United States of America v. Wight et al

Filing 51

ORDER denying the Government's 45 Motion for Reconsideration signed by U.S. District Judge John C Coughenour. (TH)

THE HONORABLE JOHN C. COUGHENOUR

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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UNITED STATES OF AMERICA,

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Plaintiff,

CASE NO. C16-1556-JCC
ORDER

v.

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MARJORIE A. WIGHT, et al.,

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Defendants.

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This matter comes before the Court on the Government’s motion for reconsideration

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(Dkt. No. 45). Having thoroughly considered the parties’ briefing and the relevant record, the

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Court DENIES the motion for the reasons explained herein.

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Motions for reconsideration are generally disfavored. W.D. Wash. Local Civ. R. 7(h)(1).

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Reconsideration is only appropriate where there is “manifest error in the prior ruling or a

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showing of new facts or legal authority which could not have been brought to [the Court’s]

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attention earlier with reasonable diligence.” Id. “‘A motion for reconsideration should not be

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used to ask the court to rethink what the court had already thought through—rightly or

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wrongly.’” Premier Harvest LLC v. AXIS Surplus Insurance Co., No. C17-0784-JCC, Dkt. No.

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61 at 1 (W.D. Wash. 2017) (quoting U.S. v. Rezzonico, 32 F. Supp. 2d 1112, 1116 (D. Ariz.

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1998)).

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The Court previously granted summary judgment to the Government, setting aside
ORDER
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Defendant Marjorie Wight’s constructively fraudulent transfer of real property to Defendant

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Matthew Migel. (Dkt. No. 43 at 5.) In doing so, the Court ruled that the Government’s additional

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claim for a $100,000 judgment against Mr. Migel was moot. (Id.); (see Dkt. No. 36 at 10–11);

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(see also Dkt. No. 1 at 8–10) (Counts I and IV). The Government argues that this was error

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because Washington’s Uniform Fraudulent Transfers Act (“UFTA”), Wash. Rev. Code

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§§ 19.40.071(1)(a), .081(2), allows a court to both void a transfer and grant a money judgment

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against the transferee. (Dkt. No. 45 at 3.) This assertion is both illogical and inconsistent with the

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UFTA. It is illogical because once the transfer is set aside, the basis for a judgment against Mr.

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Migel goes away. It is void ab initio. The Government claims that without the judgment it is not

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protected should Mr. Migel not fully repay his $100,000 debt to U.S. Bank, for which it recorded

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a Deed of Trust against the property. (Id. at 4.) But any potential loss the Government may incur

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relating to satisfaction of U.S. Bank’s Deed of Trust is the result of the Government’s failure to

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promptly record its tax liens before U.S. Bank recorded its Deed of trust. (See Dkt. No. 40). The

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Government’s error does not entitle it to both void the transfer and seek resulting damages.

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Moreover, the Government’s argument is inconsistent with the UFTA. While not a model

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of clarity on this issue, a close reading of the Act, coupled with a review of its legislative history,

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demonstrates that the statute does not support the Government’s interpretation. Washington

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adopted the UFTA to replace the Uniform Fraudulent Conveyances Act (“UFCA”). See 1987

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Wash. Sess. Laws 1907–13. The UFCA gave creditors two remedies when a fraudulent

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conveyance occurred: set aside the conveyance or attach the property conveyed. Wash. Rev.

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Code § 19.40.090 (1985). The Act did not allow for a direct judgment against a transferee. Id.

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Whereas, the UFTA does allow a creditor to seek a direct judgment against a transferee. See

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1987 Wash. Sess. Laws 1911–12. However, one can only be obtained “to the extent a transfer is

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avoidable . . . for the value of the asset transferred.” Wash. Rev. Code 19.40.081(2) (emphasis

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added). Therefore, to the extent the transfer is voided, rather than simply avoidable, no judgment

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can be entered because no asset was legally transferred. The committee reports confirm this
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interpretation. See S.B. Rep. on H.B. 94 at 2, 50th Leg., Reg. Sess. (Wash 1987); H.B. Rep. on

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H.B. 94 at 2, 50th Leg., Reg. Sess. (Wash. 1987) (describing the mutually exclusive remedies of

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avoidance, attachment of the asset transferred, or attachment of other property held by the

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transferee).

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The Government, in suggesting otherwise, relies heavily on Thompson v. Hanson, 239

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P.3d 537 (Wash. 2009). (See Dkt. Nos. 45 at 3, 50 at 3.) But the issue before the Thompson court

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was not whether a creditor could both seek to set aside a transfer and receive a judgment against

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the transferee. 239 P.3d at 539–41. It was whether an intent to defraud is necessary for a

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judgment against the transferee (lower courts had split on the issue). Id. Accordingly, the

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Thompson court did not set aside the fraudulent transfer. Id. at 543. It simply affirmed the

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plaintiff’s judgment against the transferee. Id. This was the sole relief the plaintiff sought before

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the lower court. See Thompson v. Hanson, 174 P.3d 120, 123 (Wash. App. 2007).

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For the foregoing reasons, the Government’s motion for reconsideration (Dkt. No. 45) is
DENIED.
DATED this 25th day of July 2018.

A

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John C. Coughenour
UNITED STATES DISTRICT JUDGE

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ORDER
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