2013 Ohio 5724
Ohio Ct. App.2013Background
- In 2004, the Danieles transferred their home to their son for life with remainder to the son, as an estate-plan type transfer, without consideration to the Danieles.
- The transfer was a gift to the son; Witschey had represented the son for years.
- A few years later, the son's business failed and he incurred substantial unpaid legal fees to Witschey.
- In 2009, the Danieles’ son transferred his interest back to them for no cost, and the wife later transferred her interest to the husband.
- Witschey discovered the back transfer and filed a November 2011 fraudulent-conveyance action asserting the deed return was to hinder, delay, or defraud creditors, with a bench trial leading to a defense judgment for the Daniels.
- The trial court applied 1336.08(A) to conclude no value was required for the 2009 transfer, and ruled for the Daniels; on appeal the court remanded for reconsideration under proper law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 1336.08(A) correctly governs rebuttal of fraud presumption. | Witschey asserts 1336.04(A)(1) with badges of fraud requires rebuttal; 1336.08(A) applies only if value exchanged. | Daniels contend 1336.08(A) negates fraud if good-faith value or subsequent transferee; they claim value need not be present here. | Court held 1336.08(A) misapplied and remanded to evaluate 1336.04(A)(1) with evidence already in record. |
| Whether the back-transfer was for reasonably equivalent value under 1336.03/A. | Witschey maintains the back-transfer should have shown value to the Danieles or their son. | Daniels argue no monetary value was given for the 2009 transfer, so value requirement could be satisfied under 1336.08(A) (as improperly applied) or not required. | Court concluded there was no evidence of value exchanged under 1336.03(A); 1336.08(A) cannot justify the transfer’s validity. |
| Whether the Danieles rebutted the presumption of fraud under 1336.04(A)(1). | Witschey argues the badges of fraud shift the burden to the Daniels to prove lack of intent to defraud. | Daniels contend evidence rebutted the presumed fraudulent intent; they did not owe Witschey any debt; burden remains with plaintiff. | Court found trial court erred by applying 1336.08(A); remanded to determine, on the trial record, if Danieles’ evidence rebutted fraudulent intent under 1336.04(A)(1). |
Key Cases Cited
- Stein v. Brown, 18 Ohio St.3d 305 (1985) (fraud burden and badges of fraud discussed (Ohio Supreme Court))
- Cardiovascular & Thoracic Surgery of Canton, Inc. v. DiMazzio, 37 Ohio App.3d 162 (5th Dist. 1987) (badges of fraud; burden shifts when badges proven (Ohio Appellate))
- Abood v. Nemer, 128 Ohio App.3d 151 (9th Dist. 1998) (addressing Section 1336.04(B) badges and rebuttal standards (Ohio Appellate))
- UAP-Columbus JV326132 v. Young, 2010-Ohio-485 (10th Dist. Franklin) (discusses proof of fraudulent transfer and burden shifting (Ohio Appellate))