Harris Gold v. Gateway Bank, FSB ( 2013 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-1935
HARRIS JASON GOLD, Liquidating Trustee,
Plaintiff – Appellant,
v.
GATEWAY BANK, FSB,
Defendant – Appellee.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Anthony J. Trenga,
District Judge. (1:12-cv-00264-AJT-IDD; 08-13293-RGM; 10-01510-
RGM)
Argued: May 15, 2013 Decided: June 3, 2013
Before WILKINSON, MOTZ, and SHEDD, Circuit Judges.
Affirmed by unpublished opinion. Judge Shedd wrote the opinion,
in which Judge Wilkinson and Judge Motz joined.
ARGUED: Kenneth Oestreicher, WHITEFORD, TAYLOR & PRESTON, LLP,
Baltimore, Maryland, for Appellant. James Robert Schroll, BEAN,
KINNEY & KORMAN, PC, Arlington, Virginia, for Appellee. ON
BRIEF: Kevin G. Hroblak, WHITEFORD, TAYLOR & PRESTON, LLP,
Baltimore, Maryland; Christopher A. Jones, Bradford F.
Englander, WHITEFORD, TAYLOR & PRESTON, LLP, Falls Church,
Virginia, for Appellant. Heidi Meinzer, BEAN, KINNEY & KORMAN,
P.C., Arlington, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
SHEDD, Circuit Judge:
H. Jason Gold is the liquidating trustee of the bankruptcy
estate of Vijay K. Taneja and Financial Mortgage, Inc. (“FMI”). 1
Gold filed this action in bankruptcy court against Gateway Bank,
FSB, seeking to avoid monetary transfers FMI made to Gateway,
claiming they were fraudulent conveyances. Following trial, the
bankruptcy court dismissed Gold’s action, and the district court
affirmed that decision. Gold now appeals, arguing that the
bankruptcy court erred in determining that Gateway met its
burden to establish the good-faith affirmative defense under 11
U.S.C. § 548(c) regarding three transfers FMI made to Gateway on
December 11, 2007 (the “Xu transfers”). Specifically, Gold
contends that the bankruptcy court erred by finding that Gateway
did not have actual knowledge or inquiry notice of FMI’s
fraudulent purpose in making those transfers when Gateway
received the payments. In light of this asserted error, Gold
further contends that the district court erred in affirming the
bankruptcy court’s order. We affirm.
We review the legal conclusions of both the district court
and the bankruptcy court de novo, and (like the district court)
1
Taneja used FMI, a mortgage loan originator, to perpetrate
a massive Ponzi scheme involving mortgage loans. See In re
Taneja, 453 B.R. 618, 620 (Bkrtcy., E.D. Va. 2011) (generally
describing the fraudulent scheme).
3
we review the factual findings of the bankruptcy court for clear
error. In re Nieves, 648 F.3d 232, 237 (4th Cir. 2011). Section
548 of the Bankruptcy Code “sets forth the powers of a trustee
in bankruptcy . . . to avoid fraudulent transfers,” and it
permits a trustee to attempt to set aside “not only transfers
infected by actual fraud but certain other transfers as well —
so-called constructively fraudulent transfers.” BFP v. R.T.C.,
511 U.S. 531, 535 (1994). However, § 548(c) “provides a
transferee with an affirmative defense where the transferee acts
in good faith and gives value to the debtor in exchange for such
transfer.” Perkins v. Haines, 661 F.3d 623, 626 (11th Cir. 2011)
(internal punctuation altered). 2 A finding of good faith under
§ 548(c) is primarily a factual determination subject to clear-
error review. In re Armstrong, 285 F.3d 1092, 1096 (8th Cir.
2002). Under the clear-error standard, we will not reverse a
bankruptcy court’s factual finding “that has support in the
evidence unless that finding is clearly wrong.” In re ESA
Environmental Specialists, Inc., 709 F.3d 388, 399 (4th Cir.
2013).
2
Section 548(c) provides: “[A] transferee or obligee of
such a transfer or obligation that takes for value and in good
faith has a lien on or may retain any interest transferred or
may enforce any obligation incurred, as the case may be, to the
extent that such transferee or obligee gave value to the debtor
in exchange for such transfer or obligation.” The “for value”
prong of § 548(c) is not at issue.
4
In reviewing Gold’s challenge to the bankruptcy court’s
good-faith finding, the district court explained:
The bankruptcy court determined, based on the
testimony presented, that Gateway bank had met its
burden of proving that, with respect to its handling
of the three Xu transfers, it followed its own routine
business practices, which were within the industry
standard. The bankruptcy court indicated that in
arriving at this determination, [it] gave “more weight
to the bank’s expert than the Trustee’s expert,”
finding the bank’s expert [Cisneros] “better
qualified” and finding “the inferences that [Cisneros]
drew from the information that he had were more
plausible.” The bankruptcy court also determined that
the testimony and evidence before him did not support
a finding that Gateway Bank had actual notice of fraud
when it accepted the transfers from FMI.
J.A. 1521-22. Although there is, perhaps, evidence in the record
to suggest a contrary finding, 3 our review of the parties’
arguments, the applicable law, and the record before us leads us
to agree with the district court that the bankruptcy court’s
finding of good faith is not “clearly wrong.”
Accordingly, we affirm the judgment of the district court.
AFFIRMED
3
Gold attaches much significance to the January 11, 2008,
email, in which Gateway employee Michael Kenny referred to the
Xu transfers as being “bogus,” arguing that this statement
establishes that Gateway knew of FMI’s fraudulent intent on
December 11, 2007, the date of those transfers. The bankruptcy
court carefully considered, and ultimately rejected, this
argument. See J.A. 1456-58. We find that the bankruptcy court’s
analysis regarding the email is not unreasonable.
5