508 B.R. 215
Bankr. D. Kan.2014Background
- Convenience Xpress (general partner) and Convenience USA (operating LP) operated convenience/fuel stores; William Martin and Howard "Mike" Boys were the two controlling principals. Convenience Xpress had no assets or employees; Convenience USA ran operations.
- In July 2007 M & W Midwest Properties (M & W) bought two Convenience USA properties and leased them back; M & W borrowed about $700,000 with personal guarantees from Martin and Boys.
- By mid-2008 Convenience USA was insolvent or near-insolvent, had large unpaid fuel supplier obligations (Sinclair, Growmark), and experienced numerous returned payments for insufficient funds.
- On July 2, 2008, Martin and Boys agreed that M & W would assume control of Convenience USA facilities (except one), and thereafter M & W received Convenience USA’s revenues and inventory while not assuming Convenience USA’s supplier debts; suppliers remained unpaid.
- Trustee (Chapter 7) sued to avoid the July 2008 transfers as fraudulent/constructively fraudulent under 11 U.S.C. §§ 548 and 544(b) (via Kansas UFTA) and sought to recover; M & W entered a consent judgment for $600,000; Martin filed bankruptcy; Trustee moved for summary judgment against Boys (unopposed motion).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Avoidance under § 548(a)(1)(B)(i) & (ii)(I) (constructive fraud) | Transfer of Convenience USA assets to M & W within 2 years; Convenience USA got less than reasonably equivalent value and was insolvent or became insolvent by the transfer | Boys did not oppose but record lacks proof tying him to a transfer by Convenience Xpress or proof of inadequate value or insolvency elements | Denied — Trustee failed to prove key elements: no transfer by Convenience Xpress and no showing of reasonably equivalent value or insolvency as required for judgment as a matter of law |
| Avoidance under § 544(b) (Kansas UFTA actual fraud) | Transfer was a fraudulent conveyance under K.S.A. § 33-102; badges of fraud (relationship, insolvency, transfer of last assets, inadequate consideration, abnormal transaction) and intent can be inferred from circumstances | Trustee did not connect Boys personally to the transfer or show M & W’s veil should be pierced; no direct evidence of intent; motion fails to impute M & W’s conduct to Boys | Denied — Trustee did not attempt to establish personal liability for Boys (no veil-piercing theory shown) and presented insufficient uncontroverted proof of actual intent as to Boys for summary judgment |
| Imputing corporate transfers to Boys (piercing veil / alter ego) | Alleged Boys was 50% owner of entities and participated in decisions that shifted assets to M & W to protect personal guaranties | Corporate form presumed separate under Kansas law; Trustee made no multi-factor alter-ego showing or legal argument to pierce veil | Denied — Trustee failed to plead or prove veil-piercing or that Boys personally received or controlled the disputed transfers |
| Grant of unopposed summary judgment | Motion is unopposed; Trustee argues facts are undisputed so judgment appropriate | Court must independently determine that uncontroverted facts demonstrate entitlement to judgment; unopposed status does not automatically warrant granting relief | Denied — Court requires an adequate legal showing of each element; unopposed motion insufficient where material elements were not established |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden allocation)
- Taylor v. Roswell Indep. Sch. Dist., 713 F.3d 25 (10th Cir. 2013) (summary judgment standards and inferences)
- BFP v. Resolution Trust Co., 511 U.S. 531 (definition of reasonably equivalent value)
- Jobin v. McKay (In re M & L Bus. Mach. Co.), 84 F.3d 1330 (10th Cir. 1996) (antecedent debt as reasonably equivalent value)
- Gaddis v. Allison, 234 B.R. 805 (D.Kan. 1999) (fraudulent transfer / UFTA standards)
- City of Ark. City v. Anderson, 243 Kan. 627 (Kan. 1988) (elements/badges of fraudulent conveyance)
- Parks v. Anderson, 406 B.R. 79 (D.Kan. 2009) (alter ego / veil-piercing multi-factor test)