Limor v. Anderson (In re Scarbrough)

Case Type:
Case Status:
Affirmed in part and Reversed in part
18-8028, 2019 WL 1418698 (6th Circuit, Mar 28,2019) Published
Summary Judgment incorrectly entered in action to avoid constructively fraudulent transfer where there were issues of material fact as to whether Debtor was insolvent as of date of the transfer.
Procedural context:
The Chapter 7 Trustee brought an action challenging two transfers of property as constructively fraudulent. The Bankruptcy Court granted Summary Judgment in favor of Trustee and the Transferee appealed. The Sixth Circuit Bankruptcy Appellate Panel reversed and remanded for further proceedings.
Debtor and her "domestic partner" dissolved their relationship and divided their assets, with Debtor retaining three vehicles valued at $7800 while her partner received two parcels of real property valued at $175,000. Debtor also retained the right to occupy one of the parcels but later vacated the property and transferred the right to occupy to her partner for no consideration. Debtor filed for relief under Chapter 7 and the Trustee brought an action against Debtor's partner to recover the two parcels. The Bankruptcy Court granted summary judgment finding that on the date of the transfers (2014) Debtor was insolvent based on Debtor's statements in the Bankruptcy filings. The BAP reversed, holding that Debtor's bankruptcy filing was not close enough in time to allow use of the Schedules to determine solvency on the transfer date. The BAP also held that the Settlement Agreement did not list all assets of Debtor and as of the date of the transfer Debtor held a one-half interest in property that was not accounted for. Evidence did not "concretely" demonstrate that Debtor was insolvent and drawing inferences in favor of Debtor presented clear issues of fact.
Buchanan, Dales and Opperman

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