Patrick Finn and Lighthouse Management Group, Inc., Appellants/Cross-Respondents, vs. Alliance Bank, Respondent/Cross-Appellant, Home Federal Bank, Respondent/Cross-Appellant, KleinBank, Respondent/Cross-Appellant, Merchant‘s Bank, Respondent/Cross-Appellant, M&I Marshall & Ilsley Bank, Respondent/Cross-Appellant, American Bank of St. Paul et al., Defendants.
A12-1930, A12-2092
STATE OF MINNESOTA IN SUPREME COURT
Filed: February 18, 2015
Stras, J.
Court of Appeals
Christopher R. Morris, Bassford Remele, P.A., Minneapolis, Minnesota, for respondent Alliance Bank.
Kevin M. Decker, Benjamin E. Gurstelle, Briggs and Morgan, P.A., Minneapolis, Minnesota, for respondent/cross-appellant Home Federal Bank.
Shari L.J. Aberle, Andrew Brattingham, Dorsey & Whitney LLP, Minneapolis, Minnesota, for respondent/cross-appellant KleinBank.
Mark A. Merchlewitz, Benson & Merchlewitz, Winona, Minnesota, for respondent/cross-appellant Merchant‘s Bank.
Keith S. Moheban, Peter J. Schwingler, Katherine E. Devlaminck, Stinson Leonard Street LLP, Minneapolis, Minnesota, for respondent/cross-appellant M&I Marshall & Ilsley Bank.
Richard T. Thomson, Lapp, Libra, Thomson, Stoebner & Pusch, Chartered, Minneapolis, Minnesota, and Kevin D. Hofman, Halleland Habicht P.A., Minneapolis, Minnesota, for amici curiae City National Bank et al.
Paul L. Ratelle, Fabyanske Westra Hart & Thomson, Minneapolis, Minnesota, and Karen E. Wagner, Andrew S. Gehring, Davis Polk & Wardwell LLP, New York, New York, attorneys for amicus curiae The Clearing House Association L.L.C.
Thomas H. Boyd, Michael A. Rosow, Jacob B. Sellers, Winthrop & Weinstine, P.A., Minneapolis, Minnesota, and H. Peter Haveles, Jr., Kaye Scholer LLP, New York, New York, and James P. Conway, Jaspers, Moriarty & Walburg, P.A., Shakopee, Minnesota, and Tobias S. Keller, Keller & Benvenutti LLP, San Francisco, California, and Joseph G. Petrosinelli, Jonathan M. Landy, Christopher J. Mandernach, Williams & Connolly LLP, Washington, D.C., attorneys for amici curiae DZ Bank AG et al.
Bruce Jones, Stephen M. Mertz, Jerome A. Miranowski, Julie R. Landy, Faegre Baker Daniels LLP, Minneapolis, Minnesota, attorneys for amicus curiae Minnesota Defense Lawyers Association.
Steven E. Wolter, Kelley & Wolter & Scott, P.A., Minneapolis, Minnesota, and Connie A. Lahn, David E. Runck, Fafinski Mark & Johnson, P.A., Eden Prairie, Minnesota, attorneys for amici curiae Douglas A. Kelley, as Chapter 11 Trustee and the Official Committee of Unsecured Creditors of Petters Company, Inc. and Petters Group Worldwide, LLC.
S Y L L A B U S
- Minnesota‘s Uniform Fraudulent Transfer Act (“MUFTA“),
Minn. Stat. §§ 513.41-.51 (2014) , does not contain a “Ponzi-scheme presumption.” - The limitations period applicable to MUFTA claims based on actual fraud “shall not be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud,”
Minn. Stat. § 541.05, subd. 1(6) (2014) .
Affirmed.
O P I N I O N
STRAS, Justice.
This case requires us to decide two questions of first impression under Minnesota‘s Uniform Fraudulent Transfer Act (“MUFTA“),
The second question is whether the statute of limitations governing claims “for relief on the ground of fraud,”
This case involves the largely fraudulent lending operations of First United Funding, LLC (“First United“), an entity controlled by Corey N. Johnston. First United acted as a conduit between borrowers and lenders by making loans to borrowers and then selling “participation” interests in those loans to financial institutions. Beginning in 2002, First United began selling participation interests that exceeded the amount of the underlying loans (“oversold participations“), or that did not rest on any underlying loans at all (“fictitious participations“). Even after 2002, however, not all of the participation interests sold by First United were fraudulent.
The respondents in this case, which include Home Federal Bank, Klein Bank, Merchant‘s Bank, M&I Marshall & Ilsley Bank (collectively “the Respondent Banks“), and Alliance Bank, each purchased participation interests from First United that were real, not fraudulent. Nevertheless, First United commingled funds from its legitimate participation interests with those that were fraudulent. Consequently, First United financed many of its payouts to earlier “investors” at least in part through the payments made by later “investors,” according to a structure commonly known as a “Ponzi scheme.”
The scheme unraveled in September 2009, when two banks sued First United and asked the court to appoint a receiver. The district court appointed appellants/cross-respondents Patrick Finn and Lighthouse Management Group (collectively “the Receiver“) to recover and liquidate First United‘s remaining assets and to distribute them to the victims of First United‘s scheme. The district court later expanded the scope of the
The Receiver commenced this action in May 2011, seeking to claw back payments made by First United, before its collapse, to various financial institutions, including Alliance Bank and the Respondent Banks. The Receiver alleged in its complaint that the payments made by First United were voidable under MUFTA, both as actually fraudulent transfers,
The allegations against Alliance Bank were based on its purchase of a participation interest in a $3.18 million loan made to Jerry Moyes, an Arizona businessman. The loan was real, not fictitious, and it was not oversold. First United renewed the loan to Moyes several times until he paid it in full by June 2007. Over the life of the loan, First United paid roughly $4.3 million to Alliance Bank, or approximately $1.2 million more than the principal amount of the loan.
According to the complaint, each of the Respondent Banks purchased participation interests between 2002 and 2004 in one or more loans, each of which the borrower paid in full approximately one year later. The last month in which any of the Respondent Banks received a principal or interest payment from First United was March 2005. First United paid the Respondent Banks sums beyond the principal amounts of the underlying loans, resulting in profits ranging from $78,000 to roughly $338,000. The participation interests of the Respondent Banks were neither fictitious nor oversold.
The court also concluded, however, that the Receiver had pleaded legally sufficient claims against each of the financial institutions that had participated in First United‘s loan-participation scheme. The court based its conclusion in part on a “Ponzi-scheme presumption,” which the court described as a rule providing that “the profits that good-faith investors enjoy in connection with a Ponzi scheme are recoverable as fraudulent transfers.” Accordingly, it allowed the remaining claims against Alliance Bank to proceed.
Following discovery, both the Receiver and Alliance Bank moved for summary judgment. The district court granted the Receiver‘s motion and denied Alliance Bank‘s motion, again relying on the Ponzi-scheme presumption. The court entered judgment in favor of the Receiver for $1,235,388.
The Receiver appealed the district court‘s dismissal of its claims against the Respondent Banks. It argued that the applicable limitations period is provided by
With respect to the Receiver‘s appeal, the court of appeals relied on our decision in McDaniel v. United Hardware Distributing Co., 469 N.W.2d 84 (Minn. 1991), to hold that the applicable statute of limitations under MUFTA depends on whether a claim is based on actual or constructive fraud. Finn, 838 N.W.2d at 594-95. Because the common law recognized claims for actual fraud, the court reasoned, they were not “liabilit[ies] created by statute,” even though the Receiver brought its claims under a statute. Id. at 595. Instead, the court treated such claims as seeking “relief on the ground of fraud” and accruing only upon the discovery by the Receiver of the facts constituting the fraud. Id. In contrast, because constructive-fraud claims did not exist at common law, according to the court, it treated those claims as involving “liabilit[ies] created by statute,” which accrued on the date when First United made the allegedly fraudulent payments to each financial institution. See id. at 591-96.
With regard to Alliance Bank‘s appeal, the court of appeals divided the Ponzi-scheme presumption into three components. Id. at 598. It concluded the first two components—that a person or entity running a Ponzi scheme has actual intent to defraud
II.
The first question presented in this case is whether the so-called “Ponzi-scheme presumption” applies to claims brought under MUFTA,
A.
Designed to “prevent debtors from placing property that is otherwise available for the payment of their debts out of the reach of their creditors,” id., MUFTA allows creditors to recover assets that debtors have fraudulently transferred to third parties. To cover the variety of situations in which debtors may attempt to place assets beyond the reach of creditors, MUFTA allows creditors to recover assets that a debtor transfers with
The former type, typically referred to as a claim of actual fraud, requires a creditor to prove that thе debtor made the transfer with the “actual intent to hinder, delay, or defraud any creditor of the debtor.”
The other type, typically referred to as a claim of constructive fraud, does not require proof of fraudulent intent. Rather, it requires a creditor to prove that
(2) without reсeiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
(i) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
(ii) intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor‘s ability to pay as they became due.
The Receiver asks us to recognize a “Ponzi-scheme presumption,” by which a creditor could prove certain elements of a fraudulent-transfer claim simply by establishing that the debtor opеrated a Ponzi scheme and that the transfers were made “in furtherance of the scheme.” Perkins v. Haines, 661 F.3d 623, 626 (11th Cir. 2011). As the court of appeals recognized, the Ponzi-scheme presumption actually consists of three separate presumptions. Finn, 838 N.W.2d at 598. The first is that it conclusively establishes that the debtor had fraudulent intent, which means that it treats all transfers
The other two presumptions would conclusively establish constructive fraud. First, the mere existence of a Ponzi scheme would prove as a matter of law that the debtor was “insolvent” at the time of a disputed transfer, regardless of the transfer‘s timing and the actual operations of the debtor. See, e.g., Wiand v. Lee, 753 F.3d 1194, 1201 (11th Cir. 2014) (stating that Ponzi schemes “are insolvent and become more insolvent with each investor payment“); Warfield v. Byron, 436 F.3d 551, 558 (5th Cir. 2006) (declaring that a Ponzi scheme is, “as a matter of law, insolvent from its inception“). Second, a court would be required to presume that any transfer from a Ponzi scheme was not for reasonably equivalent value, which would both establish the second requirement of a constructive-fraud claim and negate the statutory defense to an actual-fraud claim. See, e.g., Donell, 533 F.3d at 777-78 (holding that any payments above “the innocent investor‘s initial outlay” are not based on a “‘reasonably equivalent’ exchange“); In re Whaley, 229 B.R. 767, 775 (Bankr. D. Minn. 1999) (“A payment made solely for the benefit of a third party, such as a payment to satisfy a third party‘s debt, does not furnish reasonably-equivalent value to the debtor.“). Stated differently, the Ponzi-scheme presumption, by operation of its three components, allows a creditor to bypass the proof
Notably, however, MUFTA neither mentions nor defines a “Ponzi scheme,” a label coined from a fraud perpetrated by Charles Ponzi, who had promised Boston investors in the 1920s a 50-percent return for lending him money over a 90-day period, ostensibly to purchase international-postage coupons. See Cunningham v. Brown, 265 U.S. 1, 7 (1924). As it turned out, Ponzi was using funds paid by later investors to provide the returns promised to early investors, which еventually earned him 5 years in prison for mail fraud. See Ponzi v. Fessenden, 280 F. 1022, 1022 (1st Cir. 1922). Although the moniker “Ponzi scheme” generally refers to a financial arrangement similar to the one operated by Charles Ponzi, even those courts that have recognized a Ponzi-scheme presumption have struggled to define its scope, in no small part due to the multitude of different forms that a fraudulent-investment scheme can take.
[T]here is no precise definition of a Ponzi scheme and courts look for a general pattern, rather than specific requirements. “[T]he label ‘Ponzi scheme’ has been applied to any sort of inherently fraudulent arrangement under which the debtor-transferor must utilize after-acquired investment funds to pay off previous investors in order to forestall disclosure of the fraud.”
In re Manhattan Inv. Fund Ltd., 397 B.R. 1, 12 (Bankr. S.D.N.Y. 2007) (quoting In re Bayou Grp., LLC, 362 B.R. 624, 633 (Bankr. S.D.N.Y. 2007)).
In this case, the district court found that First United operated a Ponzi scheme because several “hallmark[s]” of such a scheme were present, including the “need[]” for First United to oversell loan participations in order “to repay earlier borrowers,” and the
MUFTA does not contain a provision allowing a court to presume anything based on the mere existence of a Ponzi scheme. The word “Ponzi” does not appear in the Minnesota Statutes, and MUFTA does not address “schemes.” Rather, MUFTA addresses a “transfer made or obligation incurred by a debtor,”
Like the court of appeals, we will examine each of the three components of the Ponzi-scheme presumption to determine whether any of the three finds support in MUFTA. The first component, as stated above, requires a court to presume—conclusively, as the Receiver would have it—that fraudulent intent accompanies all transfers in furtherance of a Ponzi scheme. The Receiver argues that such a presumption is justified by the nature of a Ponzi scheme, in which, it claims, the scheme‘s operator invariably intends to cheat all investors.
Even if there is evidence to support the inference that Ponzi-scheme operators generally intend to defraud investors, MUFTA does not contain a provision allowing a court to presume fraudulent intent. Instead, MUFTA contains a list of factors, commonly referred to as “badges of fraud,” that a court may consider to determine whether a debtor made a trаnsfer with an actual intent to defraud creditors. See
2.
Turning to constructive-fraud claims under MUFTA, the second component of the Ponzi-scheme presumption would require a court to presume—again, conclusively as the Receiver would have it—that a debtor who operates a Ponzi scheme is insolvent when it transfers assets. MUFTA contains two formulations of constructive fraud, one that applies to “a creditor whose claim arose before the transfer was made,”
The first formulation, under
The second statutory formulation, which applies to claims that “arose before or after the transfer was made,”
(i) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
(ii) intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor‘s ability to pay as they became due.
As with the first statutory formulation, however, the Receiver‘s argument on the second formulation lacks textual support. MUFTA requires courts to determine whether the debtor fit within either of the two financial-distress measures in
3.
The third component of the Ponzi-scheme presumption requires a court to conclude—once again as a matter of law—that a debtor operating a Ponzi scheme cannot receive reasonably equivalent value for the “interest” or “profits” it pays to investors. As
MUFTA does not define “reasonably equivalent value,” but designates certain types of transactions as made for reasonably equivalent value in the context of a fraudulent-transfer claim. Such transactions include an asset acquired from the debtor “pursuant to a regularly conducted, noncollusive foreclosure sale” and the “execution of a power of sale for the acquisition or disposition of the interest of the debtor upon default under a mortgage, deed of trust, or security agreement.”
Determining whether a debtor has received reasonably equivalent value depends on how to “value” an exchange under
Our cases interpreting
Generally speaking, investors in a Ponzi scheme provide funds to a scheme‘s operator based on the operator‘s promises to repay the investor‘s principal investment, plus more, at some point in the future. See In re Vaughan Co. Realtors, 481 B.R. 752, 760 (Bankr. D.N.M. 2012) (describing the “typical Ponzi scheme“). To maintain the
However, courts that adopt the Ponzi-scheme presumption effectively deem a contract between the operator of a Ponzi scheme and an investor to be unenforceable as a matter of public policy. See In re Hedged-Invs. Assocs., Inc., 84 F.3d 1286, 1290 (10th Cir. 1996) (holding that the contract, to the extent it provided excess returns to an investor, was unenforceable as a matter of public policy); cf. In re Carrozzella & Richardson, 286 B.R. 480, 487 (Bankr. D. Conn. 2002) (identifying “a line of cases . . . which focuses on the fact that the debtor was involved in a Ponzi scheme and, thus, to permit the investors to enforce their agreements with the debtor would be against public policy“). By doing so, the Ponzi-scheme presumption eliminates the possibility that an investor has a legally enforceable claim against the debtor based on the investment contract. Without a legally enforceable contractual claim, any payment made to an investor beyond its principal investment is not for antecedent debt, and therefore cannot be in exchange for reasonably equivalent value. See, e.g., Perkins v. Haines, 661 F.3d 623, 627 (11th Cir. 2011) (“[T]he general rule is that a defrauded investor gives ‘value’ to the Debtor in exchange for a return of the principal amount of the investment, but not
Two principles guide the reasoning of the courts that have concluded that investment contracts with Ponzi-scheme operators are contrary to public policy. The circumstances of this case provide reason to doubt both principles.
The first principle is a factual observation about the nature of most Ponzi schemes: the payment of “profits” from a Ponzi scheme comes solely from funds stolen from other participants and serves only the purpose of concealing the schеme and allowing it to continue. In Donell, for example, the court observed that “[p]ayouts of ‘profits’ made by Ponzi scheme operators are not payments of return on investment from an actual business venture.” 533 F.3d at 777; see also In re Indep. Clearing House Co., 77 B.R. 843, 858 (Bankr. D. Utah 1987) (“[T]he debtors here had no legitimate source of earnings but were operating a Ponzi scheme.“). In many Ponzi schemes, it is true that there is no legitimate source of earnings and the payment of profits “confer[s] no benefit on the [Ponzi scheme] but merely deplete[s] [the scheme‘s] resources faster.” Scholes v. Lehmann, 56 F.3d 750, 757 (7th Cir. 1995). However, not every Ponzi scheme lacks a legitimate source of earnings. Here, for example, no one disputes that First United operated a Ponzi scheme (at least at some point), but there is also no dispute that the banks in this case purchased
The second principle is a dubious assumption about the purpose of fraudulent-transfer laws. In Donell, the court stated:
[t]he purpose of
UFTA is to permit the receiver to collect those assets that can actually be located and recovered in the wake of a Ponzi scheme, and to ratably distribute those assets amоng all participants, including the many investors who lost everything.UFTA accomplishes this by requiring good faith participants to disgorge their gains and permitting them [to] keep the full amount of their initial investment.
533 F.3d at 779; see also, e.g., In re Petters Co., 499 B.R. 342, 356 (Bankr. D. Minn. 2013) (“[G]reater equity is deemed to lie in favor of unsatisfied creditors and investors.“). Likewise, the Receiver argues here that we should adopt the Ponzi-scheme presumption because it avoids the “absurd[ity] and inequit[y]” of allowing “a criminal mastermind like Johnston,” the Ponzi-scheme operator, to determine “who profits from the Ponzi scheme and who bears the loss.” One of the amici echoes the Receiver‘s argument by asserting that fraudulent-transfer actions are an “essential tool” for achieving equality among all of the victims of a Ponzi scheme.
Yet equality among a debtor‘s creditors, even if they are victims of a Ponzi scheme, is not the purpose of
[p]ayment of an honest debt is not fraudulent under the general statutes against fraudulent conveyances, although it operates as a preference; the rule being that a preference by an insolvent debtor of one of his creditors can be avoided only by appropriate proceedings under the bankruptcy law . . . and is not open to attack in an action brought by another creditor.
Thompson v. Schiek, 171 Minn. 284, 287, 213 N.W. 911, 912 (1927); see also, e.g., Wittich, 184 Minn. at 24, 237 N.W. at 586 (rejecting a fraudulent-transfer claim because “[t]he antecedent debt was a good consideration, and the fact that it was a preference in no way invalidated the transaction“).
Many of the Receiver‘s arguments focus on the purported unfairness of allowing some creditors to profit at the expense of others. However, with one exception that is not relevant here,1
In short, neither of the principles underlying the third component of the Ponzi-scheme presumption is persuasive, especially as applied to the facts alleged in this case. Accordingly, like the first two components, we decline to adopt the third component of the Ponzi-scheme presumption.
B.
Even though we have rejected each component of the Ponzi-scheme presumption, we still must address the specific actions taken by the district court with respect to the various dispositive motions filed by the parties in this case. Specifically, we must first decide whether the district court properly granted the Respondent Banks’ motion to dismiss, and then determine whether it properly granted summary judgment to the Receiver against Alliance Bank.
1.
The district court granted the motion to dismiss filed by the Respondent Banks because, according to the court, the Receiver‘s lawsuit was untimely under the applicable statute of limitations, an issue that we address in Part III of this opinion. The Respondent Banks also sought dismissal, however, on the ground that the Receiver‘s complaint failed to state a legally sufficient claim.
In reviewing whether a complaint has stated a claim under
The Respondent Banks argue that the Receiver failed to allege adequate facts in support of three elements of its fraudulent-transfer claims: actual fraudulent intent by First United, First United‘s insolvency, and a lack of reasonably equivalent value in the exchanges. Although the Receiver‘s complaint sufficiently alleged facts in support of the first two elements, we agree with the Respondent Banks that the Receiver insufficiently pleaded the lack-of-reasonably-equivalent-value element of a constructive-fraud claim.
As to the first element, the Receiver‘s complaint sufficiently alleged fraudulent intent. The complaint documented a number of fictitious and oversold participation interests sold by First United, and alleged that First United made the payments to the Respondent Banks with “actual intent to hinder, delay, or defraud creditors of [First United] or Johnston.” It also stated that Johnson admitted, as “part of his guilty plea and
The Receiver‘s complaint also sufficiently alleged that First United was insolvent when it made payments to the Respondent Banks. The complaint stated that, “[a]t thе time of the transfers[,] . . . [First United] and Johnston were engaged in or were about to engage in business for which their remaining assets were unreasonably small in relation to their business.” Indeed, the complaint recounted not only the details of the Ponzi scheme, but also asserted that Johnston diverted nearly $23 million “to support his lavish lifestyle” and that First United “maintained no system to track the over $1.6 billion in cash transfers.” Given these factual allegations, and the inferences that can be drawn from them, we conclude that the Receiver‘s complaint sufficiently alleged facts in support of the insolvency-related requirements of
However, in light of our holding that there is no Ponzi-scheme presumption, the Receiver‘s complaint does not sufficiently allege the third element: that the transfers to the Respondent Banks lacked reasonably equivalent value. The most relevant allegation in the Receiver‘s complaint is that, “because [First United] and Johnston were engaged in a Ponzi scheme, [First United] did not receive reasonably equivalent value in exchange for the profits it paid.” This allegation, on its face, is nothing more than a legal
2.
Unlike the claims against the Respondent Banks, the proceedings against Alliance Bank advanced to the summary-judgment stage, at which point both the Receiver and Alliance Bank filed motions for summary judgment. The district court granted the Receiver‘s motion for summary judgment and denied the motion filed by Alliance Bank. The court reasoned that, under the Ponzi-scheme presumption, any payments received by Alliance Bank in excess of its principal investment were voidable as fraudulent transfers under
On appeal, we must determine if the district сourt correctly concluded that “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits . . . show[ed] that there [was] no genuine issue as to any material fact and that [the Receiver was] entitled to judgment as a matter of law.”
Once the Ponzi-scheme presumption is set aside, the undisputed factual record requires summary judgment in favor of Alliance Bank rather than against it. To establish constructive fraud, the Receiver must prove both that First United did not receive reasonably equivalent value for its payments and that First United met the insolvency-related requirements in
The value claimed by Alliance Bank is the satisfaction of the debt owed by First United under the participation agreement between the parties. Under that agreement, Alliance Bank purchased a 100% undivided interest in the loan to Jerry Moyes and all of its proceeds. The Receiver does not dispute that the Moyes loan was real and not oversold. The participation agreement obligated First United to act as Alliance Bank‘s
The record also does not present a genuine issue of material fact regarding whether the value received by First United was reasonably equivalent to the payments it made to Alliance Bank. As stated above, First United was contractually obligated to pass on the interest and principal payments it received from Moyes to Alliance Bank. Alliance Bank introduced evidence at the summary-judgment stage, again undisputed, that the rate of return on the loan it purchased was commercially reasonable. Under these circumstances, we agree with the court of appeals that, “because the underlying uncontested facts show that First United received reasonably equivalent value for its transfers to Alliance, the district court erred by denying Alliance‘s motion for summary
III.
The next question presented in this case requires us to identify the statute of limitations applicable to
The selection of an appropriate statute of limitations presents a question of law that we review de novo. Park Nicollet Clinic v. Hamann, 808 N.W.2d 828, 831 (Minn. 2011). In selecting the statute of limitations that applies to actual-fraud claims, we are not writing on a clean slate. In particular, we have historically described claims to set aside fraudulent conveyances as “claims for relief on the ground of fraud” and applied a
The Respondent Banks argue, however, that the law on fraudulent transfers has evolved in the more than 100 years since we decided Brasie and Duxbury, and that the evolution has largely come by statute. See Uniform Fraudulent Conveyance Act, Act of Apr. 20, 1921, Ch. 415, 1921 Minn. Laws 642;
In short, for the limited purpose of determining the applicable statute of limitations, we conclude that a claim against a transferee that receives an actually fraudulent transfer under
IV.
With respect to the Receiver‘s claims against Alliance Bank, we affirm as modified and instruct the district court to grant summary judgment to Alliance Bank on remand. As to the Receiver‘s claims against the Respondent Banks, we conclude that the Receiver failed to adequately plead constructive fraud. However, we remand to the district court for consideration of whether the dismissal of the Receiver‘s constructive-fraud claims should be with or without prejudice, and for a determination of whether the Receiver commenced its action based on actual fraud within 6 years after the discovery of the facts constituting the fraud. Accordingly, for the foregoing reasons, we affirm as modified and remand to the district court for further proceedings consistent with this opinion.
Affirmed.