Robert G. Wing v. Bernard C. Buchanan, et al.
- Summarized by Brandon Bickle , Gable & Gotwals, PC
- 11 years 5 months ago
- Citation:
- U.S. Court of Appeals, 10th Circuit, Case No. 12-4123; Appeal from the U.S. District Court, District of Utah, Case No. 2:08-cv-00803
- Tag(s):
-
- Ruling:
- The 10th Circuit reversed the summary judgment order and remanded the case. At issue was the applicable statute of limitations. The limitations period under Utah's UFTA is four years from the date of the transfer, or if later, one year after the transfer "was or could reasonably have been discovered by the claimant." The transfers occurred more than four years prior to the filing of Plaintiff's lawsuit. Moreover, Defendants argued that the existence of Plaintiff's fraudulent transfer claim was discoverable more than a year prior to the filing of the case, and at the very latest by the time Debtor's Bankruptcy Trustee was appointed in the Bankruptcy Case. In response, Plaintiff argued that he, as receiver, was the "claimant" for purposes of the statute, and he could not have discovered the existence of the claim until after his appointment. The Court disagreed, holding that the entities over which Plaintiff was appointed receiver, not Plaintiff himself, were the "claimants," and a fact question existed as to whether Bankruptcy Trustee could have reasonably discovered the claim, in whole or in part, more than a year prior to the filing of Plaintiff's lawsuit. The Court applied the "adverse domination theory" in holding that the discovery period could not have commenced sooner, while Debtor's principals were still in control of the company. Under this theory, the discovery period on such a claim is tolled until the principals engaged in the fraud are removed. The Court concluded its analysis by rejecting Plaintiff's argument that the "equitable principles that govern a receivership" preclude application of a statute of limitations defense or give the District Court the discretion to disregard it. While acknowledging that in an equitable receivership proceeding a court has broad equitable powers concerning distribution of receivership assets, the Court recognized that the case at bar, strictly speaking, is not a receivership. Additionally, the funds at issue are not property of a receivership estate (at least not yet), and the issues in the case go beyond the mere distribution of assets. (Note: the Court expressly states, in a footnote at the beginning of its decision, that the decision is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel, and may only be cited for its persuasive value.)
- Procedural context:
- Order of summary judgment entered in favor of Plaintiff against Defendants on Plaintiff's fraudulent transfer claim. Order appealed by Defendants.
- Facts:
- On May 30, 2007, a voluntary chapter 11 bankruptcy case was commenced by VesCor Capital Inc. ("Debtor"), one of several entities involved in an alleged Ponzi scheme, in the U.S. Bankruptcy Court for the District of Utah ("Bankruptcy Case"). On July 6, 2007, a chapter 11 trustee was appointed in the Bankruptcy Case ("Bankruptcy Trustee"), based on findings that Debtor engaged in, among other things, "pre-petition fraud . . . and a history of transactions with companies affiliated with the [D]ebtor." Notwithstanding the filing of the Bankruptcy Case, in February 2008, the Securities and Exchange Commission ("SEC") filed a separate lawsuit in the U.S. District Court for the District of Utah against Debtor and several affiliated entities, alleging securities violations ("SEC Lawsuit"). Plaintiff in the case at bar was appointed receiver in the SEC Lawsuit in May 2008. In October 2008, Plaintiff initiated his own, separate lawsuit (the case at bar), against Defendants, who were investors in the alleged Ponzi scheme, seeking avoidance and recovery of fraudulent transfers under the Utah Fraudulent Transfer Act ("UFTA"), based, among other things, on payments the investors received in excess of the amount of their original investments. Plaintiff moved for summary judgment, which was granted in his favor against Defendants.
- Judge(s):
- Briscoe, Chief Judge; Brorby, Senior Circuit Judge; and Murphy, Circuit Judge.
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