Federal Deposit Insurance Corporation v. Broder, Jr. et al

Filing 106

ORDER and OPINION GRANTING 83 Plaintiff's Motion for Partial Summary Judgment and DENYING 82 Defendants' Motion for Partial Summary Judgment. The parties are directed to confer and submit proposed final judgments, including attorneys fees, on the Plaintiffs claims on the promissory notes. Signed by Judge Thomas W. Thrash, Jr on 1/31/2014. (jtj)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
FEDERAL DEPOSIT INSURANCE
CORPORATION, as receiver for
Rockbridge Commercial Bank,
Plaintiff,
v.

CIVIL ACTION FILE
NO. 1:12-CV-2554-TWT

HANS M. BRODER, JR., et al.,
Defendants.
FEDERAL DEPOSIT INSURANCE
CORPORATION, as receiver for
Silverton Bank, N.A.,
Plaintiff,
v.

CIVIL ACTION FILE
NO. 1:12-CV-2569-TWT

HANS M. BRODER, JR., et al.,
Defendants.

OPINION AND ORDER

The FDIC, as receiver for Rockbridge Commercial Bank and Silverton Bank,
N.A., brings two lawsuits against Defendant Hans M. Broder, Jr., his family, and his
companies. The FDIC claims that Broder defaulted on two separate promissory notes
and improperly transferred assets to avoid repaying debts. Because the FDIC has
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shown that Broder is liable on the promissory notes, judgment should be entered in
favor of the FDIC on the notes. However, questions of fact remain concerning whether
Broder fraudulently transferred assets to avoid repaying his debts, and summary
judgment for the Defendants should be denied in that respect.
I. Background
The Defendant Hans M. Broder, Jr. borrowed $911,821 from what became
Silverton Bank on March 22, 2005, to finance his purchase of stock in Enterprise
Banking Company. (See Pl.’s Mot. for Partial Summ. J., [Doc. 81, Case No. 1:12-cv2569], Ex. A, at 193). The loan agreement was memorialized in a promissory note (the
“Silverton Note”) and a commercial pledge agreement (the “Silverton Commercial
Pledge Agreement”). Pursuant to the agreement, Broder pledged 5,000 shares of
Enterprise Banking Company as collateral for the Silverton Note. (See id.)
Similarly, on April 25, 2007, Broder borrowed $800,000 from Rockbridge
Commercial Bank to further finance his purchase of stock in Enterprise Banking
Company. (See Pl.’s Mot. for Partial Summ. J., [Doc. 83, Case No. 1:12-cv-2554], Ex.
A, at 193). That loan was also memorialized in a promissory note (the “Rockbridge
Note”) and a commercial pledge agreement (the “Rockbridge Commercial Pledge
Agreement”). Broder pledged 103,959 shares of Henry County Bancshares, Inc. stock
as collateral for the Rockbridge Promissory Note. (See id.)

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In 2009, Rockbridge Commercial Bank and Silverton Bank failed, and the
FDIC succeeded to all of the banks’ rights under the respective notes. See 12 U.S.C.
§ 1821(d)(2)(A)(i). And in 2010, Broder failed to make payments on the Silverton
Note and the Rockbridge Note. The FDIC declared the Silverton Note in default on
May 3, 2010, and the Rockbridge Note in default on August 9, 2010. (See Broder
Dep. at 56, 74-75).
As his banking interests were collapsing, Broder transferred his interests in
eight real property assets to family members or to family-controlled limited liability
companies. In September 2008, he transferred his interest in property in Stockbridge,
Georgia to his wife, Defendant Lyndy L. Broder.1 On December 31, 2008, he
transferred his interest in another property to Lyndy Broder and his children,
Defendants Ashlee Broder Panaro, Gabrielle Broder-Porter, Michelle Broder, and
Hans M. Broder III. In January 2009, Broder transferred two pieces of property in
Stockbridge to Defendant Broder Enterprises III, LLC, a limited liability company
formed on January 1, 2009, and owned by Broder and his family. Broder transferred
two other interests in properties in McDonough, Georgia to Broder Enterprises in
September 2009. Finally, in October 2010, after defaulting on the Rockbridge and

1

For clarity, Defendant Hans M. Broder, Jr., is referred to as “Broder” in this
Order, while the remaining Defendants, including Hans M. Broder III, are referred to
with both their first and last names.
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Silverton Notes, Broder transferred his interests in two properties in Stockbridge to
Defendant Red Oak Road Investments, LLC, which was formed in October 2010 and
is 50 percent controlled by Lyndy Broder. (See Broder Aff. ¶¶ 5-11; Broder Dep. Ex.
1 ¶ 18, Ex. 2 ¶ 18).
Broder claims that he made these transfers for legitimate estate-planning
purposes, to repay his wife for her hypothecation of jointly-held stock that Broder
used as collateral on the Rockbridge Note and the Silverton Note, and in consideration
for the care he will receive from his children when he is elderly. The FDIC argues that
these transfers were fraudulent attempts by Broder to avoid his obligations on the
notes. The FDIC seeks to collect on both notes and brings claims for fraudulent
transfer due to actual fraud under O.C.G.A. § 18-2-74(a)(1) and constructive fraud
under O.C.G.A. §§ 18-2-74(a)(2)(A) and (B) and 18-2-75(a), and fraudulent transfer
pursuant to 12 U.S.C. § 1821(d)(17), as well as to collect attorneys’ fees. The
Defendants brought a counterclaim for breach of contract but voluntarily dismissed
it.
This Order resolves motions brought in cases 1:12-cv-2554-TWT and 1:12-cv2569-TWT. In both cases, the FDIC moves for partial summary judgment on Broder’s
liability on the Rockbridge Note and the Silverton Note. The FDIC further seeks
attorneys’ fees on the notes. The Defendants have filed motions for partial summary

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judgment in both cases contending that the FDIC has not met its burden to show that
any of the transfers Broder made were fraudulent.
II. Motion for Summary Judgment Standard
Summary judgment is appropriate only when the pleadings, depositions, and
affidavits submitted by the parties show that no genuine issue of material fact exists
and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).
The court should view the evidence and any inferences that may be drawn in the light
most favorable to the nonmovant. Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59
(1970). The party seeking summary judgment must first identify grounds that show
the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317,
323-24 (1986). The burden then shifts to the nonmovant, who must go beyond the
pleadings and present affirmative evidence to show that a genuine issue of material
fact does exist. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986).
III. Discussion
A.

FDIC’s Motions for Judgment on the Notes

The FDIC seeks partial summary judgment on Defendant Broder’s liability for
the promissory notes at issue in both cases. The FDIC also seeks an award of
attorneys’ fees and asks the Court to enter final judgment with respect to its claims on
the notes.

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1.

FDIC’s Motions for Partial Summary Judgment

“In a suit to enforce a promissory note, ‘[i]t is well established that a plaintiff…
establishes a prima facie case by producing the note and showing that it was executed.
Once that prima facie case has been made, the plaintiff is entitled to judgment as a
matter of law unless the defendant can establish a defense.’” Trendmark Homes, Inc.
v. Bank of North Georgia, 314 Ga. App. 886, 887 (2012) (citing Newton v. Sibley,
273 Ga. App. 343, 343 (2005)). Here, Broder admits that he signed the Rockbridge
Note and subsequently defaulted on it. (See Broder Dep. at 64, 75). Likewise, Broder
admits that he signed the Silverton Note and defaulted on it. (Id. at 20, 56). While
Broder admits default, he argues that he is not liable on the notes because the banks
failed to maintain or collect from the collateral that Broder pledged when he signed
the notes. However, neither the terms of the notes themselves nor Georgia law
supports Broder’s arguments.
Both the Silverton Note and the Rockbridge Note and their corresponding
pledge agreements specifically state that “Lender shall use ordinary reasonable care
in the physical preservation and custody of the Collateral in Lender’s possession, but
shall have no other obligation to protect the Collateral or its value.” (See Answer,
Case No. 1:12-cv-2554-TWT, Ex. A, “Rockbridge Commercial Pledge Agreement,”
at 3; Answer, Case No. 1:12-cv-2569, Ex. A, “Silverton Commercial Pledge

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Agreement,” at 3). Further, the agreements provide that “all of Lender’s rights and
remedies … shall be cumulative and may be exercised singularly or concurrently.
Election by Lender to pursue any remedy shall not exclude pursuit of any other
remedy.” (Rockbridge Commercial Pledge Agreement, at 4; Silverton Commercial
Pledge Agreement, at 3). And the Rockbridge Commercial Pledge Agreement further
provides that:
Borrower waives any defenses that may arise, because of any action or
inaction of Lender, including without any limitation any failure of
Lender to realize upon the Collateral or any delay by Lender in realizing
upon the Collateral, and Borrower agrees to remain liable under the Note
no matter what action Lender takes or fails to take under this Agreement.
(Rockbridge Commercial Pledge Agreement, at 1). Finally, both notes state that “[a]ll
parties… agree that Lender may… impair, fail to realize upon or perfect Lender’s
security interest in the collateral; and take any other action deemed necessary by
Lender without the consent of or notice to anyone.” (Rockbridge Note, at 3; Silverton
Note, at 2). The plain terms of the agreements allow the FDIC to elect how collect on
the notes and do not require it to draw on the collateral before obtaining a judgment
on the notes against Broder.
Despite these explicit provisions, Broder argues that a commitment letter
regarding the Rockbridge Note shows that the FDIC and its predecessor banks had a
duty to maintain the collateral. The commitment letter states that, under the agreement

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between Broder and Rockbridge, the collateral is “One hundred three thousand nine
hundred fifty-nine (103,959) shares of Henry County Bancshares, Inc. Loan will not
exceed 75% loan to value; monitored on quarterly basis by Bank.” (Cross Dep. Ex.
6). Nothing in the commitment letter indicates that this language overrides the explicit
language in the Rockbridge Note or Rockbridge Commercial Pledge Agreement
allowing the lender, now the FDIC, to elect any remedy it chooses. The letter only
imposes a duty to “monitor” the collateral. There is no indication that this duty to
monitor entails a duty to sell the collateral or to take steps to maintain the 75% loan
to value threshold. (See Broder Dep. Ex. 5). Indeed, although Broder argues that
Silverton Bank undertook the same monitoring obligations when it extended its own
loan to Broder, the stock collateral only amounted to 45.6 percent loan to value when
that loan was issued. (See Cross Dep. at 19). Further, Ann Cross, who drafted the
commitment letter, stated that monitoring the collateral value was something the bank
did “for [its] own internal policy.” (Id. at 20). The commitment letter does not alter
the plain terms of the notes and commercial pledge agreements. Accordingly, the
Court concludes that the FDIC and its predecessors did not have a duty to protect the
collateral pledges or to collect on the collateral before seeking to recover on the notes.
Moreover, Georgia law does not require a plaintiff to mitigate damages or resort
to collateral when it is collecting on a note. “The holder of a note who is also the

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grantee in a deed to secure the indebtedness of the note is not forced to exercise the
power of sale in the deed. He may sue on the note or exercise the power of sale.” REL
Dev., Inc. v. Branch Banking & Trust Co., 305 Ga. App. 429, 431 (2010) (citing Trust
Inv., etc., Co. v. First Ga. Bank, 238 Ga. 309, 310 (1977)); see also Branch Banking
and Trust Co. v. Lichty Bros. Const., Inc., No. 3:10-cv-00054-JOF, 2011 WL 883912,
at *2 (N.D. Ga. Mar. 11, 2011) (“To the extent that Defendants are in fact alleging that
Plaintiff had a duty to foreclose before suing on the [promissory notes], Georgia law
makes clear that Plaintiff had no such duty.”). The Court accordingly concludes that
Georgia law does not require the lender under the Rockbridge Note or the Silverton
Note to mitigate damages by drawing on and protecting the collateral. Because the
terms of the notes and Georgia law allow the Plaintiff to collect on the notes without
resorting to collateral or even preserving the collateral, the Plaintiff’s motions for
partial summary judgment should be granted.2

2

The Defendants argue that the FDIC violated its duties under 12 U.S.C. §
1821(d)(13)(E) by failing to preserve the collateral underlying the notes. That statute
provides that when the FDIC is disposing of assets as a receiver it must “conduct its
operations in a manner which (i) maximizes the net present value return from the sale
or disposition of such assets; [and] (ii) minimizes the amount of any loss realized in
the resolution of cases.” 12 U.S.C. §§ 1821(d)(13)(E)(i) and (ii). Even assuming that
this statute provides guidance to finders of fact in suits brought by the FDIC, as the
Defendants argue, there is no indication that the FDIC violated the statute. Indeed,
should the FDIC collect the total amount owed to it by Broder on the notes, it would
appear to have maximized the value collected and minimized its losses in the
disposition of assets.
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2.

FDIC’s Motions for Attorneys’ Fees

The Plaintiff also seeks attorneys’ fees under O.C.G.A. § 13-1-11. That statute
provides that “[o]bligations to pay attorney’s fees upon any note or other evidence of
indebtedness … shall be valid and enforceable and collectable as part of such debt if
such note … is collected by or through an attorney after maturity.” O.C.G.A. § 13-111(a). Lenders are required to notify debtors in writing of their intent to collect
attorneys’ fees unless the debt is paid off within ten days. O.C.G.A. § 13-1-11(a)(3).
Here, the Plaintiff notified Broder of its intent to collect attorneys’ fees on the
Rockbridge Note by letter dated August 9, 2010, and when it filed its complaint. (See
Broder Dep. Ex. 3, Ex. B; Case No. 1:12-cv-2554, Complaint ¶ 34). Likewise, the
Plaintiff notified Broder of its intent to collect attorneys’ fees on the Silverton Note
by a letter dated May 3, 2010, and in its complaint. (See Broder Dep. Ex. 1, Ex. B;
Case No. 1:12-cv-2569, Complaint ¶ 35). Both notes provide that Broder is liable for
attorneys’ fees equal to 15 percent of the principal and accrued interest, which is
permissible under O.C.G.A. § 13-1-11. (See Silverton Note, at 2; Rockbridge Note,
at 2); O.C.G.A. § 13-1-11(a)(1). The FDIC accelerated the notes to their maturities,
and used an attorney to collect on them. Accordingly, the Plaintiff’s motions for
partial summary judgment should be granted with respect to its request for attorneys’
fees.

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3.

FDIC’s Motions for Judgment Under Rule 54(b)

The Plaintiff moves for judgment on the notes under Rule 54(b). “When an
action presents more than one claim for relief … or when multiple parties are
involved, the court may direct entry of final judgment as to one [claim] … only if the
court expressly determines that there is no just reason for delay.” Fed. R. Civ. P.
54(B). “Courts should exercise their discretion to enter partial final judgment under
Rule 54(b) sparingly.” Boone v. Corestaff Support Servs., Inc., 805 F. Supp. 2d 1362,
1378 (N.D. Ga. 2011) (citing In re Southeast Banking Corp., 69 F.3d 1539, 1548 (11th
Cir. 1995)).
Courts in the Eleventh Circuit engage in a two-prong test to determine whether
entry of final judgment is appropriate. “First, the court must determine that the
decision at issue is a ‘final judgment.’” Id. at 1379 (quoting Curtiss-Wright Corp. v.
Gen. Elec. Co., 446 U.S. 1, 7 (1980)). “Second, the Court must determine that there
is no just reason to delay the appeal.” Id. (citing Curtiss-Wright, 446 U.S. at 8).
Under this second prong of the test, the court must consider the interests
of efficient judicial administration and the equities involved in the
particular case… Of particular relevance … is the degree to which
pending claims are legally and factually intertwined with the adjudicated
claim that constitutes a final judgment. … Thus where there is significant
factual overlap between the adjudicated and unadjudicated claims, courts
should be reluctant to use Rule 54(b).

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Id. (citing Curtiss-Wright, 446 U.S. at 8 and Ebrahimi v. City of Huntsville Bd. of
Educ., 114 F.3d 162, 166 (11th Cir. 1997)).
Here, the Court concludes the FDIC is entitled to judgment under Rule 54(b).
First, the decisions in favor of the FDIC on their motions for partial summary
judgment on the promissory notes are final judgments because they “dispose[] entirely
of [] separable claim[s],” namely the FDIC’s claims on the Rockbridge Note and the
Silverton Note. Id. (quoting Lloyd Noland Found., Inc. v. Tenet Health Care Corp.,
483 F.3d 773, 777 (11th Cir. 2007)). Next, there are no factual and legal overlaps
between the adjudicated claims, those seeking payment on the notes, and the
remaining unadjudicated claims for fraudulent transfer. The factual basis for the
fraudulent transfer claims concerns Broder’s actions in 2008 through 2010 while the
factual basis for the claims on the notes concerns agreements made in 2005 and 2007.
There are no discernible legal overlaps. Because the Plaintiff’s claims on the
promissory notes are distinct from the Plaintiff’s remaining claims for fraudulent
transfer, the Court concludes there is no just reason to delay entering final judgment
in favor of the Plaintiff. Accordingly, the Plaintiff’s motions for final judgment should
be granted.

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B.

Defendants’ Motions for Partial Summary Judgment

The Defendants argue that the Plaintiff has not met its burden in showing that
the transfers at issue were fraudulent under any of the fraud causes of action in either
case. In general, to establish a cause of action for fraudulent or constructively
fraudulent transfers, the plaintiff must show that: “(1) there was a claim against
Defendant by Plaintiff; (2) the Defendant did not receive relatively equivalent value
in consideration of the transfer; and (3) Defendant was insolvent or likely to become
insolvent,” CSX Transp., Inc. v. Leggett, No. 1:07-cv-1152-WSD, 2010 WL 3210841,
at *4 (N.D. Ga. Aug. 12, 2010) (citing Kipperman v. Onex Corp., 411 B.R. 805, 834
(N.D. Ga. 2009)). Here, there are issues of fact concerning whether Broder received
reasonably equivalent value in consideration for the transfers, and the Defendants’
motions for partial summary judgment should be denied.3

3

The Defendants have filed motions to exclude various aspects of the Plaintiff’s
expert testimony. (Case No. 1:12-cv-2569-TWT, [Doc. 100]; Case No. 1:12-cv-2554TWT, [Doc. 102]). Specifically, the Defendants contend that the Plaintiff’s expert’s
calculations of Broder’s financial state were redone after the discovery period ended,
and that the Defendants should have a chance to re-examine the expert. The
Defendants’ motions have not been fully briefed. Because the Court will deny the
Plaintiff’s motions for partial summary judgment based on questions of fact
concerning the value of considerations received in exchange for Broder’s transfers,
and not on Broder’s financial circumstances at the time of transfer, the Court need not
resolve the Defendants’ motions to exclude expert testimony before denying the
Defendants’ motions for partial summary judgment.
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1.

Plaintiff’s Claims for Actual Fraud

The Plaintiff brings a claim for actual fraud under O.C.G.A. § 18-2-74(a)(1) and
under 12 U.S.C. § 1821(d)(17).
A transfer made or obligation incurred by a debtor is fraudulent as to a
creditor, whether the creditor’s claim arose before or after the transfer
was made or the obligation was incurred, if the debtor made the transfer
or incurred the obligation: (1) with actual intent to hinder, delay, or
defraud any creditor of the debtor.
O.C.G.A. § 18-2-74. Similarly, 12 U.S.C. § 1821(d)(17) provides that the FDIC, as
receiver of an institution, “may avoid a transfer of any interest of an institutionaffiliated party… if such party or person voluntarily or involuntarily made such
transfer or incurred such liability with the intent to hinder, delay, or defraud the
insured depository institution” or the FDIC. 12 U.S.C. § 1821(d)(17).
To assess intent, O.C.G.A. § 18-2-74 lists eleven non-exclusive factors, asking
whether:
(1) the transfer or obligation was to an insider; (2) the debtor retained
possession or control of the property transferred after the transfer; (3) the
transfer or obligation was disclosed or concealed; (4) before the transfer
was made or obligation was incurred, the debtor had been sued or
threatened with suit; (5) the transfer was of substantially all of the
debtor’s assets; (6) the debtor absconded; (7) the debtor removed or
concealed assets; (8) the value of consideration received by the debtor
was reasonably equivalent to the value of the asset transferred or the
amount of the obligation incurred; (9) the debtor was insolvent or
became insolvent shortly after the transfer was made or the obligation
was incurred; (10) the transfer occurred shortly before or shortly after a
substantial debt was incurred; and (11) the debtor transferred the
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essential assets of the business to a lienor who transferred the assets to
an insider of the debtor.
O.C.G.A. § 18-2-74(b). These factors are known as “badges of fraud.” See SRB Inv.
Servs., LLLP v. Branch Banking and Trust Co., 289 Ga. 1, 4 (2011).
Here, the Defendants claim that the FDIC cannot show the requisite intent
because Broder made the transfers pursuant to estate planning purposes, to pay back
his wife, Defendant Lyndy Broder, for her hypothecation of stock to him, or in
consideration for his children caring for him when he is elderly. However, outside of
affidavits from the Broders, the Defendants have not provided any evidence of a
hypothecation of stock from Lyndy Broder to Broder or an agreement for elderly care.
Further, the Plaintiff has furnished evidence suggesting that the transfers at issue
reflect the “badges of fraud” listed above.
First, it is not disputed that Broder transferred assets to insiders: the transfers
were made to family members or to companies controlled at least in part by the Broder
family. (See Broder Aff. ¶¶ 5-11; Complaint ¶ 18; Answer ¶ 18). Next, there are
indications that Broder retained control over the property he transferred and the
entities he transferred the property to. Broder Enterprises III, LLC, the recipient of
four of the transfers at issue, is a limited liability company comprised of six members:
Defendants Hans M. Broder, Jr., Lyndy Broder, Ashlee Broder Parano, Gabrielle
Broder-Porter, Michelle Broder, and Hans M. Broder III. Broder himself owns a 25
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percent interest in the company. (See Complaint ¶ 22; Answer ¶ 22). At least two of
the transfers, the ones in October of 2010, were made after Broder was notified of his
defaults on the Rockbridge and Silverton Notes. (See Complaint, Case No. 1:12-cv2554-TWT, Ex. B; Complaint, Case No. 1:12-cv-2569-TWT, Ex. B). Additionally,
Broder became insolvent before or shortly after these transfers were completed.
(Broder Aff. ¶¶ 16-17). Finally, as will be discussed further in the next section, there
remains a question of fact as to whether Broder received reasonably equivalent values
in exchange for the transfers. Accordingly, the Plaintiff has provided sufficient
evidence of the “badges of fraud” associated with fraudulent transfers under O.C.G.A.
§ 18-2-74 to create questions of fact, and the Defendants’ motions for partial summary
judgment should be denied in this respect.4
2.

Plaintiff’s Claim for Constructive Fraud

The Defendants argue that the Plaintiff cannot show that any of Broder’s
transfers were constructively fraudulent.
[A] transfer made or obligation incurred by a debtor is fraudulent as to
a creditor, whether the creditor’s claim arose before or after the transfer
was made or the obligation was incurred, if the debtor made the transfer
4

Because the Plaintiff’s claim for fraudulent transfer under 12 U.S.C. §
1821(d)(17) also requires a showing that Broder made the transfers with “the intent
to hinder, delay, or defraud the insured depository institution,” the Plaintiff’s evidence
also creates an issue of fact on its claim under 12 U.S.C. § 1821(d)(17), and the
Defendants’ motions for partial summary judgment should be denied in that respect
as well. See 12 U.S.C. § 1821(d)(17).
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or incurred the obligation… (2) without receiving a reasonably
equivalent value in exchange for the transfer or obligation, and the
debtor: (A) was engaged or was about to engage in a business or a
transaction for which the remaining assets of the debtor were
unreasonably small in relation to the business or transaction; or (B)
intended to incur, or believed or reasonably should have believed that he
or she would incur, debts beyond his or her ability to pay as they became
due.
O.C.G.A. § 18-2-74. Here, again, the Plaintiff has presented sufficient evidence to
create a question of fact capable of defeating summary judgment. First, although
Broder argues that the transfers to his wife and to the limited liability companies were
to repay an earlier stock hypothecation, there is no record of the hypothecation from
Lyndy Broder. Additionally, Lyndy Broder admitted in her deposition that she never
signed her legal title and right to the stock over to her husband. (Lyndy Broder Dep.
at 23). Likewise, Broder himself never listed an obligation to Lyndy Broder on any
financial statement prior to this lawsuit. (See Broder Dep. Exs. 6-11). Importantly, the
Broders admitted that they backdated an alleged “Promissory Agreement” that
purports to memorialize Broder’s obligation to Lyndy Broder after these lawsuits were
initiated, although the Broders maintain that the written agreement only memorialized
the arrangement they made in 2007. (See Broder Dep. at 155-56; Lyndy Broder Dep.
at 18-19). This evidence is sufficient to create an issue of fact as to whether Broder
received reasonably equivalent value when he transferred property to Lyndy Broder.
Likewise, there is a question of fact as to whether Broder received reasonably
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equivalent value for the transfers of property to the limited liability companies
because those transfers, according to Broder, were also in response to Lyndy Broder’s
hypothecation of the jointly-held stock. (See Defs.’ Mot. for Partial Summ. J. at 8-9).
Accordingly, those transfers are also not suitable for summary judgment.
Similarly, the transfers that Broder made to his children may not have been in
exchange for reasonably equivalent value. Broder argues that those transfers were in
consideration of his children caring for him when he is elderly. However, according
to O.C.G.A. § 18-2-73(a), “value does not include an unperformed promise made
otherwise than in the ordinary course of the promisor’s business to furnish support to
the debtor or another person.” O.C.G.A. § 18-2-73(a). There is no indication that
caring for the elderly is the business of Broder’s children. And, as with the
hypothecation of stock from Broder to Lyndy Broder, there is no written evidence of
this agreement. Accordingly, there are questions of fact concerning whether Broder
received reasonably equivalent value in exchange for the transfers of property to his
children.
In CSX Transp., Inc. v. Leggett, No. 1:07-cv-1152-WSD, 2010 WL 3210841
(N.D. Ga. Aug. 12, 2010), the court found that several transfers of property from a
husband, who was facing a judgment against him, to his wife and brother, were
fraudulent under Georgia law. There were three transfers at issue: (1) the defendant

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transferred over one hundred thousand dollars to a bank account in his wife’s name
that he controlled; (2) the defendant sold property to his brother, who then quitclaimed
the house to the defendant’s wife, who in turn refinanced the property and refunded
the brother; and (3) the defendant transferred rental property to his wife with no
apparent consideration and continued to personally receive the rental payments. The
court concluded that the plaintiff’s prior judgment against the defendant was a valid
claim against the defendant, that the defendant did not receive reasonably equivalent
value because he did not receive consideration from his wife when he transferred
property to her, and that the defendant was insolvent at the time of the transfers based
on his bankruptcy filings. The court granted summary judgment to the plaintiff,
although the motion was unopposed. Id. at *1-5.
Here, the similarities between the transfers by Broder to his wife and the
transfers by the defendant in Leggett to his wife illustrate why questions of fact
remain. First, as in Leggett, Broder substantially retained control of the assets he
transferred to his family. Likewise, as noted above, it is not clear that Broder received
consideration for all of the transfers to his wife and children. Finally, although Broder
maintains he was not in dire financial circumstances at the time of the earlier transfers,
his subsequent financial duress is sufficient to create an issue of fact concerning his

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solvency at the time he made each transfer. Accordingly, the Defendants’ motions for
partial summary judgment should be denied.
IV. Conclusion
For the reasons set forth above, the Plaintiff’s Motions for Partial Summary
Judgment [Case No. 1:12-cv-2554-TWT, Doc. 83; Case No. 1:12-cv-2569-TWT, Doc.
81] are GRANTED. The parties are directed to confer and submit proposed final
judgments, including attorneys’ fees, on the Plaintiff’s claims on the promissory notes
in both Case No. 1:12-cv-2554-TWT and Case No. 1:12-cv-2569-TWT. The
Defendants’ Motions for Partial Summary Judgment [Case No. 1:12-cv-2554-TWT,
Doc. 82; Case No. 1:12-cv-2569-TWT, Doc. 80] are DENIED.
SO ORDERED, this 31 day of January, 2014.

/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge

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