XL Specialty Insurance Company et al v. Truland et al

Filing 221

MEMORANDUM OPINION. Signed by District Judge James C. Cacheris on 05/11/2015. (mpha)

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division

XL SPECIALTY INSURANCE
COMPANY, et al.,
Plaintiffs,
v.
ROBERT W. TRULAND, et al.,
Defendants.

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M E M O R A N D U M

1:14cv1058(JCC/JFA)

O P I N I O N

This matter is before the Court on the parties’ crossmotions for summary judgment.

Plaintiffs XL Specialty Insurance

Co., XL Reinsurance America, Inc., and Greenwich Insurance Co.’s
(collectively “Plaintiffs” or “XL”) have moved for summary
judgment on Counts I through III of the Amended Complaint.
(Pls.’ Mot. for Summ. J. [Dkt. 151].)

Robert Truland has moved

for “partial” summary judgment on the fraud and fraudulent
conveyance counts and also asks the Court to find that his
retirement accounts are exempt from his indemnity obligations,
as well as moving for summary judgment on the fraud and
fraudulent conveyance counts.
[Dkt. 158].)
counts.

(R. Truland’s Mot. for Summ. J.

Mary Truland moves for summary judgment on all

(M. Truland’s Mot. for Summ. J. [Dkt. 160].)

For the

following reasons, the Court will (1) grant Plaintiffs’ Motion

1

for Summary Judgment; (2) deny Robert Truland’s Motion for
Summary Judgment as to his retirement accounts and Count IX; (3)
grant Robert and Mary Truland’s Motions for Summary Judgment as
to Counts IV, V, VI, and VII; and (4) deny Mary Truland’s Motion
for Summary Judgment as to Counts I, II, III, and IX. 1

Thus, the

sole issue remaining for trial is whether Robert Truland
fraudulently conveyed an interest in Truland Partners to an
irrevocable family trust in order to put the interest beyond the
reach of Plaintiffs.
I. Background
A. Factual Background
Plaintiffs underwrite construction surety bonds.
(Pls.’ Mem. in Supp. [Dkt. 152] at 2.) 2

In July 2011, the

Truland Entities, through their broker Thomas Rutherfoord
(“Rutherfoord”) sought to establish a surety relationship with
Plaintiffs to support an expansion of their business.
4.)

(Id. at

In underwriting the request for bonds, Plaintiffs required

personal indemnity from Robert Truland (“Dr. Truland”), the
president of Truland Entities, in the event of a loss on any
bond.

(Id. at 4, 9.)

As part of the underwriting process,

1

In resolving these motions, the Court will deny Plaintiffs’
motion in limine [Dkt. 155] and Robert Truland’s Motion in
Limine [Dkt. 187] as moot.
2
Though the citations in Section I are to Plaintiffs’ Memorandum
in Support, all parties have admitted the facts as stated in
this Memorandum Opinion.
2

Plaintiffs requested a financial statement from Dr. Truland and
his wife, Mary (“Mrs. Truland”).

(Id. at 4.)

On July 26, 2011 Dr. and Mrs. Truland each signed an
Indemnity Agreement (“Indemnity Agreement”) with Plaintiffs.
(Id. at 9.)

The Trulands read and initialed each page of the

Indemnity Agreement.

(Id. at 9.) 3

B. Relevant Provisions of the Indemnity Agreement
Section II(E) of the Indemnity Agreement states that
“this AGREEMENT 4 shall be liberally construed so as to protect,
exonerate, hold harmless and indemnify to the fullest extent
SURETY.”

(Pls.’ Mem. in Supp. at 9.)

It provides that it

“binds UNDERSIGNED, jointly and severally, to SURETY in
connection with each and every obligation of this AGREEMENT,
including, but not limited to, Section V of this AGREEMENT.”
(Id. at 9.)

“Undersigned” are defined as “PERSON(S) who

execute this AGREEMENT.”

(Id. at 9.)

Section V(A) contains a key feature of the Indemnity
Agreement, the obligation of the undersigned
to exonerate, hold harmless, indemnify, and
keep indemnified SURETY from and against any
and
all
losses,
claims,
liabilities,
damages, demands for payment or performance,
expenses and costs of whatever kind or
nature
including,
but
not
limited
to,
3

Dr. Truland also signed the Indemnity Agreement on behalf of
the Truland Entities in his capacity as president. (Pls.’ Mem.
in Supp. at 9.)
4
Emphasis appears in original.
3

interest, court costs, document reproduction
and storage charges, investigative expenses
and costs, adjusting, expert and attorney
fees
imposed
upon,
made,
sustained
or
incurred by SURETY by reason of: (1) SURETY
having executed, provided or procured BONDS
on
behalf
of
PRINCIPAL;
(2)
the
UNDERSIGNED’S failure to perform or comply
with
any
of
the
provisions
of
this
AGREEMENT; (3) SURETY enforcing any of the
covenants or conditions of this AGREEMENT;
(4) SURETY conducting any investigation,
obtaining or attempting to obtain a release,
or recovering or attempting to recover loss
or unpaid premium in connection with any
BONDS(S); and/or (5) SURETY prosecuting or
defending any action or claim in connection
with
any
BONDS
executed,
provided
or
procured on behalf of PRINCIPAL.
(Id. at 10.)
In order to meet this obligation, “UNDERSIGNED shall,
upon demand of SURETY deposit funds or other collateral with
SURETY; such funds shall be, at the SURETY’S option, money or
property or liens on or security interests in property.”
Aff. [Dkt. 153], Ex. A, at 4.)

(Daily

The amount of collateral shall

be, at Plaintiffs’ option, either “the sum of all pending claims
asserted against SURETY on BOND(S), whether such claims are
contested or not or whether or not liability has been
established with respect to such claims, plus the amount of
costs and expenses which the SURETY, in its sole discretion,
estimates may be incurred as a result of the assertion of such
claims” or “ the reserve established by SURETY as a consequence
of having issued BOND(S) on behalf of PRINCIPAL whether on
4

account of an actual liability or one which is, or may be,
asserted against SURETY and whether or not any payment for such
loss has been made.”

(Id. at 4.)

Regarding claims, demands, suits, or judgments against
the bonds, Section VI(A) provides that Plaintiffs
shall
have
the
right
in
[their]
sole
discretion to determine whether any claims,
demands, suits or judgments on or against
BOND(S) provided, procured or executed by
SURETY shall be paid, compromised, defended,
prosecuted or appealed irrespective of the
fact that UNDERSIGNED may have assumed, or
offered to assume, the defense of the SURETY
upon such claim, demand, suit or judgment.
(Id. at 5.)

Liability to the undersigned extends to

all amounts paid by the surety “in good faith” under the belief
that
(1) SURETY is or was liable for the sums and
amounts
so
disbursed,
or
that
it
was
necessary
or
expedient
to
make
such
disbursements,
whether
or
not
such
liability, necessity or expediency existed;
or (2) such payments were necessary or
advisable to protect any of the SURETY’S
rights or to avoid or lessen SURETY’S
liability or alleged liability.
(Id. at 5.)

“Good faith” is defined in Section I of the

Indemnity Agreement as “[h]onest motives regardless of whether
such motives are the product of bad judgment or negligence.”
(Id. at 3.)

“The voucher(s) or other evidence of such

payment(s) or an itemized statement of payment(s) sworn by an
officer of SURETY shall be prima facie evidence of the fact and
5

the extent of the liability of UNDERSIGNED to SURETY.”

(Id. at

5.)
Dr. and Mrs. Truland’s indemnity obligations were
originally limited to ten million dollars.

(Id. at 12.)

Mrs.

Truland’s obligation to indemnify “shall only extend to and be
enforceable against those assets jointly held by the Individual
Indemnitors, and to any and all property she has received or may
hereafter receive from Robert Truland and shall not extend and
be enforceable against her sole and separate estate.”
12.)

(Id. at

Additionally, Dr. and Mrs. Truland’s indemnity obligations

“shall not extend to and be enforceable against the home of the
Individual Indemnitors located at 15800 Darnestown Rd.,
Germantown, Va. [sic] 20874.”

(Id. at 12.)

Section XXI 5 is titled “Financial Reporting and
Warranty of Financial Information.”

(Id. at 11.)

The section

describes undersigned’s responsibility to “deliver to the SURETY
within one hundred and twenty days (120 days) of the end of the
fiscal year of the UNDERSIGNED (i) the consolidated and
consolidating balance sheet of the UNDERSIGNED as of the end of
the fiscal year of the UNDERSIGNED and (ii) the related
consolidated and consolidating statements of income and surplus
and cash flows for such year . . . with (iii) the opinion of a
5

The Trulands contend that this section does not apply to them,
though they do not dispute that it is contained in the Indemnity
Agreement that they signed.
6

nationally recognized independent public accountants [sic][.]”
(Id. at 11.)

Subsection (D) of this section contains the

following representation regarding accuracy of the financial
statements:
The UNDERSIGNED hereby warrant the accuracy
of all financial statements submitted to the
SURETY and covenants and agrees that the
assets described therein are dedicated to
and imposed with a trust for the purposes of
this AGREEMENT.
(Pls.’ Mem. in Supp. at 11.)

The term “undersigned” is defined

as “PERSON(S) who execute this AGREEMENT[.]”

(Daily Aff., Ex.

A, at 3.)
Finally, under Section XXII(B), “[t]he UNDERSIGNED has
all necessary corporate or other power, authority or legal right
to execute, deliver and perform UNDERSIGNED’S obligations under
this AGREEMENT.”

(Pls.’ Mem. in Supp. at 11.)

According to the

preamble of that section, Plaintiffs “shall be entitled to rely
upon the truth, accuracy, and completeness” of this
representation “without regard to any other information that may
be now or hereafter known by or disclosed” to Plaintiffs.

(Id.

at 11.)
The parties executed two amendments to the Indemnity
Agreement.

Only the second amendment is relevant here. 6

6

That

The first amendment, on February 2, 2012, added another
corporate indemnitor to the agreement. (Pls.’ Mem. in Supp. at
12.)
7

amendment, executed on February 21, 2013, removes the ten
million dollar cap on the Trulands’ indemnity obligation for
bonds issued after January 18, 2013, which means that the
Trulands’ liability is uncapped.

(Id. at 12.)

C. Procedural History
Following the execution of the Indemnity Agreement,
Plaintiffs issued numerous payment, performance, and commercial
surety bonds on behalf of the Truland Entities.

(Pls.’ Mem. in

At some point in 2013 or 2014, 7 the Truland

Supp. at 12.)

Entities experienced significant financial difficulties.
at 12.)

(Id.

On July 21, 2014, the Truland Entities ceased

operations on all bonded projects, and two days later it filed
for bankruptcy.

(Id. at 13.)

As of that date, July 23, 2014,

the Truland Entities were in default on all active, bonded
projects.

(Id.)

As a result of the default and bankruptcy,

Plaintiffs have received demands on the performance and payment
bonds.

(Id. at 13.)

Through counsel, Plaintiffs sent a demand

letter to the Trulands on July 25, 2014, seeking indemnity
regarding losses as of that date, a deposit of collateral in the
amount of Plaintiffs’ initial reserve, and access to the
Trulands’ books and records.

(Id. at 16.)

7

When the Trulands

The parties disagree as to whether the Truland Entities’
financial difficulties began in 2013 or 2014. The Court does
not find it necessary for present purposes to resolve when the
difficulties began.
8

failed to comply with those demands, Plaintiff initiated this
suit, naming A&E Technologies, Inc. (“A&E Technologies”), the
sole non-bankrupt holding of Truland Entities, and the Trulands
as defendants.
Plaintiffs moved for a temporary restraining order
(“TRO”), which was granted in part. 8
Order [Dkts. 11-12, 22].)

(See 8/21/14 Mem. Op. &

The parties were able to reach an

agreement on the terms of a preliminary injunction.
12/19/14 Consent Order [Dkt. 87].)

(See

With leave of Court,

Plaintiffs filed an Amended Complaint on January 6, 2015.
(1/5/15 Order [Dkt. 93]; Am. Compl. [Dkt. 94].)

The Amended

Complaint, the operative pleading here, asserts nine causes of
action: breach of contract (money damages) (“Count I”); breach
of contract (specific performance) (“Count II”); quia timet and
injunctive relief (“Count III”); fraud/misrepresentation in the
inducement (“Count IV”); constructive fraud in the inducement
(“Count V”); fraud/misrepresentation in the inducement of
continued bonding relationship (“Count VI”); constructive
fraud/misrepresentation in the inducement of continued bonding
8

Under the TRO, the Trulands were prohibited from selling or
transferring any assets that could be pledged as collateral but
could sell assets for fair market value, assuming that
Plaintiffs did not object, and deposit the funds in escrow.
Additionally, the Trulands had to immediately furnish continuing
and complete access to their books and records, a complete
accounting of all assets presently held, and a complete
accounting of all assets pledged to Plaintiffs and/or held in
trust under the Indemnity Agreement. (9/23/14 Order [Dkt. 22].)
9

relationship (“Count VII”); fraudulent/voluntary conveyance in
violation of Virginia law (“Count IX”) 9; and breach of fiduciary
duty (“Count X”).

(Am. Compl. at 27-48.)

As noted earlier, all parties have moved for summary
judgment.

Having been fully briefed and argued, this motion is

ripe for disposition.
II. Legal Standard
Summary judgment is appropriate only where, on the
basis of undisputed material facts, the moving party is entitled
to judgment as a matter of law.

See Fed. R. Civ. P. 56; Celotex

Corp. v. Catrett, 477 U.S. 317, 322 (1986).

The moving party

always bears the initial burden of “informing the district court
of the basis for its motion,” and identifying the matter “it
believes demonstrate[s] the absence of a genuine issue of
material fact.”

Celotex, 477 U.S. at 323.

Once a motion for

summary judgment is properly made and supported, the opposing
party has the burden of showing that a genuine dispute exists.
See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 586-87 (1986); see also Ray Commc’ns, Inc. v. Clear Channel
Commc’ns, Inc., 673 F.3d 294, 299 (4th Cir. 2012) (stating the
opposing party must “come forward with specific facts showing

9

The Court dismissed Count VIII, fraudulent/voluntary conveyance
in violation of the Maryland Uniform Fraudulent Conveyance Act,
because Virginia law controls this litigation. (3/3/15 Mem. Op.
and Order [Dkts. 143 and 144].)
10

that there is a genuine issue for trial.”).

Importantly, the

non-moving party must show more than some metaphysical doubt as
to the material facts.

“[T]he non-moving party ‘may not rest

upon mere allegation or denials of his pleading, but must set
forth specific facts showing that there is a genuine issue for
trial.’”

Hughes v. Bedsole, 48 F.3d 1376, 1381 (4th Cir. 1995)

(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256
(1986)).
In reviewing the record on summary judgment, the Court
“must draw any inferences in the light most favorable to the
non-movant” and “determine whether the record taken as a whole
could lead a reasonable trier of fact to find for the nonmovant.”

Brock v. Entre Computer Ctrs., Inc., 933 F.2d 1253,

1259 (4th Cir. 1991) (citations omitted).

“[A]t the summary

judgment stage the judge’s function is not himself to weigh the
evidence and determine the truth of the matter but to determine
whether there is a genuine issue for trial.”
at 249.

Anderson, 477 U.S.

Where there is conflicting evidence, the court must

credit the evidence of both sides and acknowledge that there is
a genuine issue of material fact that cannot be resolved by
summary judgment.

See Tolan v. Cotton, 134 S. Ct. 1861, 1868-69

(2014) (stating that summary judgment is inappropriate where
each side has put forward competent evidence that raises a
dispute about a material fact).
11

III. Analysis
A. Contract Claims (Counts I, II, and III) against the
Trulands
The first three counts of the Amended Complaint arise
from the Trulands’ alleged breach of contract.

In moving for

summary judgment on these claims, 10 Plaintiffs seek the following
relief: (a) the Trulands are jointly and severally liable to
Plaintiffs under the Indemnity Agreement for $16,083,280.69 of
Plaintiffs’ total net loss as of February 6, 2015; (b) the
Trulands are contractually required to reimburse Plaintiffs for
attorneys’ fees, expert fees, investigative costs and expenses
as stated in Section V of the Indemnity Agreement, including,
but not limited to, fees, costs, and expenses in this action, in
the bankruptcy action against the Truland Entities, and in any
action related to bonds issued for the Truland Entities; (c) the
Trulands are contractually liable for interest from the date of
Plaintiffs’ payments at the statutory rate of six percent per
annum; (d) Plaintiffs may satisfy Dr. Truland’s indemnity
obligation from all of his assets, including, but not limited
to, all individual and joint assets in the Revised 2011
financial statement, except for his interest in the Trulands’
home located at 15800 Darnestown Road, Germantown, Maryland; and
10

The Court interprets Plaintiffs as moving for relief on these
three claims only, not the remaining six counts related to fraud
in the inducement and fraudulent conveyance. (See Pls.’ Mot. &
Ex. 7, Proposed Order.)
12

(e) Plaintiffs may satisfy Mrs. Truland’s indemnity obligation
from her interests in the joint assets on the Revised 2011
financial statement (except for her interest in the Trulands’
home at 15800 Darnestown Road, Germantown, Maryland) as well as
any assets she received from Mr. Truland. 11

(Pls. Mot. [Dkt.

151] at 1-3.)
1. Breach of the Indemnity Obligation and Damages
The applicable Virginia contract law principles are
well-settled.
plain meaning.

Unambiguous contractual terms are given their
See Pysell v. Keck, 559 S.E.2d 677, 678 (Va.

2002) (stating familiar rule of contract interpretation that
courts must apply the plain meaning of unambiguous contract
terms).

When there is an express indemnity agreement between a

surety and a subcontractor, the “surety is entitled to stand
upon the letter of his contract.”

Fid. & Deposit Co. of Md. v.

Bristol Steel & Iron Works, Inc., 722 F.2d 1160, 1163 (4th
Cir.1983).

The governing Indemnity Agreement provisions are

clear and unambiguous and must therefore be applied in
accordance with their plain meaning.

See Bell BCI Co. v. Old

Dominion Demolition Corp., 294 F. Supp. 2d 807, 812 (E.D. Va.
2003) (stating the same).
11

Plaintiffs also seek a judgment that A&E Technologies is
jointly and severally liable to Plaintiffs under the Indemnity
Agreement for $22,574,152.82 of Plaintiffs’ total net loss as of
February 6, 2015. The Court addresses A&E Technologies in
Section III.D, infra.
13

The elements of a breach of contract action in
Virginia are (1) a legally enforceable obligation of a defendant
to a plaintiff; (2) the defendant’s violation or breach of that
obligation; and (3) injury or damage to the plaintiff caused by
the breach of obligation.
(Va. 2004).

Filak v. George, 594 S.E.2d 610, 614

Though the parties would have the Court believe

otherwise, this case is quite simple.

It is undisputed that

Plaintiffs and the Trulands entered into an contract, whereby
the Trulands promised to be personally liable to Plaintiffs
should demands be made on the bonds in exchange for Plaintiffs
agreeing to issue payment and performance bonds for the Truland
Entities.

This created a legally enforceable obligation that

the Trulands owe to Plaintiffs and that the Plaintiffs owe to
Trulands.
bonds.

Neither party disputes that demands were made on the

This triggered both parties’ obligations.

Plaintiffs

had an obligation to make payments on those demands, and the
Trulands had an obligation to post collateral in an amount
determined by Plaintiffs and to indemnify Plaintiffs.
Plaintiffs have fulfilled their obligation to pay claims on the
bonds.

The Trulands have not fulfilled their obligation,

failing to post collateral until this litigation and contesting
their indemnity obligation.

This is a breach of the Indemnity

Agreement, specifically the provision requiring the Trulands to
post collateral once a demand was made by the Plaintiffs
14

(Section V(B)) and to indemnify Plaintiffs (Section V(A)).
Finally, the Trulands’ failure to perform their legally
enforceable obligation has resulted in damages to Plaintiffs.
Plainly, the elements of a breach of contract have been met in
this case.
The only issue that needs to be resolved with respect
to Plaintiffs’ contract claim is the measure of damages.

Under

Section VI of the Indemnity Agreement, Plaintiffs have the
right, in their sole discretion, to determine what claims,
demands, suits, or judgments should be paid.
A, at 5.)

(Daily Aff., Ex.

Vouchers or other evidence of payment sworn to by an

officer of Plaintiffs are prima facie evidence of the extent of
the Trulands’ liability to Plaintiffs.

(Id.)

Mrs. Truland

argues that summary judgment is inappropriate because Plaintiffs
have not proffered an expert to value her sole and separate
estate and therefore the measure of damages is uncertain.
Truland’s Mem. in Supp. [Dkt. 162] at 6.)

(M.

This is incorrect.

The measure of damages here is not the value of the assets the
Trulands agreed to pledge.

Rather, per the terms of the

Indemnity Agreement, damages are determined by the amount of
money Plaintiffs have expended resolving bond claims.
In support of their motion for summary judgment,
Plaintiffs have submitted the affidavit of Greg Daily, vice
president, head of North America XL Surety Claims, and
15

supporting documentation of computer-generated payment reports,
copies of checks and wire transfer receipts, and summaries of
such payments of demands on the bonds.
at 22; Greg Daily Aff., Ex. A-Z.)

(See Pls.’ Mem. in Supp.

According to Daily, as of

February 6, 2015 Plaintiffs have received 209 bond claims and
paid $38,169,724.65 toward resolving payment bond claims and
completing bonded projects, including legal and consulting fees.
(Daily Aff. ¶¶ 26-27.)

At the motion hearing, counsel for both

Robert and Mary Truland stipulated that the figures represented
in Daily’s affidavit were accurate.
Exhibit U to Daily’s affidavit is a spreadsheet
prepared by him documenting Plaintiffs’ net bond losses.

The

spreadsheet is broken down into two parts: bonds executed
between the original Indemnity Agreement and the Second
Amendment to that agreement, at which time the Trulands’
liability was capped at $10 million (hereinafter “Group A
bonds”), and bonds issued after the Second Amendment, in which
there was no cap on the Trulands’ liability (hereinafter “Group
B bonds”).

Plaintiffs paid $30,113,532.65 in both bond payments

and legal and consulting fees on Group A bonds.
Ex. U, at 1.)

(Daily Aff.,

Plaintiffs received $11,492,950.56 in contract

monies from jobs secured by the bonds that they credited to the
Trulands.

(Id.)

$18,620,582.09.

This yields a net loss on Group A bonds of
(Daily Aff. ¶ 48.)
16

As the Trulands are only

personally liable up to $10 million, Plaintiffs seek to recover
the full $10 million from the Trulands on Group A Bonds.

(Id.)

Plaintiffs paid $8,056,192.00 in both bond payments
and legal and consulting fees from Group B bonds.
Ex. U, at 2.)

(Daily Aff.,

They received $1,972,911.31 in contract monies

from jobs secured by Group B bonds.

(Id.)

loss on Group B bonds of $6,083,280.69.

This yields a net

(Id.)

Since Group B

bonds were executed after the limitation on liability was
removed, the Trulands are personally responsible for all
$6,083,280.69 in losses on Group B bonds.

(Daily Aff. ¶ 48.)

In total, therefore, Plaintiffs have established their prima
facie case that the Trulands are personally liable to indemnify
Plaintiffs in the amount of $16,083,280.69.
The $16,083,280.69 does not include unpaid bond
premiums.

(Daily Aff. ¶ 48.)

In addition to the

indemnification for demands on the bond, the Indemnity Agreement
states that the “UNDERSIGNED shall pay or cause to be paid to
SURETY, in such manner and at such time as required by SURETY,
all premiums and charges of SURETY . . . for executing,
providing or procuring BOND(S) for PRINCIPAL.”
A, at 4.)

(Daily Aff., Ex.

As noted earlier, “undersigned’ are “PERSON(S) who

execute this AGREEMENT.”

(Daily Aff., Ex. A, at 3.)

Trulands both signed the Indemnity Agreement.

The

There is still

$9,083.25 in outstanding bond premiums that need to be paid.
17

(Daily Aff. ¶ 42.)

As the Trulands executed the Indemnity

Agreement, they are liable for the unpaid bond premiums.
Therefore, the Trulands are personally liable to Plaintiffs in
the amount of $16,092,363.94.
The Trulands raise three challenges to the dollar
figure calculated by Plaintiffs.

First, in attempting to

overcome Plaintiffs’ prima facie evidence, they state that they
“cannot dispute” the figures reached by Plaintiffs because such
calculations are “solely within XL’s possession.”
Opp. [Dkt. 182] at 21.) 12

(M. Truland’s

Under both the Federal Rules of Civil

Procedure and this Court’s Local Rules, the nonmoving party
“must support [its] assertion by citing to particular parts of
materials in the record, including depositions, documents,
electronically stored information, affidavits or declarations,
stipulations (including those made for purposes of the motion
only), admissions, interrogatory answers, or other materials[.]”
Fed. R. Civ. P. 56(c)(1)(A); see also E.D. Va. Local Rule 56(B)
(“A brief in response to [a motion for summary judgment] shall
include a specifically caption section listing all material
facts as to which it is contended that there exists a genuine
issue necessary to be litigated and citing parts of the record

12

Dr. Truland raises the same arguments, but for ease of
citation the Court refers only to Mary Truland’s opposition.
18

relied upon to support the facts alleged to be in dispute.”)
(emphasis added).
The Court is not persuaded by the Trulands’ claim that
they cannot meaningfully challenge Plaintiffs’ figures because
they lack the right information.

One of the purposes of

discovery is to “ascertain[] the facts, or information as to the
existence or whereabouts of facts[.]”

Hickman v. Taylor, 329

U.S. 495, 500 (1947) (citation omitted).

“[The discovery rules]

make a trial less a game of blind man’s bluff and more a fair
contest with the basic issues and facts disclosed to the fullest
practicable extent.”
677, 682-83 (1958).
9, 2015.

[Dkt. 29.]

United States v. Proctor & Gamble Co.,
Here, discovery was set to close on January
However, after consideration of the

parties’ joint discovery plan, the magistrate judge extended
discovery to February 13, 2015.

[Dkt. 51.]

The parties jointly

moved to extend discovery again, [Dkt. 104], which the
magistrate judge denied [Dkt. 119].

The Trulands had ample time

to conduct discovery and learn more about these figures, but
apparently chose not to do so. 13

13

The Court notes that this is not a situation governed by
Federal Rule of Civil Procedure 56(d), which applies when “a
non-movant shows by affidavit or declaration that, for specified
reasons, it cannot present facts essential to justify its
opposition[.]” First, the Trulands have produced no such
affidavit. Second, the Trulands have had more than enough time
to undertake sufficient investigation. At the August 21, 2014
TRO hearing, at which both Plaintiffs and Robert Truland’s
19

Quite simply, it is not enough at this point for the
Trulands to state that they do not have the information required
to dispute the facts.

Under both the Federal Rules and the

Local Rules, stating that Plaintiffs’ undisputed facts are
beyond the Trulands’ ability to dispute is the same as admitting
Plaintiffs’ facts are true.

See Fed. R. Civ. P. 56(e)(2)-(3)

(“If a party . . . fails to properly address another party’s
assertion of fact as required by Rule 56(c), the court may . . .
consider the fact undisputed for purposes of the motion . . .
[or] grant summary judgment if the motion and supporting
materials – including the facts considered undisputed – show
that the movant is entitled to it[.]”); E.D. Va. Local Rule
56(B) (“In determining a motion for summary judgment, the Court
may assume that facts identified by the moving party in its
listing of material facts are admitted, unless such a fact is
controverted in the statement of genuine issues filed in
opposition to the motion.”).

The Trulands have failed to

controvert any of the dollar amounts calculated by Plaintiffs.
Therefore, the Court deems those figures admitted as the measure
of the Trulands’ liability.

counsel were present, the Court directed the parties to confer
on discovery. [Dkt. 10.] Discovery commenced on October 1,
2014. [Dkt. 29.] Therefore, the remedies available under Rule
56(d) do not apply here.
20

Second, the Trulands argue that the Indemnity
Agreement is a security agreement and that Plaintiffs are
secured parties under the Virginia Uniform Commercial Code
(“UCC”).

(M. Truland’s Mem. in Supp. at 24.)

The Trulands

assert that the dispute over the scope of the Indemnity
Agreement precludes summary judgment.

(Id.)

“‘[C]ontract

interpretation is a subject particularly suited for summary
judgment disposal.’”

Bala v. Commonwealth of Va. Dept. of

Conservation & Recreation, No. 3:12CV748–HEH, 2014 WL 1281235,
at *2 (E.D. Va. Mar. 27, 2014) (quoting Bank of Montreal v.
Signet Bank, 193 F.3d 818, 835 (4th Cir. 1999)).

“‘Only an

unambiguous writing justifies summary judgment without resort to
extrinsic evidence, and no writing is unambiguous if susceptible
to two reasonable interpretations.’”

Id. (quoting Goodman v.

Resolution Trust Corp., 7 F.3d 1123, 1126 (4th Cir. 1993)).
The contract language at issue here is unambiguous.
Section XII states “[t]his AGREEMENT shall constitute a security
agreement and financing statement for the benefit of the SURETY
in accordance with the provisions of the Uniform Commercial Code
or any other statute and may be so used by the SURETY without in
any way abrogating, restricting, or limiting the rights of the
SURETY under this AGREEMENT or as provided by law or equity.”
(Daily Aff., Ex. A, at 7.)

Section XII’s plain language

allowing the Indemnity Agreement to qualify as a security
21

agreement and financing statement under Article 9 of the UCC do
not, without more, bring the entire contract within the ambit of
the UCC.

See General Ins. Co. of Am. v. Mezzacappa Bros., Inc.,

No. 01–CV–7394, 2003 WL 22244964, at *5 (E.D.N.Y. Oct. 1, 2003)
(rejecting that such contractual language automatically brings
the contract under the UCC).

All Section XII does is alert the

parties that the Indemnity Agreement is a security agreement and
financing statement under Article 9 of the UCC.

It does not

state, nor can it be interpreted as such, that the terms of the
Indemnity Agreement are subject to the UCC.
Finally, the Trulands challenge whether the dollar
figures are “reasonable” and state that it is a jury question as
to whether Plaintiffs made payments on the bond in good faith.
In support, they point to the report of James F. Morelewicz
(“Morelewicz”).

(M. Truland’s Opp., Ex. R.)

In a separate

motion, Plaintiffs have moved to exclude Morelewicz’s report.
(See Pls.’ Mot. in Limine [Dkt. 155].)
As noted earlier, the Indemnity Agreement allows
Plaintiffs to make payments in the “good faith” belief that they
were liable or payments were necessary to protect themselves
from liability.

(Daily Aff., Ex. A, at 5.)

The Indemnity

Agreement provides the definition of good faith: “[h]onest
motives regardless of whether such motives are the product of
bad judgment or negligence.”

(Id. at 3.)
22

Good-faith payment

clauses like the one here have routinely been upheld by courts,
subject to the exception of a payment made fraudulently or in
bad faith.

Bristol Steel, 722 F.2d at 1164 (collecting cases). 14
Thus, in order for the Trulands to defeat summary

judgment, they have to point to a specific part of the record
showing that Plaintiffs acted with a dishonest motive or for a
fraudulent purpose.
burden.

The Trulands have failed to meet this

Though they offer Morelewicz’s report, which generally

alleges that Plaintiffs should have handled the bond payment
claims better, the report does not address whether there was
fraud or bad faith in making the bond payments.

Morelewicz’s

report states his belief that Plaintiffs did not mitigate
damages.

(Pls.’ Mot. in Limine [Dkt. 155], Ex. B., at 13.)

14

But

Though neither party has cited to it, the case of Bd. of
Supervisors of Fairfax Cnty. v. Culbertson Constr. Co. is
distinguishable. The Circuit Court of Fairfax County considered
a nearly identical good-faith payment language in a construction
suretyship contract. No. 69951, 1987 WL 488767, at *1 (Va. Cir.
Ct. Nov. 17, 1987). Noting that there was no Virginia case on
point, the court discussed the majority view upholding such
provisions. Id. at *2-3. Yet for public policy reasons, it
appeared to craft a standard that required a surety to undertake
reasonable investigation of claims, even in the face of express
contractual language that did not require one, before it was
entitled to indemnification. Id. at 4. Ultimately, however,
the court held that the surety did not perform work outside the
contract and was entitled to indemnification, even without prior
investigation. Id. at 5. Therefore, the court’s discussion
about public policy considerations suggesting that a principal
should not be liable for a surety’s negligence is dicta. See
Lone Mountain Processing, Inc. v. Bowser-Morner, Inc., No. Civ.
A. 2:00CV000093, 2005 WL 1894957, at *8 (W.D. Va. Aug. 10, 2005)
(interpreting Culbertson as upholding an agreement absolving a
surety from its own negligence).
23

Morelewicz admits that he does give any opinion as to
Plaintiffs’ motivation in making payments on bond claims.
at 9-13.) 15

(Id.

Therefore, the report standing alone does not show

that Plaintiffs acted in bad faith or for fraudulent purposes in
making payments on the bonds.
Nor does the Court find the report instructive on the
ultimate legal determination of whether Plaintiffs acted in good
faith as defined by the Indemnity Agreement.

Morelewicz’s

conclusion is that Plaintiffs did not “meet the usual and
customary industry standards of good surety claim decisions and
handling.”

(M. Truland’s Mem. in Supp., Ex. R, at 17.)

That

conclusion and Morelewicz’s analysis do not help the Court in
determining whether there was bad faith or fraud in making
payments on bond claims.

While it may be that Plaintiffs were,

15

The relevant portion of Morelewicz’s deposition testimony is
as follows:
Q: So you haven’t given an opinion whether
XL acted in good faith; right?
A: That’s not my place to do.
That’s the
Court’s place to do that.
Q: You have not given any opinion whether XL
acted with honest motives in any of the
actions
that
it
took
related
to
this
litigation; right?
A: I did not address honest motives, that is
correct.
Q: You certainly have not opined that XL
acted in bad faith with regard to any of the
actions that it took relating to this
Truland matter?
A: That is correct.
(Pls.’ Mot. in Limine, Ex. B., at 7.)
24

in fact, negligent in handling bond claims on the Truland
Entities’ projects, the explicit contractual language agreed to
by all parties says that negligence is irrelevant.

Morelewicz’s

report detailing Plaintiffs’ alleged negligence is therefore
also irrelevant.
Morelewicz’s report is the only evidence the Trulands
put forward to attack how Plaintiffs handled the payments on
bond claims.

Therefore, there is no jury question as to

whether these payments were made in good faith, and summary
judgment is appropriately awarded to Plaintiffs in the
aforementioned amount.

See Hanover Ins. Co. v. N. Bldg. Co.,

751 F.3d 788, 795 (7th Cir. 2014), cert. denied, 135 S. Ct. 280
(2014,) reh'g denied, 135 S. Ct. 747 (2014) (stating the
nonmoving party “had to come forward with more than just an
ethereal suspicion that the number was too high.”).

Because

summary judgment for Plaintiffs is appropriate, Plaintiffs’
motion in limine to exclude Morelewicz’s report at trial will be
denied as moot.
Plaintiffs also request prejudgment interest.
Virginia law controls.

Here,

See Hitachi Credit Am. Corp. v. Signet

Bank, 166 F.3d 614, 633 (4th Cir. 1999) (stating state law
governs award of prejudgment interest in a diversity case).
With regard to such an award, the Virginia Code provides in
pertinent part that “[i]n any action at law or suit in equity,
25

the final order, verdict of the jury, or if no jury the judgment
or decree of the court, may provide for interest on any
principal sum awarded, or any part thereof, and fix the period
at which the interest shall commence.”
382.

Va. Code Ann. § 8.01–

Whether prejudgment interest should be awarded under §

8.01–382 is a matter within the sound discretion of the district
court.

Hitachi, 166 F.3d at 633.

The statutory rate of

interest in Virginia is six percent.
302(A).

Va. Code Ann. § 6.2-

Under the Indemnity Agreement, Plaintiffs are entitled

to “interest from the date of SURETY’S payment at the maximum
rate permitted in the jurisdiction in which this AGREEMENT is
enforced, or is enforceable.”

(Daily Aff., Ex. A, at 5.)

However, Plaintiffs have not provided any meaningful way for the
Court to calculate interest from date of payment.

Therefore,

the Court calculates prejudgment interest in this case from the
date the suit was filed – August 20, 2014 – to the date of
judgment.

Thus, Plaintiffs are entitled to $698,364.48 in

interest, bringing the Trulands’ total liability to
$16,790,728.42.
2. Assets that Can Satisfy the Judgment
There is dispute among the parties as to which assets
may be pledged to satisfy the Trulands’ indemnity obligations.
The dispute centers on the purported “2011 Revised Financial
Statement.”

Under the terms of the Indemnity Agreement, Dr.
26

Truland agreed to pledge all of his assets, except the home at
15800 Darnestown Road, and Mary Truland agreed to pledge assets
held jointly with Dr. Truland, excluding the home at 15800
Darnestown Road.

Additionally, Mrs. Truland’s “sole and

separate estate” is not subject to the indemnity obligation.
Thus, regardless of the outcome of the fraud counts, the Court
must address the Trulands’ affirmative defenses and resolve what
assets may be used to satisfy the judgment here.

Therefore, the

Court will address whether the Trulands must pledge the
following assets in dispute: (a) Dr. Truland’s retirement
accounts; (b) Mrs. Truland’s interests in Belgarde, Truland
Partners, and Truland Holdings; (c) the scope of the marital
home exemption; and (d) Park Potomac Investors 1 and 2.
a. Dr. Truland’s retirement accounts
Dr. Truland maintains that his 401(k) and 408(b) plans
cannot be pledged or used to satisfy the indemnity obligation.
(R. Truland’s Mem. in Supp. of Summ. J. [Dkt. 159] at 9-14.)
The question is whether Dr. Truland effectuated a pledge of his
retirement accounts when he signed the Indemnity Agreement and
subsequent amendments, and, if so, whether such a pledge was
valid.
The original Indemnity Agreement itself is silent as
to what assets Dr. Truland must pledge or make available for the
collateral requirement.

The Indemnity Agreement does not have
27

exclusions for either retirement account.

In the Second

Amendment to the Indemnity Agreement, “[t]he obligations of
Robert W. Truland shall be without any limitation or restriction
set forth whatsoever, except” the exclusion of the marital home.
(Daily Aff., Ex. C, at 3.)

Given that the Second Indemnity

Agreement sets forth an unqualified pledge of all of Robert
Truland’s assets and listed only one exception to this pledge,
the Court finds that Dr. Truland did pledge both of his
retirement accounts. 16
The Court must now turn to whether such a pledge was
valid.

With respect to the 401(k) account, Dr. Truland contends

that any pledge of that account is void because of the antialienation provision of the Employment Retirement Income
Security Act (“ERISA”).
9.)

(R. Truland Mem. in Supp. [Dkt. 156] at

Congress enacted ERISA, 29 U.S.C. § 1001 et seq., to

establish “a comprehensive federal scheme for the protection of
pension plan participants and their beneficiaries.”

Smith v.

Mirman, 749 F.2d 181, 183 (4th Cir. 1981) (citations and
internal quotation marks omitted).

Its “most important purpose”

is to “assure American workers that they may look forward with
anticipation to a retirement with financial security and

16

Given the unqualified language of the Second Indemnity
Agreement, the Court’s finding that Dr. Truland pledged the
retirement accounts does not depend on the validity of the 2011
Revised Financial Statement.
28

dignity, and without fear that this period of life will be
lacking in the necessities to sustain them as human beings
within our society.”
marks omitted).

Id. (citations and internal quotation

Among the provisions designed to “further

ensure that the employee's accrued benefits are actually
available for retirement purposes” is the requirement that
benefits may not be assigned or alienated.

Id. (citations

and

internal quotation marks omitted) (emphasis added).
ERISA’s anti-alienation statute prevents a transfer of
benefits provided under the plan.

29 U.S.C. § 1056(d)(1) (“Each

pension plan shall provide that benefits provided under the plan
may not be assigned or alienated.”).

This language contemplates

that creditors may not garnish benefit payments to satisfy
debts.

See Guidry v. Sheet Metal Workers Nat’l Pension Fund,

Fund et al., 493 U.S. 365, 371 (1990) (stating ERISA’s antialienation provision applies to garnishment and holding
constructive trust of benefit payments violated ERISA’s
prohibition on assignment or alienation of pension benefits).
It says nothing about whether an individual may make a
constructive withdrawal of funds by pledging the entire account
as collateral before the account begins to pay retirement
benefits.
Section 72(p) of Title 26 states that “[i]f . . . a
participant or beneficiary assigns (or agrees to assign) or
29

pledges (or agrees to pledge) any portion of his interest in a
qualified employer plan, such portion shall be treated as having
been received by such individual as a loan from such plan.”
U.S.C. § 72(p)(1)(B).

26

Loans from plans are treated as

distributions from that plan.

26 U.S.C. § 72(p)(1)(A).

A

qualified employer plan is defined as a plan listed in 26 U.S.C.
§ 401(a).

26 U.S.C. § 72(p)(4)(A)(i)(I). 17

Therefore, the

401(k) plan at issue here can be pledged, and such a pledge is
effectively a distribution of the funds in the account.

Thus,

Dr. Truland’s pledge of his 401(k) account was valid.
As to the 408(b) account, in 2012 Dr. Truland rolled
over money from his 401(k) account and opened a 408(b) annuity
account with Allianz Life Insurance Company of North America.
(R. Truland Mem. in Supp. at 9.)

Dr. Truland argues that

federal and state law prohibit him from transferring any
interest in the account.

(Id.)

Under 26 U.S.C. § 408(e)(4), “[i]f, during any taxable
year of the individual for whose benefit an individual
retirement account [“IRA”] is established, that individual uses
the account or any portion thereof as security for a loan, the

17

Section 401(k) states that such a cash or deferred arrangement
“shall not be considered as not satisfying the requirements of
subsection (a) merely because the plan includes a qualified cash
or deferred arrangement.” 26 U.S.C. § 401(k)(1). This language
suggests that as a general rule, 401(k) plans are meant to be
treated as satisfying the requirements under § 401(a).
30

portion so used is treated as distributed to that individual.”
This “clear language” means that “a pledge of funds in an IRA
constitutes a distribution of funds to the individual.”
Roberts, 326 B.R. 424, 426 (S.D. Ohio 2004).

In re

Thus, a taxable

event has occurred and the account is no longer protected under
the bankruptcy code.

Id.

“This outcome is consistent with the

general policy behind the exemption of an IRA, i.e., to protect
a debtor’s future income stream upon retirement.”

Id.

Thus, “a

debtor's pledge of his IRA as collateral for a loan, especially
a business loan, is inconsistent with the need to protect that
money as a future income stream for the debtor as against the
debtor's creditors.”

Id.

Therefore, under federal law Dr.

Truland’s pledge of his 408(b) account is valid.
Dr. Truland also cites to Maryland law in support of
his argument that his 408(b) account is exempt from a judgment
against Dr. Truland.

Assuming, without deciding, that Dr.

Truland may claim exemptions under Maryland law, the pledge of
the account is still valid.

Maryland law exempts from a

judgment creditor
any money or other assets payable to a
participant or beneficiary from, or any
interest of any participant or beneficiary
in, a retirement plan qualified under §
401(a), § 403(a), § 403(b), § 408, § 408A, §
414(d), or § 414(e) of the United States
Internal Revenue Code of 1986, as amended,
or § 409 (as in effect prior to January

31

1984) of the United States Internal Revenue
Code of 1954, as amended[.]
Md. Code Ann, Cts. & Jud. Proc. § 11-504(h)(1).
In support of his contention that §11-504(h)(1)
applies, Dr. Truland cites to In re Gibson.
inapposite.

That citation is

Gibson concerned “whether funds withdrawn from a

qualified retirement plan are entitled to exemption status when
not rolled into another qualified retirement plan until after
the filing date of a bankruptcy petition.”
(Bankr. D. Md. 2013).

300 B.R. 866, 868-69

In considering whether the withdrawal of

funds from an annuity account still kept their tax-exempt status
and thus were immune from bankruptcy proceedings under § 11504(h)(1), 18 the court looked “to the treatment of the property
outside the bankruptcy proceeding.”

Id.; see In re Mueller, 256

B.R. 445, 451 (Bankr. D. Md. 2000) (“To be exempt from the
claims of creditors in bankruptcy, assets must be exempt from
the claims of creditors outside of bankruptcy.”)

Applying

Gibson’s methodology, then, pledging the 408(b) account as
collateral counts as a distribution of funds in the account
under the Internal Revenue Code.

Therefore, it would be a

taxable event and would exclude the account from bankruptcy
protection.

See Gibson, 300 B.R. at 870 (“The Maryland

18

Maryland has opted out of the federal bankruptcy exemptions.
Debtors in Maryland may only claim exemptions under § 11-504.
In re Gibson, 300 B.R. 866, 869 (Bankr. D. Md. 2003)
32

legislature has expressed a similar desire to protect an
individual's retirement interest by extending the protection
available to IRAs under the Internal Revenue Code to IRAs in
bankruptcy.”).

Because pledging the 408(b) account is a

distribution that triggers a taxable event and removes the plan
from favorable tax treatment under 26 U.S.C. § 408, there is no
protection for the 408(b) account under § 11-504.

Thus, Dr.

Truland’s pledge of his 408(b) account is also valid.
Finally, Dr. Truland argues that the terms of the
contract with Allianz prevent him from pledging his account.
The Individual Retirement Annuity Endorsement (the
“Endorsement”) for the 408(b) annuity provides:
“The policy is not transferable by the Owner and is for the
exclusive benefit of the Owner and Beneficiary.
interest of the Owner is nonforfeitable.”
Supp. at 5.)

The entire

(R. Truland Mem. in

In pledging the funds, however, Dr. Truland has

made a constructive withdrawal.

See 26 U.S.C. § 408(e)(4).

Therefore, Dr. Truland has not assigned his interest in the
plan, and this provision has no effect on the Court’s ruling.
b. Mrs. Truland’s Interest in Belgarde, Truland
Partners, and Truland Holdings
Mrs. Truland claims that her interests in Belgarde,
Truland Partners, and Truland Holdings are part of her sole and
separate estate.

(M. Truland Decl. [Dkt. 161] ¶ 19.)

33

At the time of its organization in 2000, Truland
Partners, a limited liability company, issued twenty percent of
its original membership interests to Mrs. Truland individually
for $1,000.00.

(M. Truland Decl. ¶¶

23-24, 28.)

Her

membership interest was not received from Dr. Truland and was
never held jointly with Dr. Truland.

(Id. ¶¶ 30-34.)

In 2009,

Mrs. Truland transferred her interest in Truland Partners to the
Mary W. Truland Revocable Inter Vivos Trust.

(Id. ¶ 37.)

In

support of her declaration, Mrs. Truland attached the Deed of
Trust effectuating that transfer.
M.)

(M. Truland Decl., Exhibit

She also attached Truland Partners’ ownership schedule and

her partnership taxation forms (“Schedule K-1” or “K-1”) for the
years 2011, 2012, and 2013.

(M. Truland Decl., Ex. L.)

Belgarde was organized in 2009 and is a Virginia
limited liability company.

(M. Truland Decl. ¶ 39.)

At the

time of its organization, Belgarde issued 2.7857 percent of its
original membership interest to Mary Truland individually for
$287.57.

(M. Truland Decl. ¶¶ 41-42.)

Mrs. Truland’s

membership interest has never been held jointly with Dr.
Truland.

(M. Truland Decl. ¶ 44.)

Belgarde’s ownership

schedule and Mrs. Truland’s K-1s for 2011, 2012, and 2013 are
attached as Exhibit N to her declaration.
Truland Holdings was organized in 1999 and is a
Virginia limited liability company.
34

(M. Truland Decl. ¶¶ 50-

51.)

At the time of its organization, Truland Holdings issued

thirty percent of its original membership interests to Mrs.
Truland in exchange for $75,000.00.

(Id. ¶¶ 52-53.)

Her

interest in Truland Holdings has never been held jointly with
Dr. Truland and she did not receive her membership interest from
Dr. Truland.

(Id. ¶¶ 54-55.)

In 2009, she transferred her

membership interest to her revocable trust.

(Id. ¶ 61.)

Truland Holdings’ ownership schedule, Mrs. Truland’s K-1s, and
the deed of trust are attached to her declaration as Exhibits O
and P.
Plaintiffs argue that these three interests are not
part of Mrs. Truland’s sole and separate estate because Mrs.
Truland has not put forth any evidence that the funds used to
purchase the membership interests were not drawn from a joint
account.

(Pls.’ Opp. to M. Truland’s Mot. [Dkt. 184] at 20-21.)

Additionally, Plaintiffs argue that Truland Partners and Truland
Holdings are “jointly held” with Dr. Truland because both
Trulands are trustees of Mrs. Truland’s revocable trust.

(Id.)

The phrase “sole and separate estate” is not defined
in the Indemnity Agreement.

From the Court’s perspective, it

has one of two meanings: property that is titled in Mrs.
Truland’s name only or property that Mrs. Truland acquired using
funds constituting her separate property under the relevant
domestic relations law.

The Indemnity Agreement states that
35

“the liability and obligation’s [sic] of Mary Truland hereunder
shall only extend to and be enforceable against those assets
jointly held by the Individual Indemnitors, and to any and all
property she has received or may hereafter receive from Robert
Truland and shall not extend and be enforceable against her sole
and separate estate.”

(Daily Aff., Ex. A, at 12.)

Reading this

language to give effect to every word, the Court believes the
phrase “sole and separate estate” was intended to refer to
assets based on title, not by source of funds.

See Amchem

Prods., Inc. v. Newport News Circuit Court Asbestos Cases, 563
S.E.2d 739, 743 (Va. 2002) (“The guiding light in the
construction of a contract is the intention of the parties as
expressed by them in the words they have used, and courts are
bound to say that parties intended what the written instrument
plainly declares.”); see also Bala, 2014 WL 1281235, *3 (“Thus,
the parties’ intent should be discerned solely from the four
corners of the agreement.”)
First, the indemnity obligation extends to assets
“jointly held.”

This contemplates designating assets by title,

which results in three categories of assets: assets owned by
both Dr. and Mrs. Truland, assets owned by Dr. Truland, and
assets owned by Mrs. Truland.

Given that all of Dr. Truland’s

assets are subject to the indemnity obligation, Dr. Truland
could transfer all of his individual assets to Mrs. Truland,
36

thereby putting his assets beyond the reach of the indemnity
obligation.

However, the inclusion of “any and all property she

has received or may hereafter receive from Robert Truland”
forecloses such a result.

Thus, the Indemnity Agreement freezes

the Trulands’ asset structure as it existed on July 26, 2011:
assets owned by Dr. Truland and assets owned by Dr. and Mrs.
Truland, which are subject to the indemnity obligation, and
assets owned by Mrs. Truland, which are not.

Since Mrs. Truland

acquired her separate interests in Belgarde, Truland Holdings,
and Truland Partners before signing the Indemnity Agreement in
2011, these assets are part of her sole and separate estate and
are not subject to the indemnity obligation.
Plaintiffs contend that Truland Holdings and Truland
Partners are jointly owned because both Trulands are trustees of
Mrs. Truland’s revocable trust.

(Pls.’ Opp. at 20.)

Plaintiffs

cite to Higdon v. Lincoln Nat’l Ins. Co. for the proposition
that “[t]he trustee is in substance the ‘owner’ of the trust
property, as far as third persons are concerned.”

No. CIV.A.-

ELH-13-2152, 2014 WL 1630210, at *4 (D. Md. Apr. 21, 2014).
While the quotation is correct, the principle for which it is
cited is not.

The question in Higdon was whether a beneficiary

of a trust has standing to sue on a contract right held by the
trust.

Id.

The quotation cited by Plaintiffs was used to

explain the general rule that the right to bring an action on
37

behalf of the trust against a third party belongs to the trustee
because “[t]he trustee is in substance the ‘owner’ of the trust
property, as far as third persons are concerned.”
and internal quotation marks omitted).

However, this does not

mean the trustee owns the property as his own.
on behalf of the beneficiaries.

Id. (citation

The trustee acts

Personal creditors of the

trustee cannot reach the trust’s assets.

See In re Bilter, 413

B.R. 290, 305 (Bankr. E.D. Va. 2009) (stating that all that is
necessary to create an express trust is “that the legal estate
[be] vested in one person, to be held in some manner or for some
purpose on behalf of another.”).

Therefore, Dr. Truland cannot

be considered a co-owner of property in Mrs. Truland’s revocable
trust.

Furthermore, according to the trust documents, only Mrs.

Truland as the grantor has power to direct the trustees as to
how to manage the property.
J.)

(M. Truland’s Mem. in Supp., Ex.

Though the interests are held in trust, they are still

subject to Mrs. Truland’s exclusive control.

Accordingly,

Truland Holdings and Truland Partners are part of Mrs. Truland’s
sole and separate estate.
c. The Scope of the Marital Home Exemption
The Trulands maintain that their marital home is a
106-acre plot known as “Ithaca Farm,” and all of this property
is exempt from the indemnity obligation.
27.)

(M. Truland’s Opp. at

Plaintiffs argue that the only exempt property is 15800
38

Darnestown Rd., Germantown, Maryland, a much smaller subset of
Ithaca Farms.

(Pls.’ Opp. to M. Truland [Dkt. 184] at 23.)

The

Indemnity Agreement states that “The SURETY hereby covenants and
agrees that the liability and obligation’s [sic] of the
Individual Indemnitors shall not extend to and be enforceable
against the home of the Individual Indemnitors located at 15800
Darnestown Rd., Germantown, Va. [sic] 19 20874.”
A, at 12.)

(Daily Aff., Ex.

Subsequent amendments to the Indemnity Agreement

retained this language.
The Trulands have submitted two deeds.

The first deed

is dated September 10, 2009 and transfers Dr. and Mrs. Truland’s
fee simple interest in 15800 Darnestown Road to the Trulands’
revocable trusts.

(Mary Truland Decl., Ex. C, at 1.)

The

second deed is dated September 25, 2009 and transfers Dr. and
Mrs. Truland’s fee simple interest in 15330 Darnestown Road to
the same revocable trusts.

(M. Truland Decl., Ex. D, at 1.)

In

the State of Maryland Land Instrument intake sheet attached to
the 15800 Darnestown Road deed, the property is listed as
residential and as the grantees’ (Dr. and Mrs. Truland’s)
principal residence.

(M. Truland Decl., Ex. C, at 8.)

In the

instrument intake sheet attached to the 15330 Darnestown Road
deed, the property is listed as non-residential and not as the

19

Though the original Indemnity Agreement lists the address as
located in Virginia, it is actually in Maryland.
39

grantees’ principal residence.

(M. Truland Decl., Ex. D, at 9.)

The parcels, according to the intake sheet, have different tax
identification numbers.

And as best the Court can tell from the

legal description of the land, the deeds represent two separate
yet adjacent parcels.

In light of this and the contractual

language exempting the “home” of Dr. and Mrs. Truland located at
15800 Darnestown Road, the Court finds that the parcel of
property identified in Exhibit D to Mary Truland’s declaration
as at 15330 Darnestown Road is subject to the Trulands’
indemnity obligation.
The Trulands cite the appraisal report done for JP
Morgan as evidence that the two parcels of land both constitute
15800 Darnestown Road.

(M. Truland’s Decl., Ex. E.)

While

practically the Trulands may hold out both parcels as part of
one united homestead, legally the parcels are separate.

The

Court is bound to enforce the plain meaning of the Indemnity
Agreement, which exempts only the property at 15800 Darnestown
Road, not “Ithaca Farm,” which is both 15800 Darnestown Road AND
15330 Darnestown Road.

Therefore, the only part of “Ithaca

Farm” that is exempt from the Trulands’ indemnity obligation is
the parcel of land identified in the deed in Exhibit C to Mary
Truland’s declaration as 15800 Darnestown Road.
d. Park Potomac Condominiums (Investor) 1 and 2

40

While the Trulands state that their interests in Park
Potomac Condominiums (Investor) 1 and 2 are joint, they argue
that their interests cannot be pledged because of the antihypothecation provisions in the operating agreements.
Truland’s Mem. in Supp. at 12-13.)

(M.

Plaintiffs claim that the

Trulands are free to transfer their interests under the
operating agreements because such a transfer only requires the
approval of Dr. Truland.

(Pls.’ Opp. to M. Truland’s Mot. at

24-25.)
Section 9.4 of the Parc Potomac (Investor) 1 and 2
operating agreements 20 states that “[a]ny hypothecation,
mortgage, pledge or collateralization of a Membership Interest
is expressly prohibited, and any such purported hypothecation,
mortgage, pledge or collateralization in any manner by any
person shall be null and void and of no legal consequence.”
Truland Decl., Exs. R & S, at 19.)

(M.

Thus, the Trulands cannot

pledge their membership interests in Park Potomac (Investor) 1
and 2 as collateral.
However, this prohibition on using the interests as
collateral does not mean that the Trulands cannot sell or
transfer the interests.

Section 9.1 states “[u]nless otherwise

permitted in this Section 9, no Member may assign, transfer,

20

The operating agreements for both Park Potomac (Investor) 1
and 2 appear to be the same.
41

sell or otherwise dispose of its Membership Interest, 21 or any
portion thereof, except with the consent of the Manager and only
after complying with the provisions of Section 9.3 hereof.”
(Id.)

“‘Manager’ shall initially mean Robert W. Truland, and

subsequently any person who (i) has become a Manager pursuant to
the terms of this Agreement, and (ii) has not ceased to be a
Manager pursuant to the terms of this Agreement.”

(Id. at 6.)

Thus, it is within Dr. Truland’s power to authorize a sale or
transfer of a membership interest, provided that the sale or
transfer complies with the registration requirements of Section
9.3. 22

Additionally, the operating agreements contemplate that

such sales or transfers will take place, as other sections
govern the rights of the assignee (Section 9.6), whether the
transferee is qualified to become a member (Section 9.7), and
how to distribute profits and losses when a membership interest
has been transferred (Section 9.8).

21

(Id. at 20.)

Therefore, in

“‘Membership Interest’ means an ownership interest in the
Company corresponding to a Percentage Interest to which the
interest relates and includes any and all benefits to which the
holder of such a Membership Interest may be entitled as provided
in this Agreement, together with all obligations of such Person
to comply with the terms and provisions of this Agreement.” (M.
Truland Decl., Exs. R & S, at 6.) Exhibit A to the operating
agreements state that the Trulands have a ten percent interest
in each company. (Id. at 27.)
22
The Trulands have not shown that there are other managers
under the operating agreements. The Court assumes Dr. Truland
is the only manager and thus the only person whose permission is
necessary to effectuate a transfer of the Trulands’ membership
interests.
42

order to satisfy the judgment, the Trulands must transfer their
membership interests in Park Potomac Condominiums (Investor) 1
and 2 to Plaintiffs.
e. Other Assets
The Court entered a preliminary injunction covering
certain assets.

Now that there has been a final determination

of liability, the art and the funds in escrow shall be released
to Plaintiffs.

Furthermore, since there is no dispute that RWT

I, LLC is a joint asset (see M. Truland Decl. ¶¶63-69), it is
also subject to the indemnity obligation.
B. Fraud Counts
Plaintiffs have brought four claims for fraud.

Two of

the claims relate to the purported fraudulent inducement to
enter into the Indemnity Agreement in 2011 and center on the
alleged 2011 financial statement.

The remaining two counts

involve inducement to continue the bonding relationship and
focus on the alleged 2013 financial statement.

The Trulands

contest the validity of these financial statements, in
particular Mrs. Truland, who argues that she was not aware of
the existence of these financial statements until this
litigation commenced. 23

(M. Truland Decl. ¶¶ 97-101.)

23

The Court notes that this litigation position is at odds with
what is already in evidence. The 2011 and 2013 financial
statements were admitted into evidence at the first preliminary
43

In light of the Court’s holding regarding Dr.
Truland’s retirement accounts and Park Potomac Condominiums
(Investor) 1 and 2, the only assets which could be the subject
of a fraud action are Mrs. Truland’s separate interests in
Belgarde, Truland Partners, and Truland Holdings.

Therefore,

the Court’s inquiry will focus on these three assets.
The elements of fraud in the inducement are (1)
false representation of material fact; (2) reliance; and (3)
inducement to enter the contract.
699 S.E.2d 483, 489 (Va. 2010).

Abi-Najm v. Concord Condo.,
As to two of the assets,

Truland Partners and Truland Holdings, the fraud claims must
fail.

These assets appear nowhere in the 2011 or 2013 financial

statements, and neither party has pointed the Court to where
they are located on the financial statements.

Since the assets

are not listed, there is no way that Plaintiffs could have
relied on the value of these assets in agreeing to enter into
the bonding relationship.
This leaves Belgarde as the lone asset that may have
been fraudulently misrepresented.

On the 2011 financial

statement, Belgarde is listed as having a valuation of $16
million.

(Pls.’ Mem. in Supp., Ex. 5, at 3.)

The Trulands had

an $800,000.00 investment in the property, all of which is

injunction hearing in October 2014 without any objection from
Robert or Mary Truland. (10/30/14 TRO Hr’g [Dkt. 47].)
44

listed as joint.

(Id.)

The 2013 financial statement lists the

Trulands as having a $758,400.00 investment in Belgarde, of
which the Trulands each have half ($379,200.00).
Hr’g [Dkt. 47], Ex. 4.)

(10/30/14 TRO

Summary judgment for the Trulands is

appropriate on Counts VI and VII, the counts arising from the
2013 financial statement, because there was no misrepresentation
about Mrs. Truland’s separate interest in Belgarde on that
statement.

Thus, the fraud inquiry centers on whether the 2011

representation that Belgarde was a joint interest constitutes
actionable fraud.
Mrs. Truland previously moved to dismiss the fraud
counts on grounds that Plaintiffs were barred by the statute of
limitations.

As this is an affirmative defense, the Court

declined to entertain that argument at the motion to dismiss
stage.

(3/3/15 Mem. Op. [Dkt. 145] at 14-15.)

Mrs. Truland

appropriately renews this argument in her motion for summary
judgment.
The statute of limitations for fraud actions in
Virginia is two years “after the cause of action accrues.”
Code Ann. § 8.01-243(A).

Va.

The cause of action does not accrue

until such fraud is discovered “or by the exercise of due
diligence reasonably should have been discovered.”
Ann. § 8.01-249(1).

Va. Code

Ultimately, the burden is on the plaintiff

to “prove that, despite the exercise of due diligence, he could
45

not have discovered the alleged fraud except within the two-year
period before he commenced the action.”

Dunlap v. Texas

Guaranteed, 590 F. App’x 244, 244 (4th Cir. 2015) (citing
Schmidt v. Household Fin. Corp., II, 661 S.E.2d 834, 839 (Va.
2008)).
The Supreme Court of Virginia has interpreted the due
diligence requirement in § 8.01-249 as “such a measure of
prudence activity, or assiduity, as is properly to be expected
from, and ordinarily exercised by, a reasonable and prudent man
under the particular circumstances; not measured by any absolute
standard, but depending on the relative facts of the special
case.”

STB Marketing Corp. v. Zolfaghari, 393 S.E.2d 394, 397

(Va. 1990) (citations and internal quotation marks omitted).
Such a determination is fact-specific to each case.

Id.

Mrs. Truland argues that the statute of limitations
began to run at some point in 2011, either before the Indemnity
Agreement was signed or soon thereafter in the fall when
Plaintiffs began to have “major concerns” about the financial
condition of the Truland Entities.
at 13.)

(M. Truland’s Mem. in Supp.

At the latest, Mrs. Truland argues that Plaintiffs

should have been aware of the alleged fraud by October 16, 2012,
the date the Truland Entities received notice of default in
connection with the Utah Data Center project, one of the Truland

46

Entities’ biggest jobs.

(Id. at 13-14.)

Both contentions must

be rejected.
Mrs. Truland’s first argument is premised on the idea
that Plaintiffs had a duty to verify the assets were as the
Trulands allegedly stated on the financial statement.

While

this may have been a prudent business practice, Plaintiffs had
no such duty.

In fact, it was the Trulands who had a common law

duty to provide accurate information about their ability to
perform under the contract, which in this case meant the
Trulands had to present an accurate representation of assets
available to satisfy the their indemnity obligation.

See

Nystrom v. Servus Robots, LLC, No. LF-1517-3, 2000 WL 249246, at
*3 (Va. Cir. Ct. Mar. 2, 2000) (“[Defendant] clearly would have
a common law duty not to defraud and mislead [plaintiff] at the
time of formation about [defendant’s] intentions to perform
under the alleged contract.

A contrary finding would extinguish

actions for fraud in the inducement of contracts.”).
Mrs. Truland’s second argument does not put this suit
outside of the reach of the statute of limitations.

Learning

that the Truland Entities defaulted on a large project could
not, in and of itself, have put Plaintiffs on notice that
representations about Mrs. Truland’s interest in Belgarde were
misrepresented on the 2011 financial statement.

To be sure, it

appears that as a consequence of that default, Plaintiffs
47

required that the Indemnity Agreement be revised to remove any
cap on the Trulands’ individual liability and that as part of
the revision, Plaintiffs requested the 2013 financial statement
from the Trulands.
194-95.)

(M. Truland’s Mem. in Supp., Ex. 3, at 172,

But the mere fact of default would not have been a

reasonable basis to question the representations in the 2011
statement.

Furthermore, the point is academic, as this suit was

filed on August 20, 2014, within two years of the October 16,
2012 default. 24
Nonetheless, summary judgment for Mrs. Truland is
appropriate on Counts IV and V as well because the
misrepresentation of her separate interest in Belgarde is not
material.

Had the Trulands 25 correctly labeled Mrs. Truland’s

separate interest in Belgarde, the 2011 financial statement
would have reflected $400,000.00 less that would have been
available to satisfy the indemnity obligation.
24

This means that

The amended complaint “relates back” to the original filing
date, since the addition of the fraud counts “asserts a claim or
defense that arose out of the conduct, transaction, or
occurrence set out – or attempted to be set out – in the
original pleading[.]” Fed. R. Civ. P. 15(c)(1)(B).
25
Mrs. Truland argues that she cannot be liable for fraud
because she never directly participated in the preparation of
both financial statements and was unaware of their existence
until this litigation. (M. Truland Decl. ¶¶ 97 -101.) She also
challenges Plaintiffs’ assertion that there was an actual or
apparent agency relationship between her and her husband in
relation to the preparation of the financial statements. (M.
Truland Opp. at 30.) In light of the Court’s finding that the
misrepresentation is not material, it is not necessary to reach
the agency issue.
48

instead of having $91,079,600.00 available to indemnify
Plaintiffs (the sum of the “RWT Individual” and the “Joint”
columns), Plaintiffs would have seen that there was only
$90,679,600.00 available.

Put another way, the Trulands

misstated their assets by less than one percent.

Considering

the contract involved several million dollars and Plaintiffs are
sophisticated construction sureties, such a minute difference
could not have been material to Plaintiffs’ decision to enter
into a bonding relationship.

See In re Batromeli, 303 B.R. 254,

273-74 (Bankr. D. Conn. 2004) (finding that debtor’s
misstatement of personal assets by eight percent on a personal
financial statement submitted to surety was not a “material
falsity” within the meaning of the Bankruptcy Code).
C. Fraudulent/Voluntary Conveyance
The Trulands move for summary judgment on the
fraudulent/voluntary conveyance count.

Plaintiffs allege that

on or about December 27, 2012, after the Indemnity Agreement and
First Amendment were signed but just before the Second Amendment
was signed, Dr. Truland created a new irrevocable trust known as
the Truland 2012 Family Generation Trust (“2012 Family Trust”).
(Am. Compl. ¶ 62.)

Mrs. Truland is the trustee and the

Trulands’ four children are the beneficiaries of the trust.
(Id.)

Dr. Truland transferred a $4.5 million interest in

49

Truland Partners to the 2012 Family Trust without consideration.
(Id. ¶ 63.)
Virginia’s fraudulent conveyance statute states:
Every
gift,
conveyance,
assignment
or
transfer of, or charge upon, any estate,
real or personal . . . with intent to delay,
hinder, or defraud creditors, purchasers, or
other persons of or from that they are or
may be lawfully entitled to shall, as to
such
creditors,
purchasers,
or
other
persons, their representatives or assignees
be voided.
This section shall not affect
the title of a purchaser for valuable
consideration, unless it appear that he had
notice of the fraudulent intent of his
immediate grantor or of the fraud rendering
void the title of the granter.
Va. Code § 55-80.

Because of the difficulty of establishing

“actual intent,” evidence of fraud is generally circumstantial.
In re Porter, 37 B.R. 56, 63 (Bankr. E.D. Va. 1984).

Courts

have relied on badges of fraud, which consist of facts and
circumstances which the law admits to be signs of fraud and from
which the fraudulent intent may be inferred.

Id.

Badges of

fraud include:
(1)
retention
of
an
interest
in
the
transferred property by the transferor; (2)
transfer
between
family
members
for
allegedly antecedent debt; (3) pursuit of
the transferor or threat of litigation by
his creditors at the time of the transfer;
(4)
lack
of
or
gross
inadequacy
of
consideration
for
the
conveyance;
(5)
retention or possession of the property by
transferor; and (6) fraudulent incurrence of
indebtedness after the conveyance.

50

Id. (citing Hutcheson v. Savings Bank of Richmond, 105 S.E 677,
(Va. 1921)).
A party seeking to void a transfer establishes a prima
facie case by demonstrating a badge of fraud.

Porter, 37 B.R.

at 63 (citing Temple v. Jones, Son & Co., 19 S.E.2d 57, 62 (Va.
1942)).

Plaintiffs here identify three badges of fraud: Dr.

Truland’s retention of an interest in the transferred property,
the lack of consideration given for the transfer, and Dr.
Truland’s “fraudulently” incurred indebtedness after the
transfer by signing the Second Amendment to the Indemnity
Agreement.

(Pls.’ Opp. to M. Truland’s Mot. at 32.)

badges are supported by the record.

These

Article 3 of the trust,

titled “Grantor Trust,” allows Dr. Truland to reacquire trust
assets by substituting other property of equivalent value and
gives the trustee power to make loans to Dr. Truland without
adequate security.

(M. Truland Decl., Ex. T, at 2.)

Article 4

of the trust provides that the income or principal shall not be
used for Dr. Truland’s benefit or to pay any legal obligation of
Dr. Truland or the trustee.

(Id. at 3.)

Dr. Truland

transferred the interest to the trust for no consideration. 26
(M. Truland Decl., Ex. U, at 1.)

26

Finally, in December of 2012

Since no consideration was given, the last sentence of § 55-80
does not apply and the Court need not consider whether Mrs.
Truland, as trustee of the 2012 Family Trust, was aware of the
alleged fraud.
51

talks were on-going with Plaintiffs about amending the Indemnity
Agreement, which was done in January of 2013 and removed the cap
on the Trulands’ individual liability.

(M. Truland Mem. in

Supp., Ex. B, Martha Gaines Dep., at 42 (“Q: Do you remember
when, after July 26, 2011, when the next time was that XL
requested a personal financial statement from the Trulands? A:
It would have been towards the end of 2012.”).) 27
“[W]here the transaction assailed is between . . .
near relatives, only slight evidence is required to shift the
burden of showing its bona fides.”
302, 305 (Va. 1935).

Fowlkes v. Tucker, 180 S.E.

Plaintiffs have established a prima facie

case of fraudulent conveyance.

In order to succeed on their

motion for summary judgment, the Trulands must put forth
evidence that the transaction was legitimate.

Beyond the

27

Gaines also testified about the circumstances surrounding the
removal of the limitation on liability.
Q: Could you tell me what precipitated the
second amendment?
A: Sure.
As a result of the financial
results from The Truland Group – you know,
when I say ‘The Truland Group,’ the Truland
group of companies – as a result of the
financial results and the claim on the Utah
Data Center, and the condition of the
corporate
entities,
we
demanded,
asked,
requested that Mr. and Mrs. Truland provide
unlimited personal indemnity for all bonds
going forward.
That was a – you know, a
condition of continued support as a result
of the facts and circumstances of that time.
(M. Truland Mem. in Supp., Ex. B, Martha Gaines Dep., at 46-47.)
52

conclusory statement that they lacked the requisite fraudulent
intent, the Trulands have put forward no evidence 28 to rebut the
badges of fraud.

(M. Truland Mem. in Supp. at 14-16.)

As

Plaintiffs have not moved for summary judgment on this count,
the Court is forced to deny summary judgment to the Trulands and
let this issue proceed to trial.
Though it is not pled in a count separate from the
fraudulent conveyance, Plaintiffs also seek to set aside the
transfer to the 2012 Family Trust on a theory of voluntary
conveyance under Virginia Code § 55-81. 29

To avoid a transfer

pursuant to this provision, the party challenging the transfer
must demonstrate “(1) a transfer was made, (2) the transfer was
not supported by consideration deemed valuable in law, and (3)
28

In Mrs. Truland’s memorandum in support, she states the
assignment was made at the advice of their estate advisor, John
Dedon, an attorney. (M. Truland Mem. in Supp. at 15.) But at
the time she filed her motion for summary judgment, Mrs. Truland
did not have Dedon’s declaration and did not seek leave of court
to file the declaration out of time. Therefore, the Court
granted Plaintiffs’ motion to strike Dedon’s declaration as
untimely. (3/25/15 Order [Dkt. 175].)
29
That statute states:
Every gift, conveyance, assignment, transfer
or charge which is not upon consideration
deemed valuable in law, or which is upon
consideration of marriage, by an insolvent
transferor, or by a transferor who is
thereby rendered insolvent, shall be void as
to creditors whose debts shall have been
contracted at the time it was made, but
shall not, on that account merely, be void
as to creditors whose debts shall have been
contracted or as to purchasers who shall
have purchased after it was made.
53

the transfer was done when the transferor was insolvent or the
transfer rendered the transferor insolvent.”
F.3d 352, 353 (4th Cir. 2001).

In re Meyer, 244

Summary judgment for the

Trulands is appropriate on this theory because Plaintiffs have
not shown that Dr. Truland’s transfer to the 2012 Family Trust
was done at a time he was insolvent or that that the transfer
made him insolvent.

Therefore, the lone issue for trial is

whether Dr. Truland fraudulently conveyed an interest in Truland
Partners to the 2012 Family Trust to put the interest beyond the
reach of Plaintiffs.
D. A & E Technologies
Plaintiffs move for summary judgment against A&E
Technologies, a signatory to the Indemnity Agreement.
was issued to A&E Technologies.

[Dkt. 5.]

proof of service as to A&E Technologies.

A summons

However, there is no
See Fed. R. Civ. P.

4(l)(1) (“Unless service is waived, proof of service must be
made to the court.”).

A&E Technologies has not filed any answer

or responsive pleading in this case. 30
The appropriate procedural mechanism for getting a
judgment against A&E Technologies is to move for default.

Fed.

R. Civ. P. 55(a) (“When a party against whom a judgment for

30

Terry Bowman appeared on behalf of A&E Technologies at the TRO
hearing on August 21, 2014. [Dkt. 10.] Mr. Bowman is not an
attorney and did not make any further appearances before this
Court.
54

affirmative relief is sought has failed to plead or otherwise
defend, and that failure is shown by affidavit or otherwise, the
clerk must enter the party’s default.”).

Therefore, the Court

will deny Plaintiffs’ motion for summary judgment against A&E
Technologies.
IV. Conclusion
For the foregoing reasons, the Court will (1) grant
Plaintiffs’ Motion for Summary Judgment; (2) deny Robert
Truland’s Motion for Summary Judgment as to his retirement
accounts and Count IX; (3) grant Robert and Mary Truland’s
Motions for Summary Judgment as to Counts IV, V, VI, and VII;
and (4) deny Mary Truland’s Motion for Summary Judgment as to
Counts I, II, III, and IX.

Plaintiffs’ motion in limine to

exclude the expert report of Robert Morelewicz and Robert
Truland’s motion in limine to exclude the expert opinion of Mary
Jeanne Anderson will be denied as moot.

An appropriate order

will issue.

May 11, 2015
Alexandria, Virginia

/s/
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE

55