Duffield Associates, Inc. v. Lockwood Brothers, LLC, 9067-VCMR

Duffield Associates performed geotechnical work for Meridian (owned by Darin Lockwood) on property developed by Windmill Estates LLC; a 2008 bilateral corporate guarantee bound Meridian and Windmill to pay Duffield.
By 2009–2010 Duffield was owed $82,153.17; Windmill faced a $250,000 valuation shortfall and an August 29, 2010 loan maturity with County Bank.
On August 2–3, 2010, Windmill members distributed approximately $414,295.85 received from litigation proceeds; $240,000 was disbursed in $80,000 checks to Don, Darin, and John Lockwood.
Duffield obtained a Superior Court judgment against Windmill and Meridian for $82,153.17 (plus interest) which remained unpaid; Duffield then sued Windmill members for fraudulent conveyance in Chancery Court.
The record showed Windmill was insolvent at the time of the disbursements, the transfers were not for reasonably equivalent value, and Don and John authorized/received the distributions; Pamala’s membership in Windmill and involvement in the transfers were disputed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the August 3, 2010 distributions were fraudulent transfers under 6 Del. C. §1304	Transfers were made while Windmill was insolvent and without reasonably equivalent value, so fraudulent under §1304(a)(2)	Insolvency depends on property valuation at transfer; factual dispute requires trial	Court granted summary judgment: transfers were fraudulent as to Don and John (insolvency undisputed; no reasonably equivalent value)
Whether defendants provided reasonably equivalent value for distributions	No; payments exceeded any capital contributions — not repayment for value provided	Argued distributions repaid prior advances to Windmill (thus gave value)	Court found Frick’s testimony undermined defendants’ repayment claim; no genuine dispute on value prong; defendants failed to rebut
Need to prove actual intent to defraud under §1304(a)(1)	Not necessary because §1304(a)(2) applies (no reasonably equivalent value + insolvency)	Asserted actual intent is disputed and requires trial	Court held actual intent need not be shown where §1304(a)(2) applies; summary judgment appropriate against Don and John
Appropriate remedies for fraudulent transfer	Seek constructive trust, full accounting, disgorgement	No opposition to remedies raised	Court imposed constructive trust, ordered full accounting and disgorgement against proceeds transferred to Don and John; denied summary judgment as to Pamala due to disputed membership/involvement

Judah v. Delaware Trust Co., 378 A.2d 624 (Del. 1977) (summary judgment standard and viewing evidence in favor of nonmoving party)
Emerald Partners v. Berlin, 726 A.2d 1215 (Del. 1999) (issues not briefed are waived)
Hogg v. Walker, 622 A.2d 648 (Del. 1993) (equitable remedies available for fraudulent conveyances)
Trenwick Am. Litig. Trust v. Ernst & Young, L.L.P., 906 A.2d 168 (Del. Ch. 2006) (remedies for fraudulent transfer are broad and permit equitable discretion)
U.S. v. West, 299 F. Supp. 661 (D. Del. 1969) (burden on creditor to prove conveyance fraudulent)