Interfinancial Midtown, Inc. v. Choate Constr. Co.
343 Ga. App. 793
Ga. Ct. App.2017Background
- In 1999–2004 I-Midtown (controlled by Leventhal) developed 700 Piedmont, hired Choate for construction, and financed the project with Quantum; construction stalled after 2001 and Choate sued I-Midtown in 2002 (Choate I).
- In 2004 Leventhal formed Piedmont Fountains (buyer) and I-Properties (manager) and sold 700 Piedmont to Piedmont Fountains for $1.29M while Choate’s suit was pending; proceeds paid off Quantum and left I-Midtown with ~$300,660, which was largely disbursed to Leventhal and I-Properties.
- Choate did not receive payment from that sale and later filed a second suit (Choate II) alleging the transfer and certain cash disbursements were fraudulent transfers under Georgia’s UFTA and seeking compensatory and punitive damages and fees; the jury returned a judgment for Choate (including punitive damages against Leventhal).
- Appellants appealed, challenging: recoverability of general and punitive damages under the UFTA; denial of a reconveyance defense; award of attorney fees and special master costs; exclusion of expert testimony about intent; and jury consideration of post-judgment interest.
- The Court of Appeals reviewed statutory text, pre-UFTA Georgia law, the UFTA catch‑all relief clause and preservation of OCGA §§ 18-2-20 and 18-2-21, and affirmed the trial judgment in favor of Choate.
Issues
| Issue | Plaintiff's Argument (Choate) | Defendant's Argument (Appellants) | Held |
|---|---|---|---|
| Whether general and punitive damages are available under Georgia’s UFTA | UFTA’s catch‑all relief plus OCGA § 51-12-2 and common‑law fraud permit general and punitive damages | UFTA limits remedies to the statutory list (equitable remedies and avoidance/levy) and excludes damages beyond those items | Court: General and punitive damages remain available; UFTA did not displace prior Georgia law and its catch‑all plus OCGA §§ 18-2-20/21 allow such awards |
| Whether subsequent transfers back into debtor (reconveyance) bar liability | N/A (Choate argued transfers were fraudulent when made) | Reconveyance of funds into I-Midtown after transfer is an absolute defense that eliminates fraud liability | Court: No absolute reconveyance defense; intent at time of transfer controls—late payments do not mandate directed verdict for defendants |
| Recoverability of attorney fees and special master/auditor costs | Fees and special master costs are recoverable as litigation expenses under OCGA § 13-6-11 and OCGA § 9-7-22(c) | Trial judge previously said plaintiff would pay special master; fees not segregated by claim and I-Properties was not original defendant so fees improper | Court: Fees and special master costs may be awarded; evidence supported award and pre‑suit fees were substantially related to successful claims against all defendants |
| Exclusion of expert testimony on the debtor’s defense to Choate I (intent evidence) | N/A (Choate moved to exclude) | Defendants sought to admit expert opining I-Midtown had a valid defense in Choate I to justify later transfers back into I-Midtown | Court: Trial court did not abuse discretion excluding expert—evidence would be cumulative, risk relitigation of Choate I, and intent at time of transfer is controlling |
| Jury consideration/award of post-judgment interest on Choate I judgment | Choate introduced evidence of prime rate to support award | Defendants moved for directed verdict at close of plaintiff’s case arguing insufficient proof of interest; later challenged jury charge | Court: Defendants waived directed-verdict complaint by failing to obtain ruling and abandoned jury-charge argument on appeal; no reversible error found |
Key Cases Cited
- Kesler v. Veal, 257 Ga. 677 (Ga. 1987) (recognizing damages for fraudulent conveyance and limiting transferee liability to cases with bad faith or actual fraud)
- Cavin v. Brown, 246 Ga. App. 40 (Ga. Ct. App. 2000) (payment after transfer does not negate fraudulent conveyance; intent at time of transfer controls)
- United States v. Tranakos, 778 F. Supp. 1220 (N.D. Ga. 1991) (creditor may obtain personal money judgment against transferee under Georgia law)
- Playnation Play Sys. v. Hammer, 277 Ga. App. 675 (Ga. Ct. App. 2006) (discussing repeal of former OCGA § 18-2-22 and adoption of UFTA)
- Klein v. Weidner, 729 F.3d 280 (3d Cir. 2013) (interpreting UFTA catch‑all to permit punitive damages subject to usual prerequisites)
- DFS Secured Healthcare Receivables Trust v. Caregivers Great Lakes, 384 F.3d 338 (7th Cir. 2004) (rejecting view that UFTA limits monetary relief to situations where assets cannot be reconveyed; catch‑all empowers broader remedies)