537 B.R. 797
Bankr. S.D. Tex.2015Background
- Venezia Edwards (Debtor) filed Chapter 7 on July 11, 2013; Allison Byman is the chapter 7 trustee. Debtor received discharge Oct. 16, 2013. Trustee sued siblings William Denson and Deborah Washington to recover value of Debtor’s one‑third interests in two parcels and related insurance proceeds.
- Father died intestate in 1987; Debtor and siblings each inherited one‑third interests in San Jacinto County property (29.7 acres) and two adjacent Houston lots (Terry Street House and Lot).
- Debtor agreed years earlier the San Jacinto property would be Washington’s if Washington paid all ad valorem taxes; no deed was recorded then. Debtor executed and recorded a quitclaim to Washington on March 18, 2013. One‑third interest value was stipulated at $60,000.
- Debtor agreed years earlier to give Terry Street House to siblings in exchange for the Lot; siblings conveyed their Lot interests to Debtor in 1999 (recorded). Debtor executed and recorded a quitclaim of the Terry Street House to siblings on March 14, 2013. The house burned in Nov. 2012; insurer issued checks Jan. 2013 payable jointly to the three siblings; checks were endorsed and deposited by Denson.
- Trustee asserted avoidance claims: preferences under 11 U.S.C. § 547 and fraudulent transfers under 11 U.S.C. § 548 and Texas Uniform Fraudulent Transfer Act (TUFTA), Tex. Bus. & Com. Code §§ 24.005, 24.006. Trial occurred Feb. 2015; parties stipulated key facts and values.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether San Jacinto transfer is avoidable as a preference under § 547 | Trustee: deed recorded Mar. 18, 2013 is a transfer within one year to an insider for antecedent debt and Debtor was insolvent, so avoidable | Washington: she acquired Debtor’s one‑third long before by oral conveyance or adverse possession, so no transfer within preference period | Held: Transfer perfected on Mar. 18, 2013; Trustee proved all § 547 elements; money judgment $60,000 against Washington |
| Whether San Jacinto transfer is avoidable under TUFTA § 24.006(b) (present creditors) | Trustee: transfer to insider for antecedent debt while Debtor insolvent and insider knew or had reasonable cause to know insolvency | Washington: similar defense—no transfer or acquired earlier | Held: TUFTA § 24.006(b) satisfied; judgment $60,000; Trustee entitled to reasonable attorney’s fees |
| Whether Washington acquired Debtor’s San Jacinto interest by adverse possession or oral conveyance >10 years earlier | Washington: asserted oral gift/conveyance or adverse possession predating recording | Trustee: no evidence of ouster, date, or elements of oral exception to statute of frauds; deed shows agreed conveyance and late recording | Held: Washington failed to prove adverse possession or oral conveyance; March 18, 2013 is controlling perfection date |
| Whether Terry Street House and insurance proceeds are avoidable fraudulent transfers under § 548 / TUFTA for actual intent to defraud | Trustee: transfers (quitclaim and endorsement/deposit) were close to bankruptcy and to insiders, indicating fraudulent intent | Denson/Washington: transfers satisfied antecedent exchange (agreement re: Terry Street) and reasonably equivalent value; no actual intent shown | Held: Transfers satisfied reasonably equivalent value; Trustee failed to prove actual fraudulent intent; fraudulent‑intent claims dismissed |
Key Cases Cited
- Hooks v. Bridgewater, 111 Tex. 122, 229 S.W. 1114 (Tex. 1921) (enforcement of oral contract for sale where payment, possession, and valuable improvements exist)
- Fandey v. Lee, 880 S.W.2d 164 (Tex. App.—El Paso 1994) (applying oral‑contract exception to statute of frauds)
- Rittgers v. Rittgers, 802 S.W.2d 109 (Tex. App.—Corpus Christi 1990) (same)
- Dyer v. Cotton, 333 S.W.3d 703 (Tex. App.—Houston [1st Dist.] 2010) (co‑tenant adverse possession requires ouster or repudiation)
- King Ranch, Inc. v. Chapman, 118 S.W.3d 742 (Tex. 2003) (co‑tenant cannot adversely possess absent clear repudiation)
- Murphey v. Murphey, 131 S.W.2d 158 (Tex. Civ. App.—Waco 1939) (co‑tenant’s right to occupy property)
- Stern v. Marshall, 131 S. Ct. 2594 (U.S. 2011) (bankruptcy court constitutional authority discussion cited for final orders)
- Wellness Int’l Network, Ltd. v. Sharif, 135 S. Ct. 1932 (U.S. 2015) (parties may consent to final judgment by bankruptcy court)