Branch Banking and Trust Company v. Hamilton Greens, LLC

Case Information

U N ITED STA TES D ISTRICT CO U RT SOU TH ERN D ISTRICT O F FLORID A Case No. 1 I-8OSO7-CIV-M ARRA/M ATTHEW M AN BRAN CH BAN K IN G A N D TRU ST COM PA N Y ,

Plaintiff,

HA M ILTON G REEN S, LLC, D EV CON

LIV IN G STO N GREEN S, LLC, BLG

EN TERPRISES, LLC, R ICHA RD BELLIN GER ,

individually, CH AD LA BON TE, individually, and

ROLAND LABONTE, individually,

Defendants,

and

M AUREEN DONNELY, individually,

D efendant in Proceedings

Supplem entary.

/ M A G ISTR ATE JU D G E 'S RE PO R T AN D R ECO M M EN D A TIO N O N BR AN CH BAN K IN G A ND TR U ST C O M PAN Y 'S CO M PLA INT IN PR O CEED ING S SUPPLEM ENTARY IDE 2931

TH IS CAUSE came before the Court for evidentiary hearings, held on September 28 and Complaint in Proceedings Supplementary (DE 2931 instituted October 7, 2015, on BB& T's pursuant to Federal Rule of Civil Procedure 69(a) and section 56.29, Florida Statutes. This m atter w as referred to the undersigned by the H onorable U nited States D istrict Judge Kerm eth A . M arra. See D E 278. The undersigned having received docum entary and testim onial evidence, having heard argum ents of counsel, having considered the dem eanor and credibility of the witnesses, and being othenvise fully advised in the prem ises, m akes the following findings of fact and conclusions of law, and RECOM M ENDS that the Honorable United States District Judge K erm eth A . M arra G R ANT IN PAR T A ND D ENY IN PA RT the Com plaint in Proceedings Supplementary (DE 2931.

1. PR O CE DU RA L BA C K G RO UN D

Plaintiff, Branch Bank & Trust Company (çiBB&T'') filed a claim for breach of contract against various defendants (DE 11 and obtained a Final Judgment(DE 21 1) in the amount of Richard Bellinger (ûiBellinger'') on May 28, $4,923,797.57 (tûludgment'') against Defendant 2013 .

O n August 5, 2013, BB& T attem pted to hold Bellinger in contem pt of court for not com plying with this Court's Final Judgment. See DE 216. In that proceeding, BB&T attempted to argue that the creation of Bellinger's trust in the Cook Islands tçiTrust''l was a fraudulent transfer designed to avoid payment of the Judgment. gDE 240, p. 61. The undersigned found that BB&T did not present sufficient evidence to establish that Bellinger should be held in contempt of court for failing to pay the Judgm ent entered against him . 1d. at 8. However, this Court dtdid not make a finding as to whether the creation of the Cook lslands Trust amounted to a fraudulent conveyance; rather, the undersigned lim ited its holding to the discrete issue of whether Mr. Bellinger should be held in contempt of court.'' gDE 292, p. 21.

Then, pursuant to section 56.29, Florida Statutes, and Federal Rule of Civil Procedure 69(a), BB&T sought to commence proceedings supplementary to and in aid of execution and to implead a third party, Maureen Dolmelly (çiDo1melly''), who allegedly received assets that may have been used to satisfy BB&T's Judgment. See DE 283. Pursuant to Rule 69(a)(1), l This amount was partially satisfied by payments from certain of the defendants of $2,000,314.90; $386,183.00; and $20,370.00. (DE 387, p. 12, n. 221.

proceedings supplem entary to and in aid of execution must comply with the procedure of the state where the court is located. Section 56.29, Florida Statutes, permits plaintiffs to im plead a third party based on the filing of an affidavit dem onstrating a w rit of execution that is valid and unsatisfied. See Regent Bank v. Woodcox, 636 So. 2d 885, 886 (Fla. 4th DCA 1994). BB&T had obtained a valid W rit of Execution (DE 264) on May 13, 2014, in furtherance of executing on the Judgm ent against Bellinger. The undersigned found that BB& T, having subm itted an affidavit demonstrating a writ of execution that is valid and unsatisfied gDE 283-11, met the requirements of section 56.29 to commence proceedings supplementary. (DE 2921.

On October 1, 2014, BB&T filed its Complaint in Proceedings Supplementary. (DE 2931. ln the Complaint, BB&T alleges that approximately in or before November of 20l 1 Bellinger çidevised a scheme.. .to transfer valuable, non-exempt assets, including but not lim ited to, over $1 .7 million in stocks, bonds, and cash, to a Cook Islands Tnlst.'' gDE 293, p. 31. The aim of this plan, BB& T contends, ilw as to transfer such assets beyond the reach of Bellinger's creditors or potential creditors, including BB&T.'' 1d. The distributions from the Trust were initially m ade to Bellinger's W ells Fargo bank account, but BB& T asserts that Bellinger closed the W ells Fargo account on M ay 8, 2013- two weeks after this Court granted BB&T's slzmmary judgment motion against Bellinger- and directed the Trustee to make the distributions to lmpleaded Defendant,Dormelly, Bellinger's girlfriend, instead of to Bellinger him self. Id BB& T alleges that the transfer of the Trust distributions w as an actual fraudulent transfer under section 726. 1 05(1)(a), Florida Statutes, because it was made with the actual intent to hinder, delay, or defraud BB&T. (DE 293, p. 41. BB&T also claims that Bellinger did not receive reasonably equivalent value in exchange for said transfer, and therefore the transfer alternatively meets the requirements of section 726.105(1)(b) for a constructive fraudulent transfer. gDE 293, p. 51.

Bellinger denies that any transfer was done with the actual intent to hinder, delay, or defraud BB&T. See DE 296. According to Bellinger, he had no reasonable expectation that he would owe any money to BB&T arising from BB&T's $3 m illion loan to Hamilton Greens because the property securing the debt was valued at $15 m illion, his co-guarantors had a combined net worth of over $ 100 m illion, his co-guarantors had indemnified Bellinger from the BB&T claim , and his co-guarantors had discharged a11 of Bellinger's other contingent liabilities during the previous five years. (DE 296, p. 4).Bellinger also claims that he had legitimate, non- fraudulent reasons for creating 1he Trust in Novem ber of 201 1, which included concerns over post-divorce claims of his ex-wife, anticipated end-of-life m edical expenses, exposure to risk from new and uncertain business ventures, and a desire to secure retirement. 1d.

According to Donnelly, the transfers 'twere not transfers made with an actual intent to hinder, delay, or defraud creditors. Rather, the transfers were m ade in order to pay the reasonable and necessary living expenses of Bellinger and expenses incurred by Bellinger in exercising his constitutional right to due process.'' rDE 31 1, p. 61. Because of this, Donnelly claims she Ssacted as a mere conduit of the funds from the (Trust) to the persons and entities she transferred the funds to.'' (DE 3 l l , p. 8j. Donnelly also argues that a transfer or obligation is not voidable under section 726. 105, Florida Statutes, against a person who took a transfer or transfers in good faith and for reasonably equivalent value or against any subsequent transferee or obligee, which she contends she did. gDE 31 1, p. 5J.

The undersigned held evidentiary hearings on September 28, 20l 5 and October 7, 2015. See D Es 373, 378. During both hearings,the Court received into evidence the testim ony of Richard Bellinger; the testimony of M aureen Donnelly; and BB&T's exhibits #1-10, including the follow ing specific docum ents'.

A copy of the Affidavit of Financial Condition of Richard Bellinger from July 30, 2012;

ii. Copies of Richard Bellinger's Statem ents of Financial Condition dated June 30, 2010 and June 30, 2012;

Copies of Richard Bellinger's W ells Fargo bank statements from Decem ber 22, 201 1 to M ay 2 1, 2013;

iv. Copies of Richard Bellinger's tax documents from the years 2009, 2010, 201 1, and 2012;

A copy of Laurie Bellinger's 2010 W -2 Form ;

vi. A copy of the Bellinger Fam ily Trust;

A copy of Richard Bellinger and Laurie Bellinger's M arital Rights and Property Settlement Agreement dated M ay 17, 20 1 1 ;

viii. A copy of the Ora Fiduciary (Cook lslands) Limited Estate Planning Questionnaire of Richard Bellinger dated Novem ber 21, 201 1;

ix, A copy of a letter from Richard Bellinger to Voja Andjelkovic of M errill Lynch Private Banking dated January 30, 2012; and

Copies of M aureen Donnelly's W ells Fargo bank statem ents from M ay 8, 2013 to January 7, 2015. th identiary hearing , the Coul't allowed both sides to subm it

Follow ing the October 7 ev supplem ental memoranda. See DE 378. BB& T, Bellinger, and Dormelly a11 submitted supplemental memoranda to the Court. (DES 385, 386, and 3871.Additionally, on November 20, 2015, this Court asked both sides to subm it supplemental m emoranda on the issue of this Court's ancillary jurisdiction in these proceedings supplementary. gDE 3891. On December 2, 201 5, each party submitted a supplemental memorandum of 1aw to the Court. (DES 390, 391, 3921.

I1. LEG AL STA ND A RD Pursuant to Federal Rule of Civil Procedure 69(a)(1), tçgtqhe procedure on execution- and in proceedings supplementary to and in aid of judgment or execution- must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies.'' As noted earlier, section 56.29, Florida Statutes, provides the practice and procedure for proceedings supplementary. The Uniform Fraudulent Transfer Act ($çUFTA''), codified in chapter 726, Florida Statutes, articulates what constitutes a fraudulent transfer. ûç-f'he standard to determ ine whether a transfer is fraudulent under Florida 1aw is the preponderance of the evidence standard.'' In re Young, 235 B.R. 666, 669 (Bankr. M .D. Fla. 1999).

111. FINDINGS OF FACT AND CONCLUSIONS OF LAW The follow ing are the tsndings of fact and conclusions of 1aw by the undersigned based on the testim ony and evidence presented during both evidentiary hearings on the Complaint in Proceedings Supplementary gDE 2931.

A . Prelim inary Factual Findines

Defendant Donnelly is the long-time girlfriend of Defendant Bellinger. Donnelly has known Bellinger since 1986 and alw ays perceived him as an honest businessm an w ith high integrity. Donnelly's relationship with Bellinger started as a professional one and evolved into a personal one in approximately 2006. Donnelly worked as a secretary and bookkeeper for Bellinger's company, RPB Developm ent, from about 2006 through 201 5, when she retired. D onnelly and Bellinger live together and share a personal and rom antic relationship.

The underlying lawsuit started when BB&T filed a claim for breach of contract against Bellinger, BLG Enterprises, LLC, Ham ilton Greens, LLC, Devcon Livingston Greens, LLC, Chad Labonte, and Roland Labonte on M ay 5, 201 1. See DE 1 . The claim against Bellinger was based upon a personal guaranty he had signed on a loan that BB&T made to fund a property owned by Ham ilton Greens, LLC. ld During the underlying litigation, BB& T filed m otions for summary judgment against Bellinger on July 1 and October 10, 201 1. (DES 25, 30J. Bellinger responded to the summary judgment motions, and filed an affidavit in support of his opposition, on November 17, 201 1 . (DES 41 , 421.

A lso on N ovem ber 17, 201 1, Ora Fiduciary Unlim ited, the com pany that set up Bellinger's Cook lslands Trust, sentBellinger an Estate Plamzing Questionnaire for him to complete in order to establish the Trust. (DE 377-13, p. 1J. Bellinger's testimony, which this Court found to be credible, established that he created the Trust for multiple reasons: (1) the unusual nature of Bellinger's M arital Settlement Agreem ent with his ex-wife, which he thought she may violate and seek more money from him; (2) end-of-life medical expenses that he anticipated because of his mother's recent passing from Alzheimer's disease; (3) exposure to risk from new and uncertain business ventures in commercial property; and (4) a desire to secure his retirement. According to Bellinger, the claim of BB&T was not a factor in creating the Tnlst because the property securing the subject $3 million loan from BB&T was valued at $15 million; his co-guarantors had a combined net worth of over $100 m illion; his co-guarantors agreed to indem nify Bellinger for any liability in relation to the BB&T claim ; and his co-guarantors had discharged a11 of Bellinger's other contingent liabilities (based on similar personal guaranties he had signed) during the previous five years. (DE 377-1 11. The listed beneficiaries of

The Trust was settled on Novem ber 30, 201 1. the Trust were Bellinger, Bellinger's two adult children, Bellinger's heirs-at-law, and Donnelly. 1d. Bellinger testified that he cannot revoke the Trust, cannot override the Trustee, and cnnnot replace the Trustee. On January 30, 2012, Bellinger instnzcted M errill Lynch to transfer cash and certain other assets to the Cook Islands Trust in the amount of $ 1 ,629,934.00, and this was completed On February 10, 2012. gDE 377-1, p. 13J. BB&T was unaware of the creation of the Trust at this time. However, Bellinger notified BB&T of the existence of the Trust on August 7, 2012 in a financial affidavit. gDE 385, p. 4J.

ln the underlying litigation, BB&T tiled an amended motion for summary judgment, which was granted in favor of BB&T and against Bellinger on April 29, 2013. (DE 2091. The 2 M a 28 2013 . Court entered the Judgment against Bellinger in the am ount of $4,923,797.57 on y , gDE 2 1 1j.

Bellinger was originally the only person who received distributions from the Tnzst. He testified that he was also the only person who could request distributions from the Tnzst, but that these requests were not always honored . 3 B llinger received distributions from the Trust of e

approxim ately $7,000 per m onth to pay his living expenses because he had no income at the time. Distributions from the Trust were made to Bellinger's W ells Fargo bank account, but on M ay 8, 20l 3, Bellinger withdrew all the funds from his W ells Fargo account and closed the account. Bellinger adm itted that he closed his bank account because he knew that BB& T w ould 2 Although BB&T claimed in its Complaint in Proceedings Supplementary that ttBBIt,T has not received satisfaction of the Final Judgment or any portion thereof,'' the Judgment was partially satisfied by payments of $2,000,314.90., $386,183.00,* and $20,370.00. gDE 387, p. l2, n. 221. 3 However , Bellinger stated at the hearing that the only distribution request which w as denied was when he

requested that the Trust pay part of the Judgment to BB& T. garnish the account, and he did not want to suffer the embarrassment of having people at W ells Fargo, whom he associated with, knowing that his account was garnished.

Donnelly went with Bellinger to W ells Fargo on M ay 8, 2013 to close his account and, on the sam e date, she opened a W ells Fargo bank account solely in her name. Donnelly deposited into this account the funds that Bellinger withdrew from his closed account. Donnelly stated that she and Bellinger came to an agreement that she would hold this m oney in her W ells Fargo account and begin to receive distributions from the Trust in order to pay the living expenses and bills of Bellinger.

Bellinger then requested that the Trustee of the Trust start m aking the Tnzst distributions to Dormelly instead of to him self. According to Bellinger, he m ade this arrangem ent so that he would not have to worry about paying his bills or living expenses. Under this arrangem ent with Dormelly, Bellinger was able to log on to Donnelly's W ells Fargo online bnnking account, he had access to a debit card for the account, he could withdraw m oney from the account, and he filled out the checks for the account, which he then would have Donnelly sign because he did not have signatory authority on the account.

At the time of the evidentiary hearings in these proceedings supplementary, there were no longer any monthly distributions from the Trust being paid to Donnelly or to Bellinger. Bellinger caused the m onthly distributions to Dormelly's account to be stopped in January of 2015. Bellinger estim ated that, in total, there was approxim ately $305,000.00 transferred to Donnelly's W ells Fargo account from the Trust. The last distribution from the Trust to Donnelly, as listed in her W ells Fargo bank statem ent, subm itted as BB & T's Exhibit 10, w as on January 7, 2015. See D E 377-15, p. 84. The only Trust distributions m ade to D onnelly's account since then, Bellinger explained, were made for legal fees associated with Bellinger's and Donnelly's representation in this case.

B. Specific R elief Souqht bv BB& T

As an initial m atter, the Court will discuss what claim s were pled and what relief was sought by BB&T in initiating these proceedings supplementary. The Complaint, argument at the hearings, and memoranda subm itted by BB&T appear to assert different claim s and ask for varying form s of relief. During inquiry at the hearings, the Court was not given a clear answer as The vagueness and lack of clarity in to what specific claim s and relief BB& T w as pursuing. arguments have unnecessarily complicated this BB& T's Com plaint, m em oranda, and oral proceeding, resulting in the expenditure of substantial judicial resources and the necessity of a lengthy Report and Recomm endation to address a11 the issues raised by the parties.

In the Complaint in Proceedings Supplementary (DE 2932 filed on October 1, 2014, BB&T alleges that içBellinger devised a scheme (hereinaher theSAsset Diversion Scheme') to transfer valuable, non-exempt assets, including but not limited to, Over $1 .7 m illion in stocks, bonds, and cash, to a Cook lslands Trust.'' gDE 293, p. 3J. According to BB&T, the Asset Diversion Schem e was meant to t'transfer such assets beyond the reach of Bellinger's creditors or potential creditors, including BB&T.'' Id Then, BB&T asserts that itBellinger directed the trustee to stop making the Trust distributions to him, and to instead make them to Dormelly (the iAsset Transfer'l.'' Id Thus, in the Complaint, BB&T treated and defined the initial 201 1 creation of the Trust and transfer of assets by Bellinger to the Trust in 20 12 as a separate event from the subsequent paym ent of distributions from the Trust to Donnelly from M ay 8, 2013 through January 7, 20l 5.

BB&T goes on in the Complaint to allege, in its sole count (Count I), that the t4Asset Transfer was a fraudulent transfer as to BB&T pursuant to j 726.105(1)(a), Fla. Stat. because such transfer was made with the actual intent to hinder, delay, or defraud BB&T.'' (DE 293, p. 41. BB&T argued that it was ksentitled to seek application of the valuable assets of Bellinger fraudulently transferred to Dolmelly via the Trust to satisfy the Final judgement, and an injunction preventing Donnelly from receiving further disbursements from the Trust.'' (DE 293, p. 5). the /ksset Transfer vvas a

ln conclusion, BB&T asked for 1ia judgment finding that fraudulent transfer as to Plaintiff, ordering the distributions of the Trust in the possession of M aureen Donnelly to be applied to the Judgm ent and awarding to Plaintiff its reasonable attorneys' fees and costs incurred, altem atively, awarding judgment in favor of Plaintiff against Richard Bellinger and Maureen Domzelly, jointly and severally, for the value of the assets transferred, and granting such other further relief as the Court deem s proper.'' 1d. Accordingly, although the Complaint did detlne what BB&T referred to as the Asset Diversion Schem e, the Complaint did not clearly and sufficiently seek any relief as to that alleged A sset Diversion Scheme. Rather, the Complaint specifically sought relief as to what it referred to as the subsequent A sset Transfer.

ln summary, the primary relief sought by BB&T in its Complaint was: (1) that the Court issue a judgment finding that the %ûAsset Transfer'' (not the SlAsset Diversion Seheme'') was a fraudulent transfer as to BB&T; (2) that this Court order that the distributions of the Trust in the possession of Dormelly be applied to BB&T's Judgment; and (3) that this Court award BB&T its reasonable costs and attorney's fees in these proceedings supplem entary. A ny other relief sought in BB&T's Complaint was in the alternative to BB&T's prim ary requested relief described above and did not clearly and specifically refer to the so-called ktAsset Diversion Scheme.'' Furthennore, BB& T never sought to am end the Com plaint.

Over tim e, however, BB&T's request for relief seem ed to expand beyond what For exam ple, in BB& T's Brief Regarding Evidentiary Hearing on requested in its Com plaint. Complaint in Proceedings Supplementary (DE 37 11, BB&T did notspecifically allege which transfer it was seeking to avoid, the creation of the Trust and transfer of assets to the Trust in 20l l -2012 or the paym ent of the Trust distributions to Dolmelly from 2013 through 2015. BB&T instead referred generically to çstransfers.'' ln the conclusion section of its Brietl BB&T claimed entitlement to 1i(i) the avoidance of the transfers to the extent necessary to satisfy BB&T's claim; (ii) an attachment or other provisional remedy against the assets transferred or other property of the Defendant in accordance with applicable law; (iii) subject to applicable principles of equity and in accordance with applicable rules of civil procedure: (1) an injuncticm against further disposition by the gsic) Bellinger or Donnelly, or both, of the assets transferred or of other property; (2) appointment of a receiver to take charge of the assets transferred or of other property of the Defendants; or, (3) any other relief the circumstances may require; (iv) because BB&T has obtained a judgment on a claim against the gsicl Bellinger, a levy execution on the assets transferred or their proceeds; (v) an award to BB&T of its reasonable attomeys' fees and costs in obtaining such relief; and (vi) such other and further relief as the Court deems proper.'' (DE 37 1, p. 20q. This seems to be a request for broader relief than the primary relief requested in the Com plaint. clarity as to the specific relief sought by BB& T, the Court

In an effort to gain som e inquired from BB& T's counsel at the evidentiary hearings precisely w hat relief BB& T was seeking. BB& T 's counsel stated that BB& T w as seeking avoidance of the initial transfer of approximately $ 1 .7 m illion to the Trust in 2012 because it was a fraudulent transfer , as well as avoidance of the subsequent transfer of the Trust distributions to Donnelly from 2013-2015 because that was also a fraudulent transfer . BB& T's counsel argued that the Court should enter a $1 .7 million judgment against both Bellinger and Dolmelly due to the initial transfer to the Trust, as well as a $305,000 judgment against Bellinger and Donnelly due to the payments to Donnelly from the Trust , and additionally, any and a1l fonns of relief under sections 726 . 108 and 726.109, Florida Statutes .

Defendants Bellinger and Donnelly opposed this broad request for relief by BB&T and argued that BB& T cannot seek to avoid the transfer of assets from Bellinger to the T rust, that is, the so-called çiAsset D iversion Schem e , '' because that relief was not requested in BB&T's Complaint in Proceedings Supplementary and , further, the Trust is not a party to this action and is not subject to the jurisdiction of this Court . M oreover, counsel for Bellinger , Steven A . M ayans, Esq., represented that he had spoken to BB&T s prev ous counse o ' i 14 n the phone soon after the Com plaint was filed , and he was assured by BB&T's counsel that BB&T was only seeking to avoid the transfer of the Trust distributions to Domzelly from 2013 to 2015 and w as not seeking to avoid the initial creation of the Trust or transfer of assets to the Trust in 201 1 - 2012. BB&T has never disputed that its prior counsel , M s. Thomas, made these representations to M r. M ayans.

In reviewing BB&T's Complaint, it is important to note that Federal Rule of Civil Procedure 8(a) provides: 1dA pleading that states a claim for relief must contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief gandj a demand for the 4 Although the 1aw t51311 of Roetzel & Andress has represented BB&T throughout these entire proceedings , the C omplaint in Proceedings Supplementary was 5led by a different attorney than the one currently worki ng on the case. See DE 293, p. 6. Since the Complaint was filed , a new attorney, M . Robert M alani, has been assigned to the B B&T matter and he tiled a Notice of Apptarance on M ay 8 , 20 l 5. gDE 3 14). The prior attorney, Shayne A. Th omas, is no Ionger with the firm. (DE 3 12J.

1 3 relief sought, which may include relief in the alternative or different types of relief.'' W ithout fair notice of what claim a pleader is pursuing or what relief a pleader is requesting, the defendant is left guessing as to what claims it m ust defend against. See Swierkiewicz v. Sorema NA., 534 U.S. 506, 513-14 (2002); Court-Appointed Receiver ofL ancer Om hore, Inc. v. Citico Group L /tf , 2008 W L 926506, at *2 (S.D. Fla. Mar. 31, 2008). See also Fed. R. Civ. P. 10(b) ($$1f doing so would promote clarity, each claim founded on a separate transaction or occuaence--and each defense other than a denial- m ust be stated in a separate count or defense''). Here, the Complaint specifically sought to deem the 2013-2015 çsAsset Transfer'' a fraudulent conveyance and sought specified relief as to that itAsset Transfer.'' As noted above, M r. M ayans, Bellinger's counsel, contacted Shayne A. Thomas, Esq., counsel for BB& T, about this issue soon after the Complaint in Proceedings Supplem entary was fsled. BB&T's counsel, M s. Thomas, infonned Bellinger's counsel that BB& T was indeed seeking only to avoid the 20 13-201 5 Trust distributions m ade to Donnelly, not the initial creation of the Trust or transfer of approxim ately $1 .7 m illion to the Tnzst. The Court accepts and creditj M r. M ayans' representation as to his conversation with M s. Thomas, which conversation was never disputed by BB&T. The Court finds that Bellinger and his counsel, and Donnelly and her counsel, justifiably relied on that representation by BB&T s counse . BB&T may not seek any relief , j 5

which its counsel affirm atively represented to Bellinger's counsel that it was not seeking.

Further, BB& T m ay only seek to obtain the relief it sought in its Complaint. Because BB& T's Com plaint does not sufficiently seek any relief as to the initial creation of the Trust in 5 The Court is quite frankly surprised and troubled that one attorney for BB&T Ms . Thom as, w ould represent to Bellinger's counsel, M r. M ayans, that BB& T was not seeking any relief as to the initial 201 1 creation of the Trust and 20 12 transfer of approximately $ 1 .7 million in assets to the Trust by Bellinger, and subsequently another attorney for BB&T from the sam e law finn, M r. M alani, would stand before the Court and, in contravention of M s. Thomas' representation, seek a judgment against both Bellinger and Donnelly in the amount of approximately $1 .7 m illion for that very sam e transaction.

201 1 and the transfer of assets to the Trust in 2012, the Complaint fails to state a claim for which relief can be granted as to the Trust creation and funding. Bellinger and Donnelly would be severely and unfairly prejudiced if the Court allowed BB&T to proceed on unpled claims, causes of action, or relief, especially when counsel for BB&T affirmatively represented to Bellinger's counsel that BB&T was not seeking such relief.

W ith all that being said, however, and to add m ore confusion to this issue, the parties to this case all nonetheless argue that this Court m ust address whether or not Bellinger's creation of the Trust in 201 1 and initial transfer of approxim ately $1 .7 m illion in assets to the Trust in 2012 was or was not a fraudulent transfer, albeit for different reasons. On the one hand, BB&T urges this Coul't to find that the creation of the Trust and initial transfer of assets to the Tnzst by Bellinger was a fraudulent transfer so as to justify the imposition of relief in favor of BB&T and against Bellinger and Donnelly based on that Ending. BB&T asserts that this Court should tsnd the initial creation and funding of the Trust to be a fraudulent transfer and then impose an approximate $1.7 million judgment against both Bellinger and Donnelly.

On the other hand, Bellinger and Donnelly assert that even though BB&T's Complaint in Proceedings Supplementary did not properly plead or seek any relief against them as to the initial alleged fraudulent creation and funding of the Trust, the Court should nonetheless address that issue and tind that the initial creation and funding of the Trust was not a fraudulent transfer. This is so beeause, aecording to them , such a finding would then preclude any Ending by the Coul't that the subsequent paym ent of Trust distributions to Donnelly was a fraudulent transfer as that initial transfer isform s the factual predicate upon which BB&T's claim s are based . '' gDE 385, p. 21. The Defendants' position is that if the original creation and funding of the Trust is deem ed to be legitim ate and not a fraudulent transfer, then the assets of the Trust no longer belong to the debtor, Bellinger , and the distributions to Donnelly from the Trust cnnnot constitute a fraudulent conveyance.

Though the undersigned does not fully agree with any of the parties' argum ents in this regard, the Court does believe that , for pup oses of clarity, fnality and context in this complex and drawn out litigation, Bellinger's 201 1 creation of the Tnlst and 2012 transfer of assets to the Trust should be addressed by the Court along with the subsequent 2013-2015 distributions m ade to Donnelly from the Trust. Therefore , the Court will determine: (1) whether Bellinger's 2012 transfer of $ l .7 million in assets in creation of the Trust constituted a fraudulent transfer; and (2) whether the 20 13-20 1 5 payment of Trust distributions to Donnelly constituted a fraudulent transfer.

C. Fraudulent T ransfers U nder Florida Law

Chapter 726, Florida Statutes, governs fraudulent transfers in Florida . Under the U FTA , there are two ways in which a court can find that a transfer was fraudulent as to present and future creditors. Specifically, section 726 . 105(1), Florida Statutes, provides: A transfer made or obligation incurred by a debtor is fraudulent as to a creditor ,

whether the creditor's claim arose before or after the transfer was m ade or the obligation was incurred, if the debtor made the transfer or incurred the obligation: (a) gwlith actual intent to hinder, delay, or defraud any creditor of the debtor; or (b) gwlithout receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:

(1) gwjas engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably sm all in relation to the business or transaction; or

(2) gilntended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they becam e due.

Section 726.105(1)(a) is referred to as actual fraud, and section 726.105(1)(b) is referred to as construdive fraud. BB&T labels Count l of its Complaint as ttFraudulent Transfer Pursuant to j 726.105(1)(a), Fla. Stat.'' gDE 293, p. 41. This is the actual fraud portion of the statute. However, within Count 1, BB&T asserts that the Asset Transfer to Dormelly was both a tifraudulent transfer as to BB&T pursuant to j 726.105(1)(a), Fla. Stat.'' and $1a fraudulent transfer as to BB&T pursuant to j 726.105(1)(b), Fla. Stat.'' gDE 293, pp. 4-5). The Complaint, therefore, although poorly drafted, appears to seek avoidance of the transfers to Donnelly under both the actual fraud and the constructive fraud provisions of the statute . Thus, both theories of fraud will be addressed by the Court.

i.) Adual Fraud:

To establish a prim a facie case of ad ual fraud , a plaintiff must show that (1) there was a creditor to be defrauded, (2) there was a conveyance of property that could have been applied to payment of the debt due, and (3) there was a debtor intending fraud. See Nat 1 Mar. Servs., Inc. v. Straub, 979 F. Supp. 2d 1322, 1327 (S.D. Fla. 2013). Then, under section 56.29(6), Florida Statutes, the burden is on the transferee to prove that the transfer was not fraudulent . Id

Under the UFTA, a dtcreditor'' is defined as $ta person who has a claim . '' j 726.102(5), Fla. Stat. A tûclaim'' is defined as 1$a right to paym ent , whether or not the light is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, seeured, or unsecured.'' j 726.102(4), Fla. Stat. Therefore, ççga) transfer made. . .by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made.'' j 726.10641), Fla. Stat.The next step in the analysis is for the court to look at whether there was a conveyanee of property that could have been applied to paym ent of the debt . Finally, the court determines whether there was a debtor intending fraud .

Because determ ining the tkintention of fraud'' elem ent is dificult , section 726.105(2), Florida Statutes, lists eleven non-exclusive factors to consider in determ ining whether a transfer was made with intent to defraud creditors. Yaralli v. a4m . Reprographics, LLC, 165 So. 3d 785, 788 (Fla. 4th DCA 2015). These factors are referred to as lûbadges of fraud.'' 1d. They include whether: (a) the transfer or obligation was to an insider; (b) the debtor retained possession or control of the property transferred after the transfer; (c) the transfer or obligation was disclosed or concealed; (d) before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit; (e) the transfer was for substantially all of the debtor's assets; (9 the debtor absconded; (g) the debtor removed or concealed assets; (h) the value of the consideration received by the debtor was reasonably equivalent to the value of the assets transferred or the amount of the obligation incurred; (i) the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred; () the transfer occurred shortly before or after a substantial debt was incurred; and (k) the debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider or the debtor.j 726.105(2), Fla. Stat.

Although the presence of a single badge of fraud does not am ount to a finding of fraud, the presence of multiple badges of fraud will justify a finding of fraud. Yaralli, 165 So. 3d at 789. W hen badges of fraud are present, it creates a prima facie case and raises a rebuttable presumption that the transaction is void. Straub, 979 F. Supp. 2d at 1328. However, dtgilt is clear from the language of the Statute that in detenuining intent, consideration may be given to factors other than those listed above.'' In re M iller, 188 B.R. 302, 306 tBankr. M .D. Fla. 1995). W hen analyzing a particular transfer, iûcourts generally consider the totality of the circumstances'' in addition to the badges of fraud. ln re Ramsurat, 361 B.R. 246, 253 tBankwr. M .D. Fla. 2006).

ii.) Constructive Fraud:

Altem atively, to establish a prim a facie case for constnzctive fraud, under these factual circumstances , 6 Plaintiff must show that: (1) the debtor did not receive ilreasonably equivalent value'' in exchange for the transfer', and (2) the debtor itgijntended to incur, or believed or 6 Bellinger was not engaged in a business transaction in making either transfer. See j 726.105(1)(b)1 ., Fla. Stat.

1 8 reasonably should have believed that he or she would incur , debts beyond his or her ability to pay as they became due.'' See j 726.105(1)(b)2., Fla. Stat.

D. Bellinaer's 2011 Creation of the Cook Islands Trust and Initial 2012 Transfer of Approximately $1.7 M illion in Assets to the Trust

The Court finds that Bellinger's 201 1 creation of the Cook Islands Trust and initial 2012 transfer of approximately $ l .7 m illion in assets to the Trust was not a fraudulent transfer . There are several reasons for this finding.

As to BB& T's claim of actual fraud under section 726 . 105(1)(a), it is clear that BB&T filed its underlying claim against Bellinger on M ay 5 , 201 l . gDE 11. As stated earlier, a debtor's transfer may be fraudulent as to a creditor whose claim arose before the transfer was m ade

, whether or not that claim had been reduced to judgment yet. Straub, 979 F . Supp. 2d at 1328. The Trust w as settled on N ovem ber 30 , 201 1, Bellinger requested that the assets be transferred to the Trust on January 30, 2012, and the assets were transferred to the Trust on February 10 , 2012. (DE 377-1, p. 13J. Thus, BB&T was a creditor of Bellinger under the UFTA when Bellinger created the Trust on N ovem ber 30 , 20l 1, when Bellinger requested the assets be transferred to the Trust on January 30, 2012 , and when the assets were actually transferred to the Trust on February 10, 2012. M oreover , the assets Bellinger transferred to the Trust were cash and equity positions he had in certain M errill Lynch accounts . gDE 377-141. The assets that were transferred to the Trust, therefore , were property of Bellinger that could have been applied to paym ent of the debt.

Looking at the pertinent badges of fraud , Bellinger did retain som e control of the property after it was transferred to the Trust . That m uch is evident from Bellinger's U nited States Gift Tax Retunz for 2012, which states çffor purposes of the federal gift tax , (Bellingerj continues to possess dom inion and control over the property transferred to the Trtlst . '' gDE 377- 9, p. 621. That document also states that Bellinger ç'has retained a non-general power to appoint the Trust property. . .gandl the power to change the beneficiaries of the Trust and/or the interests of the beneficiaries as among them selves.'' 1d. According to the testimony and evidence, Bellinger can request that distributions from the Trust be m ade to specific beneficiaries in specific amounts, but it is ultimately up to the Trustee to decide if Bellinger's request will be honored. Bellinger cannot revoke the Trust, override the Trustee,or replace the Trustee. Therefore, for pum oses of a fraudulent transfer, Bellinger has not retained full control of the Trust; his control is limited and inferior to that of the Trustee.

Furthennore, before the alleged transfer of assets to the Trust was m ade, Bellinger had been sued. The underlying Complaint in this case was filed on May 5, 201 1. gDE 1j. Bellinger settled the Trust on November 30, 201 l (DE 377- 1 lj and requested that the assets be transferred to the Trust on Janualy 30, 2012 (DE 377- 14j.Although this much is true, the Court finds that Bellinger reasonably believed that he would not be liable if a judgment was entered against him. Bellinger credibly testified that he believed that if any judgment was entered against him, the Labontes wou p 7 ld ay it because he had an indemnification agreement with them , as his co- guarantors on the loan, and they had paid other judgments for Bellinger in the past. M oreover, the subject loan of $3million was secured by the Hamilton Greens property, which Bellinger reasonably believed was worth at least $ 10 m illion. According to Bellinger, the property was appraised at $10.1 m illion in 2006. Bellinger estimated at the hearing that, when he left the 8 project in 2007, he believed the property was worth over $15 million.

7 chad Labonte and Roland Labonte were codefendants in the underlying Iaw suit and co-guarantors with Bellinger on the loan. F Bellinger based this estimate on his extensive experience in the real estate market, the prior appraisal of $10.1

m illion that was done on the property, and the fact that the Labonte's obtained developm ent rights for the Ham ilton Greens property subsequent to the $1 0. l million appraisal.

As to the initial 2012 transfer of Bellinger's assets to the Tnlst, the Court finds that this transfer was not concealed by Bellinger. BB&T claim s that the transfer of assets to the Tnzst was not disclosed to them and that it learned of the transfer during post-judgment discovery. (DE 283, p. 2; DE 293, p. 4). However, Bellinger infonned BB&T of the creation of the Trust within m onths after transferring the assets to the Trust, which was funded on February 10, 2012. (DE 377-1, p. 13j. Specifically, Bellinger notified BB&T of the existence of the Trust on August 7, 2012 in a financial affidavit provided to BB&T in connection with a m ediation proceeding. gDE 385, p. 41. Therefore, the Court finds that Bellinger was not attempting to conceal the Trust from BB&T.

A factor weighing in BB&T's favor, which the Court has carefully considered, is that the transfer of assets to the Trust was for substantially al1 of Bellinger's assets. Under the UFTA , an fkasset'' does not include property to the extent that it is generally exempt under nonbankruptcy law. j 726.102(2)(b), Fla. Stat. Bellinger testified that, after transfening the $1,629,934.00 in assets to the Tnlst, his remaining assets were: (1 ) his homestead property, valued at approximately $350,000.00; (2) his IRA, valued at approximately $300,000.00; and (3) cash and other miscellaneous property, valued at approxim ately $75,000.00. See also DE 377-1, p. 20. Under nonbankruptcy law, Bellinger's homestead property and IItA would be exempt property. See Fla. Const. art. X j 4,' j 222.2 1, Fla. Stat. Therefore, Bellinger was left with approximately $75,000.00 in assets after the transfer of assets to the Trust, and the total amount Bellinger transferred to the Trust w as approxim ately 95 . 60% of his assets. 9 This clearly constitutes substantially al1 of Bellinger's assets.

9 Total amount of Bellinger's assets before transfer to Trust = $1 ,629,934.00 (assets transferred to Trust) + $75,000 (remaining assets) = $1,704,934.00. Thus, the percentage of assets transferred to the Trust = $1,629,934.00/$1,704,934.00 = 95.6% .

2 1 The Court has considered all of the badges of fraud alleged by BB&T. BB&T has proven several badges of fraud, and therefore BB&T has established a prim a facie case of adual fraud and has raised a rebuttable presumption that the transaction is void. Despite BB& T having established several badges of fraud, the Court finds that Bellinger sufficiently rebutted the rebuttable presum ption. Bellinger credibly testifed as to his reasons for creating the Trust in 201 1 . W ith regard to the creation and funding of the Trust, the undersigned found Bellinger's demeanor and testimony to be candid and truthful. First, Bellinger had a m arital settlement agreement gDE 377-121 with his ex-wife, which he believed she may violate and seek more m oney from Bellinger in the future because of its unique term s. Second, Bellinger's mother passed away from Alzheimer's disease, and he witnessed how her m edical expenses drained al1 of her financial assets. He was reasonably concerned that he, too, may ultimately suffer from Alzheimer's disease, which could negatively impact his assets. Third, Bellinger was considering getting into the com m ercial real estate developm ent business, w hich was apparently volatile, and he svanted to protect his assets fronA any future creditors' clainAs. Fourth, Bellinger w anted to secure funds for his support after his retirement. For all of these reasons, Bellinger attested that he created the Trust. Taking into account a11 the evidence and the totality of the circum stances that surrounded the 20l l creation of the Trust and the 2012 conveyance of Bellinger's assets to the Tnlst, the undersigned concludes Bellinger set forth legitim ate reasons for creating the Trust. See In re Bfani, 580 Fed. Appx. 740, 745 (1 1th Cir. 2014). The Court finds that Bellinger created the Trust in 201 1 and transferred the assets to the Trust in 2012 in good faith, w ithout any intent to defraud BB& T. A careful review of a11 the evidence and the totality of the circum stances supports a finding that the transfer of approxim ately $1.7 m illion in assets by Bellinger to the Trust in 20 12 w as not a fraudulent transfer.

The undersigned previously distinguished this case from S.E.C. v. Solow, 682 F. Supp. 2d 13 12 (S.D. Fla. 2010) in the Report and Recommendation (DE 240j on the M otion to hold Bellinger in civil contempt, and that distinction bears repeating here. Unlike the defendant in Solow, Bellinger did not divest himself of his assets in anticipation of the judgment that was about to be entered against him . ld at 1328. Bellinger set forth a num ber of legitimate bases for creating the Trust. M oreover, Bellinger m ade good faith, reasonable efforts to retrieve the assets that he transferred to the Trust when he realized he would be liable for the BB&T Judgment on BB& T to pay a portion of the his ow n, and he asked the Trustee to m ake distributions to For a11 of the reasons stated in this Judgm ent. 1d. The Trustee refused Bellinger's request. Report and Recom mendation, the undersigned finds that the Trust was created and the assets transferred to the Trust in good faith and without actual fraudulent intent. The Court rejects BB& T's claim of actual fraud regarding Bellinger's 201 1 creation and 2012 funding of the Trust, and the Court finds that BB& T failed to establish such claim by a preponderance of the evidence.

As to BB&T's claim of constructive fraud under section 726.105(1)(b), BB&T has failed to m ake a sufficient showing that Bellinger believed or reasonably should have believed that he would incur debts beyond his ability to pay as they becam e due when he created the Trust in 201 1 or when he transferred the assets to the Trust in 2012. As discussed above, Bellinger testified at the evidentiary hearings that, when he created the Trust and transferred the assets to it, he was not concerned about having to pay a judgment to BB&T.According to Bellinger, he believed that even if there was ajudgment entered against him, the Labontes, as co-guarantors on the loan, would pay it, as they alw ays did for Bellinger. A lso, as noted above, the property securing the $3 m illion loan had been appraised at $10.1 m illion, and Bellinger believed it had increased in value since the appraisal. Therefore, Bellinger reasonably believed that the value of the property securing the loan was m uch higher than the loan am ount. Finally, Bellinger explained that he had an indem nification agreem ent with the Labontes, whom he believed to be worth over $100 million, which he fully anticipated they would honor. The Court finds Bellinger's testim ony to be credible. A lthough Bellinger w as a guarantor on the loan together with the Labontes, there w as an established pattern of the Labontes paying off several of the loans that Bellinger guaranteed. Thus, it was objectively and subjectively reasonable for Bellinger to rely on this pattenz Of behavior when he transferred assets to the Trust in 2012. For those reasons, and based on a review of a1l the evidence and the totality of the circum stances, the Court rejects BB&T's claim of constructive fraud and further finds that BB&T did not prove, by a preponderance of the evidence, its claim of constructive fraud as to the 201 1 creation of the Tnlst and 2012 transfer of assets to the Trust.

M oreover, it bears mentioning that even if the Court were to find (which it does not) that the Trust was created and funded by Bellinger with fraudulent intent as a fraudulent transfer, BB&T would not be entitled to an additional judgment against Bellinger for the approximate $ 1 .7 m illion in assets transferred to the Trust in 2012. çiA fraudulent conveyance action is sim ply another creditors' rem edy.'' Yusem v. S. Fla. Water Mgmt. Dist. , 770 So. 2d 746, 749 (Fla. 4th DCA 2000). A fraudulent conveyance action is not a means to obtain anotherjudgment against the debtor. See j 726.108, Fla. Stat.That is not one of the creditors' remedies listed in the statute, and that is not the purpose of the statute. See Yusem, 77Q So. 2d 749. Therefore, in this fraudulent conveyance action, BB& T would not be entitled to an additional, redundant judgment against Bellinger for the amount transferred to the Tnlst even if Bellinger had acted with fraudulent intent and m ade a fraudulent transfer, which he did not. Instead, under Florida's fraudulent conveyanee statute, BB&T's rem edy would be to stek to recover those funds from the transferee, not obtain another judgment against Bellinger.

E. D onnellv's A lleaed Involvem ent in the 2011 C reation of the C ook lslands Trust and 2012 Transfer of Bellinzer's A ssets to the T rust

Despite having failed to properly plead such claim for relief in its Com plaint in Proceedings Supplementary,BB&T argued that this Court should enter a judgment against Donnelly for the approximate $1.7 m illion transferred to the Trust by Bellinger in 2012 . However, even if BB& T had properly pled this claim and properly sought this relief against Dolmelly (which it did not), and even if BB&T had proved that Bellinger's $1 .7 million transfer to the Trust was a fraudulent transfer (which it did not), it is clear that BB&T utterly failed to prove that Donnelly had a role in the 201 1 ereation of the Cook Islands Trust or in the 2012 transfer of Bellinger's assets to the Trust suffcient to foist liability upon her . BB& T's evidence against her in this regard is w oefully lacking and insuffcient .

It seem s that BB&T is attem pting to assert liability against Donnelly for Bellinger's creation and funding of the Trust based upon a coconspirator or aiding and abetting theory , or based upon som e other unpled, vague theory. How ever, at the tim e that Betlinger created and funded the Trust, Donnelly was not a debtor to BB&T and she was not the transferee receiving any assets. Furthermore, the Florida Supreme Court has held that there is not a cause of adion for aiding and abetting a fraudulent transfer when the alleged aider-abettor is not a transferee . Freeman v. First Union Nat. Bank, 865 So. 2d 1272, 1276 (Fla. 2004). Thus, Donnelly could not be found liable for the 20l 1 creation of the Trust or the 2012 transfer of Bellinger's assets to the Trust even if it was a fraudulent transfer, which it was not. Donnelly had insufficient involvem ent in, and therefore no liability for, Bellinger's creation of the Trust in 201 1 or transfer of assets to the Tnlst in 2012. The Court finds BB& T's claim against Dormelly in this regard to be without m erit and frivolous.

F. BB& T Failed to Join the Trust or Trustee

As noted previously, BB&T has argued to this Court that the 2012 transfer of approximately $1 .7 m illion in assets by Bellinger in creation of the Trust was a fraudulent transfer. Yet, BB&T did not join or even attempt to join the Trust or Trustee- the transferee of Bellinger's assets- as a party in these proceedings supplem entary. Additionally, neither the Trust nor the Trustee is located within the jurisdiction of this Court; they are located in the Cook lslands. It is clear that BB&T never served a summ ons upon the Trust or Tnzstee even though iûthe service of summons is the procedure by which a court having venue and jurisdiction of the subject matter of the suit asserts jurisdiction over the person of the party served.'' M iss. Pub. Corp. v. Murphree, 326 U.S. 438, 444-45 (1946); see also Fed. R. Civ. P. 4(a)(1) ($W summons must: (A) name the court and the parties; gand) (B) be directed to the defendanf). lf this Court were to impose a judgment against the Trust or the Trustee, that would violate due process. Thus, this Court has no jurisdiction over the Trust or the Trustee without the Trust or Tnlstee being named as a party in a properly pled complaint and being served with process.

G. Paym ent of Trust Distributions to Donnellv from M av 2013 to January 2015 The Court will now consider whether the paym ent of the Trust distributions to Dormelly from 201 3-2015 amounted to a fraudulent transfer, which claim was properly pled by BB&T in its Complaint in Proceedings Supplementary gDE 2931.

As to BB&T's actual fraud claim under section 726.105(1)(a), it is clear that BB&T was a û'creditor'' of Bellinger under the U FTA in M ay 2013 w hen Bellinger caused the Trust distributions that he was receiving to be paid to Donnelly. The original underlying Com plaint in this case was filed on M ay 5, 201 1. See DE 1. BB&T's claim was reduced to judgment in the amount of $4,923,797.57 on M ay 28, 2013 (DE 21 1). Again, as noted previously, a debtor's transfer m ay be fraudulent as to a ltcreditor'' whose claim arose before the transfer was m ade, whether or not that claim has been reduced to judgment yet. Straub, 979 F. Supp. 2d at 1328. Thus, BB&T was considered a ûicreditor'' of Bellinger for pum oses of the UFTA when Bellinger caused the Trust distributions to be transferred and paid to Donnelly from on or about M ay 2013 through January 2015.

Bellinger and Donnelly argue that the 2013-2015 Trust distributions to Donnelly did not constitute a fraudulent conveyance. First, Dormelly argues in her First Affinnative Defense gDE 297, p. 41 and elsewhere, which Bellinger adopts, that the Tnlst distributions made to Donnelly were not ûstransfers'' under section 726.102. (DE 31 1, p. 41. Section 726.102(14) defines ittransfer'' as tievery m ode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and ineludes paym ent of money, release, lease, and creation of a lien or other encumbrance.'' According to section 726.102(2), an isasset'' is property of a debtor. Bellinger and Donnelly assert that the Trust distributions made to Dolmelly from M ay 2013 through January 2015 were not içproperty of the debtor,'' Bellinger, because once Bellinger transferred the assets to the Trust in 2012, they became property of the Trust. gDE 31 1, p. 4; DE 385, p. 2). Bellinger settled the Tnlst on November 30, 201 1 and funded the Trust on February 10, 20 12. gDE 377-1, p. l3; DE 377-1 l). Therefore, Bellinger and Donnelly assert that the m oneys in the Trust w ere no longer assets of Bellinger after February 10, 2012, when the Tnlst was funded, because once those assets were lawfully transferred to the Tnlst they belonged to the Trust, not to Bellinger.

BB& T countered this argum ent at the evidentiary hearings, in part, by arguing that the Trust w as the alter ego of Bellinger, w hich destroys the Trust relationship. How ever, a court in the Middle District of Florida recently held that içgblecause the Florida Trust Code (and Florida courts) are so protective of the sanctity of trusts, the Court doubts that the alter ego doctrine applies to irrevocable trusts and is unwilling to extend the doctrine under the circum stances presented in this case.''In re Eddy, No. 6:12-bk-04736-CCJ, 2015 W L 1585513, at *4 tBankr. M .D. Fla. April 3, 2015). M oreover, BB&T never pled this alter ego theory in its Complaint and never m ade the Tnlst or the Trustee a party to this action. BB&T also failed to prove its unpled alter ego allegation with sufficient facts. Under the circumstances presented in the instant case, the undersigned finds that BB& T's belated alter ego theory should not and cannot be applied to Bellinger and the Trust. But this does not end the inquiry.

Regarding Bellinger and Donnelly's argument that the Trust assets were n0t property of Bellinger, it is true that çiga) debtor can only commit fraud on his creditors by disposing of such property as the creditor would have a legal right to look for satisfaction of his claim .. .creditors have no right to com plain of dealings with property which the 1aw does not allow them to apply on their claim s, even though such dealings are with a purpose to hinder, delay or defraud them .'' ln re Matthews, 360 B.R. 732, 746 tBankT. M .D. Fla. 2007) (quoting In re Kimmel, 131 B.R. 223, 229 (Bankr. S.D. Fla. 1991)).Under Florida law, when a trust contains a valid spendthrift provision, a creditor of a beneficiary cannot reach any interest or distribution from the trust until the benetsciary receives the interest or distribution. Miller v. Kresser, 34 So. 3d 172, 175 (F1a. 4th DCA 20 10); j 736.0502, Fla. Stat. Moreover, if a tnlstee makes discretionary distributions, a creditor of a beneficiary may not $û(a) (clompel a distribution that is subject to the trustee's discretion; or (b) gajttach or otherwise reach the interest, if any, which the beneticiary might have as a result of the trustee's authority to m ake discretionary distributions to or for the benefh of the beneficiary.'' j 736.0504(2), Fla. Stat.

The undersigned has concluded that the Trust was created in 201 1 as a valid irrevocable trust and that the transfer by Bellinger of approxim ately $1.7 m illion in assets to the Trust in 2012 was not a fraudulent transfer. And, a review of the Trust shows that it contains a valid spendthrift provision at Article V(A)(1). (DE 377-1 1, p. 272. Additionally, it is undisputed that the Trust distributions are discretionary.Therefore, it would follow that BB& T cannot reach any interest or distribution of the Trust until Bellinger receives the interest or distribution. Once Bellinger receives the interest or distribution, BB&T m ay properly garnish or attach it. The question here is what happens when Bellinger takes action to have the Trustee direct Trust distributions to Donnelly, for the sole benefit of Bellinger.

ln engaging in this analysis, it is clear that Bellinger requested that the Trustee make the monthly Trtlst distributions to Donnelly, instead of to himseltl on or about M ay 8, 2013. That is, Bellinger requested that the Trustee pay to Donnelly the sam e am ount of distributions it had been The intent of Bellinger w as to have D orm elly receive those paying each m onth to Bellinger. distributions solely for his benefit. This was clearly an effort by Bellinger to divert his assets- his receipt of distributions from the Trust- aw ay from BB& T's reach, yet also to keep them for his om z benefit and support.These distributions were paid to Donnelly from M ay 8, 2013 until Bellinger requested that the Tnlstee stop the distributions on or about January 7, 2015. As Bellinger testitied, the total amount of these distributions was approximately $305,000.00. But for Bellinger's direction to the Trustee, these Trtlst distributions would have been m ade to Bellinger and, once received by Bellinger, could have been applied to the Judgm ent that Plaintiff held against Bellinger. See Wiand v. f ee, 753 F. 3d 1 194,1203 (1 1th Cir. 2014). ln effect, Bellinger was using D onnelly as his proxy to continue receiving his Trust distributions.

Even though BB&T cannot reach the Trust corpus when it is held by the Trust, BB&T can reach the Trust distributions once they are received by Bellinger (or his proxy) for his benefit. This is so because the broad definition of ç'transfer'' includes every mode of disposing of an asset, and it is not limited to direct transactions made by the debtor. See Nationsbank, N A. v. Florida courts' criterion for Coastal Utils., lnc., 8 14 S0. 2d 1227, 1230 (Fla. 4th DCA 2002). when something constitutes property of a debtor that is transferred is dtproperty which could have been applicable to the payment of the debt due.'' Wiand, 753 F. 3d at 1203. Therefore, the payment of Trust distributions to Dormelly (solely for Bellinger's benefit) per Bellinger's request, instead of directly to Bellinger, was a tûtransfer'' under the UFTA. ln effect, Bellinger requested and caused the diversion to Dormelly of the Tnlst distributions previously payable to him . Bellinger also maintained a high level of control over Donnelly's W ell Fargo bank aecount, as discussed elsewhere in this Report and Recom mendation. Based upon the evidence and the totality of circum stances surrounding the payment of Trust distributions to Bellinger, and then to Donnelly as his proxy, for Bellinger's benefit, the Court finds that those distributions, once received by Donnelly as Bellinger's proxy, were the property of Bellinger. By requesting and causing the Tnlst distributions to be made to Donnelly, for Bellinger's benefit, instead of to him self, Bellinger effectively put those distributions out of the reach of BB& T but retained them for his benefit. ln doing so, he affected a transfer under section 726.1 02, Florida Statutes.

Although Bellinger does not have complete control over the Trust corpus, he does have limited control over the Trust distributions. That is, he has the power to request that Trust distributions be made to a specified beneficiary in a specified amount, and he has the power to request a change in Trust distributions, although the final decision is up to the Trustee. Thus, the Court rejects Defendants' argument that because the initial creation of the Tnlst in 201 1 and the funding of the Trust in 2012 was a not a fraudulent transfer, BB&T cannot obtain the distributions received by Bellinger through his proxy, Donnelly, for his benefit. The finding by this Court that the funding of the Trust w as not a fraudulent conveyance m eans that B B& T cannot garnish or attach the corpus of the Trust. BB& T also cannot ganzish or attach Trust distributions made to beneficiaries other than Bellinger unless those other beneficiaries are being used by Bellinger as his proxy and are receiving Trust distributions solely for the benefit of Bellinger. H ow ever, this does not m ean that BB& T calm ot garnish or attach the Trust distributions once received by Bellinger or once received by Bellinger's proxy solely for Bellinger's beneft.

Donnelly also m akes a second argum ent that the property in the Tnzst is exem pt property under Cook Islands law and, therefore, the property does not constitute an çsasset'' that could have been applied to the Judgment under the UFTA. (DE 31 1, p. 41. 7tccording to section 726.102(2), an Sfasset'' is property of a debtor, but the tenu does not include 'tproperty to the extent it is generally exem pt under nonbankruptcy law.'' Dormelly contends that tmder nonbankruptcy law, which she says includes the 1aw of the Cook Islands, the Trust property is exempt property. Donnelly argues that the Court must follow Cook lslands law in determ ining whether the assets in the Trust are exem pt property because the 1aw of the site of the property controls. Id.

How ever, the Court is not persuaded by this argum ent. First, the Court's reasoning in the im m ediately preceding paragraphs as to Bellinger's use of D onnelly as his proxy to receive Trust distributions for his benetit applies to this argum ent as w ell. Second, the distributions that w ere made to Donnelly from the Trust from M ay 20 1 3 through January 20 1 5 were deposited into Donnelly's W ells Fargo account, located in Florida. Those distributions were being made to Bellinger until he requested that those distributions be made to Donnelly on or about M ay 8, 201 3. It is undisputed that the distributions m ade to Donnelly's W ells Fargo account were for the benetit of Bellinger. The distributions, once distributed to Donnelly (Bellinger's proxy) from the Trust for the benefit of Bellinger, w ere no longer ç'property in the Trust.'' Therefore, the Court sees no reason to apply Cook lslands 1aw when the distributions were received in Florida, in Donnelly's W ells Fargo account, for the benefit of Bellinger who resides in Florida. Instead, under the unique facts of this case, Florida 1aw applies to such distributions from the Tnzst which were received in Florida and deposited into a Florida bank account for the benefit of a Florida debtor.

BB&T claims that several badges of fraud are present and establish that Bellinger had actual fraudulent intent when he requested that the Trust distributions be transferred from himself to Donnelly for his benefit. lndeed, the transfer was to an çûinsiden'' Section 726.10248) defines Sçinsider'' as, among other things, a relative of the debtor. k%lkelative'' is defined in section 726. 102(13) as çsan individual related by consanguinity within the third degree as detennined by the com mon law, a spouse, or an individual related to a spouse within the third degree as so determined, and includes an individual in an adoptive relationship within the third degree.'' However, the 'linsider'' badge has also been found where there are close, personal relationships between a debtor and transferee. See ln re Mclver, 177 B.R. 366, 370 tBankz. N.D. Fla. 1995) (holding that a debtor's live-in girlfriend was an insider-in-factl; In re L evy, 185 B.R. 378, 384- 85 tBankz. S.D. Fla. 1995). Therefore, because Donnelly was Bellinger's live-in girlfriend, had known him since 1986, had worked for his company from 2006 through 2015, and had both a personal and business relationship with him , Dolm elly was an insider. M oreover, as established earlier, Bellinger had been sued before he requested the transfer of the distributions from him self to Donnelly, to be held by Dolm elly for Bellinger's benefit.

Once Bellinger caused the Tnlst to m ake distributions to D onnelly in M ay of 2013, for his benefh, he did essentially retain control over the Trust distributions made to Donnelly's W ells Fargo account. As noted earlier, Bellinger had access to the online banking for Donnelly's account, he had a debit card for Donnelly's account, he could withdraw money from Dormelly's account, and he uœote checks on that account, which Donnelly would then sign. Further, Bellinger and Donnelly both testified that the account was purely set up to pay the living expenses of Bellinger. That is, the Trust distributions w ere being paid to D onnelly's account in order to pay Bellinger's living expenses. A nd, Bellinger did not receive any consideration from Donnelly when he caused the Trust distributions to be transferred to Donnelly.

Finally, the transfer of distributions did occur near in tim e to when a substantial debt was incurred. Summary judgment was entered in favor of BB&T against Bellinger on April 29, 2013. gDE 2091. The transfer of the Trust distributions to Donnelly began on or about M ay 8, 2013, and the Final Judgment against Bellinger was entered on M ay 28, 2013. (DE 293, pp. 2,

As there are m ultiple badges of fraud present, which BB& T has proven, a prim a facie case is established, and the burden shifts to Bellinger and Donnelly to show that the transfer was not fraudulent. Section 726.109(1) states that a transfer Slis not voidable under (j1 726.105(1)(a) against a person who took in good faith and for a reasonably equivalent value.'' D onnelly and Bellinger claim that Donnelly took in good faith and for reasonably equivalent value. gDE 31 1, PP. 5-61.

Coul'ts apply an objective test to detennine if a transferee has acted in good faith. In re Berkman, 517 B.R. 288, 303 tBankr. M .D. Fla. 2014). The question is whether the transferee had either adual knowledge of the debtor's fraudulent purpose or knowledge of such facts or circum stances that would have eaused a reasonable person to inquire further about the transferor's purpose. The Court finds that Donnelly was a credible witness based on her dem eanor and testimony. Donnelly had known Bellinger since 1986 and perceived him to be an honest man of the highest integrity. She testified that she did not believe Bellinger had a fraudulent purpose in making the transfers . There was also no evidence that Donnelly benefitted or profited from the transfer of Trust distributions to her , nor is there sufficient evidence to establish that she conspired with Bellinger to defraud BB&T . A lthough Donnelly knew of BB&T's lawsuit against Bellinger, she testifsed that she had no intention of helping Bellinger avoid BB&T; she just wanted to help Bellinger pay his everyday living expenses and avoid em barrassm ent.

According to Donnelly, she believed that any assets in the Trust were urlreachable by Bellinger's ereditors because they were exempt under Cook lslands law . Further, D onnelly did not expect that Bellinger would be personally liable for any m onies owed to BB&T because the property securing the debt w as valued at $15 m illion, Bellinger's co-guarantors had a com bined net worth of over $100 million, Bellinger's co-guarantors had indemnified him from the BB&T claim , and the co-guarantors had discharged all of Bellinger's other contingent liabilities during the previous five years. gDE 367, p. 6j. The Court tinds that Donnelly objectively and subjectively acted in good faith and without fraudulent intent in receiving the Trust distributions from on or about M ay 8, 201 3 through on or about January 7 , 20 1 5. H ow ever, that does not end the inquiry as the Court must determ ine whether Donnelly took the distributions for reasonably equivalent value.

As to the lçreasonably equivalent value'' elem ent, Bellinger and Donnelly both argue that the distributions from the Trust were received by Dolmelly for reasonably equivalent value because D onnelly was going to pay a11 of Bellinger's living expenses w ith the distributions. However, Donnelly and Bellinger both testifed that Donnelly did not give any consideration to Bellinger at the time of the transfer when Bellinger directed the Trustee to m ake the distributions to her account. Moreover, Section 726. 1 04(1) states that ûkvalue does not include an unperform ed promise m ade otherwise than in the ordinary course of the promisor's business to furnish support to the debtor or another person.'' H ere, Bellinger asked the Trustee to transfer the fixed monthly distributions that he was receiving from the Trust to Donnelly's W ells Fargo account on or about M ay 8, 2013 until on or about January 7, 2015. Bellinger and Donnelly claim that Donnelly gave reasonably equivalent value for the transfer of distributions because she prom ised to pay Bellinger's living expenses with the distributions and did in fact pay those expenses with the distributions. ln other words, Dormelly prom ised to support Bellinger with the distributions from the Trust that would be made to her. Donnelly testified that she indeed only used the distributions to pay the living expenses of Bellinger, except for her attorney's fees in this litigation, w hich Bellinger agreed to pay for from the Trust distributions. Bellinger and Donnelly claim that Donnelly's prom ise to pay Bellinger's living expenses was perform ed and that the bank statem ents of Donnelly's W ells Fargo account prove that m uch. See D Es 377-15, 377-16.

H owever, it is difficult for this Court to reconcile D onnelly's prom ise to pay support w ith section 726. 10441). The term tlunperformed promise'' is not defined in the statute. One question is whether the tenn i'unperformed prom ise'' is referring to unperformed at the time the transfer was made or unperfonned at the tim e the action is brought . Florida's Fourth District Court of Appeal held that a son's promise to pay his father , the debtor, a certain am ount of future royalties of an aeronautical invention was an unperfonned prom ise because tûthere had been no sales of the invention, no projected sales and gthe son) was a less than credible proponent of the invention's prospeds for generating future revenue . M oreover, distribution of the invention required FAA approval, whieh was, at best, uneertain . '' M anchec v. M anchec, 951 So. 2d 1026, 1029 (Fla. 2007). Further, the court stated that 'iltqhe potential of future royalties was uncertain and unfixed, two qualities that render an 'unperform ed prom ise' insufficient to qualify as ûvalue g iven for a transfer.''' ld ,

Here, the undersigned tsnds that Donnelly's prom ise to support Bellinger was an unperformed prom ise in that, when Bellinger initially transferred the distributions of the Trust to Donnelly: (1) she had not yet paid for any of his living expenses; (2) the payment of his living expenses was uncertain because the Trustee had the discretion to deny any of the distributions; and (3) the payment of his living expenses was an unfixed amount because Donnelly's promise was just a general promise to support Bellinger whenever he needed it. Therefore, Donnelly's prom ise to support Bellinger did not qualify as reasonably equivalent value . The Court also finds that it would be against publie policy to allow a debtor to cause Trust distributions to be paid to the debtor's proxy, for the debtor's beneft, in order to evade a creditor and then claim that when the debtor's proxy paid the debtor's living expenses , such paym ent or prom ise to pay constituted Sçreasonably equivalent value.'' Accordingly, for all these reasons, the undersigned rejects this affinuative defense.

Dolm elly also asserts the iimere conduit'' affirmative defense. Donnelly claim s that she dçacted as a mere conduit of the funds from the (Trustl to the persons and entities she transferred the funds to.'' gDE 31 1, p. 81. BB&T, however, correctly points out that the Eleventh Circuit has not yet addressed w hether the affirm ative defense of çsm ere conduit'' applies in U FTA actions. Perlman v. Bank ofAm., X -d., 56l Fed. Appx. 810, 812-13 (1 1th Cir. 2014). This affrmative defense has only been applied by the Eleventh Circuit çiin the context of banks receiving ftmds and depositing them into customer accounts.'' Steinberg v. Barclay 's Nominees (Branches), L /t@ , 2008 W L 7601042, at *7-8 (S.D. Fla. Sept. 30, 2008). lt does not appear that the Eleventh Circuit intended to apply this defense to an individual receiving funds and subsequently paying them to som eone else or using them to pay som eone else's living expenses. M oreover, in order to prove the affinnative defense of klm ere conduit,'' the transferee must establish that he or she did not have control over the assets transferred. Perlman, 56l Fed. Appx. 813. Donnelly did not m ake this show ing because she w as the only person w ith signatory authority on the W ells Fargo account and did have joint control with Bellinger over the money while it was in her account. Thus, the undersigned also rejects this affinnative defense.

The Court therefore finds that BB & T did establish, by a preponderance of the evidence, that the transfer of Tnlst distributions from Bellinger to Dolm elly and the payment of Tnzst distributions to Donnelly for the benefit of Bellinger from on or about M ay 8, 2013 through on or about January 7, 201 5 constituted an actual fraudulent transfer by Bellinger.

W ith regard to constructive fraud under section 726.l05(1)(b), as discussed above, D om w lly did not take the Trust distributions in exchange for reasonably equivalent value. That is, in exchange for Bellinger requesting that the distributions from the Trust go to D onnelly's account, it w as not 'éreasonably equivalent value'' for Donnelly to agree to pay a1l of Bellinger's living expenses with the distributions. See j 726.104(1). Additionally, BB&T showed that Bellinger believed or reasonably should have believed that he would incur debts beyond his ability to pay as they became due when he caused the transfer of the distributions from the Trust to Dormelly for his benefit. Bellinger testified that the Trust distributions were his only income w hen he w as receiving them . Because these distributions were Bellinger's only incom e , he reasonably should have believed that if he caused the transfer of the distributions to Donnelly then he would be unable to pay his debts as they became due. ln fact, Bellinger did believe this; Bellinger testifed that he and Donnelly set up Donnelly's W ells Fargo account in order to pay Bellinger's living expenses. Thus, BB&T did m ake a prim a facie showing of constructive fraud for the transfer of the Trust distributions to Donnelly from M ay 2013 to January 2015.

However, as the Court has already found that BB&T established that the transfer of the Trust distributions from Bellinger to Donnelly was an actual fraudulent conveyance, and that Bellinger and Donnelly failed to prove their aftirm ative defenses, the Court need not readdress Bellinger and Donnelly's affirm ative defenses to the extent they pertain to the constructive fraud claim . The analysis discussed above is incom orated herein. Accordingly, the undersigned tinds that the transfer of Trust distributions from Bellinger to Donnelly and the payment of Tnlst distributions to Donnelly, for the benefit of Bellinger, from on or about M ay 8, 2013 through on or about January 7, 2015 also am ounted to constructive fraud by Bellinger and constituted a fraudulent transfer.

H . R elief to W hich BB& T is Entitled

ln its Complaint in Proceedings Supplementary gDE 2931, BB&T sought the primary relief of:

A judgment finding that the Asset Transfer from 20 1 3 to 20l 5 was a fraudulent transfer;

2) A judgment ordering that the distributions of the Trust in the possession of Dolmelly be applied to the Final Judgm ent;

An award of reasonable costs and attorney's fees to BB&T; and 4) An injunction preventing Donnelly from receiving further disbursements from the Trust.

gDE 293, p. 5, para. 24 and klW herefore'' elause).The Complaint in Proceedings Supplementary also sought certain alternative relief, including the entry of a judgment against Bellinger and Donnelly for the value of the assets transferred, but the prim ary relief sought by BB&T was that recited above. In subsequent hearings and mem oranda, BB&T requested additional relief , such as a judgment against Bellinger and Donnelly, jointly and severally, in the approximate amount of $1 .7 million, and eertain other form s of relief not requested in its Com plaint in Proceedings S lementary. gDE 371 p. 20; DE 387, p. 201.10 upp ,

Since this Court has determ ined that Bellinger's 201 1 creation of the Tnzst and 2012 transfer of assets to the Trust was not a fraudulent transfer, BB& T is not entitled to any relief against either Bellinger or Donnelly in regards to the 201 1 creation of the Cook Islands Trust or the 2012 transfer of assets to the Trust. However, since this Coul't has detennined that 10 D to the Court's concerns as to whether it hadjurisdiction to entertain the relief apparently sought by BB&T ue , the Court gave the parties an opportunity to tile supplemental memoranda on thejurisdictional issues. gDE 3891. The Court has carefully considered these memoranda, and the Iimits of its ancillaryjurisdiction, in entering this Report and Recommendation. See, e.g., Peacock v. Thomas, 5 16 U.S. 349, 359 (1996) (ancillaryjurisdiction does not extend to çta new lawsuit to impose liability for a judgment on a third party.''); Nat '1 Mar. s'enm, Inc., 979 F. Supp. 2d at 1327 ($%The Court has ancillaryjurisdiction over these supplemental proceedings as (the creditorl is seeking assets of the Judgment Debtor. . .that are found in the hands of a third party. . .''), aftnd, 776 F. 3d 783 (1 1th Cir. 20 1 5) (çt(T1he district court had ancillary jurisdiction over this supplementary proceeding because National Maritime sought to disgorge Straub of a fraudulently transferred asset, not to impose liability for ajudgment on a third party.'')', Reiseck v. Universal Commc 'ns ofMiami, Inc., CASE NO. 15-20935-MC-ALTONAGA, 20 15 WL 656 1689, *5 (S.D. Fla. Aug. 1 8, 201 5) (The court stated that the Eleventh Circuit affirmed in National Maritime because, by lim iting the third party's liability to the proceeds the defendant fraudulently transferred to the third party, the plaintiff sought to disgorge the third party of a fraudulently transferred asset, not to impose liability for a judgment on a third party).

Bellinger's effort from 2013-2015 to have the Trust distributions transferred and paid to Donnelly (as his proxy) for his benefit was a fraudulent transfer, the Court will now address the appropriate relief to which BB& T is entitled.

A s to Bellinger, BB& T argues that Nat '1 M ar. Servs ., Inc. v. Straub, 979 F. Supp. 2d 1322 (S.D. Fla. 2013), affd, 776 F. 3d 783 (1 1th Cir. 2015), allows this Court to enter an additional judgment against Bellinger. gDE 390, p. 51. BB&T wants this Court, at a minimum, to enter a judgment against Bellinger in the amount of the $305,000.00 paid by the Trust to Donnelly for the benetit of Bellinger. 1d. In Straub, the Southern Distrid of Florida eoncluded , without discussion of imposition of an additional judgment, that final judgment should be entered liagainst Defendant, Burrell Shipping Company, LLC, and lmpleaded Defendant , G lenn F. Straub, for the am ount of the Final Judgm ent entered against Burrell Shipping Com pany , LLC.'' Straub, 979 F. Supp. 2d at l 330. M oreover, the district court stated that it had itancillary jurisdiction over these supplemental proceedings as gthe creditor) is seeking assets of the Judgment Debtor. . .that are found in the hands of a third party. . .'', Nat 1 M ar . Servs., Inc., 979 F. Supp. 2d at 1327. On appeal, the Eleventh Circuit stated that the district court Sfentered judgment against Straub in the amount of the final judgment against Burrell Shipping.'' Straub, 776 F. 3d at 786. Moreover, the Eleventh Circuit concluded that içthe judgment in favor of National M aritim e and against Straub'' would be affirmed. Id at 789. The court did not mention a judgment against Burrell Shipping. Thus, Straub is not necessarily instructive for the proposition that this Court can enter an additional judgment against Bellinger.

The Court finds that BB&T is not entitled to another judgment against Bellinger for the approxim ate $305,000.00 in Trust distributions m ade to Donnelly from 2013-2015. As stated earlier, a fraudulent conveyance action is not a m eans for a creditor to obtain an additional judgment against the debtor. A fraudulent conveyance action is Vteither an action by a creditor against a transferee directed against a particular transaction . . . or it is an action against a transferee who has received an asset by m eans of a fraudulent conveyance and should be required to either return the asset or pay for the asset . '' Yusem , 77Q So. 2d at 749. It is not çsan action against a debtor forfailure to pay an amount owing from a prior judgment.'' 1d. Therefore, BB&T is not entitled to another judgment against Bellinger for the nmount of the Tnzst distributions transferred to Donnelly from 2013-2015. BB& T already has its m ain Judgment against Bellinger. A further judgment for $305,000.00 against Bellinger would be redundant, unnecessary, and not within the relief contemplated under Florida's fraudulent conveyance statute.

As to Donnelly, courts have ancillary jurisdiction in cases where a creditor institutes proceedings supplem entary in order to recover assets that were fraudulently transferred to a third party. Straub, 776 F. 3d 783,788 (1 1th Cir. 2015). As BB&T is seeking to recover the distributions that were fraudulently transferred to Dormelly, this Court has ancillary jurisdiction over her, and Donnelly's liability is lim ited to the proceeds that Bellinger fraudulently transferred to her W ells Fargo account from the Tnlst. f#. at 787. Bellinger testified that the am ount of distributions transferred to Donnelly from M ay 2013 through January 2015 was approximately $305,000.00. Therefore, the maximum amount that this Court has jurisdiction to hold Donnelly liable for is $305,000.00. However, this situation is unique because, although the distributions w ere m ade to D onnelly, she spent nearly all of the m oney to pay Bellinger's living expenses. The balance of the m oney w as used to pay her attom ey in this action, w hich indirectly benefitted Bellinger and guaranteed D onnclly due process. M oreover , she did not profk at all from the Trust distributions and acted in good faith, without a eorrupt motive. Further , this is not a situation where the asset transferred to Donnelly rem ains fully in her possession and can be returned.

In BB&T's Com plaint in Proceedings Supplementary, BB&T specifically sought an order that iûthe distributions of the Trust in the possession of M aureen Donnelly'' be applied to the Judgment. gDE 293, p, 5, SiW herefore'' clausej (emphasis added). The Court should grant that specific primary relief requested by BB& T in its Complaint in Proceedings Supplementary

, that is, Dolm elly should be ordered to pay over to BB&T the distributions rem aining in her possession that she received from the Trust from M ay 2013 through January 2015 . The Court should not order that a judgment in the amount of $305,000.00 be entered against Dolmelly. ln this regard, it is clear that the remedies set forth for creditors in section 726 . 108, Florida Statutes, are equitable in nature.See j 726.108, Fla. Stat.The court is given broad discretion to fashion an appropriate remedy for the creditor. Taking this into eonsideration , the Court believes that, under the circumstances, it would be inequitable and unfair to enter a judgment against Dolmelly in the amount of $305,000.00, as sought by BB& T. Donnelly did not profit from the Trtlst distributions, Donnelly paid the Trust distributions to Bellinger for his living expenses , care and sustenance, Donnelly acted in good faith without any intent to defraud BB&T , and Donnelly is unemployed and withoutsuftieient assets to pay such a judgment. M oreover, the Court is concerned that entry of a judgment of $305,000.00 against Donnelly, under the specific fads of this case, may exceed this Court's ancillary jurisdiction.

Dormelly only received the distributions from approxim ately M ay 2013 to January 2015 . The only benetit Donnelly actually received from the Tnlst distributions was the payment of her attonwy's fees in this litigation, which was also in the best interests of Bellinger because if Donnelly prevailed then his transfer would not be fraudulent . Finally, almost all of the distributions m ade to Donnelly's account have been paid out to Bellinger or to the attorneys in this litigation. She did not benefit at all from her receipt of the Trust distributions . Thus, Donnelly should only be required to pay to BB&T the am ount of Tnlst distributions remaining in her possession, as sought by BB&T as its prim ary request for relief in its Complaint . l 1 In other words, Donnelly should be ordered to pay to BB&T the rem aining assets in her possession that were fraudulently transferred to her from the Trust between M ay 2013 and January 2015 . See Yusem, 77Q So. 2d at 749. Such relief is clearly appropriate under Florida's fraudulent conveyance statute.

Further, BB& T requested that Bellinger, not D onnelly , be held liable for its reasonable costs and attorney's fees incurred in these proceedings supplementary . See D E 293, p. 5; DE 371, p. 20; DE 390, p. 8. Section 56.29(1 1), Florida Statutes, provides that ç'lclosts for proceedings supplementary shall be taxed against the defendant as well as all other incidental costs determined to be reasonable and just by the court,'' which includes reasonable attorney's fees. Florida courts have interpreted this section to mean that costs for proceedings supplementary ean only be taxed against the judgment debtor and cannot be taxed against impleaded parties. See Rosenfeld v. TP1 Intern. Airways, 630 So. 2(1 1 167, 1 169 (Fla. 4th DCA l 993); Dusoe v. Securis Int? Inc., 672 So.2d 89, 90 (Fla. 1st DCA 1996). ln other words, BB&T would only be entitled to an award of costs and attorney's fees against Bellinger , the judgment debtor, and not against Donnelly, the impleaded party. Because Bellinger did engage in a fraudulent transfer as to the paym ent of the Trust distributions to D orm elly from 2013-2015 , Bellinger is liable for BB&T's reasonable attorney's fees and costs incurred in seeking and obtaining that relief.

I I There was no testim ony at the evidentiary hearings on what am ount rem ains in Donnelly's W ells Fargo a ccount. However, according to the Wells Fargo account statement (DE 377-15, p. 841, as of January 7, 2015, there was $10,488.75 remaining in the account.

Finally, in Paragraph 24 of its Com plaint , BB&T seeks an injunction preventing Donnelly from receiving further disbursements from the Trust . (DE 293, p. 5, para. 241. The undersigned recommends that an injunction be entered preventing Donnelly from receiving any further distributions from the Trust , as Bellinger's proxy, for the sole benest of Bellinger . That is, the Court should enjoin Bellinger from using Donnelly as his proxy to receive Trust distributions for his sole benefit . However, because Donnelly is a beneficiary under the Trust

, and because the Trust was legitimately created , Donnelly is entitled to receive distributions from the Trust for her own benefit . lt would be overbroad to enjoin Donnelly from receiving Trust distributions for her own benefit , but she should be enjoined from receiving Trust distributions as Bellinger's proxy, for the sole benefit of Bellinger .

IV . CO NC LU SIO N Based on the foregoing considerations , this Court RECO M M ENDS that the Honorable United States District Judge Kemzeth A . M arra GR ANT IN PART AND DENY IN PART the Complaint in Proceedings Supplementary gDE 2931, as follows:

BB&T's Complaint in Proctedings Supplementary (DE 293) should be GRANTED to the extent that it seeks to have the paym ent of the Tnlst distributions to Donnelly for the benefit of Bellinger from M ay 8 , 2013 to January 7, 2015 deemed a fraudulent transfer under Florida law . lmpleaded Defendant Donnelly should be ordered to pay over to BB&T a11 am ounts remaining in her possession that were transferred to her from the Trust between M ay 2013 and January 20 l 5. D efendant Bellinger should be ordered to pay B B& T's reasonable costs and attonzey's fees w hich BB &T incurred in seeking to have the Tnzst distributions paid to Donnelly for Bellinger's benefit be deemed a fraudulent COnVCyanCC.

An injunction should be GRANTED preventing Donnelly from receiving any further Trust distributions from the Tnzst as Bellinger's proxy for the sole benefit of Bellinger, and preventing Bellinger from taking any action to have the Tnzst distributions paid to Donnelly as his proxy for his sole benefit .

3. BB&T's Complaint in Proceedings Supplementary (DE 293) should be DENIED in al1 other respects .

NOTICE OF RIGH T TO OBJECT A party shall file written objections, if any, to this Report and Recommendation with U nited States D istrict Judge K enneth A . M arra within fourteen (14) days of being served with a copy of this Report and Recommendation . See 28 U.S.C. j 636(b)(1)(C).

RESPECTFULLY SUBM ITTED in Cham bers at W est Palm Beach , Palm Beach , Z County, Florida, this ( - 3 7ay of January , 2016.

% W ILLIA M M ATTH W M A N UN ITED STATES M AGISTM TE JUDGE

Case Details

Case Name: Branch Banking and Trust Company v. Hamilton Greens, LLC

Court Name: District Court, S.D. Florida

Date Published: Jan 13, 2016

Docket Number: 9:11-cv-80507

Court Abbreviation: S.D. Fla.