Lamarca v. Jansen (In re Bifani)

Summarized by David Bury , Stone & Baxter, LLP
11 years 5 months ago

Citation:

LaMarca v. Jansen (In re Bifani), Nos. 14-10826, 14-11149 (11th Cir. Sep. 11, 2014)

Tag(s):

Ruling:

The Eleventh Circuit affirmed the District Court’s upholding of the Bankruptcy Court’s conclusion that certain real estate transfers were fraudulent under FUTA and reversed the District Court’s reversal of the Bankruptcy Court’s imposition of an equitable lien on property acquired with proceeds from the transfers. With respect to the fraudulent transfer claim under FUTA, the Court held that the Trustee had established “badges of fraud” and, when the burden shifted to Bifani (the debtor), Bifani was unable to rebut them. Specifically, the Court found that (1) LaMarca (the transferee), although not family or a spouse, was close enough to Bifani to constitute an insider, given their longtime relationship and her cohabitation with Bifani; (2) Bifani maintained control of property after they were transferred because he either continued to live in the property, received profits from the sale of the property, and/or used (or benefited from) the proceeds to purchase their next home; (3) the timing of the transfers was contemporaneous with a pending lawsuit involving Bifani and a former business partner; and (4) the consideration for the transfers was not reasonably equivalent, particularly given that the only possible consideration (debts owing from Bifani to LaMarca) was less than the value of the property, the debts were not credited upon the transfer, and the debts still existed as of the time of Bifani’s bankruptcy, as LaMarca was a creditor. When given the opportunity to rebut such “badges of fraud,” Bifani and LaMarca were unable to (as all three reviewing courts agreed). With respect to the equitable lien, the Court agreed with the Bankruptcy Court, concluding that, under Florida law, homestead property purchased with funds obtained by fraud (as in Bifani’s and LaMarca’s case) is not exempted from equitable liens, the idea being that the purpose of the lien is to avoid unjust enrichment (while the Florida homestead exemption cannot be employed as a shield and a defense after fraudulently imposing on others).

Procedural context:

Chapter 7 Trustee (Jansen) sued Chapter 7 Debtor (Mr. Bifani) and Ms. LaMarca, Bifani’s non-spouse partner, alleging, under the Florida Uniform Fraudulent Transfer Act (FUFTA), that Bifani had fraudulently transferred certain of his real property to LaMarca, and requesting an equitable lien against property acquired using the proceeds of the transfers. The Bankruptcy Court ruled for the Trustee on both counts. The District Court ruled for the Trustee on the FUTA claim, but reversed the Bankruptcy Court’s imposition of an equitable lien on the property. The Trustee appealed; LaMarca cross-appealed.

Facts:

Ronald Bifani owned several properties in Colorado. He met Arlene LaMarca and they moved in together. Bifani starting transferring real estate to LaMarca, including two properties that became the subject of a fraudulent transfer complaint in Bifani’s eventual Chapter 7 bankruptcy. LaMarca sold the properties, paid off the debt on the properties, and used the proceeds to purchase a new home in Sarasota for her and Bifani. Bifani later filed bankruptcy following a judgment being entered against him in a state court action involving a former business partner. Prior to the bankruptcy, LaMarca had also made various personal loans to Bifani. In the bankruptcy, the Trustee sued Bifani and LaMarca, alleging that the transfers were fraudulent and seeking an equitable lien on the Sarasota property on account of it having been acquired using the proceeds from the alleged fraudulent transfers.

Judge(s):

Wilson, Rosenbaum, and Kravitch, Circuit Judges

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