GE Capital Commercial, Inc. v. Worthington National Bank
754 F.3d 297
5th Cir.2014Background
- GE Plaintiffs sued Worthington under TUFTA to void transfers from Wright & Wright totaling $2.5 million; CitiCapital/Citibank involvement and later settlement with Citibank exceeded $2.5 million.
- GE discovered Citibank settlement after verdict; pretrial order limited jury consideration of settlements and adopted an objective good-faith standard.
- Trial: jury found Wright & Wright transfers were fraudulent; Worthington failed to prove good faith; district court voided all three transfers.
- GE disclosed Citibank settlement details to Worthington after verdict; Worthington sought a settlement credit based on that settlement.
- Worthington argued TUFTA §24.009(b) limits recovery and the common-law one-satisfaction rule apply; district court denied credit.
- On appeal, Fifth Circuit considers whether a settlement credit is available under TUFTA, whether the one-satisfaction rule applies, and the proper standard for TUFTA’s good-faith defense.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| TUFTA settlement credit availability | Worthington seeks credit; GE argues not applicable | Worthington claims §24.009(b) limits recovery | Credit denied; neither provision supports credit |
| One-satisfaction rule applicability | GE contends rule does not apply to nonjoint-liability contract/tort | Worthington asserts rule applies | One-satisfaction rule inapplicable under Texas law in this context |
| Good-faith standard under TUFTA | Hahn objective standard should apply | Hawes subjective standard should apply | TX Supreme Court would adopt objective Hahn standard; district court proper |
Key Cases Cited
- Challenger Gaming Solutions, Inc. v. Earp, 402 S.W.3d 290 (Tex. App.—Dallas 2013) (TUFTA §24.009(b) scope and claim definition guidance)
- NXS Construction, Inc. v. Citizens Nat’l Bank of Texas, 387 S.W.3d 74 (Tex. Ct. App.—Houston [14th Dist.] 2012) (“claim” scope under §24.009(b) includes value of assets and bargained damages)
- Bradshaw v. Baylor University, 84 S.W.2d 703 (Tex. 1935) (one-satisfaction rule origin in tort contribution context)
- Sterling v. Craft, 822 S.W.2d 8 (Tex. 1992) (one-satisfaction rule requires settling party be joint tortfeasor for credit)
- Garrett v. First Title Co., 860 S.W.2d 74 (Tex. 1993) (one-satisfaction rule applies when plaintiffs allege joint tortfeasors; settlement credits depend on joint liability)
- CTTI Priesmeyer, Inc. v. K & O Ltd. P’ship, 164 S.W.3d 675 (Tex. Ct. App.—Austin 2005) (contractual vs tort liability and application of one-satisfaction rule)