Rainsdon v. Garcia (In re Garcia), 465 B.R. 181

Debtors owned the Gooding, Idaho residence at 114 Oregon St.; Debtors lived there, paid mortgage to Zion’s Bank, taxes, and insurance.
June 20, 1998, Debtors entered a Rent to Own (RTO) with Defendants; RTO required Defendants to pay mortgage, taxes, insurance, and utilities, with deed to Defendants upon mortgage payoff.
RTO described the Property only by street address; no legal description; signatures not notarized; not recorded until April 13, 2000.
October 18, 2008, a second agreement titled Contract was executed; Defendants to pay $312/month, balance $14,402.64, and no occupancy until obligations paid; Debtors’ signatures limited to Oscar (Hodelia not signing).
Defendants paid off the Zion’s Bank loan in October 2009; Debtors delivered a warranty deed in April 2010 transferring title to Defendants; Debtors filed Chapter 7 bankruptcy May 27, 2010; Trustee sued to avoid transfer in 2011.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether §544(a) avoidance applies to the transfer.	RTO/Contract unenforceable under statute of frauds; BFP cannot be defeated.	Transfer completed before petition; perfected; BFP status not available to unwind.	No §544(a) avoidance; completed transfer not subject to BFP avoidance.
Whether the transfer is a avoidable §547(b) preference.	Transfer to Defendants was on account of antecedent debt and within 90 days; Debtors insolvent.	Debt not antecedent or improperly characterized; value exchanged could be reasonably equivalent.	Summary judgment for Defendants on §547(b) is denied; there are triable issues.
Whether the transfer was a constructively fraudulent transfer under §548(a).	Transfer occurred within two years; Debtors received less than reasonably equivalent value; insolvency.	Part performance doctrine saves contract; transfer valued to satisfy claim; no insolvency evidence.	Defendants granted summary judgment on §548(a) due to lack of proveable less-than-value and insolvency.
Whether the transfer violated Idaho’s fraudulent transfer statute §55-913 (and §544(b)).	Constructively fraudulent transfer; same issues as §548.	No reasonably equivalent value; Part performance doctrine; value received equals debt relief.	Summary judgment for Defendants on §544(b)/§55-913.

Ray v. Frasure, 200 P.3d 1174 (Idaho Supreme Court 2009) ( Statute of Frauds description requires adequate property description)
In re Ricks, 433 B.R. 806 (Bankr. D. Idaho 2010) (real estate contracts and statute of frauds; part performance)
Simons v. Simons, 11 P.3d 20 (Idaho Supreme Court 2000) (part performance exception for real estate contracts)
Bauchman-Kingston P’ship v. Haroldsen, 233 P.3d 18 (Idaho Supreme Court 2010) (part performance applied where contract partially performed)
Pfankuch, 393 B.R. 18 (Bankr. D. Idaho 2008) (debt incurred when legally bound; rule for antecedent debt)
Upstairs Gallery, Inc. v. Macklowe West Dev. Co., L.P. (In re Upstairs Gallery, Inc.), 167 B.R. 915 (Bankr. B.A.P. 1994) (definition of debt and “claim” in preference context)
In re Deuel (Chase Manhattan Bank USA, N.A. v. Taxel), 594 F.3d 1073 (9th Cir. 2010) (§544(a) and hypothetical BFP standard)
Ray v. Frasure, 200 P.3d 1174 (Idaho Supreme Court 2009) (statute of frauds real property description)