Renate Nixdore GmbH & CO. KG, and Watercrest Partners, L.P. v. Midland Investors, LLC, 05-14-01258-CV

Background

In 2009, W. Eric Brauss and Christine Brauss Martin transferred their indirect ownership interest in TRA Midland Properties, LLC (TRA) to MRI for no compensation; appellants later obtained a $43M+ judgment against Brauss and Martin.
In 2012 TRA sold twenty-one apartment complexes to Midland Investors, LLC (Midland) (Pivotal/Pivotal-created entities involved); Midland paid $40M cash (allegedly diverted to Pillar) and assumed loans for a ~$170M purchase.
Appellants (investors who previously sued Brauss/Martin) sued Midland, TRA, Pillar, and MRI under the Texas Uniform Fraudulent Transfer Act (TUFTA), alleging (a) the 2009 transfer was fraudulent and (b) proceeds from the 2012 sale were diverted to hinder creditors.
Midland moved for summary judgment (no-evidence and traditional), arguing lack of standing, that it was a good-faith purchaser for reasonably equivalent value, and that there was no evidence to defeat its defenses; the trial court granted summary judgment and severed the claims against Midland.
The court of appeals reversed: it held appellants had standing to challenge the 2012 transfer under TUFTA, the no-evidence basis on Midland’s good-faith defense was improper, Midland failed to prove reasonably equivalent value as a matter of law, and severance was erroneous because appellants’ claims were interwoven with the remaining litigation.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standing to challenge 2012 transfer	Appellants argued they were creditors of TRA with an existing TUFTA claim arising from the 2009 transfer, so they had standing to challenge the 2012 sale	Midland argued appellants lacked standing because they had no claim against TRA before or within a reasonable time after the 2012 transfer	Court: Appellants had standing — the 2009 TUFTA claim against TRA sufficed as a "claim" under the statute
No-evidence summary judgment on good-faith defense	Appellants asserted Midland bore the burden to prove good faith, so a no-evidence motion was improper	Midland moved no-evidence, claiming plaintiffs presented no evidence Midland lacked good faith	Court: No-evidence ground improper because good faith is an affirmative defense Midland must prove
Traditional summary judgment: reasonably equivalent value	Appellants disputed that Midland paid reasonably equivalent value for the portfolio	Midland submitted officer affidavits stating the negotiated price was fair market value and argued it proved reasonably equivalent value as a matter of law	Court: Midland’s officer testimony was conclusory (no factual basis); did not prove reasonable equivalence as a matter of law; summary judgment improper
Severance of claims against Midland	Appellants argued claims against Midland were interwoven with claims against other defendants and severance caused prejudice/duplicative proof	Midland sought severance to allow appeal of summary judgment	Court: Severance was erroneous because the claims were interwoven; severance prejudiced appellants and was reversible given erroneous summary judgment

Key Cases Cited

Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546 (Tex. 1985) (standard for traditional summary judgment)
City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (summary judgment review—resolve doubts and inferences for nonmovant)
King Ranch, Inc. v. Chapman, 118 S.W.3d 742 (Tex. 2003) (more-than-a-scintilla evidentiary standard)
Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706 (Tex. 1997) (defining scintilla/insufficiency)
Heckman v. Williamson County, 369 S.W.3d 137 (Tex. 2012) (standing reviewed de novo; standing as jurisdictional)
Reid Road Mun. Util. Dist. No. 2 v. Speedy Stop Food Stores, Ltd., 337 S.W.3d 846 (Tex. 2011) (property-owner witness valuation—need factual basis for opinion)
Forney 921 Lot Dev. Partners I, L.P. v. Paul, 349 S.W.3d 258 (Tex. App.—Dallas 2011) (party may not use no-evidence motion to challenge an affirmative defense)