, SEPH maintains that the following transfers by Charles and Belinda
Trammell were fraudulent under Alabama law: (i) their execution of a deed to Trammell Orange
Beach of the Baldwin County beach condominium unit in January 2011; (ii) their execution of a
deed to Trammell Lake Martin of the Lake Martin house in January 2011; (iii) their transfer of a
90% ownership/membership interest in Trammell Orange Beach and Trammell Lake Martin to
Brown and Center in December 2011, such that each LLC (which had previously been owned
50% by Charles Trammell and 50% by Belinda Trammell) was now owned 45% by Brown, 45%
by Center, 5% by Charles Trammell, and 5% by Belinda Trammell; (iv) Charles Trammell’s
transfer of UPS stock to relatives or family-controlled LLCs in 2012; and (v) transfer upon
Charles Trammell’s death of his interest in the Trammells’ principal residence and additional
UPS stock shares to Belinda Trammell, leaving his Estate with a value of less than $200,000,
some $5.8 million lower than Charles Trammell’s net worth in 2008. (Doc. 55, ¶¶ 19, 21, 23, 24,
28.) Defendants Belinda Trammell, Center and Brown are alleged to have liquidated some of
these fraudulently transferred assets and expended the proceeds for their own use and benefit.
(Id., ¶ 24.)
In the First Amended Complaint, SEPH parlays the foregoing allegations into claims of
actual fraudulent transfer pursuant to Alabama Code § 8-9A-4(a) (Count One); constructive
fraudulent transfer pursuant to Alabama Code § 8-9A-4(c) (Count Two); constructive fraudulent
transfer pursuant to Alabama Code § 8-9A-5(a) (Count Three); and conspiracy (Count Four).
SEPH now moves for summary judgment as to Count Three (and only Count Three) of the First

1

According to uncontradicted factual allegations in the First Amended Complaint,
Charles Trammell died on or about October 24, 2013. (Doc. 55, ¶ 2.)
2

Defendants Brown and Center are the adult daughters of Charles and Belinda
Trammell. Trammell Orange Beach and Trammell Lake Martin are family-held Alabama
limited liability companies in which Charles Trammell, Belinda Trammell, Brown and Center
have possessed various ownership/membership interests at various times.

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Amended Complaint.3 Counts One, Two and Four are not implicated by plaintiff’s Rule 56
Motion, and therefore will not be addressed herein.
B.

Relevant Facts.4
1.

The Loans and Guaranties.

Between 2005 and 2007, SEPH’s predecessor (Vision Bank) entered into certain loan
agreements with companies called Bama Bayou, LLC (formerly known as Riverwalk, LLC) and
Marine Park, LLC, whereby those entities became indebted to Vision Bank (and, later, SEPH)
for certain commercial loans. (Braswell Aff. (doc. 92, Exh. A), ¶ 4 & Exh. A-1.)5 In connection
with those loans, Riverwalk, LLC signed a promissory note for $6 million in Vision Bank’s
3

In their principal brief, defendants note that “SEPH then proceeds to argue only
on the basis of Ala. Code § 8-9A-5(a),” not § 8-9A-4(c). (Doc. 100, at 2-3.) Of course, that
limitation in plaintiff’s summary judgment brief makes sense because the Motion for Partial
Summary Judgment is aimed solely at Count Three, which is a claim brought pursuant to § 89A-5(a). By contrast, Alabama Code § 8-9A-4(c) is the statutory basis for Count Two, as to
which no summary judgment motion has been filed. The point is that, for purposes of this Order,
only § 8-9A-5(a) is germane to the analysis.
4

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 nonmoving party.
See Skop v. City of Atlanta, GA, 485 F.3d 1130, 1136 (11th Cir. 2007). Thus, defendants’
evidence is taken as true and all justifiable inferences are drawn in their favor. 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[s] [defendants’] version of the facts
drawing all justifiable inferences in [their] favor.” Burnette v. Taylor, 533 F.3d 1325, 1330 (11th
Cir. 2008).
5

The loans were made to finance a massive real estate development project in
Orange Beach, Alabama. For example, a March 2, 2007 loan agreement between Vision Bank
and Marine Park, LLC, indicated that the borrower sought a loan of $5 million “for the
acquisition of that certain land located within the Bama Bayou development in the City of
Orange Beach … and for the construction thereon of a marine park consisting of a 500 seat
theatre, 1000 seat stadium and 134,000 gallon aquarium and related improvements … to be
known as GulfWorld Marine Park.” (Braswell Aff., Exh. A-1 at 14.) And the Bama Bayou
project was conceived as a development on the north bank of the Intracoastal Waterway at its
intersection with the Foley Beach Express, incorporating commercial, retail, resort, residential,
marina, hotel and entertainment venues. (Doc. 100, Exh. 2, at 4.) Despite these loans, the Bama
Bayou and GulfWorld Marine Park developments never came to pass.

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favor on March 24, 2005; Riverwalk, LLC signed a promissory note for $5 million in Vision
Bank’s favor on June 12, 2006; Bama Bayou, LLC signed a promissory note for $5 million in
Vision Bank’s favor on September 27, 2007; and Marine Park, LLC signed a promissory note for
$5 million in Vision Bank’s favor on March 2, 2007. (Id.) Those loans and notes were fully
funded by Vision Bank and its participant banks. (Braswell Aff., ¶ 6.)
In connection with those loans, Charles and/or Belinda Trammell executed at least four
guaranties in Vision Bank’s favor. (Braswell Aff., ¶ 5.) First, on March 20, 2005, Charles
Trammell executed a Limited Continuing Guaranty with respect to Riverwalk’s indebtedness in
the March 24, 2005 promissory note. (Braswell Aff., ¶ 5 & Exh. A-2.) In that guaranty, Charles
Trammell agreed to be liable for up to $315,000 in principal of the note, 100% of all interest
accruing at any time, and 100% of collection costs, expenses, and reasonable attorney’s fees.
(Id., Exh. A-2 at ¶ 14.) Second, in May 2006 Charles Trammell and Belinda Trammell each
executed Limited Continuing Guaranties with respect to Riverwalk’s indebtedness in the June
12, 2006 promissory note. (Braswell Aff, ¶ 5 & Exh. A-3.) In those guaranties, the Trammells
each agreed to be liable for up to $280,000 in principal of the note, 100% of all interest accruing
at any time, and 100% of collection costs, expenses and reasonable attorney’s fees. (Id., Exh. A3 at ¶ 14.) Third, on January 26, 2006, Charles and Belinda Trammell jointly executed a Limited
Continuing Guaranty with respect to Marine Park’s indebtedness in the March 2, 2007
promissory note. (Braswell Aff., ¶ 5 & Exh. A-4.)6 In that guaranty, the Trammells agreed to be
liable for up to $280,000 in principal of the note, 100% of all interest accruing at any time, and
100% of collection costs, expenses and reasonable attorney’s fees. (Id., Exh. A-4 at ¶ 14.) And
fourth, on September 27, 2007, Charles and Belinda Trammell jointly executed a Limited
Continuing Guaranty with respect to Bama Bayou’s indebtedness in the September 27, 2007
6

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 promissory note was
subsequently transferred to FNB Bank, which is not a party to these proceedings. (Braswell Aff.,
¶ 15.) SEPH’s objective is to collect on the Bama Bayou loans and guaranties, not the Marine
Park loans and guaranties, which it no longer holds and which it has no direct interest in
enforcing. Nonetheless, the Marine Park loan and guaranty are pertinent to the issues presented
on summary judgment here. After all, Vision Bank held the Marine Park debt at the time of the
challenged transfers, and the Trammells’ financial obligations under the Marine Park guaranty
bear on their solvency or lack thereof when the challenged transfers occurred.

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promissory note. (Braswell Aff., ¶ 5 & Exh. A-5.) In that guaranty, the Trammells agreed to be
liable for up to $280,000 in principal of the note, 100% of all interest accruing at any time, and
100% of collection costs, expenses and reasonable attorney’s fees. (Id., Exh. A-5 at ¶ 14.)7
2.

The Defaults and Plaintiff’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. (Braswell Aff., ¶ 6.) Vision
Bank subsequently demanded payment from the borrowers and guarantors, including Charles
and Belinda Trammell. (Id.) When payment was not forthcoming, Vision Bank sued Bama
Bayou, Marine Park, Charles and Belinda Trammell, and others in the Circuit Court of Mobile
County, Alabama, on January 16, 2009 (the “Bama Bayou Action”). 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.
Pursuant to its collection efforts, on March 20, 2009, Vision Bank foreclosed on multiple
parcels of real property that secured its loans to Bama Bayou and Marine Park, purchasing such
property via credit bid. (Id., ¶ 7.) In the wake of that foreclosure, large deficiencies remained on
both the Bama Bayou and Marine Park loans. (Id.) Indeed, SEPH’s calculations are that, as of
September 23, 2016, Charles Trammell (or, more accurately, the Estate) was indebted to SEPH
in the amount of $4,872,895 in principal and interest pursuant to his guaranties of Bama Bayou’s
indebtedness. (Id., ¶ 8.) SEPH further calculates that, as of the same date, Belinda Trammell
was indebted to SEPH in the amount of $2,524,791.84 in principal and interest pursuant to her
guaranty of Bama Bayou’s indebtedness. (Id.) Such calculations exclude costs of collection,
which are claimed to be well in excess of a million dollars.

7

Charles Trammell also took on certain indebtedness obligations with respect to a
$3 million loan that Vision Bank made to Sundance, LLC. (Braswell Aff., ¶¶ 9-10.) In
particular, he executed a Continuing Guaranty in Vision Bank’s favor on September 19, 2007,
whereby he agreed to be liable for up to $900,000 in principal. (Id., ¶ 10 & Exh. A-7.) When
Sundance defaulted, litigation ensued. (Id., ¶ 11.) Pursuant to a compromise resolution of that
litigation, Charles Trammell, Sundance and others executed a promissory note on February 12,
2012, wherein they collectively agreed to pay Vision Bank the sum of $428,118.22. (Id. & Exh.
A-8.) The Sundance note from February 2012 was paid in full in approximately January 2015.
(Doc. 92, Exh. F, at #7.)

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3.

The Challenged Transfers.

As noted, the claims asserted by SEPH herein focus on four specific transfers of property
by Charles and Belinda Trammell. Most of those transfers were made to defendants Brown and
Center (their daughters), either directly or through entities established and controlled by the
Trammells; however, SEPH also seeks relief on transfers made by Charles Trammell to Belinda
Trammell upon the former’s death. Relevant facts pertaining to each such transfer include the
following:
On January 26, 2011, after the Bama Bayou Action was underway, Charles and Belinda
Trammell transferred ownership of their Baldwin County beach condominium unit to defendant
Trammell Orange Beach, an Alabama limited liability company then owned 50% by Charles
Trammell and 50% by Belinda Trammell. (Doc. 92, Exh. F, at #8; doc. 92, Exh. M, at #8.) On
the same date, Charles and Belinda Trammell transferred ownership of their Lake Martin house
to defendant Trammell Lake Martin, an Alabama limited liability company then owned 50% by
Charles Trammell and 50% by Belinda Trammell. (Doc. 92, Exh. F, at #8; doc. 92; Exh. M, at
#8.) The LLCs paid neither monetary consideration nor other property to the Trammells in
exchange for these valuable transfers of real property. (Id.)
Belinda Trammell testified that, when she and Charles Trammell formed the defendant
LLCs, they had planned to give their daughters (defendants Center and Brown) an ownership
interest in those entities. (Doc. 92, Exh. E, at 53.) Defendant Center confirmed her
understanding that, as part of their estate planning, her parents intended to give Center and
Brown an interest in those LLCs. (Doc. 92, Exh. B, at 66.) The Trammells followed up on this
plan on or about December 12, 2011, with each of Charles and Belinda Trammell transferring a
22.5% ownership/membership interest in each of Trammell Orange Beach and Trammell Lake
Martin to each of Center and Brown. (Doc. 92, Exh. F, at #8; doc. 92, Exh. M, at #8.) Pursuant
to these December 2011 transfers, then, Trammell Orange Beach came to be owned 45% by
Center, 45% by Brown, 5% by Charles Trammell, and 5% by Belinda Trammell. The same was
true of Trammell Lake Martin. Again, both of those entities had previously been owned 50% by
Charles Trammell and 50% by Belinda Trammell, with the daughters holding no ownership
interest at all. (Id.) Brown and Center paid no money or property to their parents in
consideration for these ownership interests in the LLCs. Indeed, Center confirmed in her
testimony that “[t]here was no money exchanged,” that the transactions were set up as gifts, but

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that Center and Brown “did do consideration with [their] emotional support and help” to their
parents. (Doc. 92, Exh. B, at 78-79.)8 To that end, Charles and Belinda Trammell filed a gift tax
return with the IRS for the 2011 tax year reporting gifts of a 22.5% interest in Trammell Orange
Beach and Trammell Lake Martin given by each of them to each of Brown and Center. (Doc.
92, Exh. V.)
In April 2012, Charles Trammell transferred or caused to be transferred 12,551 shares of
UPS stock that he owned individually to Trammell Orange Beach, and an additional 12,551
shares of UPS stock that he owned individually to Trammell Lake Martin. (Doc. 92, Exh. F, at
#8; doc. 92, Exh. B, at 95; doc. 93, Exh. W, at 25.) Collectively, those shares were valued at
close to $2 million at the time of the subject transfers. (Doc. 93, Exh. BB, at 53.)9 There is some
indication in the summary judgment record that those shares may have been funneled through
Brown’s and Center’s hands before reaching the LLCs. (Id. at 52-58.) Nonetheless, regardless
of whether the transactions were direct or indirect, the net result was that Trammell transferred
more than 25,000 shares of UPS stock from his personal holdings to the defendant LLCs (which
were at that time owned 45% by Center, 45% by Brown, and just 5% each by Charles and
Belinda Trammell) in April 2012. No money or property changed hands as consideration for
these UPS stock transfers, and Charles Trammell submitted a gift tax return in connection with
same. (Doc. 92, Exh. B, at 96; doc. 93, Exh. BB, at 47-51.)
Charles Trammell died on October 24, 2013. At the time of his death, his remaining UPS
stock interests (which apparently totaled 8,798 shares) transferred to Belinda Trammell via a
payable-on-death account. (Doc. 92, Exh. B at 17.) Likewise, Charles Trammell’s interest in the
couple’s primary residence passed to Belinda Trammell by operation of law in accordance with
their joint tenancy. (Id. at 18.) In the wake of those transfers, the assets remaining in the
8

In her deposition, Center elaborated as follows: “I’m sure at times I may have
[paid money] to help them out. But the support that I’m referring to is my father was very sick.
… My father passed away with acute Leukemia. So he was in and out of the cancer center, and
blood transfusions. … The blood transfusions that my dad would have took four hours, the
process. … So his care was very time consuming. And we had to help my mom, because she
couldn’t handle that.” (Doc. 92, Exh. B, at 29-30.)
9

The Court takes judicial notice that the closing price of UPS stock on April 30,
2012, was $78.14 per share. Multiplied across the 25,102 shares that Charles Trammell
transferred to the LLCs, that share price yields a valuation exceeding $1.9 million.

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defendant Estate of Charles Trammell had a total valuation of $199,700. (Doc. 92, Exh. C.)10
By way of comparison, Charles Trammell had notified Vision Bank in June 2009 that his
personal and jointly owned assets exceeded $4.5 million. (Braswell Aff., ¶ 12 & Exh. A-9.)
The centerpiece of SEPH’s argument on summary judgment is that the Trammells’
transfers of the beach condo and Lake Martin house to the defendant LLCs, and their transfers of
90% of their interests in the LLCs to defendants Center and Brown, were constructive fraudulent
transfers as a matter of law; and that Charles Trammell’s transfers of 25,102 shares of UPS stock
to the defendant LLCs, and his transfers of his remaining shares of UPS stock and his interest in
his personal residence to Belinda Trammell upon his death, were likewise constructive
fraudulent transfers. Those transactions lie at the heart of the pending Motion for Partial
Summary Judgment.
II.

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).
10

Those assets included Charles Trammell’s 5% interest in Trammell Orange Beach
(valued at $80,000), his 5% interest in Trammell Lake Martin (valued at $90,000), a 1963
Chevrolet Impala (valued at $20,000), a pontoon boat (valued at $5,000), a 2006 Bombadier
Seadoo (valued at $3,000) and additional clothing and personal effects valued collectively at less
than $2,000.

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“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).
III.

Analysis.
A.

Elements of § 8-9A-5(a) Cause of Action.

As noted, Count Three of the First Amended Complaint asserts a claim against
defendants for constructive fraudulent transfer pursuant to 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); see also
Baggett v. Baggett, 870 So.2d 735, 739 (Ala.Civ.App. 2003) (“A constructive fraudulent transfer
occurs when a debtor transfers assets to another without consideration, and the debtor was, or
became, insolvent at the time of the transfer.”) (citations omitted); SE Property Holdings, LLC v.
Braswell, 2013 WL 4498700, *5 (S.D. Ala. Aug. 21, 2013) (under § 8-9A-5(a), “a transfer is
fraudulent if the debtor did not receive ‘reasonably equivalent value’ and if the debtor was
‘insolvent’”).
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.
1 Ala. Pattern Jury Instr. Civ. § 18.20 (3d ed.); see also Lord Abbett Municipal Income Fund,
Inc. v. Southern Farms, Inc., 2015 WL 9474287, *8 (M.D. Ala. Dec. 1, 2015) (“Under § 8-9A5(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

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transfers.”).11 Inasmuch as defendants dispute SEPH’s ability to establish any of these elements
(much less all of them), the Court will consider each in turn.
B.

The Existence of a Creditor/Debtor Relationship.

The plain language of the Alabama Uniform Fraudulent Transfer Act (the “AUFTA”)
requires a creditor/debtor relationship as a prerequisite to a viable constructive fraudulent
transfer claim. See Ala. Code § 8-9A-5(a) (“a transfer made by a debtor is fraudulent as to a
creditor …”) (emphasis added). 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) (emphasis added). 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).
To satisfy the debtor/creditor element of its § 8-9A-5(a) cause of action, SEPH presents
evidence that the Trammells were indebted to it (or its predecessor, Vision Bank) at the time of
the challenged transfers. In particular, SEPH has come forward with competent record evidence
to show each of the following: (i) SEPH’s predecessor loaned millions of dollars to Bama Bayou,
LLC from 2005 to 2007; (ii) in connection with those loans, Charles and Belinda Trammell
executed multiple continuing guaranties in favor of SEPH’s predecessor, pursuant to which they
guaranteed payment of hundreds of thousands of dollars of principal on each loan, all unpaid and
accrued interest on each loan, and all costs of collection, including reasonable attorney’s fees;
(iii) Bama Bayou defaulted on all of those loans; (iv) Charles and Belinda Trammell never paid
SEPH or its predecessor the sums they had promised to pay in the continuing guaranties; and (v)
the Trammells are presently indebted to SEPH in the sum of millions of dollars in principal,
accrued interest and costs of collection.
These record facts are plainly sufficient to satisfy SEPH’s initial burden on summary
judgment of showing that it is a creditor and that the Trammells are debtors within the meaning
11

Notably, the transferor’s intent is not relevant to the analysis of a claim brought
under Alabama Code § 8-9A-5(a). See, e.g., McPherson Oil Co. v. Massey, 643 So.2d 595, 596
(Ala. 1994) (“without regard to the actual intent of the grantor, the law infers constructive fraud
when it appears that an indebted grantor has conveyed property to a family member without
receiving valuable consideration”).

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the Alabama Uniform Fraudulent Transfer Act. See Clark, 929 F.2d at 608 (“The moving party
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.”). The foregoing facts (as to
each of which SEPH has made a showing via record evidence) would entitle SEPH to a directed
verdict if not contradicted at trial; indeed, those facts (if not rebutted) show that the Trammells
executed binding, enforceable guaranties in SEPH’s favor, then failed or refused to pay when the
borrowers defaulted.12 Thus, SEPH has met its burden of making an affirmative showing of the
absence of a genuine issue of material fact for purposes of the debtor/creditor element. See Rich
v. Secretary, Florida Dep’t of Corrections, 716 F.3d 525, 530 (11th Cir. 2013) (“When the
moving party has the burden of proof at trial, that party must show affirmatively the absence of a
genuine issue of material fact: it must support its motion with credible evidence that would
entitle it to a directed verdict if not controverted at trial.”) (citation omitted); Burger King Corp.
v. E-Z Eating, 41 Corp., 572 F.3d 1306, 1313 (11th Cir. 2009) (summary judgment movant
“always bears the initial responsibility of … identifying those portions of the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the affidavits, if
any, which it believes demonstrate the absence of a genuine issue of material fact”) (citation
omitted).
SEPH having met its initial burden as to the debtor/creditor element of its § 8-9A-5(a)
cause of action, the burden shifts to defendants to demonstrate the existence of genuine issues of
material fact. See Clark, 929 F.2d at 608 (after movant meets initial burden, “the burden shift[s]
to the non-moving party to demonstrate that there is indeed a material issue of fact that precludes
summary judgment”). In their brief, defendants state in conclusory fashion that “SEPH has
failed to prove that it has a right to payment from the Estate of Charles Trammell and Belinda
Trammell.” (Doc. 100, at 3.) In the context of the relevant Rule 56 analysis, however, that
argument is unpersuasive. SEPH’s evidence shows that the Trammells made promises to pay
Vision Bank, that they failed to fulfill those obligations, that they transferred certain assets to the
12

Such guaranties are enforceable under Alabama law like any other contracts. See,
e.g., Eagerton v. Vision Bank, 99 So.3d 299, 304 (Ala. 2012) (“Rules governing the
interpretation and construction of contracts are applicable in resolving a question as to the
interpretation or construction of a guaranty contract. … Absent fraud in the inducement, an
absolute guaranty will be enforced according to its terms ….”) (citations omitted).

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other defendants (the LLCs, Center and Brown) after SEPH attempted to enforce those promises
to pay, and that they continue to owe SEPH millions of dollars today. If no other evidence were
presented at trial, that showing would establish that the Trammells were liable on SEPH’s claim
for payment. Thus, that evidence (if uncontroverted) would entitle SEPH to a directed verdict on
the issue of whether it was a “creditor” for AUFTA purposes, and whether the Trammells were
“debtors” for AUFTA purposes, at the time of the challenged transfers. Accordingly, defendants
cannot withstand summary judgment on this point by making an unsupported blanket statement
that SEPH has not proven a right to payment. On the evidence before the Court, it has. If there
is other evidence casting doubt – or creating genuine issues of material fact – on the existence of
such a right to payment, then it is incumbent on defendants to submit it as part of the summary
judgment record.
Stated differently, to meet their burden and defeat SEPH’s summary judgment motion,
defendants must come forward with evidence demonstrating the existence of a triable issue of
fact. See Rich, 716 F.3d at 530 (“If the moving party makes such an affirmative showing, it is
entitled to summary judgment unless the nonmoving party, in response, comes forward with
significant, probative evidence demonstrating the existence of a triable issue of fact”)
(emphasis added and citation omitted).13 Of course, “[a] factual dispute is genuine only if a
reasonable jury could return a verdict for the nonmoving party.” Information Systems and
Networks Corp. v. City of Atlanta, 281 F.3d 1220, 1224 (11th Cir. 2002). Defendants allude to
the question of SEPH’s “right to payment” as one that “is being extensively litigated and
vigorously contested in the” Bama Bayou Action in state court. (Doc. 100, at 4.) Merely making
such a statement, however, does not discharge defendants’ burden on summary judgment in this
case. To defeat summary judgment on the creditor/debtor element of Count Three, defendants
must come forward with evidence demonstrating the existence of a triable fact on the question of
13

See also Dietz v. Smithkline Beecham Corp., 598 F.3d 812, 815 (11th Cir. 2010)
(“Once the movant adequately supports its motion, the burden shifts to the nonmoving party to
show that specific facts exist that raise a genuine issue for trial.”) (emphasis added); Burger
King, 572 F.3d at 1313 (“If the movant succeeds in demonstrating the absence of a material issue
of fact, the burden shifts to the non-movant to show the existence of a genuine issue of fact.”);
Cotton v. Cracker Barrel Old Country Store, Inc., 434 F.3d 1227, 1231 (11th Cir. 2006) (“To
survive a motion for summary judgment, the nonmoving party must demonstrate that there is a
genuine issue for trial.”) (citation and internal quotation marks omitted).

-12-

whether the Trammells owed money to SEPH when the allegedly fraudulent transfers were
made. Defendants have cited no evidence. They have explained neither the legal nor the factual
grounds for their objections in the Bama Bayou Action to SEPH’s claim for payment.14 Simply
put, defendants have not met their burden on summary judgment here. Accordingly, for Rule 56
purposes, the Court concludes that SEPH is entitled to judgment as a matter of law on the
creditor/debtor element of its § 8-9A-5(a) claim set forth in Count Three of the First Amended
Complaint.
C.

The Timing of Plaintiff’s Claim and the Trammells’ Transfers.

The second element of SEPH’s claim asserted under Alabama Code § 8-9A-5(a) is that
plaintiff must establish that its claim “arose before the transfer was made.” The summary
judgment record unambiguously demonstrates that this element is satisfied. Plaintiff’s evidence,
which has been neither controverted nor opposed by defendants, reveals the following timetable:
The Trammells executed guaranties in favor of Vision Bank in 2005, 2006 and 2007. The
borrower (Riverwalk / Bama Bayou) defaulted. Vision Bank demanded payment from the
Trammells and others. When no such payment was forthcoming, Vision Bank filed suit against
them in state court in January 2009. The Trammells transferred their interests in the beach
condo, the Lake Martin house, the LLCs, and the UPS stock during the period of January 2011
through October 2013. 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 plainly satisfied. Defendants do not maintain otherwise.

14

It appears that defendants are placing all their eggs in the “right to payment”
basket. Certainly, it is true that, for purposes of establishing whether one is a debtor or creditor,
the AUFTA defines “claim” as requiring a “right to payment.” See Ala. Code § 8-9A-1(3).
However, the statute clarifies that the “right to payment” qualifies as a claim for AUFTA
purposes “whether or not the right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.”
Id. It is not necessary for SEPH to have received a judgment in the Bama Bayou Action that the
Trammells owed it money; rather, it suffices for SEPH to make an unrebutted showing in this
action based on record facts that the Trammells owed money to SEPH (or its predecessor) when
they made the subject transfers. Plaintiff has made that affirmative showing here, and defendants
have not discharged their burden of rebutting it with evidence showing the existence of a genuine
factual dispute.

-13-

D.

Whether the Trammells Received a Reasonably Equivalent Value.

The third element of a constructive fraud claim brought pursuant to Alabama Code § 89A-5(a) is that the Trammells must have made the transfers “without receiving a reasonably
equivalent value in exchange for the transfer.” This element is hotly debated in the parties’
summary judgment briefs. For its part, SEPH relies on undisputed record facts that no money or
property was given to Charles and Belinda Trammell in exchange for the beach condo and Lake
Martin house when they transferred such real property to the LLCs; that no money or property
was given to the Trammells in exchange for the 90% interest in the two LLCs that they
transferred to their daughters (Center and Brown); and that no money or property was given to
Charles Trammell in exchange for the thousands of shares of UPS stock that he transferred to the
LLCs, or the remaining UPS stock and primary residence that he transferred to Belinda
Trammell upon his death. In response, defendants criticize SEPH’s argument as championing an
excessively narrow definition of “value,” and contend that the requisite value was exchanged in
the form of support, tax savings and better asset management.
The appropriate analytical starting place is, of course, the statute itself. Alabama’s
version of the Uniform Fraudulent Transfer Act provides as follows: “Value 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). Where, as here, the transfers were made between family members, with
the Trammells transferring property to their daughters (and/or to LLCs whose ownership was
also largely transferred to those same daughters), the Alabama Supreme Court instructs that the
“value” element must be scrutinized with particular care.15

15

See, e.g., 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 (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.”) (citations omitted).

-14-

Significantly, it is incorrect to equate the AUFTA concept of “reasonably equivalent
value” with the common-law notion of consideration. 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. 1985)
(“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.”). Where, as here, the creditor has made a showing on summary judgment that
the grantees paid no money or property to the grantors in exchange for the transferred asset, an
inference of constructive fraud arises; therefore, defendants bear the burden of proving the
existence of valuable and adequate consideration. See McPherson Oil, 643 So.2d at 596 (“When
that inference of constructive fraud arises, the burden then shifts to the grantee to prove the
existence of such consideration.”); Reese, 475 So.2d at 508 (“The burden is upon the grantee to
show a consideration both valuable and adequate.”) (citation omitted).
In evaluating whether valuable – as opposed to simply good – consideration has been
given for a challenged transfer, the Uniform Fraudulent Transfer Act as adopted in Alabama (and
other jurisdictions, for that matter) 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, the Comments to the Uniform Fraudulent
Transfer Act 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 Uniform
Fraudulent Transfer Act 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

-15-

debtor’s creditors.” Kaye v. Lone Star Fund V (U.S.), L.P., 453 B.R. 645, 667 (N.D. Tex. 2011)
(citations omitted).16
Defendants’ primary argument on summary judgment is that reasonably equivalent value
was given by defendants Brown and Center for their parents’ transfers of the beach condo, the
Lake Martin house, the UPS stock and the LLCs because Brown and Center furnished
“emotional support” to Charles and Belinda Trammell. In particular, defendants rely on Center’s
deposition testimony that she and her sister provided emotional support to the Trammells while
Charles Trammell was undergoing difficult blood transfusions and Belinda Trammell was
experiencing health issues of her own. The first, most glaring shortcoming with this argument is
that Alabama’s Uniform Fraudulent Transfer Act expressly excludes unperformed promises of
support from the definition of “value” given for a transfer. See Ala. Code § 8-9A-3(a) (“value
does not include an unperformed promise to furnish support to the debtor”). Thus, promises of
future support have been deemed insufficient as a matter of law to constitute “reasonably
equivalent value” for a debtor’s asset transfers to a third party. See, e.g., In re Ventimiglia, 362
B.R. 71, 83 (Bankr.E.D.N.Y. 2007) (“In general, a promise of future support is not considered a
fair equivalent of property transferred.”); Springfield Ins. Co. v. Fry, 267 F. Supp. 693, 696
16

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.”).

-16-

(N.D. Okla. 1967) (“ordinarily a transfer of property in consideration of future support is held to
be invalid, at any rate, as to existing creditors whose rights are prejudiced by such transfer”);
American Surety Co. of New York v. Edwards & Bradford Lumber Co., 57 F. Supp. 18, 27 (N.D.
Iowa 1944) (“That a conveyance by an insolvent in consideration of future support is void so far
as it puts the property of the grantor out of the reach of creditors, is well settled.”) (citation
omitted).17
A larger, more fundamental problem with defendants’ reliance on “emotional support” as
constituting reasonably equivalent value for the transfer of millions of dollars of real property
and UPS stock shares from the Trammells to their daughters lies in the legal requirement that
value be viewed from the standpoint of the creditor, not the debtor. As the above-cited
authorities demonstrate, consideration having no utility from a creditor’s vantage point may be
“good” consideration supporting a valid contract, but it cannot constitute reasonably equivalent
value under § 8-9A-5(a), as a matter of law. Courts in Alabama and elsewhere routinely find no
reasonably equivalent value where the consideration is cited as love and affection, a moral
obligation, or some other intangible psychological benefit to the debtor, for the simple reason
that such consideration (while it might be “good”) lacks “value” from a creditor’s standpoint,
such that the exchange injures creditors’ interests. Pursuant to that line of reasoning, the
Alabama Supreme Court has repeatedly “held that a conveyance given in return for ‘love and
17

On summary judgment, defendants make much of the word “unperformed” in the
statutory definition, insisting that there is no evidence that the support given by Brown and
Center was “future support or [an] unperformed promise to furnish support.” (Doc. 100, at 18.)
This argument is unavailing. If, at the time the transfers were made, the support had already
been given, then that support could not constitute valuable consideration absent evidence of a
previous agreement (i.e., Brown and Center agree to provide emotional support in 2009 and
2010, and the Trammells agree to transfer property to them in 2011), none of which is found in
the summary judgment record. If defendants are suggesting that Brown and Center’s past
support somehow created a moral obligation for the Trammells to transfer property to them, that
argument fails as a matter of law. See, e.g., Rubenstein v. C.I.R., 134 T.C. 266, 277-78 (2010)
(“Petitioner suggests that his father had a moral obligation to compensate him for his caregiving.
The satisfaction of a moral obligation, however, does not constitute ‘value’ within the meaning
of the FUFTA.”). Although they have been vague in their briefs, defendants’ theory is
apparently that the Trammells gave property to their daughters in exchange for their daughters
providing emotional support to them thereafter. That kind of “unperformed promise to furnish
support” (at the time the transfer was made) cannot constitute reasonably equivalent value for
AUFTA purposes, as a matter of law.

-17-

affection’ is supported by ‘good,’ rather than ‘valuable’ consideration, and is thus a voluntary
conveyance and void against existing creditors.” McPherson Oil, 643 So.2d at 596 (citations
omitted); see also Matter of Treadwell, 699 F.2d 1050, 1051 (11th Cir. 1983) (“Even if the love
and affection of the daughters for their father increased $4,000 worth, it is of no benefit to the
creditors. That his love and affection for them motivated the gift does not satisfy the intent of
the statute, … [which is] to prevent the debtor from depleting the resources available to creditors
through gratuitous transfers of the debtor’s property.”); In re Earle, 307 B.R. 276, 292 n.7
(Bankr.S.D. Ala. 2002) (“The Court notes that conveyances made only in return for ‘love and
affection’ are deemed to be made for good, but not valuable, consideration under Alabama state
law for fraudulent transfer purposes.”).18 Simply put, then, any promises by Brown and Center

18

Courts in other states construing similar language drawn from the Uniform
Fraudulent Transfer Act or its analogues have likewise cast a jaundiced eye on arguments that a
family member’s love, affection, emotional support or psychic satisfaction may amount to a
“reasonably equivalent value” for fraudulent transfer purposes. See, e.g., In re Marlar, 252 B.R.
743, 760 (8th Cir. BAP 2000) (“Since the question of fair consideration as it pertains to an
alleged fraudulent conveyance must be determined from the standpoint of creditors … it is clear
that no fair equivalent is exchanged when the conveyance is simply for natural love and
affection. The creditor’s interest will not be protected since the debtor’s property has departed
without any fair equivalent taking its place.”) (citation omitted); Federal Refinance Co. v. Klock,
352 F.3d 16, 24 (1st Cir. 2003) (“And although [debtor’s] brief includes a perfunctory assertion
that the transfer was in fact adequately supported by the love and affection of his children, he
points us to no case law that suggests that, for purposes of the UFCA, such intangibles may
supplant money, property, or satisfaction of an antecedent debt as fair consideration.”); Janvey v.
Golf Channel, Inc., 487 S.W.3d 560, 574 (Tex. 2016) (“[L]ove and affection, and other types of
consideration that have no utility from a creditor’s viewpoint, do not confer value for an
exchange. Rather, consideration must go beyond some speculative, ephemeral[,] psychic
satisfaction to constitute value or reasonably equivalent value.”) (internal quotation marks and
footnotes omitted); United States v. Major, 551 B.R. 531, 541 (M.D. Fla. 2016) (“transfers of
money or property to a family member in exchange for ‘love and affection’ do not constitute
reasonably equivalent value”); Mann v. Hanil Bank, 920 F. Supp. 944, 954 (E.D. Wisc. 1996)
(“These benefits, to constitute ‘reasonably equivalent value’ under the Wisconsin statute, must
go beyond some speculative, ephemeral psychic satisfaction that might result from doing a favor
for a friend.”); In re Young, 152 B.R. 939, 949 (D. Minn. 1993) (“emotional support received in
exchange for a transfer, without more, cannot satisfy the requirement for reasonably equivalent
value”); In re Simione, 229 B.R. 329, 335 (Bankr.W.D. Penn. 1999) (“where a conveyance of
property is made in consideration of an agreement to support the grantor in the future, it is
invalid as to creditors if by the conveyance the grantor renders himself unable to pay his debts”)
(citation omitted); In re Guerrera, 225 B.R. 32, 36 (Bankr.D. Conn. 1998) (“[i]t has been
determined that intangible, psychological benefits do not constitute reasonably equivalent
(Continued)
-18-

to provide emotional support to their parents subsequent to the subject transfers, or any gratitude,
love, affection or sense of moral obligation felt by the Trammells for their daughters’ past
support, may or may not constitute “good” consideration for the transfers, but they do not and
cannot as a matter of law rise to the level of “valuable” consideration from the standpoint of
creditors, which is the operative query in a constructive fraudulent transfer analysis.
Defendants’ alternative arguments for “reasonably equivalent value” fare no better.
Specifically, they maintain that the Trammells received reasonably equivalent value in the form
of “tax savings” and “better asset management.” (Doc. 100, at 17.) To support this theory,
defendants point to a letter from the Trammells’ lawyer dated January 11, 2010, in which the
lawyer advised the Trammells that “[b]eginning a gifting program with your children,
grandchildren, and in-laws could also help lower estate taxes, protect assets, and allow better
asset management.” (Doc. 100, Exh. 5, at 3.) The problem, once again, is that the Trammells’
creditors (and, particularly, SEPH) did not benefit from these transfers in the specified (or any)
ways. That the Trammells may have enjoyed favorable tax treatment and “better asset
management” (whatever that means)19 by transferring their beach condo, their Lake Martin

value”) (citations and internal quotation marks omitted); Doe v. Ewing, 517 N.W.2d 849, 850-51
(Mich.App. 1994) (“Gifts or the satisfaction of moral obligations do not constitute equivalent
value for purposes of determining whether the conveyance was fraudulent.”); Jahner v. Jacob,
252 N.W.2d 1, 5-6 (N.D. 1977) (“Love and affection is a sufficient consideration for a deed. …
But ‘love and affection’ is not that ‘fair consideration’ required by [the UFCA]. …
[C]onveyances to family members for love and affection have frequently been held fraudulent as
to creditors.”) (citations omitted); Royal Indem. Co. v. McClendon, 323 P.2d 1090, 1092 (N.M.
1958) (“By the weight of authority a transfer of property in consideration of future support is
held to be invalid when the rights of existing creditors are thereby prejudiced.”). And the
Comments to the Uniform Fraudulent Transfer Act on the topic of “value” explain that “[t]he
definition does not specify all the kinds of consideration that do not constitute value for the
purposes of this Act – e.g., love and affection.” Uniform Fraudulent Transfer Act 1984, § 3,
comment 2.
19

By all appearances, “better asset management” is another way of saying “place
your assets beyond the reach of your creditors,” which is precisely the sort of practice that the
AUFTA was enacted to prevent. And if “tax savings” were valuable consideration under the
AUFTA, then no transfer could ever be constructively fraudulent as long as it funneled assets
from a more wealthy to a less wealthy family member. That result would frustrate the statute’s
purpose.

-19-

house, their LLC interests, and their UPS stock shares to their daughters had no utility – and
yielded absolutely no value – for their creditors. Under the AUFTA, “value” is gauged in light
of the statute’s purpose of protecting creditors from being prejudiced by the depletion of a
debtor’s assets. The above-cited transfers served to deplete the Trammells’ assets to a
considerable degree, with no countervailing utility or benefit to creditors; therefore, notions of
“tax savings” and “better asset management” from the Trammells’ perspective do not furnish the
necessary reasonably equivalent value or valuable consideration necessary to pass muster under
§ 8-9A-5(a).20
For all of the foregoing reasons, the Court finds on this record as a matter of law that the
Trammells did not receive a reasonably equivalent value for any of the subject transfers.
Therefore, SEPH has satisfied the third element of its claim for constructive fraudulent transfer
set forth in Count Three of the First Amended Complaint.
E.

Whether the Trammells Were Insolvent at the Time of the Transfers.

The fourth element of a constructive fraudulent transfer cause of action brought under §
8-9A-5(a) is that 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 statute provides that
20

Defendants’ reliance on In re Northlake Foods, Inc., 715 F.3d 1251 (11th Cir.
2013), for the proposition that tax benefits constitute reasonably equivalent value for a transfer is
misplaced. In Northlake Foods, the Eleventh Circuit reiterated 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 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.” Id.
at 1255-56. Under the specific circumstances alleged in the pleading, the Northlake Foods panel
concluded that this test was satisfied. Here, however, the test is not satisfied. Notwithstanding
their purported goals of “tax savings” and “better asset management,” the Trammells depleted
their assets without preserving their net worth, all at great injury to their creditor, SEPH.
Whatever tax benefits the Trammells might have enjoyed from their “gifting program” did not
redound to the benefit of their creditors or preserve assets from which SEPH could collect the
millions of dollars owed by the Trammells; to the contrary, those transfers drained the
Trammells’ coffers without replacing the transferred assets with anything approaching equivalent
value. Under Northlake Foods, the result of the analysis in this case is thus unchanged. Also, it
bears noting that the reasonably equivalent value issue in Northlake Foods was being addressed
at the pleadings stage, not at summary judgment. Unlike the Court in the case at bar, the
Eleventh Circuit in Northlake Foods was constrained to accept as true all factual allegations in
the complaint (including benefit allegations set forth in the pleading), and did not have access to
the clarifying vehicle of discovery to make a reasonably equivalent value determination.

-20-

“[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); see also Kaye, 453 B.R. at 668 (“Under the AUFTA, 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.”) (citation and internal quotation marks omitted). On summary judgment, the
parties vigorously dispute whether the AUFTA’s test for “insolvency” was satisfied at the time
of the subject transfers.
In an attempt to bypass the need to weigh the Trammells’ debts and assets at the time of
the transfers, SEPH invokes the statutory presumption of insolvency, to-wit: “A debtor who is
generally not paying his debts as they become due is presumed to be insolvent.” Ala. Code § 89A-2(b). However, SEPH has not made a showing on summary judgment sufficient to support a
conclusion as a matter of law that the Trammells were “generally not paying [their] debts as they
bec[a]me due.” The only evidence submitted by SEPH on this point is testimony that the
Trammells did not fulfill their guaranty obligations when Vision Bank demanded payment in or
around early 2009. (See Braswell Aff., ¶¶ 6-8.) That showing leaves many relevant questions
unanswered. As the comments to the Uniform Fraudulent Transfer Act explain:
“In determining whether a debtor is paying its debts generally as they become
due, the court should look at more than the amount and due dates of the
indebtedness. The court should also take into account such factors as the number
of the debtor’s debts, the proportion of those debts not being paid, the duration of
the nonpayment, and the existence of bona fide disputes or other special
circumstances alleged to constitute an explanation for the stoppage of payments.”
Uniform Fraudulent Transfer Act 1984, § 2, comment 2. On the summary judgment record
presented, the Court has no information about the number of the Trammells’ debts, the
proportion of those debts not being paid, the duration of nonpayment and so on. On this record,
the Court likewise cannot evaluate whether the Trammells did or did not have “bona fide
disputes or other special circumstances” that might have influenced their stoppage of payments
on the Bama Bayou / Riverwalk and Marine Park loans.21 Simply put, SEPH (as the movant on
21

The Court is aware, of course, that a central issue being litigated in the Bama
Bayou Action pending in state court since 2009 is whether the Trammells were actually indebted
on the subject guaranties, and if so to what extent. On the summary judgment record presented,
the Court cannot evaluate whether the Trammells’ dispute over liability in the Bama Bayou
Action is or is not grounded in a bona fide dispute. On this fragmentary evidentiary showing, the
Court cannot make a definitive finding on summary judgment as to whether the Trammells were
generally paying their debts as they became due.

-21-

summary judgment) has not come forward with proof that there is no genuine issue of material
fact and that the Trammells were generally not paying their debts as they became due at the time
of the challenged transfers of the beach condo, the Lake Martin house, the LLC interests, the
primary residence and the UPS stock. As such, the Court cannot find on summary judgment that
AUFTA’s presumption of insolvency set forth at Alabama Code § 8-9A-2(b) is applicable here.
In the absence of a statutory presumption of insolvency, the critical question for purposes
of the insolvency element is whether the sum of the Trammells’ debts was greater than their
assets at a fair valuation at the time of the subject transfers. To shoulder its summary judgment
burden, SEPH presents evidence tabulating in detail Charles and Belinda Trammell’s assets and
liabilities immediately after each challenged asset transfer (i.e., the beach condo and Lake Martin
house transfers on January 26, 2011; the LLC membership interest transfers on December 12,
2011; the UPS stock transfer on April 25, 2012; and the UPS stock and principal residence
transfer on October 24, 2013). In its principal brief, SEPH offers charts summarizing the
evidence for each line item of assets and liabilities. (Doc. 91, at 13-21.) In each instance,
SEPH’s evidence reflects that Charles and Belinda Trammell’s liabilities exceeded their assets
by a wide margin after the transfer took place, so as to satisfy the statutory definition of
insolvency.22
In response, defendants advance three specific criticisms against the validity of SEPH’s
calculations of the Trammells’ assets and liabilities. First, defendants contend that the liability
figures used by SEPH are inflated by millions of dollars in interest and collection costs on the
Bama Bayou debt that they believe the Mobile County Circuit Court will set aside in the Bama
Bayou Action. This objection centers on a ruling issued by Circuit Judge Stewart in Bama
Bayou on October 26, 2016, setting aside certain foreclosure sales performed by Vision Bank in
22

Specifically, SEPH’s calculations (again, grounded in cited record evidence)
show that as of January 26, 2011, Charles Trammell’s assets were fairly valued at $2.81 million
while his debts were $4.58 million; that on the same date, Belinda Trammell’s assets were fairly
valued at $0.35 million while her debts were $1.68 million; that as of December 12, 2011,
Charles Trammell’s assets were fairly valued at $2.71 million as compared to debts of $6.02
million; that on the same date Belinda Trammell’s assets were fairly valued at $0.31 million as
compared to debts of $2.24 million; that as of April 25, 2012, Charles Trammells’ assets were
fairly valued at $0.83 million, while his debts were $5.36 million; and that after the transfers
upon his death on October 24, 2013, Charles Trammell’s Estate’s assets were $29,700 as
compared to debts of $6.61 million.

-22-

March 2009. (Doc. 100, Exh. 1.) After commencing the Bama Bayou Action in January 2009,
Vision Bank foreclosed on real property securing its loans to Bama Bayou and Marine Park, and
ultimately purchased that property through credit bids. (Braswell Aff., ¶ 7.) Judge Stewart ruled
in October 2016 that Vision Bank’s credit bids were “on their face so grossly inadequate as to
shock the judicial conscience,” and that “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.” (Doc. 100, Exh. 1, at 2.) On
that basis, she “set[] aside the foreclosure sale and declare[d] the foreclosure deeds null, void and
of no force and effect.” (Id.)
Defendants’ argument is that SEPH’s liability calculations for insolvency purposes fail to
take into account the effect of the state court order, whose likely corollary (according to
defendants) is that interest and collection costs accruing after those March 2009 foreclosure sales
will be set aside.23 In so arguing, defendants point to provisions in the relevant mortgage
documents for the real property on which foreclosures were set aside, which provisions specify
that the status quo will be restored if foreclosure proceedings are determined adversely to the
lender.24 If the status quo must be restored, then that implies that SEPH should not be able to
claim as costs of collection the attorney’s fees it incurred in the foreclosure battle.25 At the very
23

Defendants posit that one effect of the “grossly inadequate” credit bids by Vision
Bank was to create the illusion of millions of dollars in indebtedness that did not exist (or would
not have existed had Vision Bank made reasonable, fair bids at the foreclosure sales). Thus,
according to defendants, interest was computed based on the grossly inflated debt figure, and
collection costs were incurred in the course of SEPH’s attempts to defend its “grossly
inadequate” credit bids and collect that grossly inflated debt figure. And the resulting inflated
interest and collection costs were plugged into the asset/liability analysis by SEPH as proof of
the Trammells’ insolvency here.
24

Representative of those clauses is the following contract language: “In case the
Lender shall have proceeded to enforce any right or remedy under this Mortgage by foreclosure
… and such proceedings … shall have been determined adversely to the Lender, then and in
every such case the Borrower and the Lender shall be restored to their former positions and
rights hereunder … as if no such proceeding had been taken.” (Doc. 100, Exh. 3, § 2.14
(emphasis added).)
25

There is also a reasonable argument to be made that accrued interest should be
ratcheted downward because the amount of principal remaining on the loans would have been
substantially lower had Vision Bank made reasonable bids at the foreclosure sales. The
(Continued)
-23-

least, Judge Stewart’s ruling in the Bama Bayou Action appears to affect the “liability” side of
the ledger for Charles and Belinda Trammell in significant and material ways, yet SEPH’s
calculations do not take it into account.
Second, defendants maintain that SEPH’s asset/liability calculations are flawed because
the liability side of the ledger includes hundreds of thousands of dollars of attorney’s fees whose
reasonableness is contested. Recall that, as part of the Limited Continuing Guaranties they
signed, the Trammells agreed to be responsible for Vision Bank / SEPH’s costs of collection,
including “reasonable” attorney’s fees.26 On their face, these agreements limit the Trammells’
exposure to only those attorney’s fees that are “reasonable.” Even if such a limitation were not
supplied by contract terms, it would be implied by Alabama law as a matter of public policy.27
As a general proposition, “[t]he starting point for determining the amount of a reasonable fee is
the number of hours reasonably expended on the litigation multiplied by a reasonable hourly
rate.” Bivins v. Wrap It Up, Inc., 548 F.3d 1348, 1350 (11th Cir. 2008) (internal citations and
quotation marks omitted). Defendants correctly observe that SEPH has made no such
evidentiary showing of reasonableness, but instead appears to have lumped all attorney’s fees it

counterargument, however, is that “status quo” could be construed as meaning that interest
accrues on the full amount of principal (unreduced by any actual or hypothetical foreclosure sale
proceeds) from March 2009 through the present day. In that event, of course, accrued interest
(and, hence, the Trammells’ liabilities) would be higher, not lower, than SEPH’s calculations.
The Court expresses no opinion as to the proper means of implementing the “status quo”
provisions in the mortgages in light of the ruling in the Bama Bayou Action setting aside the
foreclosure sales as unconscionable.
26

For example, in the May 2006 guaranties they executed as to the Riverwalk loan,
each of Charles and Belinda Trammell agreed to the following provision: “Guarantor agrees to
pay reasonable actual attorney’s fees and all other costs and expenses which may be incurred by
the Bank in the enforcement of this Guaranty.” (Doc. 92, Exh. A-3 at ¶ 10.) Other relevant
guaranties include similar language.
27

See, e.g., Willow Lake Residential Ass’n, Inc. v. Juliano, 80 So.3d 226, 241
(Ala.Civ.App. 2010) (“Alabama law reads into every agreement allowing for the recovery of
attorney’s fees a reasonableness limitation.”); Branch Banking and Trust Co. v. Howard, 2013
WL 951652, *6 (S.D. Ala. Mar. 8, 2013) (“Alabama law imposes a reasonableness constraint on
all fee-shifting contracts, as a matter of public policy.”).

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has incurred into the “costs of collection” column as a conclusory total on the liability side of the
ledger.
Third, defendants take aim at SEPH’s “assets” calculations by asserting that SEPH has
systematically excluded the Trammells’ interests in limited liability companies, to-wit: Gulf
World, LLC; Bama Bayou, LLC; Trammell Family Orange Beach Properties, LLC; and
Trammell Family Lake Martin Properties, LLC. Particularly significant, defendants argue, is
Gulf World, LLC, the entity that purportedly owns the Bama Bayou parcels as to which the
foreclosure sales were set aside by the Bama Bayou order. Because those foreclosure sales were
set aside, defendants reason, Gulf World must be construed as owning those parcels (which are
worth millions of dollars) at all relevant times, including the dates of the challenged transfers by
the Trammells.28 The result, defendants maintain, is that the “asset” side of the ledger proposed
by SEPH in its insolvency analysis drastically understates the Trammells’ assets at the time of
the challenged transfers.29
28

As evidence of the value of the parcels, defendants refer to pleadings from the
Bama Bayou Action, which in turn cite appraisals showing those parcels were valued at a
minimum of $25,697,000 as of April 2009. (Doc. 100, Exh. 2, ¶ 166.) Such evidence is not
admissible in its present form; nonetheless, it is properly considered on summary judgment
because all indications are that defendants can reduce it to admissible form (via the appraisals
and/or appraisers themselves) at trial. See Rule 56(c)(2), Fed.R.Civ.P. (recognizing that “[a]
party may object that the material cited to support or dispute a fact cannot be presented in a form
that would be admissible in evidence”); Brannon v. Finkelstein, 754 F.3d 1269, 1277 n.2 (11th
Cir. 2014) (hearsay statement “should be considered on summary judgment here because it can
be reduced to an admissible form at trial”).
29

SEPH’s counterarguments are not persuasive on summary judgment. First, SEPH
argues that the Trammells’ interests in the LLCs do not qualify as “assets” within the meaning of
the AUFTA. In particular, plaintiff reasons that the statute defines an “asset” as “[p]roperty of a
debtor,” but excludes “[p]roperty to the extent it is generally exempt under nonbankruptcy law.”
Ala. Code § 8-9A-1(2)(b); see also Wheeler Bros. Inc. v. Jones, 167 F. Supp.3d 1283, 1301
(M.D. Ala. 2016) (“The definition of ‘asset’ under Ala. Code § 8-9A-1 states that it is property
of the debtor but does not include property to the extent that it is exempt under non-bankruptcy
law.”); Flirt v. Kirkpatrick, 175 So.2d 755, 758 (Ala. 1965) (“A sale or other disposition of
property which is by law exempt from payment of debts cannot be impeached by creditors as
fraudulent, since creditors cannot be deemed concerned with property not subject to their
demands.”). A basic defect with this argument is that the Trammells waived any exemptions that
might otherwise be available. See, e.g., doc. 92, Exh. A-3, ¶ 10 (“Guarantor hereby waives any
rights of exemption, both as to personal and real property, under the Constitution or laws of the
United States, the State of Alabama, or any other state or jurisdiction as to any debt, liability or
(Continued)
-25-

The cumulative effect of all of these objections is to create considerable uncertainty as to
whether “the sum of the debtor’s debts is greater than all of the debtor’s assets at a fair
valuation,” as necessary to establish insolvency under the AUFTA. An example illustrates the
point. On January 26, 2011 (the date on which the Trammells transferred their interests in the
beach condo and the Lake Martin house to family-owned LLCs), the summary judgment record
reflects Charles Trammell’s debts consisted of $1.775 million in principal that he guaranteed on
the Bama Bayou, Marine Park and Sundance debts, plus interest and collection costs. (Braswell
Aff., ¶ 13.) Plaintiff’s evidence identifies $1,818,806.09 in accrued interest and late fees, as well
as $977,332.53 in costs of collection. But the October 26, 2016 order in the Bama Bayou Action
obligation hereunder.”). By all appearances, the effect of that waiver is to render the Trammells’
interests in LLCs not “generally exempt under nonbankruptcy law” because they are not exempt
at all. Even if those waivers were not enforceable or were otherwise invalid, SEPH’s argument
that an interest in an LLC is not an AUFTA “asset” fails because it proves too much. Among the
transfers that SEPH seeks to have set aside as fraudulent in these proceedings are the Trammells’
transfers of 90% of their interests in Trammell Orange Beach and Trammell Lake Martin to their
daughters in October 2011. If those interests in LLCs are not AUFTA “assets” (and SEPH has
argued that LLC interests do not count as AUFTA assets for purposes of the insolvency
analysis), then there was no AUFTA “transfer,” which the statute defines as “[e]very mode … of
disposing of or parting with an asset or an interest in an asset.” Ala. Code § 8-9A-1(13)
(emphasis added); see also Wheeler Bros., 167 F. Supp.3d at 1301 (“[t]he plain language of the
AUFTA says that a transfer has to be of an asset”). If there were no AUFTA “transfer,” then no
cause of action for constructive fraudulent transfer is available to SEPH under § 8-9A-5(a).
Simply put, SEPH cannot have it both ways. An interest in an LLC is either an “asset” or it is
not. Plaintiff’s Count Three is predicated on such an interest being an “asset,” which directly
contradicts its attempts to argue otherwise in its insolvency analysis. SEPH’s second
counterargument is that defendants have not proven the value of those LLC interests or even
whether Belinda Trammell has an interest in Gulf World, LLC. But as summary judgment
movant, SEPH bears the initial burden of showing what the Trammells’ assets are and how they
are valued. If SEPH concedes that Charles Trammell had an interest in Gulf World at the time of
the subject transfers, then it must make an affirmative showing on summary judgment to value
that interest. If SEPH contends that Belinda Trammell has no interest in Gulf World, then it
likewise must make such a showing. It has not done so; therefore, the evidentiary burden does
not shift to defendants to come forward with evidence showing genuine issues of material fact on
those matters. At any rate, there is evidence in the summary judgment record that “the value of
Mr. Trammell’s interest in Gulf World, LLC is a function of the value of the assets of the LLC,
which mainly consist of millions of dollars in real property and damages from the lawsuit
pending in Mobile County.” (Doc. 92, Exh. G, at #2.) Those statements can be reduced to
admissible form at trial, and therefore are properly considered on summary judgment as
supporting a genuine issue of material fact.

-26-

likely reduces both interest and costs of collection, and SEPH offers no evidence as to reasonable
estimates of those figures in the wake of the judicially-undone foreclosures. Moreover, SEPH’s
collection cost figures appear to consist primarily of attorney’s fees as to which no showing of
reasonableness has been made. Thus, for summary judgment purposes, we know only that
Charles Trammell’s debts included some amount of interest and collection costs. We do not
know – and, on this record, cannot hazard a reasonable estimate – how much. On the asset side
of the equation, SEPH identifies $27,033 that Charles Trammell held in joint bank accounts,
$29,700 in automobiles and other personal property, $78,500 in his share of his personal
residence, and $2,675,063 in UPS stock shares. (Doc. 91, at 13.) But SEPH does not identify
Charles Trammell’s interests in LLCs, much less assign any fair market valuation to those
interests. The resulting gaps on both the liabilities and assets side of the equation preclude the
Court from making any definitive determination at this time as to whether Charles Trammell was
insolvent after transferring the beach condo and Lake Martin house to family-owned LLCs. This
analysis would yield similar results for summary judgment purposes at each of the critical
junctures for both Charles and Belinda Trammell.
In light of the foregoing, the Court finds that there are genuine issues of material fact as
to whether defendants Charles Trammell and Belinda Trammell were insolvent at the time of the
challenged transfers. Because insolvency is a necessary element of proof for Count Three (a
cause of action asserted pursuant to Alabama Code § 8-9A-5(a)), that finding precludes entry of
summary judgment at this time.30
IV.

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

Plaintiff’s Motion for Partial Summary Judgment (doc. 90) is granted in part,
and denied in part;

2.

Because the summary judgment record reveals no genuine issues of material fact,
the Motion is granted as to the following elements of Count Three: (i) SEPH’s

30

See Sibille v. Davis, 2016 WL 1178662, *9 (M.D. Ala. Mar. 25, 2016) (“[T]he
value of the property is a disputed issue of fact. Therefore, the court cannot calculate, on the
basis of undisputed facts, whether … he became insolvent as a result of the October 2012
transfers. Accordingly, summary judgment will be denied as to Sibille’s claims that the October
2012 transfers were constructively fraudulent.”).

-27-

status as a creditor and the Trammells’ status as debtors; (ii) the timing of SEPH’s
claim against the Trammells (i.e., that it arose before the subject transfers were
made); and (iii) that the Trammells made the transfers without receiving a
reasonably equivalent value. Those issues having been resolved on summary
judgment, they need not and will not be litigated at trial, pursuant to Rule 56(g),
Fed.R.Civ.P.;
3.

The Motion is denied as to the insolvency element of Count Three. The evidence
and argument at trial on Count Three will be limited to the questions of whether
Charles and Belinda Trammell were insolvent within the meaning of Alabama
Code § 8-9A-2 at the time of, or became insolvent as a result of, the challenged
transfers. The Court will also accept evidence and argument on the question
(raised for the first time on summary judgment in defendants’ brief) of whether
Charles Trammell’s death effected “transfers” of his interest in the primary
residence and remaining UPS stock to Belinda Trammell within the meaning of
the AUFTA;31

4.

Review of the court file confirms that on September 26, 2016, Magistrate Judge
Cassady entered an Order (doc. 89) referring this case to mediation. On October

31

The Court did not address that issue on summary judgment because it was
unnecessary to do so to resolve in full the issues raised in SEPH’s Motion. The Court also
questions the need to address whether those transfers were constructively fraudulent at all in
order to afford complete relief to SEPH in this litigation. The assets ostensibly transferred from
Charles Trammell to Belinda Trammell upon the former’s death consisted of an $81,000 interest
in the couple’s personal residence and UPS stock valued at $831,323.02 (8,798 shares priced at
$94.49 on October 24, 2013). (Doc. 91, ¶ 52.) These transfers are different than the others at
issue in this litigation because they were made from one debtor to another, rather than from a
debtor to a third-party person or entity. If plaintiff’s position is ultimately vindicated at trial,
then Belinda Trammell is indebted to SEPH in an amount exceeding $2 million. (Braswell Aff.,
¶ 8.) Logic and common sense suggest that SEPH could use the assets transferred to her upon
Charles Trammell’s death in its efforts to collect on that debt, without ever needing to litigate
whether the passage of those assets to her upon her husband’s death constitutes a “transfer” for
AUFTA purposes. Stated differently, it is not readily apparent on this record why it matters
whether the 8,798 shares of UPS stock and the ownership interest in the residence are deemed
property of the Estate of Charles Trammell or property of Belinda Trammell. Either way, they
would appear to be assets reachable by SEPH to collect on the underlying debt. The Court will
entertain briefing and/or argument on this threshold question at an appropriate time.

-28-

21, 2016, Judge Cassady entered a follow-up Order (doc. 97) providing that the
parties must conduct their first mediation conference by no later than November
10, 2016. Although that deadline expired more than seven weeks ago, it appears
the parties have not complied. They are ordered to show cause, on or before
January 5, 2017, why they have not conducted a mediation session to date (if in
fact they have not). The Court understands that a mediation scheduled for
November 10, 2016 was canceled at the eleventh hour due to an “emergency
scheduling conflict” with the mediator (doc. 101), but it is unclear whether the
parties ever rescheduled mediation in the intervening seven weeks; and
5.

This action remains set for a Final Pretrial Conference before the undersigned on
January 10, 2017 at 10:00 a.m., with nonjury trial to follow during the February
2017 term. The Court is aware of defendants’ Motions to Continue and to Stay
(docs. 102 & 107), and anticipates ruling on same in short order. The parties must
file their Joint Pretrial Document by no later than January 6, 2017.

DONE and ORDERED this 30th day of December, 2016.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE

-29-