FOX REST ASSOCIATES, LP v. Little
717 S.E.2d 126
Va.2011Background
- Fox Rest Associates, L.P. sued Mr. Little, Mrs. Little, and GBL & A to void certain transfers as fraudulent or voluntary conveyances under Code §§ 55-80 and 55-81.
- Transfers at issue include the Fox Rest Commission deposited into SunTrust Account, Wilton Farm Proceeds, Wage Transfers, and Equipment Sale.
- Mr. Little established and controlled GBL & A; disputes with Fox Rest’s limited partners culminated in derivative litigation.
- Expert testimony (McDonald) concluded Mr. Little was insolvent from Feb 2003 to Sept 2006 and that the Equipment Sale lacked fairness as a market transaction.
- Circuit court granted defendants’ motion to strike after Fox Rest’s case, then the circuit’s ruling was reviewed on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fraudulent conveyance prima facie showings | Fox Rest established badges of fraud shifting burden to defendants. | SunTrust Account transfers and timing lacked fraudulent intent or badge strength. | Prima facie shown; circuit erred in striking most fraud claims. |
| Equipment Sale as fraudulent conveyance | Equipment Sale evidenced transfers to hinder creditors and lacked fairness. | Equipment Sale was fair market value; not a fraudulent conveyance. | Equipment Sale not fraudulent; circuit properly struck that claim. |
| Voluntary conveyance elements | Mr. Little was insolvent during transfers; transfers were voidable. | No considerationless transfer or solvency proof; no voluntary conveyance. | Evidence supports insolvency during transfers; circuit erred in striking voluntary conveyance claim. |
Key Cases Cited
- Hutcheson v. Savings Bank of Richmond, 129 Va. 281 (Va. 1921) (fraud may be shown by circumstantial badges of fraud)
- In re: Porter, 37 B.R. 56 (Bankr. E.D.Va. 1984) (fraud may be proven by circumstantial evidence)
- Temple v. Jones, Son & Co., 179 Va. 286 (Va. 1942) (badges of fraud establish prima facie case; burden shifts to bona fides)
- First National Bank of Bluefield v. Pressley, 176 Va. 25 (Va. 1940) (burden-shifting when prima facie case of fraud arises)
- TB Venture, LLC v. Arlington County, 280 Va. 558 (Va. 2010) (standard for reviewing a motion to strike plaintiff's evidence)