Estate of Hurst ex rel. Cherry v. Jones
750 S.E.2d 14
N.C. Ct. App.2013Background
- Hurst and Henley sold two tracts to Cramer Mountain, which assigned to Moorehead I, LLC; closing occurred 13 March 2007 with net proceeds deposited to Moorehead.
- Moorehead wired/transferred funds on 14 March 2007: $650,000 to Pat Jones and $380,383.74 each to Jeff Gordon and Scott Bieber.
- Jones had previously loaned $500,000 to Park West; Gordon and Bieber had prior loans to Investments International; plaintiffs later obtained a 2008 judgment finding Blackmon the alter ego of several Park West entities (including Moorehead and Park West).
- Plaintiffs sued under the Uniform Fraudulent Transfer Act (UFTA), asserting the March 2007 transfers were fraudulent; trial court granted summary judgment to plaintiffs for the three transfers; defendants appealed.
- Court of Appeals held plaintiffs are judicially estopped from denying the unity of Moorehead/Park West/Blackmon (based on plaintiffs’ successful 2008 litigation), found the $650,000 to Jones repaid an antecedent debt and thus constituted "value," and remanded other factual issues (fraudulent intent, good-faith transferee status, intercompany loan characterization, insolvency) for trial or further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs are estopped from denying Moorehead and Park West (and Blackmon) were the same entity | Plaintiffs asserted transfers were by distinct entities (so Moorehead didn’t repay Park West debt) | Defendants argued plaintiffs previously argued the entities were alter egos and prevailed, so they cannot now deny unity | Judicial estoppel applies: plaintiffs are estopped from asserting entities were separate |
| Whether Moorehead’s $650,000 payment to Jones lacked "reasonably equivalent value" under UFTA §§ 39-23.4(a)(2) / 39-23.5 | Plaintiffs: payment by Moorehead was not for antecedent debt of Moorehead and thus lacked value | Jones: payment satisfied Park West’s antecedent debt and therefore constituted value | Payment was repayment of antecedent debt of the Blackmon/Moorehead/Park West structure; constitutes value — summary judgment for Jones reversed in part and remanded for summary judgment in Jones’ favor on §§ 39-23.4(a)(2) and 39-23.5 issues |
| Whether transfer to Jones was made with fraudulent intent and whether Jones is a good-faith transferee under § 39-23.8(a) | Plaintiffs: transfer may have been fraudulent (intent to hinder/delay/defraud) | Jones: even if fraudulent, he is a good-faith transferee for value and protected | Genuine factual issues exist on intent and Jones’ good-faith status; remanded for jury determination (summary judgment inappropriate) |
| Whether transfers to Gordon and Bieber were fraudulent (value, insolvency, and good-faith defenses) | Plaintiffs: transfers lacked reasonably equivalent value, Moorehead was insolvent/about to be, and transfers were fraudulent | Gordon/Bieber: transfers repaid antecedent debt via intercompany loan (Investments) or otherwise were for value; they are good-faith transferees or subsequent transferees | No judicial estoppel as to Investments; material factual disputes exist about whether the March 14 transfers were for value (intercompany "book-entry" loan), Moorehead’s insolvency, fraudulent intent, and whether Gordon/Bieber are good-faith transferees — summary judgment for plaintiffs reversed and remanded for further proceedings |
Key Cases Cited
- Whitacre P’ship v. Biosignia, Inc., 358 N.C. 1 (2004) (judicial estoppel doctrine and factors)
- New Hampshire v. Maine, 532 U.S. 742 (2001) (judicial estoppel principles)
- Miller v. First Bank, 206 N.C. App. 166 (2010) (analysis of reasonably equivalent value in multi-party/indirect-benefit contexts)
- Danville Lumber & Mfg. Co. v. Gallivan Bldg. Co., 177 N.C. 104 (1919) (intent as fact question; intent rarely inferred as matter of law)