Aceituno v. Vowell et al

Filing 81

CONCLUSIONS of LAW AND FINDINGS of FACT AS TO STEADFAST AND TODD VOWELL signed by Judge John A. Mendez on 9/18/14. The Court GRANTS judgment in the amount of $100,000 against Steadfast as transferee, and against Todd Vowell as the entity for whose benefit the transfer was made.(Mena-Sanchez, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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In re:

Case No.: 2:12-cv-03068 JAM-EFB

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INTELLIGENT DIRECT MARKETING,

Related No.: 2:09-cv-02898 JAMGGH

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Debtor,
[Bky Case 07-30685-A-7]

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THOMAS ACEITUNO, Chapter 7
Trustee,
Plaintiff,

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[Bky AP No. 09-2439]

v.
TODD VOWELL; RAEANNE VOWELL;
BEVERLY VOWELL; STEADFAST
MAILING SERVICES, INC.; SASHI
CORPORATION; JEFFREY K.
GARCIA; and FIDELIS
MARKETING, INC.,

CONCLUSIONS OF LAW AND FINDINGS
OF FACT AS TO STEADFAST AND TODD
VOWELL

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Defendants.
On July 28, 2014, Plaintiff Thomas Aceituno, Chapter 7

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Trustee, (“Plaintiff” or “Trustee”) moved for judgment against

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Steadfast Mailing Services, Inc. (“Steadfast”) and Todd Vowell

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(“Mr. Vowell”) (Doc. #77) pursuant to Federal Rule of Civil

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Procedure 54.

A bench trial was held from June 23, 2014, to

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June 27, 2014.

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of the FAC, undisputed facts, testimony, exhibits, briefing, and

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all arguments made, the Court now enters its Findings of Fact

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and Conclusions of Law pursuant to Federal Rule of Civil

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Procedure 52(a) as to Steadfast and Mr. Vowell.

For the reasons set forth below and upon review

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I.
1.

FINDINGS OF FACT

All findings of fact in the Court’s Findings of Fact

and Conclusions of Law as to the Vowells, Mr. Garcia, and Fidelis
are incorporated herein.
2.

Steadfast is a suspended corporation not represented by

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counsel.

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Order, Doc. #44, ¶ 1.

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3.

Undisputed Facts (“UF”), Amended Pretrial Conference

Steadfast was a commercial printing company and did the

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printing and mailing for Intelligent Direct Marketing, Inc.

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(“IDM”).

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4.

Mr. Vowell’s Testimony.

Steadfast.
5.

Mr. Vowell is the sole director of both IDM and
Mr. Vowell’s Testimony.
On May 16, 2007, IDM transferred $100,000 to Steadfast.

IDM Bank Statement, Ex. 103, at 23 of 494.
6.

At the time of the transfer, IDM owed Steadfast money.

Mr. Vowell’s Testimony.

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II.

OPINION

The Trustee moves for judgment against Steadfast and Mr.

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Vowell to avoid and recover the $100,000 transfer as a

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constructive fraudulent transfer under 11 U.S.C. § 548 and state

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law and as an avoidable preference pursuant to 11 U.S.C. § 547.
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The Trustee also argues that he can recover from Steadfast and

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Mr. Vowell under 11 U.S.C. § 500 and because Steadfast was the

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alter ego of Mr. Vowell for the purposes of the $100,000

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transfer.

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A.

Fraudulent Conveyance

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To prove a claim for constructive fraudulent conveyance

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under 11 U.S.C. § 548(a)(1)(B), a plaintiff must show that

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(1) the transfer involved property of the debtor; (2) the

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transfer was made within two years of the filing of the

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bankruptcy petition; (3) the debtor did not receive reasonably

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equivalent value in exchange for the property transferred; and

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(4)(a) the debtor was insolvent at the time of the transfer or

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was made insolvent by the transfer or (b) the transfer was to an

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insider under an employment contract and not in the ordinary

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course of business.

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United Energy Corp., 944 F.2d 589, 594 (9th Cir. 1991) (stating

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elements of a claim for fraudulent transfer under § 548).

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11 U.S.C. § 548(a)(1)(B); see also In re

IDM transferred $100,000 in 2007, within two years of filing

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the bankruptcy petition.

Mr. Vowell testified that IDM owed

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Steadfast money at the time.

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evidence or documentation that IDM received reasonably equivalent

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consideration for the transfer.

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Mr. Vowell’s testimony that IDM owed Steadfast money credible.

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Based on these facts, the Court finds that there was adequate

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consideration because the transfer was to repay past debt.

The Trustee argues that there is no

Nevertheless, the Court finds

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Accordingly, the transfer was not a constructively

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fraudulent transfer. In addition, the transfer is not a

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fraudulent conveyance under state law.
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See Screen Capital Int’l

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Corp. v. Library Asset Acquisition Co., Ltd., 510 B.R. 248, 257

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(C.D. Cal. 2014) (“The federal fraudulent transfer provisions are

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‘similar in form and substance’ to California’s fraudulent

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conveyance statutes . . . .”) (citation omitted).

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B.

Avoidable Preference

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The Bankruptcy Code permits trustees to recover

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“preferential transfers,” or “preferences,” made between the

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debtor and its creditors before the debtor filed a bankruptcy

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petition under 11 U.S.C. § 547.

In re Schuman, 81 B.R. 583, 585

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(9th Cir. BAP 1987).

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insolvent debtors, on the eve of filing for bankruptcy, from

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paying off their debts held by ‘preferred’ creditors—those

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creditors whom the soon-to-be bankrupts wish to favor.”

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Taylor, 599 F.3d 880, 888 (9th Cir. 2010).

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§ 547(b):

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“That section is designed to prohibit

In re

Pursuant to 11 U.S.C.

The trustee may avoid any transfer of an interest of the
debtor in property—

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(1) to or for the benefit of a creditor;

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(2) for or on account of an antecedent debt owed by the
debtor before such transfer was made;

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(3) made while the debtor was insolvent;
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(4) made—
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(A) on or within 90 days before the date of the
filing of the petition; or
(B) between ninety days and one year before the
date of the filing of the petition, if such
creditor at the time of such transfer was an
insider; and

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(5) that enables such creditor to receive more than
such creditor would receive if—
(A) the case were a case under chapter 7 of this
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title;

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(B) the transfer had not been made; and

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(C) such creditor received payment of such debt to
the extent provided by the provisions of this
title.

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11 U.S.C. § 547(b).

Therefore, under this section, a preference

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must be made within the reach-back period of 90 days or 1 year

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when the creditor is deemed to be an “insider.”

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81 B.R. at 585; 11 U.S.C. § 547(b)(4)(A), (B).

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by blood or marriage are deemed insiders.

In re Schuman,
Entities related

In re Friedman, 126

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B.R. 63, 69–70 (9th Cir. BAP 1991).

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whose relationship with the debtor “compels the conclusion that

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the individual or entity has a relationship with the debtor,

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close enough to gain an advantage attributable simply to affinity

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rather than to the course of business dealings between the

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parties.”

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Insiders are also those

Id. at 70.

First, the transfer was to Steadfast, a creditor.

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§ 547(b)(1).

Second, as discussed above, IDM owed money to

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Steadfast at the time of the transfer.

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was insolvent in May 2007.

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an insider of IDM because Mr. Vowell created the two corporations

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and was a director of both, which means the one-year reach back

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period applies.

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applicable period.

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transfer was made, IDM was insolvent.

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file a claim for the value of the unpaid debt as a creditor in

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the bankruptcy proceeding but it was not guaranteed to be repaid

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from the bankrupt estate.

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received more than it would have received had the transfer not

§ 547(b)(2).

§ 547(b)(3).

Third, IDM

Fourth, Steadfast was

Therefore, the transfer was made within the
§ 547(b)(4).

Fifth and finally, when the
Steadfast was entitled to

As a result of the transfer, Steadfast

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been made.

Accordingly, the Court finds that all the requirements of
§ 547(b) are met and the transfer is avoidable.

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§ 547(b)(5).

1.

11 U.S.C. § 550

Section 550(a)(1) of the Bankruptcy Code authorizes the

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Trustee to recover from the “initial transferee” or “the entity

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for whose benefit such transfer was made.”

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(a)(1).

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transferring the avoided funds, the debtor must have been

11 U.S.C. § 550

“This phraseology implies a requirement that, in

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motivated by an intent to benefit the individual or entity from

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whom the trustee seeks to recover.

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entity benefit from the transfer; the transfer must have been

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made for his benefit.”

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544, 547 (9th Cir. 1991) (emphasis in original) (quoting Merrill

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v. Dietz (In re Universal Clearing House Co.), 62 B.R. 118, 128

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n. 12 (D. Utah 1986)).

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It is not enough that an

In re Bullion Reserve of N. Am., 922 F.2d

In this case, Mr. Vowell was the sole director and sole

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shareholder of both IDM and Steadfast.

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the $100,000 knowing that IDM was in a dire situation, and there

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is no evidence Steadfast needed the money at that point.

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result, any money transferred to Steadfast was for Mr. Vowell’s

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benefit.

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2.

Mr. Vowell transferred

As a

Alter Ego

The Trustee also argues that alter ego is an appropriate

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alternative basis to recover the $100,000 transfer from Mr.

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Vowell.

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subject to 11 U.S.C. § 550(a)(1), the Court need not address

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alter ego liability.

However, because the Court finds that Mr. Vowell is

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III.
1.

CONCLUSIONS OF LAW

The $100,000 transfer was not a fraudulent transfer

under the Bankruptcy Code or California law.

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2.

The $100,000 transfer is an avoidable preference.

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3.

Mr. Vowell is the entity for whose benefit such

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transfer was made.

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IV.

ORDER

For the reasons set forth above, the Court grants judgment

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in the amount of $100,000 against Steadfast as transferee, and

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against Todd Vowell as the entity for whose benefit the transfer

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was made.

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IT IS SO ORDERED.
Dated:

September 18, 2014

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