MERRILL RANCH PROPERTIES, LLC v. AUSTELL Et Al.

FOURTH DIVISION
BARNES, P. J.,
RAY and MCMILLIAN, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
March 28, 2016
In the Court of Appeals of Georgia
A15A2313. MERRILL RANCH PROPERTIES, LLC v. AUSTELL et al.
MCMILLIAN, Judge.
Appellant Merrill Ranch Properties, LLC (“Plaintiff” or “Appellant”) brought
suit1 against appellees2 seeking, among other things, to set aside certain transfers and
conveyances that Plaintiff contends were made in violation of Georgia’s Uniform
Fraudulent Transfers Act, OCGA § 18-2-70 et seq. (the “UFTA”).3 The trial court
1
Plaintiff’s initial complaint was filed on July 30, 2012, and amended
numerous times to add additional claims against additional defendants.
2
There are numerous appellees listed on the notice of appeal and the relevant
parties will be more specifically identified below.
3
We will refer to the operative provisions of the UFTA as they existed at the
time the challenged transfers were made and the complaint was filed, while noting
that the UFTA has since been amended in 2015 and is now called the Uniform
Voidable Transactions Act (“UVTA”). See Ga. L. 2015, p. 996, § 4A-1 (effective July
1, 2015).
granted summary judgment to appellees, and Plaintiff filed this appeal. We now
affirm in part, reverse in part, and remand for further proceedings as more fully set
forth below.
The underlying facts, although somewhat complex and confusing,4 are largely
undisputed.5 In 2006, the Peoples Bank of Winder, Georgia (“Peoples Bank”)
extended a $100 million revolving line of credit (the “Loan”) to WHM Merrill Ranch
Investments LLC (the “Borrower”). The Loan was evidenced by a Loan Agreement
dated September 28, 2006 and a Promissory Note executed “of approximately even
date herewith”; it was secured by certain real property located in Arizona. The Loan
was guaranteed by real estate developer W. Harrison Merrill (“Harrison Merrill”) and
4
Some of the confusion in this case stems from the frequency in which
“Merrill” appears as part of the name of the persons or entities involved or referenced
in this case, including Plaintiff and various defendants, and from the fact that a
number of the trusts and LLCs involved and referenced in this case also have
overlapping names. We have attempted to simplify the facts whenever possible, and
have eliminated details that, while possibly pertinent to post-appeal or potential post-
summary judgment proceedings, are not relevant to our analysis.
5
“This Court reviews the grant of summary judgment de novo, viewing the
evidence in the light most favorable to the nonmovant.” Godwin v. Mizpah Farms,
LLLP, 330 Ga. App. 31, 31 (766 SE2d 497) (2014).
2
eight trust entities6 he controlled (collectively “Guarantors”). In addition to Peoples
Bank, numerous other banks held participation interests in the Loan.
Over time, $89 million was extended to the Borrower under the Loan.
However, the Borrower was unable to make the required payments on the debt, and
the Loan was declared in default on or around September 26, 2008. A few months
later, in February 2009, Peoples Bank purchased by credit bid the Arizona property
securing the Loan, and in April 2009, Peoples Bank instituted proceedings in Arizona
against the Borrower and Guarantors to recover the deficiency owing after the sale
of the property (the “Arizona litigation”).
While the Arizona litigation was pending, on September 28, 2009, Peoples
Bank entered into a written agreement with a “Steering Committee of Subparticipant
Lenders,” to sell its interest in the Loan and collateral (“Agreement”). The Agreement
expressly provided that an unidentified legal entity would be created prior to closing
to consummate the transaction, and Plaintiff was formed about a month later for this
6
The trust Guarantors were a single trust created under Line Item Nine of the
Will of Arthur Jesse Merrill (“the Item Nine Will Trust”), and seven “breakout” trusts
— WHM Management Trust; WHM Merrill Ranch Trust; Merrill Communities &
Resorts Trust (MCRT); WHM Chattahoochee Hills Trust; WHM Copper Mountain
Trust; WHM Paloma Trust; and WHM Sky Valley Trust. The breakout trusts were
created from the original Item Nine Will Trust as part of an organizational
restructuring in 2006.
3
purpose. On October 28 and 29, 2009, Peoples Bank executed a series of documents,
including an allonge to the note, which transferred and assigned its interests in the
Loan to Plaintiff, and Plaintiff wired the purchase money for the Loan to Peoples
Bank.
After Plaintiff was substituted for Peoples Bank in the Arizona litigation, the
parties settled the suit for $10 million, plus post-judgment interest, and the judgment
was entered accordingly on June 14, 2011.7 Plaintiff petitioned to domesticate the
judgment in the Superior Court of Fulton County, Georgia and on August 15, 2011,
the court entered an order domesticating the Arizona judgment.
During post-judgment discovery, Plaintiff determined that shortly after the
Loan was declared in default in September 2008, three limited liability companies
with corporate relationships to Merrill companies8 made transfers of unsecured real
property (collectively the “2008 LLC Real Estate Transfers”) to various newly-
created entities that were, in turn, directly or indirectly “owned” by trusts established
7
The defendants in the Arizona litigation — i.e., the original Borrower and
Guarantors of the Loan, will hereinafter be referred to as “Judgment Debtors.”
8
The 2008 Real Estate Transfers were made by WHM Paloma Investments,
LLC; WHM Sky Valley Investments LLC; and Indian Creek Resort LLC. These
entities will be referred to as the 2008 LLC Real Estate Transferors.
4
for the benefit of Harrison Merrill, his then-wife whom he was in the process of
divorcing, and his five children (“Children’s Trusts”). Although the 2008 LLC Real
Estate Transferors were neither guarantors of the Loan nor Judgment Debtors and the
property transferred had not been pledged to secure the Loan, the LLC Real Estate
Transferors were at least partially owned by several of the Judgment Debtors.
Additionally, Plaintiff discovered that at the beginning of 2010, the Item Nine
Will Trust, which is one of the Judgment Debtors, transferred its membership
interests in five limited liability companies to the Merrill Family Partnership, LLC,
which was “owned” by the Children’s Trusts (“Item Nine Will Transfer”). And
another transfer also occurred sometime at the beginning of 20109 when Merrill
Mining LLC, transferred stock it owned in S-Corporation Florence Copper Mining
Inc.10 either directly or indirectly to the Children’s Trusts (“Merrill Mining
Transfer”). Although neither Florence Copper nor Merrill Mining were guarantors of
9
Although the stock transfer documents were dated June 8, 2008, evidence was
presented that the documents were actually executed between June 1, 2009 and
February 18, 2010, and there now appears to be some agreement between the parties
that this transfer took place sometime in January or February 2010; accordingly, we
will assume likewise for the purpose of this appeal.
10
Florence Copper Mining Inc. was not named as a defendant below and is not
a party to this appeal.
5
the Loan or Judgment Debtors, Judgment Debtor MCRT was a member of Merrill
Mining, LLC.
On July 30, 2012, Plaintiff filed its initial complaint11 under the UFTA seeking
to set aside or impose a constructive trust on the assets involved in the Merrill Mining
Transfer. Shortly before the suit was filed, on March 9, 2012, and then after the suit
was filed on December 19, 2013, Plaintiff obtained charging orders against the
membership and ownership interests of various Judgment Debtors in numerous
limited liability companies,12 including the 2008 LLC Real Estate Transferors and the
Merrill Mining Transferor.
Plaintiff amended its complaint several times, and on January 9, 2014, Plaintiff
filed a motion and proposed amended complaint to add additional defendants and/or
11
Judgment Debtors MCRT and Harrison Merrill, and non-judgment debtors
Merrill Mining, LLC, the Trustees of the Children’s Trusts, and Harrison Merrill’s
children were named as defendants in the initial complaint. Plaintiff alleges that as
a result of this transfer, proceeds from the imminent sale of the mining rights owned
by Florence Copper were distributed to the Children’s Trusts instead of Merrill
Mining, LLC, who would have, according to Plaintiff, then been required by its
Operating Agreement to distribute the proceeds to Judgment Debtor MCRT.
12
Pursuant to OCGA § 14-11-504 (a), “[o]n application to a court of competent
jurisdiction by any judgment creditor of a member or of any assignee of a member,
the court may charge the limited liability company interest of the member or such
assignee with payment of the unsatisfied amount of the judgment with interest.”
6
fraudulent transfer claims based on the 2008 Real Estate Transfers and the 2010 Item
Nine Will Transfer. On April 22, 2014, the trial court granted Plaintiff’s motion to
amend, and on April 29, 2014, Plaintiff amended its complaint to add these fraudulent
transfer claims and defendants.
Subsequently, the parties filed opposing motions for summary judgment, and
following a hearing, the trial court denied Plaintiff’s summary judgment motion and
granted Appellees’ motion, entering judgment in favor of Appellees on all claims.
The trial court based its ruling on the following findings: (1) the Loan assignment to
Plaintiff was ineffective and thus Plaintiff was not the holder of the Loan; (2) even
if the assignment of the debt was proper, the fraud claims were not assignable as a
matter of law; (3) Plaintiff lacked standing under the UFTA because it was not a
creditor or subsequent creditor of the non-judgment debtor LLC transferors; and (4)
the Loan, domesticated Arizona Judgment, and charging orders did not create “a
direct nexus” or basis of direct liability between Plaintiff and the LLC transferors. As
more fully set forth below, we now reverse in part and affirm in part the trial court’s
order and remand for further proceedings consistent with this opinion.
1. As a preliminary matter, we must decide if the Loan was properly assigned
to Plaintiff. To answer this question, we must determine if, as the trial court found,
7
the assignment of the Loan to Plaintiff was ineffective because Peoples Bank had
already assigned the Loan to the Steering Committee pursuant to the terms of the
Subparticipant Agreement.
We begin our analysis by turning to the relevant provisions of the Agreement,
which we review under the usual rules of contract construction, JBM Investments,
LLC v. Callahan Indus., Inc., 293 Ga. App. 580, 582 (1) (667 SE2d 429) (2008),
mindful that “[w]here contract language is unambiguous, construction is unnecessary,
and the court simply enforces the contract according to its clear terms.” (Citation and
punctuation omitted.) Losey v. Prieto, 320 Ga. App. 390, 391 (739 SE2d 834) (2013).
Contrary to the trial court’s findings, the Subparticipant Agreement did not effect an
immediate transfer and assignment of the Loan by People’s Bank to the Steering
Committee of the subparticipant banks. Rather, the unambiguous terms of the
Agreement show that the actual transfer and assignment of the Loan was to be made
at a future date. For example, the Agreement expressly provides that the Seller’s
rights in the Loan and Loan documents would be sold, transferred, assigned and
conveyed “[u]pon satisfaction of the terms and conditions contained herein, . . .”
including a due diligence review conducted to the “Buyer’s” satisfaction of the
relevant documents. (Emphasis supplied.) Further, the Agreement also expressly
8
provides that a not-yet-in-existence entity, such as the Plaintiff, would be created by
the Buyer for the purpose of actually consummating the transaction, defined in the
Agreement as the Closing. The evidence appears undisputed that the Plaintiff was
formed about a month later to close the Loan, and that the only “Closing” that took
place occurred on or about October 28, 2009, when an allonge13 was executed, the
guaranties and security instruments were transferred and assigned to Plaintiff, and
Plaintiff wired the purchase money to Peoples Bank.
“A party may assign to another a contractual right to collect payment, including
the right to sue to enforce the right. But an assignment must be in writing in order for
the contractual right to be enforceable by the assignee.” (Citation and punctuation
omitted.) Hosch v. Colonial Pacific Leasing Corp., 313 Ga. App. 873, 874 (2) (722
SE2d 778) (2012); Ware v. Multibank 2009-1 RES-ADC Venture, LLC, 327 Ga. App.
245, 251-52 (4) (758 SE2d 145) (2014). Here, the transfer and assignment of the Loan
occurred with the execution of the allonge and other documents from Peoples Bank
to Plaintiff. Accordingly, the trial court erred by granting summary judgment to
13
“An allonge is a piece of paper attached to a promissory note on which
parties write endorsements for which there is no room on the instrument itself.”
(Citation omitted.) Milestone v. David, 251 Ga. App. 832, 832, n.1 (555 SE2d 163)
(2001).
9
Defendants based on a finding that the Loan had not been effectively assigned to
Plaintiff.14
2. That does not end our inquiry, however, because the trial court also cited
other reasons why the Plaintiff lacked standing to pursue its claims. We begin this
portion of our analysis by looking to the relevant provisions of the UFTA.
At the pertinent time, OCGA § 18-2-74 (a) (1) (2014), the actual fraud
provision of the UFTA pursuant to which Plaintiff filed its claims, provided as
follows:
A transfer made or obligation incurred by a debtor is fraudulent as to a
creditor, whether the creditor’s claim arose before or after the transfer
was made or the obligation was incurred, if the debtor made the transfer
or incurred the obligation: (1) With actual intent to hinder, delay, or
defraud any creditor of the debtor.”15
14
The Defendants also make the additional argument that, even assuming the
Loan was properly assigned to Plaintiff, there was no evidence presented that the
claims at issue in this case were assigned to Plaintiff. But this argument is unavailing
as to the Judgment Debtors named as parties in this case, as they are bound by the
Arizona Judgment, which was entered by consent and domesticated in Georgia after
Plaintiff was substituted as a party in the Arizona litigation. Moreover, we need not
parse this issue as to the non-judgment debtors since Plaintiff’s UFTA claims fail
against them for other reasons as set forth in Divisions 2 and 3.
15
Whether a transfer is made with actual intent to defraud a creditor is
determined by reference to subsection (b) of OCGA § 18-2-74, which contains a non-
exhaustive list of factors, commonly called the “badges of fraud,” which may be
10
Thus, a creditor is entitled to seek relief16 under the UFTA for transfers made,
or obligations incurred, by a debtor with actual intent to hinder, delay, or defraud any
creditor of the debtor. However, while under the UFTA, a fraudulent transfer claim
can only be brought by a “creditor” against a “debtor,” the UFTA contains broad
definitions of those terms. A “creditor” is a “person who has a claim”; a debtor is a
“person who is liable on a claim”; and a “claim” is “a right to payment, whether or not
the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.” OCGA §
18-2-71 (3), (4), (6) (2014); RES-GA Hightower, LLC v. Golshani, 334 Ga. App. 176,
178 (1) (a) (778 SE2d 805) (2014), cert denied, January 11, 2016.17 The UFTA also
includes an expansive definition of “transfer,” which includes “every mode, direct or
indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting
considered in determining intent to defraud. See Target Corp. v. Amerson, 326 Ga.
App. 734, 737 (1) (755 SE2d 333) (2014). The transferors’ intent was not addressed
by the trial court and is not an issue in this appeal.
16
The relief available to a creditor under Georgia’s UFTA against a fraudulent
transfer is set out in OCGA § 18-2-77, and includes, among other things, avoidance
of the transfer to the extent necessary to satisfy the creditor’s claim and attachment
against the asset transferred or other property of the transferee.
17
Thus, Georgia’s version of UFTA does not distinguish between creditors
who hold judgments against persons liable to them on a debt and those who do not.
11
with an asset or an interest in an asset and includes payment of money, release, lease,
and creation of a lien or other encumbrance.” OCGA § 18-2-71 (12) (2014). And
“asset” is defined as “property of a debtor” with certain exceptions. OCGA § 18-2-71
(2) (2014).
Applying these definitions here, it is clear that Plaintiff meets the definition of
a “creditor” under the UFTA with respect to the Judgment Debtors, who were the
original Borrower and Guarantors of the Loan, and appellees make no contention
otherwise. But only one of the transfers in this case — the Item Nine Will Trust
Transfer — was made by a Judgment Debtor.18 The question then is whether Plaintiff
is a creditor with standing to seek relief under the UFTA with regards to the other
four transfers, which were made by non-judgment debtor limited liability companies.
According to Plaintiff, it became a creditor of these non-judgment debtor LLC
transferors by virtue of the charging orders, which created a “right to payment” from,
and thus, according to Plaintiff, a “claim” against, any LLC entity named in the
18
Instead, Appellees argue this claim must fail because it is time-barred under
OCGA § 18-2-79 (1) of the UFTA. We will address this contention in Division 4.
12
charging orders, including the LLCs who made the 2008 Real Estate Transfers and
the 2010 Merrill Mining Transfer.19
Plaintiff misapprehends the nature of a charging order. As we recently
explained in Gaslowitz v. Stabilis Fund I, LP, 331 Ga. App. 152,152, n.2 (770 SE2d
245) (2015),20 “[a] charging order is [simply] a statutory provision [found in OCGA
§ 14-11-504] ‘that enables the judgment creditor (of a member of a limited liability
company) to realize the value of the judgment debtor-member’s distributional
interest, while at the same time protecting both the (limited liability company’s)
ability to operate and the interests of the other members.’ 51 AmJur2d Limited
Liability Companies § 23.” “Thus, from the limited liability company’s standpoint,
it is business as usual except that any distributions to the member subject to the
charging order are diverted to the judgment creditor.” (Emphasis supplied.) Mahalo
19
Although Plaintiff cites to both the Arizona and Georgia limited liability
company acts and charging order provisions, A.R.S. § 29-601 et seq. and Chapter 11
of Title 14 of the Georgia Code, the charging orders in this case were issued by a
Georgia court and make no reference to the Arizona statute. Thus, we will confine our
analysis to Georgia’s charging order statutes.
20
In Gaslowitz, we held that a judgment creditor of a member of an LLC has
no right to seek an accounting of the assets of the LLC. 331 Ga. App. at 155 (2).
13
Investments III, LLC v. First Citizens Bank & Trust Co., Inc., 330 Ga. App. 737, 743
(769 SE2d 154) (2015).21
Importantly for the issue we must decide in this case,
[a] charging order . . . gives no direct remedy against company property,
Nigri v. Lotz, 216 Ga. App. at 205 (2), and company assets . . . would
not be subject to satisfaction of [a member’s individual] debt. “A
member has no interest in specific limited liability company property.”
OCGA § 14-11-501 (a). See generally Acree v. McMahan, 276 Ga. 880,
881 (585 SE2d 873) (2003) (a third-party creditor may not disregard
corporate form so as to reach corporate assets to satisfy claims against
an individual corporate insider); Word v. Stidham, 271 Ga. App. [435,
437 (609 SE2d 651) (2004)] (“[T]he holder of an interest in [a limited
liability] company has no interest in specific property owned by the
company.”)
Gaslowitz, 331 Ga. App. at 156 (2).
21
The issue in Mahalo was whether an application for a charging order against
a member’s distributional interests in a LLC must be filed by the judgment creditor
as a separate action, apart from the original action in which the judgment creditor
obtained the judgment against the member of the LLC, and in a court with jurisdiction
over the LLC. We concluded that under the LLC charging order statute, it is only
necessary for a court to have jurisdiction over the judgment debtor to have the
authority to enter a charging order against the judgment debtor’s distributional
interests in an LLC, and that, therefore, an action for a charging order may be filed
under the same case number and in the same court that issued the original unsatisfied
judgment against the debtor. Mahalo, 330 Ga. App. at 743.
14
It is clear from the foregoing that a charging order does not create a debtor-
creditor relationship between the judgment creditor who obtained the charging order
and the LLC whose member’s interests are being charged. However, in its reply and
supplemental briefs to this Court, Plaintiff makes additional arguments concerning
its standing to challenge the LLC transfers, starting with the general premise that
LLCs are not immune from claims under the UFTA. We agree that LLCs are not
immune from claims under the UFTA if a debtor-creditor relationship exists between
the person seeking relief under UFTA and the LLC (e.g., if the LLC owed a debt to
the plaintiff). But where, as in this case, a creditor of a member of the LLC does not
also have a debtor-creditor relationship with the LLC, the creditor does not also
become a creditor of the LLC by obtaining a charging order against the LLC.
Accordingly, the creditor does not have standing under the UFTA to set aside a
transfer of assets made by the LLC solely by obtaining a charging order against the
LLC.
Plaintiff also argues that it has standing under the UFTA to set aside the Merrill
Mining Transfer because Judgment Debtors Harrison Merrill and MCRT, through its
trustee, “participated” in the transfer by “instruct[ing]” that the transfer be made and
executing the necessary documents. As stated above, a transfer is broadly defined
15
under OCGA § 18-2-71 (12) of the UFTA to include both direct and indirect transfers
of an asset or an interest in an asset, and an asset is defined as property of the debtor.
Thus, under the plain language of the UFTA, participating or even directing that a
transfer of property be made has no consequence unless the asset was property of the
debtor, which it was not here. And although as Plaintiff argues, our Supreme Court
in Bishop v. Patton, 288 Ga. 600, 608, n.5 (706 SE2d 634) (2011), overruled in part
on other grounds, SRB Investment Svcs., LLLP v. Branch Banking and Trust Co., 289
Ga. 1, 5 (3), n.7 (709 SE2d 267) (2011), has recognized that the transfer need not be
made by the debtor directly, that case involved the withdrawal of funds by the
debtor’s son in a jointly owned bank account and is thus readily distinguishable
because the funds being transferred were actually property of the debtor (as well as
the son/joint account holder).
Moreover, although Plaintiff disavows that it is proceeding under an “alter
ego” theory, Plaintiff is essentially asking to disregard the corporate form and find
that a creditor of a member of an LLC is also a creditor of the LLC for purposes of
attaching the LLC’s assets and preventing their transfer in order to satisfy the debt.
In a somewhat different context, our Supreme Court has held that a creditor may not
reach the assets of a corporation or LLC to satisfy a debt of one of its shareholders
16
or members. Acree v. McMahan, 276 Ga. 880, 881 (585 SE2d 873) (2003). See also
Otero v. Vito, 2009 U. S. Dist. LEXIS 86638, at *19 (M.D. Ga. 2009) (citing Acree,
held that Georgia law does not recognize “reverse veil-piercing,” that is, piercing of
the veil to the extent that it would allow an ‘outsider,’ such as a third party creditor,
to pierce the veil in order to reach a corporation’s assets to satisfy claims against an
individual corporate insider); see generally In re Christine M. Stadler, No. 04-91944,
2005 Bankr. LEXIS 571, at *3 (Bankr. N.D. Ga. March 30, 2005) (LLC in which
debtor in bankruptcy was the sole member was not itself a debtor subject to the
automatic stay provisions of the Bankruptcy Code). We find that authority persuasive
here.
Based on the foregoing, we agree with the trial court that the Plaintiff did not
have standing under the UFTA to set aside the transfer of assets made by the non-
judgment debtors in the 2008 Real Estate Transfers or the 2010 Merrill Mining LLC
Transfer. Accordingly, the trial court properly granted summary judgment to
Defendants on these claims.
3. Defendants further argue that, as the trial court found, an additional ground
exists to grant summary judgment on Plaintiff’s claims to set aside the allegedly
fraudulent 2008 Real Estate Transfers which, in addition to being made by a non-
17
judgment debtor, were made before the Loan was assigned to Plaintiff in 2009.
Specifically, Defendants argue that Plaintiff’s claims to set aside these pre-Loan
assignment transfers also fail under our Supreme Court’s long-standing precedent in
Security Feed & Seed Company of Thomasville, Inc. v. NeSmith, 213 Ga. 783 (102
SE2d 37) (1958).
Applying NeSmith, we recently considered this exact issue in RES-GA
Hightower, LLC v. Golshani, in which we determined whether “an assignee to a debt
[has] standing to assert a claim that the debtor fraudulently conveyed property in
violation of . . . the UFTA.” 334 Ga. App. at 176. Although noting that “under the
plain terms of the UFTA, an assignee to debt ordinarily would qualify as a ‘creditor’
who has a ‘claim,’”22 id. at 178 (1) (a), we were nevertheless constrained by NeSmith
and our Supreme Court’s interpretation of Georgia’s Anti-Assignment Statute, OCGA
§ 44-12-24, to hold that because such claims are not assignable under Georgia law,
an assignee of debt is precluded from pursuing a pre-assignment fraudulent transfer
claim under the UFTA. Golshani, 334 Ga. App. at 180 (1) (a).
22
For purposes of this analysis only, and notwithstanding our holding in
Division 2, we will assume a debtor-creditor relationship existed between the
transferors of the 2008 Real Estate Transfers and the Plaintiff.
18
Although Plaintiff makes a number of arguments23 in an attempt to limit the
application of NeSmith, we previously considered and rejected the same or
substantially similar arguments in Golshani. Moreover, Plaintiff’s attempt to
distinguish Golshani as “irrelevant” to the present case by arguing that our opinion
“presumes that there is a contract which actually assigns a claim of fraud or
fraudulent transfer” (emphasis deleted) is likewise unavailing. Golshani and the
present case are factually indistinguishable insofar as both involve standing to assert
a fraudulent transfer claim based on the assignment of a debt.
It is also important to note, as we did in Golshani, that the General Assembly
amended the UFTA in 2015 so that the term “creditor” is now defined as “a person
who has a claim, regardless of when the person acquired the claim, together with any
successors or assigns.” OCGA § 18-2-71 (4) (additional language italicized).
Additionally, the 2015 amendment added subsection (c) to OCGA § 18-2-74, so that
section now provides that “[i]f a creditor is a successor or assignee, a right of action
under subsection (a) of this Code section is automatically assigned to such successor
23
Golshani was decided on October 16, 2015, and appellant’s initial brief to
this Court in this case was filed on August 31, 2015 and its reply brief was filed on
October 8, 2015. Thus, appellant first posited these arguments in its supplemental
brief filed after oral argument.
19
or assignee.” However, these amendments only apply to transfers made or obligations
incurred on or after July 1, 2015, and only to a right of action accruing after July 1,
2015, and are of no effect here. See Ga. L. 2015, pp. 996, 1029, § 7-1 (d).
Accordingly, based on the foregoing, we affirm the trial court’s order to the extent it
determined that Plaintiff does not have standing under the UFTA to contest the
transfers that occurred prior to the assignment of the Loan.
4. Lastly, we turn to the only transfer at issue in this case that was made by a
Judgment Debtor — the Item Nine Will Trust Transfer. Although Defendants
acknowledge, at least implicitly and assuming the Loan was effectively assigned, that
Plaintiff has standing as a creditor under the UFTA to pursue this claim, they argue
that summary judgment was also properly granted as to this fraudulent transfer claim
because it is time-barred pursuant to OCGA § 18-2-79 (1).24 That section, which
applies to claims such as the ones in this case brought under the actual fraud
provisions of OCGA § 18-2-74 (a) (1), provides that “[a] cause of action with respect
to a fraudulent transfer or obligation . . . is extinguished unless action is brought . .
. within four years after the transfer was made or the obligation was incurred or, if
24
Although raised below, the trial court was not required to reach this issue
based on its determination that Plaintiff could not maintain any of its claims against
any of the defendants because the assignment of the Loan was ineffective.
20
later, within one year after the transfer or obligation was or could have reasonably
have been discovered by the claimant.” OCGA § 18-2-79 (1) (2014).
The parties appear to agree that the Item Nine Will Transfer occurred on or
about January 1, 2010, and the record shows that Plaintiff first sought to assert a
claim based on this transfer on January 9, 2014, at the earliest, when it sought leave
to amend its complaint. Thus, this claim is time barred unless Plaintiff is entitled to
invoke the one year discovery period also included in OCGA § 18-2-79 (1), which
begins to run when the transfer “was or could reasonably have been discovered” by
the party seeking relief under the UFTA. As Defendants acknowledge, issues
concerning a plaintiff’s diligence usually must be resolved by the trier of fact, but
nevertheless urge us to decide this issue as a matter of law. However, we decline to
do so here in light of the fact that the record more than strongly suggests that efforts
were made to conceal some or all of the transfers from Plaintiff and especially since
the trial court has not considered this issue in the first instance. Accordingly, this case
is remanded to the trial court for further proceedings on this issue.
Judgment affirmed in part and reversed in part, and case remanded with
direction. Barnes, P. J., and Ray, J., concur.
21