Essex Crane Rental Corp. and Vincent A. Morano v. Kenneth Beverly
371 S.W.3d 366
Tex. App.2012Background
- Essex sued McPherson, Sr. and Coastal and others in the underlying fraud/conspiracy matter after obtaining Essex’s judgment lien on McPherson, Sr.’s Montgomery House; TWC Settlement Agreement with an Assignment to HII was used to transfer rights to pay debts to an insider; HII, created by Farley, with Carter as registered agent, obtained agreed judgments totaling over $3 million; the Assignment was to shield assets from Essex and enable payment to HII; Beverly, McPherson, Sr.’s accountant and friend, purchased the bank note and lien on the Montgomery House and later rented it back to McPherson, Sr., amid disputed intent; the trial court granted Beverly’s quiet-title and Carter/Farley’s summary judgments, which were later reversed on rehearing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fraudulent transfer conspiracy evidence sufficiency | Essex shows Carter/Farley knowingly conspired to transfer/assets to avoid Essex. | Carter/Farley acted as attorneys and immunity applies; no conspiracy. | Essex raised material fact issues as to conspiracy participation. |
| Attorney immunity for alleged conspiratorial acts | Immunity does not apply to fraudulent-conspiracy acts by attorneys. | Chu immunity applies to advocacy; acts were within representation. | Immunity not established as matter of law; factual questions remain. |
| Timeliness/effect of Beverly’s objections to evidence; quiet title | Beverly’s objections were timely, and quiet-title relief was proper. | Objections untimely; quiet-title based on lack of valid lien. | Beverly’s objections improper; no-evidence judgment improper; quiet title reversal. |
| Beverly’s no-evidence summary judgment and standing to assert TUFTA claims | Essex had standing as a judgment creditor with a lien; evidence supports conspiracy. | Beverly challenges TUFTA elements; no evidence of conspiracy/standing. | Essex established material fact issues on conspiracy and standing; no-evidence judgment improper. |
Key Cases Cited
- Flores v. Robinson Roofing & Constr. Co., Inc., 161 S.W.3d 750 (Tex.App.-Fort Worth 2005, pet. denied) (badges of fraud; fraudulent intent for TUFTA must be proven by facts for jury)
- Hahn v. Love, 321 S.W.3d 517 (Tex.App.-Houston [1st Dist.] 2009) (no-evidence standard; badges of fraud; insider transfers)
- Chu v. Hong, 249 S.W.3d 441 (Tex. 2008) (attorney immunity; conspiracy to defraud requires knowing participation)
- Poole v. Houston & T.C. Ry. Co., 58 Tex. 134 (1882) (attorney cannot shield willful frauds committed for client)
- Stonecipher v. Estate of Butts, 686 S.W.2d 101 (Tex. 1985) (creditor with lien can sue to recover damages from conspiracy to defraud)
- Stonecipher’s Estate v. Butts Estate, 591 S.W.2d 806 (Tex. 1979) (standing and lien-based conspiracy standing; post-judgment conspiracy damages)
- Mack v. Newton, 737 F.2d 1348 (5th Cir. 1984) (trustee case; liens and conspiracies; TUFTA context)