Callaway Blue Springs, Lllp v. West Basin Capital, LLC
341 Ga. App. 535
Ga. Ct. App.2017Background
- In 2010 members of the Callaway family transferred land to Callaway Blue Springs, LLLP (CBS); Garners claimed those transfers were fraudulent as creditors of the Callaway Estate.
- Following a separate bench trial, the Garners obtained a $1,200,000 judgment against the Estate (2014) and then sued under the Uniform Fraudulent Transfer Act (UFTA) seeking to set aside the 2010 transfers.
- In October 2015 Garners assigned to West Basin Capital, LLC (West Basin) "all right, title, and interest" in the Garners’ claim and debt, and West Basin moved to be substituted as plaintiff and sought an interlocutory injunction to freeze the property/interest in CBS.
- CBS moved for summary judgment arguing the fraudulent-transfer claim under the UFTA is not assignable and therefore West Basin lacked standing; CBS also challenged the injunction’s factual basis.
- The trial court denied CBS’s summary judgment, permitted West Basin’s substitution, and granted the injunction; CBS appealed.
- The Court of Appeals reversed, holding West Basin lacked standing to pursue the UFTA claim because UFTA claims are not assignable and the 2015 UVTA amendments did not apply retroactively to pre-July 1, 2015 transfers/claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an assignee (West Basin) may be substituted as plaintiff to pursue a UFTA fraudulent-transfer claim assigned by the original creditor (Garners) | West Basin: assignment occurred after UVTA effective date so UVTA (which permits assignments) governs and gives West Basin standing | CBS: UFTA claims are not assignable under OCGA § 44-12-24 and controlling Georgia precedent; UVTA amendments do not apply to transfers/claims accrued before July 1, 2015 | Held: No — UFTA fraudulent-transfer claims are not assignable; West Basin lacks standing; UVTA amendments do not retroactively authorize suit on pre-2015 transfers/claims |
| Whether the trial court properly denied CBS’s summary judgment based on lack of standing | West Basin: assignment vested it with the Garners’ claim and right to pursue relief | CBS: Garners assigned away their interest, so no remaining creditor had standing under the UFTA | Held: Court reversed denial of summary judgment as to standing — West Basin lacks standing, so relief was improper |
| Whether trial court properly issued an interlocutory injunction to restrain transfers/encumbrances | West Basin: injunction necessary to preserve status quo and prevent dissipation of the allegedly fraudulently-transferred property | CBS: injunction improper because plaintiff lacked standing and factual findings were contested | Held: Court did not reach injunction merits after finding lack of standing and reversed injunction as relief to West Basin was erroneous |
| Whether the UVTA (2015) should be applied to claims or transfers predating July 1, 2015 because assignment occurred after that date | West Basin: right of action accrued upon assignment in October 2015, so UVTA applies | CBS: the statute applies only to transfers/obligations and rights of action accruing on/after July 1, 2015; assignor’s pre-UVTA claim cannot be converted into a UVTA claim | Held: UVTA does not apply to pre-July 1, 2015 transfers/claims here; prior precedent controls |
Key Cases Cited
- RES-GA Hightower, LLC v. Golshani, 334 Ga. App. 176 (Ga. Ct. App. 2015) (UFTA claims are not assignable; 2015 UVTA amendments apply only to transfers/rights accruing on or after July 1, 2015)
- Security Feed & Seed Co. of Thomasville, Inc. v. Ne Smith, 213 Ga. 783 (Ga. 1958) (assignee stands in the shoes of assignor; limits on assignability of fraud-based claims)
- Merrill Ranch Properties, LLC v. Austell, 336 Ga. App. 722 (Ga. Ct. App. 2016) (adopts Golshani holding that UFTA claims are unassignable)