302 Ga. 375
Ga.2017Background
- Georgia Trust obtained a $1.2M judgment against Virgil Lovell in 2011; Georgia Trust later failed and the FDIC became receiver and sold the bank's judgment to Community & Southern Bank (CSB).
- CSB sued Lovell, his wife, and several affiliated companies under the Uniform Fraudulent Transfers Act (UFTA) to avoid multiple conveyances CSB alleged were made to defraud creditors.
- The trial court dismissed several UFTA claims under OCGA § 9-11-12 (b)(6); CSB appealed via interlocutory review.
- Key contested issues included whether the UFTA can reach transfers by entities not themselves debtors, whether CSB had effectively withdrawn certain claims before dismissal, and whether FIRREA’s extender statute preempts Georgia’s four-year/one-year UFTA time bar (former OCGA § 18-2-79(1)) and state anti-assignment law.
- The Supreme Court of Georgia affirmed dismissal of claims attacking a transfer from a corporation (Focus on Design) to a separate LLC (Ward Land Holdings), vacated dismissal of claims CSB withdrew by amended complaint (Florida property), reversed dismissal of a Habersham County conveyance claim tied to Ankony Land (remanding to evaluate FIRREA preemption and other defenses), and reversed dismissal of derivative claims for fees and punitive damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether UFTA permits avoidance of a transfer by a non-debtor corporation (Focus on Design → Ward Land) | UFTA should set aside the transfer because Lovell controls the entities and intended to defraud creditors | Corporate-separateness bars reaching corporate assets to satisfy shareholder's debt; no allegation Focus on Design was Lovell's debtor | Dismissal affirmed — UFTA only avoids transfers of a debtor's property; corporate assets not reachable absent other grounds |
| Whether plaintiff properly withdrew Florida-property claims before dismissal | CSB amended complaint to drop those counts under OCGA § 9-11-15(a) before court ruled | Defendants said voluntary dismissal rule (OCGA § 9-11-41) governs and trial court could dismiss | Dismissal vacated — amendment under § 9-11-15(a) effectively withdrew those claims; trial court lacked authority to rule on them |
| Whether FIRREA’s extender statute preempts Georgia’s UFTA time bar (former OCGA § 18-2-79(1)) and defeats timeliness of CSB’s claim against conveyance to wife/Ankony Land | As FDIC successor-assignee, CSB contends FIRREA extends the limitations period (3 years) and preempts the state statute of repose | Defendants argued OCGA § 18-2-79(1) is a statute of repose not preempted by federal extender statutes; alternatively, claim was barred or unassignable | Dismissal reversed and remanded — state court erred treating extender statutes as categorically inapplicable to statutes of repose; trial court must determine extenter statute applicability and preemption and related assignment/notice issues |
| Whether derivative claims for attorney's fees and punitive damages should be dismissed | CSB: derivative remedies survive if any substantive claim remains | Defendants: derivative claims fail because all substantive claims were dismissed | Reversed — because at least one substantive claim remains or may be revived on remand, derivative claims may be viable |
Key Cases Cited
- RES-GA McDonough, LLC v. Taylor English Duma LLP, 302 Ga. 444 (2017) (Georgia decision addressing assignment of fraud claims under state law)
- CTS Corp. v. Waldburger, 573 U.S. 1 (2014) (Supreme Court held CERCLA limitations provision does not preempt state statutes of repose)
- FDIC v. RBS Secs., 798 F.3d 244 (5th Cir. 2015) (extender statute displaces conflicting statutes of repose; persuasive federal-circuit authority)
- Nat. Credit Union Admin. Bd. v. Nomura Home Equity Loan, Inc., 764 F.3d 1199 (10th Cir. 2014) (extender statute analysis and preemption of repose)
- Fed. Hous. Fin. Agency v. UBS Ams. Inc., 712 F.3d 136 (2d Cir. 2013) (extender statute interpreted to cover statutes of repose)