United States of America v. Key, et al
Filing
63
ORDER granting 39 Motion for Summary Judgment. Signed by Judge Samuel H. Mays, Jr on 1/24/2020. (Mays, Samuel)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
v.
JACQUELINE KEY, TESKA KEY,
and JOHNNY MARSHALL III,
Defendants.
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No. 2:17-cv-2790
ORDER
This is a civil action brought by the United States seeking
avoidance of an allegedly fraudulent transfer of property.
Before
the Court is Plaintiff United States’ (the “government”) March 19,
2019 Motion for Summary Judgment.
(ECF No. 39.)
Defendants
Jacqueline Key, Teska Key, and Johnny Marshall III (collectively,
the “Defendants”) responded on May 29, 2019.
government replied on June 11, 2019.
For
the
following
reasons,
(ECF No. 53.)
The
(ECF No. 57.)
the
government’s
Motion
for
Summary Judgment is GRANTED.
I.
Background
On July 21, 2016, a grand jury indicted Jacqueline Key and
Teska Key for unlawfully transporting stolen goods in interstate
commerce, a violation of 18 U.S.C. § 2314.
(ECF No. 1-3 at 2; ECF
No. 1 ¶ 10.).
The superseding indictment alleged that the conduct
took place between September 17, 2013, and July 24, 2015.
(ECF
No. 1-3 at 2.)
On October 4, 2016, and December 7, 2016, Teska Key and
Jacqueline Key, respectively, pled guilty to the charges against
them.
(ECF Nos. 1-5, 1-6.)
On April 21, 2017, and April 24, 2017,
Jacqueline Key and Teska Key, respectively, were sentenced to 30
months and 47 months in prison, with joint and several restitution
to be paid to Brother International Corporation and Saddle Creek
Corporation in the amount of $354,343.86.
(ECF No. 1-1.)
On
imposition of the separate judgments against Jacqueline Key and
Teska Key, statutory liens were created in the government’s favor
on all property and rights to property belonging to them.
See 18
U.S.C. § 3613(c); (ECF Nos. 1-7, 1-8).
On August 6, 2015, a warrant was executed to search Teska
Key’s house, 4909 Noel Mission, Memphis, Tennessee 38125, for
evidence of stolen goods.
(ECF No. 1-9.)
Slightly more than two
months after that search, on October 12, 2015, Jacqueline Key
quitclaimed
Parcel
Number
013059-00018,
1333
Sardis
Street,
Memphis, Tennessee 38106 (the “Property”) to Johnny Marshall III
(“Marshall”) for the sum of one dollar ($1.00).
(ECF No. 1-4 at
2-4.)
On October 26, 2017, the government filed this complaint for
fraudulent transfer against Jacqueline Key, Teska Key, and Johnny
2
Marshall
III,
alleging
the
transfer
of
the
Property
to
be
fraudulent and made with the intent to hinder, conceal, and delay
the government in collecting the restitution debt owed by the Keys.
(ECF No. 1.)
The government moves for summary judgment, asking
the Court to declare the quitclaim of the Property from Jacqueline
Key to Marshall to be fraudulent and void.
II.
(See ECF No. 39-2.)
Jurisdiction
Under 28
U.S.C.
§
1345,
district
courts
have
original
jurisdiction “of all civil actions, suits or proceedings commenced
by the United States, or by any agency or officer thereof expressly
authorized to sue by Act of Congress.”
suit under 28 U.S.C. §§ 3301, et seq.
The government brings this
The Court has jurisdiction.
III. Standard of Review
Under Federal Rule of Civil Procedure 56, a court must grant
a party’s motion for summary judgment “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.”
Fed. R. Civ. P.
56(a). The moving party must show that the nonmoving party, having
had
sufficient
opportunity
for
discovery,
support an essential element of its case.
lacks
evidence
to
See Fed. R. Civ. P.
56(c)(1); Peeples v. City of Detroit, 891 F.3d 622, 630 (6th Cir.
2018).
When confronted with a properly supported motion for summary
judgment, the nonmoving party must set forth specific facts showing
3
that there is a genuine dispute for trial.
56(c).
See Fed. R. Civ. P.
“A ‘genuine’ dispute exists when the plaintiff presents
‘significant probative evidence’ ‘on which a reasonable jury could
return a verdict for her.’”
760
(6th
Cir.
2015) (en
EEOC v. Ford Motor Co., 782 F.3d 753,
banc)
(quoting Chappell
v.
City
of
Cleveland, 585 F.3d 901, 913 (6th Cir. 2009)). The nonmoving party
must do more than simply “show that there is some metaphysical
doubt as to the material facts.”
Lossia v. Flagstar Bancorp, Inc.,
895 F.3d 423, 428 (6th Cir. 2018) (quoting Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)).
Although summary judgment must be used carefully, it “is an
integral part of the Federal Rules as a whole, which are designed
to secure the just, speedy, and inexpensive determination of every
action[,] rather than a disfavored procedural shortcut.”
FDIC
v. Jeff
Cir.
Miller
Stables,
573
F.3d
289,
294
(6th
2009) (quotation marks and citations omitted).
IV.
Analysis
In
1990,
Congress
enacted
the
Federal
Debt
Procedures Act, 28 U.S.C. §§ 3001, et seq. (“FDCPA”).
Collection
The FDCPA
authorizes, inter alia, the United States to obtain the avoidance
of a debtor’s fraudulent transfer of assets.
28 U.S.C. § 3006;
see United States v. Schippers, 982 F. Supp. 2d 948, 964 (S.D.
Iowa 2013).
Where, as here, a debt arises after a transfer has
been made, the transfer can be declared fraudulent if the debtor
4
made the transfer or incurred the obligation “with actual intent
to hinder, delay, or defraud a creditor . . . .”
3304(b)(1)(A).
28 U.S.C. §
“Because proof of actual intent to hinder, delay
or defraud creditors may rarely be established by direct evidence,
courts infer fraudulent intent from the circumstances surrounding
the transfer.”
In re Grove-Merritt, 406 B.R. 778, 793–94 (Bankr.
S.D. Ohio 2009) (citing Schilling v. Heavrin (In re Triple S
Rests., Inc.), 422 F.3d 405, 416 (6th Cir. 2005)); see also United
States v. Leggett, 292 F.2d 423, 426 (6th Cir. 1961).
When
inferring fraudulent intent under § 3304(b)(1)(A), courts consider
eleven “badges of fraud”:
(A) the transfer or obligation was to an insider;
(B) the debtor retained possession or control of the property
transferred after the transfer;
(C) the transfer or obligation was disclosed or concealed;
(D) before the transfer was made or obligation was incurred,
the debtor had been sued or threatened with suit;
(E) the transfer was of substantially all the debtor’s assets;
(F) the debtor absconded;
(G) the debtor removed or concealed assets;
(H) the value of the consideration received by the debtor was
reasonably equivalent to the value of the asset transferred
or the amount of the obligation incurred;
(I) the debtor was insolvent or became insolvent shortly after
the transfer was made or the obligation was incurred;
(J) the transfer occurred shortly before or shortly after a
substantial debt was incurred; and
5
(K) the debtor transferred the essential assets of the
business to a lienor who transferred the assets to an insider
of the debtor.
28 U.S.C. § 3304(2)(A)-(K); see also United States v. Furnari, 73
F. Supp. 3d 877, 886 (E.D. Mich. 2014).
Although courts can
consider other factors, they are not required to do so.
73 F. Supp. 3d at 886 (citations omitted).
Furnari,
Once badges of fraud
have been established, the presumption of actual fraudulent intent
is assumed, and the burden shifts to the debtor to establish the
absence of fraudulent intent.
See In re Gabor, 280 B.R. 149, 157
(Bankr. N.D. Ohio 2002) (citations omitted). 1
“[T]he confluence
of several badges can be conclusive evidence of fraudulent intent,
absent
significantly
supervening purpose.”
clear
evidence
of
debtor’s
legitimate
Id. (citations omitted).
The government argues that its evidence establishes actual
fraud because it establishes seven of the eleven badges of fraud.
(ECF No. 39-2 at 7-10; No. 57 at 3-5.)
The government argues,
alternatively, that its evidence establishes constructive fraud in
violation
of
§ 3304(b)(1)(B)(ii),
1
which
allows
avoidance
of
Because the “badges of fraud” factors and analysis are “nearly
identical” across different debt-collection legislation, see United
States v. Holt, 664 F.3d 1147, 1150 n.2 (8th Cir. 2011) (citing In re
Addison, 540 F.3d 805, 813–14 n. 11 (8th Cir. 2008)), courts
interpreting the FDCPA have relied on case law outside the FDCPA
context. See, e.g., Vancampen v. U.S., ex rel. I.R.S., No. CIV. A.
95-1436-FGT, 1997 WL 873537, at *4 (D. Kan. July 9, 1997).
6
transfers where the debtor “intended to incur, or believed or
reasonably should have believed that he would incur, debts beyond
his ability to pay as they became due.” 2
response,
standards.
Defendants
cite
cases
(See ECF No. 53.)
(Id. at 11-12.)
reitering
summary
In
judgment
Defendants do not directly dispute
or even address the government’s arguments that the transfer of
the Property was fraudulent.
Defendants deny that Marshall failed
to give “reasonably equivalent value” for the transfer and that
Jacqueline Key retained control of the property.
(See ECF No. 53-
2 ¶¶ 3, 21; ECF No. 39-1 ¶¶ 3, 21.)
A. Badges of Fraud
Under § 3304(b)(1)(A), the only element the government needs
to prove is “actual intent” to defraud.
Supp. 2d at 965.
“badges of fraud.”
See Schippers, 982 F.
That element can be satisfied by establishing
See id.
Here, the government has establishes
five of eleven badges of fraud.
1. The transfer or obligation was to an insider
It is undisputed that Marshall is Jacqueline Key’s son. (See
ECF No. 39-3 at 7; No. 39-7 ¶ 5.)
As her son, he was an insider.
See 28 U.S.C. § 3301(5)(A)(i) (defining “insider” under the FDCPA
2
In its complaint, the government pleads a third
transfer, relying on § 3304(a)(1). (See ECF No. 1
government has not pursued that theory at summary
No. 39-2.) Section 3304(a) applies only to “debt
transfer.” See 28 U.S.C. § 3304(a).
7
theory of fraudulent
at 8-9.) The
judgment. (See ECF
arising before [a]
as
“a
relative
of
the
debtor”);
id.
§ 3301([7])
(defining
“relative” as “an individual related, by consanguinity . . . within
the third degree).
The first badge of fraud is established.
2. The debtor retained possession or control of the property
transferred after the transfer
The government argues that Jacqueline Key “retained control”
of the Property because the Property remained listed as an asset
in her bankruptcy filings.
fails.
(ECF No. 39-2 at 3.)
That argument
Jacqueline Key’s bankruptcy case was filed in 2010, (see
ECF No. 39-4), almost five years before the transfer of the
Property to Marshall in 2015.
(See ECF No. 1-4 at 2-4.)
The
government concedes this point, but argues that the listing is
still evidence that Jacqueline Key retained control of the Property
because “she failed to amend the bankruptcy schedules to reflect
that the . . . Property was no longer an asset in the bankruptcy
case, which is required by 11 U.S.C. § 521(a)(1).”
at 3.)
(ECF No. 39-2
The government argues that the Property was listed as a
rental property in Jacqueline Key’s bankruptcy schedule and that
the bankruptcy schedule shows that she received $500 in rental
income monthly.
(ECF No. 39-1 ¶ 21.)
The government assumes that
this rental property income was used to fund her bankruptcy plan
payments and that without the rental income, she could not have
afforded the payments.
(Id.)
The government concludes that,
because Jacqueline Key received rental income from the Property
8
that funded bankruptcy plan payments, she must have retained
control of the Property.
These
assumptions
(See id.)
and
inferences
are
insufficient
to
establish that Jacqueline Key retained control of the Property.
To conclude as the government does, the Court would have to make
broad inferences and assume evidence and facts that are not in the
record.
There is no other evidence that Jacqueline Key retained
control of the Property.
In fact, the evidence suggests that
Marshall maintains control because Jacqueline Key is incarcerated
and Marshall has managed rental of the Property.
(See ECF No. 39-
10); United States v. White-Sun Cleaners Corp., No. 09-cv-2484 ARR
JO, 2011 WL 1322266, at *14 (E.D.N.Y. Mar. 9, 2011) (finding that
a defendant retained control over a property by continuing to
manage it), report and recommendation adopted, No. 09-cv-2484 ARR
JO, 2011 WL 1303271 (E.D.N.Y. Mar. 31, 2011).
The second badge of
fraud is not established.
3. The transfer or obligation was disclosed or concealed
The government does not cite any evidence that Jacqueline Key
disclosed or concealed the transfer of the Property.
The third
badge of fraud is not established.
4. Before the transfer was made or obligation was incurred,
the debtor had been sued or threatened with suit
The government argues that when Jacqueline Key transferred
the Property to Marshall, she knew, or reasonably should have
9
known, that she would be prosecuted and forced to pay restitution
for her crime.
(ECF No. 39-2 at 2-3.)
On August 6, 2015, a search
warrant was executed on Teska Key’s house, in which Jacqueline Key
lived, to support an investigation of the crime to which Jacqueline
Key eventually pled guilty.
(ECF No. 1-9.)
Slightly more than
two months after that search, on October 12, 2015, Jacqueline Key
quitclaimed the Property to Marshall.
(ECF No. 1-4 at 2-4.)
Although
possibility
knowledge
of
the
substantial
of
future
litigation is not the same as being sued or threatened with suit,
the circumstances here are sufficient to establish this badge of
fraud.
See Schippers, 982 F. Supp. 2d at 967 (finding this badge
of fraud satisfied when the government had not brought legal action
against the defendant but was “on his trail” and where, under the
circumstances, the defendant should have anticipated that the
government would take legal action against him); United States v.
Sherrill, 626 F. Supp. 2d 1267, 1273 (M.D. Ga. 2009) (same).
The
fourth badge of fraud is established.
5. The transfer was substantially all of debtor’s assets
Jacqueline Key filed for bankruptcy in 2010.
39-4.)
(See ECF No.
In her bankruptcy filings, she listed the total value of
her real property as $214,400, with the value of the Property as
$60,600.
(ECF No. 39-4 at 1.)
was $8,158.
The value of her personal property
(ECF No. 39-4 at 4.)
10
Because the assumed value of
the Property is less than a third of the value of Jacqueline Key’s
total assets, the fifth badge of fraud is not established.
6. The debtor absconded
The government does not cite any evidence in the record that
Jacqueline
Key
absconded.
The
sixth
badge
of
fraud
is
not
established.
7. The debtor removed or concealed assets
The government does not cite any evidence in the record that
the Jacqueline Key removed or concealed assets.
The seventh badge
of fraud is not established.
8. The value of the consideration received by the debtor was
reasonably equivalent to the value of the asset transferred
or the amount of the obligation incurred.
Reasonably equivalent value under § 3304(b) means “the debtor
has received value that is substantially comparable to the worth
of the transferred property.”
United States v. Loftis, 607 F.3d
173, 177 (5th Cir. 2010) (quoting BFP v. Resolution Tr. Corp., 511
U.S. 531, 548 (1994) (interpreting the same term in the Bankruptcy
Code)); see also 28 U.S.C. § 3303(b).
“Value is given for a
transfer or an obligation if, in exchange for the transfer or
obligation, property is transferred or an antecedent debt is
secured or satisfied, but 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.”
28 U.S.C. § 3303(a).
11
There is a dispute in the record about the exact value of the
Property.
In Jacqueline Key’s 2010 bankruptcy proceeding, she
listed the value of the Property as $60,600.
(ECF No. 39-4 at 1.)
In 2017, the value of the Property was appraised at $41,700.
No. 1-10.)
(ECF
In December of 2018, Marshall subjectively valued the
Property at $28,000.
(ECF No. 39-7 ¶ 7; No. 39-3 at 25-28.)
For
purposes of analyzing this badge of fraud, the Court assumes that
the monetary value of the Property at the time of the transfer, in
2015, was somewhere between $28,000 and $60,600.
The quitclaim deed provides that the Property was transferred
to
Marshall
“for
and
in
consideration
of
the
sum
of
One
Dollar . . . and other good and valuable consideration, . . .”
(ECF No. 1-4 at 2) (capitalization omitted). 3
Marshall submits in
an affidavit that the reason for the transfer was that Jacqueline
Key was ill and needed assistance with the maintenance and expenses
of the property and that Jacqueline Key wanted Marshall to have “a
good start in life.” 4
(ECF No. 53-1 ¶ 2-3.)
In response to
3
The signatory portion of the quitclaim deed provides “I HEREBY SWEAR
OR AFFIRM THAT TO THE BEST OF AFFIANT’S KNOWLDEGE, BELIEF, AND
INFORMATION, THE ACTUAL CONSIDERATION FOR THE TRANSFER IS $-0-” with
Jacqueline Key’s signature following. (See ECF No. 1-4 at 3.)
4
“Any intangible, emotional benefit is not included within the meaning
of reasonable equivalent value, because ‘[w]ithin the meaning of [28
U.S.C. § 3303], value means economic value.’” See United States v.
Moore, 156 F. Supp. 2d 238, 246 (D. Conn. 2001) (quoting Vancampen v.
United States, Nos. Civ. A. 95–1436–FGT, Civ. A. 95–1453–FGT, 1997 WL
873537, at *3–4 (D. Kan. 1997)); see also Sherrill, 626 F. Supp. 2d at
1273–74 (“The fact that the quitclaim deeds indicate that the
consideration was for a nominal dollar amount and love and affection
12
interrogatories, when asked if he paid fair value for his ownership
interest
in
the
Property,
Marshall
responds
that
“[t]he
consideration was my assumption of the property taxes owed at that
time.”
(ECF No. 39-7 ¶ 8.)
In his deposition, Marshall states
that he did not pay his mother anything for the property, but that
the consideration was his assumption of the property taxes owed.
(ECF No. 39-3 at 13-15, 19, 28, 31.)
The record is not clear about the amount of taxes owed at the
time of transfer.
The government submits evidence of city taxes
for the Property from 2010 to 2015 totaling a little under $9,000.
(See ECF No. 39-11.)
There is no evidence in the record about
what amount of those taxes, if any, was paid or due at the time of
the transfer.
unknown.
The amount of county taxes from that time is
(See ECF No. 39-12).
Marshall submits that he has been
paying some taxes on the Property since the transfer, (ECF No. 393 at 19-21, 28-29), but concedes that he owes an outstanding amount
of about $13,000. (ECF No. 39-3 at 19, 28; see also ECF Nos. 3911, 39-12.)
Satisfaction of antecedent debt can constitute “value” as
defined by the FDCPA.
See 28 U.S.C. § 3303(a).
However, “value”
under the FDCPA does not include an “unperformed promise.”
does not help [defendant’s] case.”) (citations omitted).
13
Id.
Marshall’s
taxes-as-consideration
argument
fails
because
his
agreement to pay future taxes does not constitute “value” under
the statute.
Although any satisfaction of antecedent, outstanding
taxes on the Property might constitute value, the record is devoid
of information about the amount of taxes, if any, Marshall paid at
the time of the transfer. 5
The Court cannot assume that any
antecedent debt was paid.
Reading the record favorably to Defendants, the Court finds
that
the
consideration
Marshall
gave
Jacqueline
Key
was
not
equivalent to the value Marshall obtained. See Vancampen v. United
States, Nos. Civ. A. 95–1436–FGT, Civ. A. 95–1453–FGT, 1997 WL
873537, at *3–4 (D. Kan. 1997) (finding that one dollar, the
debtor’s desire to spare her husband embarrassment, and the promise
for future financial support was not enough consideration to
constitute
reasonable
equivalent
value
for
a
transfer
property).
of
The eighth badge of fraud is established.
9. The debtor was insolvent or became insolvent shortly after
the transfer was made or the obligation was incurred
Section 3302 provides that a debtor becomes insolvent when
“the sum of the debtor’s debts is greater than all of the debtor’s
assets at a fair valuation.”
28 U.S.C. § 3302(a).
There is a
presumption of insolvency when a debtor generally does not pay his
5
“Value is determined as of the date of transfer.”
F.3d 638, 644 (5th Cir. 2000) (citation omitted).
14
In re Hinsley, 201
debts as they become due.
28 U.S.C. § 3302(b).
in bankruptcy is evidence of insolvency.
510, 517 (Bankr. E.D. Va. 1985).
Filing a petition
In re Porter, 50 B.R.
Defendants do not dispute that
Jacqueline Key was insolvent at the time of the transfer.
ECF No. 39-3 at 35-36; see also ECF No. 39-4.)
(See
The ninth badge of
fraud is established.
10. The transfer occurred shortly before or shortly after a
substantial debt was incurred.
The transfer occurred in October of 2015.
(ECF No. 1-4 at 2-
4.)
Jacqueline Key was indicted in July of 2016.
(ECF No. 1-3 at
2.)
On April 21, 2017, a judgment was entered against her in which
she incurred a restitution debt of $354,343.86. (ECF No. 1-1.)
Although the time between incurring the debt and the transfer was
not short, the time between the transfer and the indictment was.
That is sufficient to establish this badge of fraud. See Schippers,
982 F. Supp. 2d at 970; Sherrill, 626 F. Supp. 2d at 1275.
The
tenth badge of fraud is established.
11. The debtor transferred the essential assets of the
business to a lienor who transferred the assets to an insider
of the debtor.
The eleventh badge of fraud is not applicable.
The government has established five of the eleven statutory
badges of fraud. The presumption of actual intent to defraud under
§ 3304(b)(1)(A) is assumed.
See In re Gabor, 280 B.R. at 158
(finding fraudulent intent where the debtor made the transfer in
15
the face of actual or threatened litigation against the debtor;
while insolvent; without fair consideration for the transfer; and
where the transferee was in a special relationship to the debtor);
Schippers,
982
F.
Supp.
2d
at
953
(finding
“actual
intent
to . . . defraud” under § 3304(b)(1)(A) when the recipient was an
insider; there were mounting criminal and civil suits against the
debtor before the transfers were made; the debtor transferred
substantially all of his assets to the recipient; the debtor did
not receive equivalent value for the transfers; the debtor was
insolvent
transfers
before
and
occurred
substantial debt).
after
shortly
the
transfers
before
the
occurred;
debtor
and
incurred
the
a
The burden shifts to Defendants to establish
the absence of fraudulent intent.
See In re Gabor, 280 B.R. at
157.
B. Defendants’ Rebuttal
In their response to the government’s Motion for Summary
Judgment, Defendants recite the standards for summary judgment.
(See ECF No. 53.) The response is almost entirely devoid of
argument.
Read in the most generous light, the Court construes
Defendants to argue that summary judgment is improper because
whether a defendant had an “intent to defraud” is an issue that
must be decided by the trier of fact. 6
6
Without citing any case law, Defendants argue in their response that:
“There should be some hesitancy in granting a motion for summary
16
The question at summary judgment is “whether the evidence
presents a sufficient disagreement to require submission to a jury
or whether it is so one-sided that one party must prevail as a
matter of law.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
251-52 (1986) (emphasis added); see also Matsushita, 475 U.S. at
587 (“Where the record taken as a whole could not lead a rational
trier of fact to find for the non-moving party, there is no
‘genuine issue for trial.’”) (citation omitted); Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986) (“Rule 56(c) mandates the entry
of summary judgment, after adequate time for discovery and upon
motion, against a party who fails to make a showing sufficient to
establish the existence of an element essential to that party’s
judgment in a case like this where the property rights of a person who
was not involved in the criminal case that underlies this civil
proceeding may lose his property. The 5th Amendment mandates that due
process be met.” (ECF No. 53 at 2-3.) District courts in this
Circuit are instructed “to withhold judgment on issues not fully
developed by the briefs or in the record. Issues adverted to in a
perfunctory manner, unaccompanied by some effort at developed
argumentation, are deemed waived. It is not sufficient for a party to
mention a possible argument in the most skeletal way, leaving the
court to . . . put flesh on its bones.” United States v. Sandridge,
385 F.3d 1032, 1035–36 (6th Cir. 2004) (citation omitted); see, e.g.,
Sherman v. Michigan Dep’t of Nat. Res., No. 18-13179, 2019 WL 1556318,
at *5 (E.D. Mich. Apr. 10, 2019), aff’d, No. 19-1405, 2020 WL 236631
(6th Cir. Jan. 15, 2020). The Court need not address Defendants’ due
process argument because it is “perfunctory” and “skeletal.”
17
case, and on which that party will bear the burden of proof at
trial.”) (emphasis added).
Here, the evidence is so one-sided that the government must
prevail as a matter of law.
See BMG Music v. Martinez, 74 F.3d
87, 91 (5th Cir. 1996) (affirming a grant of summary judgment that
found
a
evidence
transfer
that
fraudulent
established
where
numerous
the
government
badges
of
presented
fraud
defendant’s only rebuttal was a self-serving statement).
and
the
The only
evidence Defendants produce to support their position that the
transfer
of
the
Property
was
not
conclusory, self-serving affidavit.
fraudulent
is
Marshall’s
(See ECF No. 53-1 ¶ 6) (“I
did not accept the property or agree for the property to be devised
to me with the intent to avoid any debt to the United States or
any other entity.”).
For purposes of § 3304(b)(1)(A), it is the
intent of the debtor that matters –- the intent or knowledge of
the transferee, although potentially informative, is not at issue.
(See 28 U.S.C. § 3304(b)(1)(A) (“[A] transfer made or obligation
incurred by a debtor is fraudulent as to a debt to the United
States, . . . if the debtor makes the transfer or incurs the
obligation . . . with the actual intent to . . . defraud . . .”)
(emphasis added); cf. Sherrill, 626 F. Supp. 2d at 1275 (collecting
cases finding that “the intent of the transferee is irrelevant” in
18
Uniform Fraudulent Transfer Act cases). 7
Even taking Marshall’s
statement as true, Defendants have not overcome the strong evidence
the government puts forth that the transfer was fraudulent.
A reasonable jury could only find that Jacqueline Key’s
transfer of the Property to Marshall was made with the intent to
“hinder,
delay,
or
defraud”
the
government.
28
U.S.C.
§ 3304(b)(1)(A); see Schippers, 982 F. Supp. 2d at 971 & n.16
(collecting
cases
finding
as
a
matter
of
law
that
defendant
transferred property with the actual intent to defraud under § 3304
where there were multiple badges of fraud).
Summary judgment is
warranted. 8
V.
Remedy
Under 28 U.S.C. § 3306, the Court may “avoid[] . . . [a]
transfer or obligation to the extent necessary to satisfy the debt
to the United States.”
28 U.S.C. § 3306(a)(1).
The transfer of
Parcel Number 013059-00018 located at 1333 Sardis Street, Memphis,
7
Section 3307(a) provides an affirmative defense to claims brought
under § 3304(b) for “a person who took [a transfer] in good faith and
for a reasonably equivalent value . . . .” Even assuming Marshall
accepted the Property in good faith, he did not receive reasonably
equivalent value for it. See supra, at 11-14. He is not entitled to
this defense. See Loftis, 607 F.3d at 176 n.3; United States v.
Kirtland, No. 11-4090-JTM, 2012 WL 4463447, at *16 (D. Kan. Sept. 27,
2012).
8
Because the Court concludes that the transfer was fraudulent under
§ 3304(b)(1)(A), it need not address the government’s alternative
argument that the transfer was fraudulent under § 3304(b)(1)(B)(ii).
See Loftis, 607 F.3d at 178 n.5.
19
Tennessee 38106, from Jacqueline Key to Johnny Marshall III on
October
12,
2015,
is
a
fraudulent
transfer
under
28
U.S.C.
§ 3304(b)(1)(A) and void to the extent necessary to satisfy the
government’s judgment in United States v. Key, et al., No. 15-cr20288 (W.D. Tenn.).
VI.
Conclusion
For the foregoing reasons, the government’s Motion for
Summary Judgment is GRANTED.
So ordered this 24th day of January, 2020.
/s/ Samuel H. Mays, Jr.
SAMUEL H. MAYS, JR.
UNITED STATES DISTRICT JUDGE
20
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