Opinion by
Plaintiff, Hans-Martin Schempp (Schempp), appeals from a judgment entered in favor of defendants, Luere Management Group, LLC (Luere), and Richard L. Rollings (Rollings). We reverse and remand for further proceedings.
Schempp held a judgment against Helmut Schaal (Schaal), a citizen of Germany, that Schempp registered as a foreign judgment in Adams County District Court. Schempp then brought this action against both TLucre and Rollings seeking relief because Schaal transferred ten office condominium units to Luere and Rollings. At the conclusion of Schempp's case, the court dismissed his claims on the motion of Luere and Rollings. This appeal followed.
Schempp asserted that conveyance of the ten office condominium units violated three sections of the Colorado Uniform Fraudulent Transfer Act (CUFTA), §§ 38-8-101 to 38-8-112, C.R.S.1999. He asserted that the transfer violated §§ 38-8-105(1)(b) and 38-
Schempp presented the following evidence. Schaal owned ten office condominium units either in his own name or through business entities that he controlled. Schaal, who did not live in the United States, gave Rollings a power of attorney to sell the ten condominium units for the benefit of Schaal. Rollings was a certified public accountant who provided accounting services to Schaal and his business entities. Rollings conveyed an offer to Schaal to purchase the ten office condominium units for $940,000, but did not inform Schaal that he was making this offer for himself. The $940,000 offer was equal to the debt secured by a deed of trust encumbering the ten office condominium units, but left Schaal owing $68,000 in past due taxes. Using the power of attorney from Schaal, Rollings conveyed the ten units to Luere, the company he had formed for the purpose of holding title, and which he fully controlled. At this time Rollings knew Schaal was having many financial difficulties, which included having been sued for failure to honor a $650,000 check.
I.
The trial court found that Schaal did not make the transfer with the actual intent to hinder, delay, or defraud any creditor, as required by $ 88-8-105(1)(a). Schempp asserted that the court applied the wrong legal standard in deciding the motion for directed verdict. He argues that the evidence supports a finding that Rollings was an "insider" as defined in CUFTA, and that Rollings' conduct should be imputed to Schaal for purposes of determining fraudulent intent. We agree.
No Colorado cases have addressed these issues. However, § 548 of the Bankruptcy Code has language very similar to § 38-8-105. 11 U.S.C. § 548 (1994 & Supp. 2000). Section 548 of the Bankruptcy Code and § 38-8-105 also have the same purpose, ie., to afford protection to creditors. Therefore, interpretations of § 548 are instructive. See Prefatory Note, Uniform Fraudulent Transfer Act, § 38-8-101, C.R.98.1999.
Section 38-8-105(2) provides factors which the court may consider in determining actual intent under § 88-8-105(1)(a). These factors are referred to as "badges of fraud." 5 L. King, Collier on Bankruptcy, § 548.04[2][bl(15th ed.1999).
It is often impracticable, on direct evidence, to demonstrate an actual intent to hinder, delay or defraud creditors. Therefore, as is the case under the common law of fraudulent conveyance, courts applying Bankruptcy Code § 548(a)(1) frequently infer fraudulent intent from the cireum-stances surrounding the transfer, taking particular note of certain recognized indi-cla or badges of fraud.
Max Sugarman Funeral Home Inc. v. A.D.B. Investors,
A.
The court found Rollings was not an insider only because Schaal was unaware of Rollings' self-dealing. However, the court did not consider the statutory definition of "insider" when deciding this issue. One of the badges of fraud listed in § 38-8-105(2)(a) is "[the transfer or obligation was to an insider." "Insider means ... [aln affiliate or ... [a] managing agent of the debtor." Section 38-8-102(8)(d) and (e), C.R.S.1999. "Affiliate means ... a person who operates the debtor's business under a lease or other agreement or controls substantially all of the
The following evidence relates to the claim that Rollings was an insider. Rollings had served as a certified public accountant for Schaal and his business entities since 1989. He devoted 40% to 50% of his time to these endeavors. Rollings had been involved in the liquidation of Schaal's assets in the United States. Schaal had given Rollings power of attorney to sell the office condominium units. Rollings had conducted significant portions of Schaal's business with regard to the condominium units for several years. The office condominium units were the only real property owned by Schaal in his own name in the United States at the time of the transfer. The evidence also showed that Rollings was aware of the deed of trust encumbering the condominium units, and Rollings was aware of Schaal's substantial financial distress.
Accordingly, we conclude that the court erred when it failed to consider the evidence as it relates to the definition of insider found in § 38-8-102, C.R.S8.1999.
B.
The court also failed to determine if Rollings' actions should be imputed to Schaal. In some cireumstances it is appropriate to impute the intent of an insider to a debtor who transfers property to the detriment of creditors.
When the transferee or obligee is in a position to dominate or control the debtor's disposition of his property, however, his intent to hinder, delay, or defraud creditors may be imputed to the debtor so as to render the transfer fraudulent within Seetion 548(a)(1)(A¥), regardless of the actual purpose of the debtor transferor.
5 L. King, Collier § 548.04[1](15th ed.1999). on Bankruptcy
Bankruptcy cases interpreting $ 548 of the Bankruptcy Code relating to transfers made with actual intent to hinder, delay, or defraud creditors, have consistently held that "[wlhere the transferee is in a position to dominate or control the debtor's disposition of his property, the transferee's intent to hinder, delay, or defraud creditors may be imputed to the debtor." In re Vaniman International, Inc.,
We find the above cited authorities to be persuasive and hold that, for purposes of CUFTA, the intent of the transferee can be imputed to the debtor when the transferee is in a position to dominate or control the disposition of the debtor's property. Therefore, we conclude that the court erred when it failed to consider Rollings' intent when determining whether Schaal had actual intent to hinder, delay, or defraud Schaal's eredi-tors.
IL
Schempp also argues that the court erred in its finding on the issue of reasonably equivalent value. We agree.
In order to succeed on a fraudulent transfer claim pursuant to § 38-8-105(1)(b) and § 38-8-106, a creditor must show that the debtor did not receive a reasonably equivalent value in exchange for the property. Reasonably equivalent value, in the context of CUFTA, is not wholly synonymous with market value. However, market value is an important factor to consider in the assessment. Determination of reasonably equivalent value requires analysis of all the facts and circumstances surrounding the transaction. Silverberg v. Colantuno,
Schempp produced evidence showing that other similar individual office condominium units had been sold for amounts in excess of the $94,000 per unit paid by Luere, including one unit Rollings sold for Schaal for $130,000. Schempp also established that Lucre, acting through Rollings, sold one of the office condominium units for $115,000 within
The weight to be accorded the evidence is committed to the sound discretion of the trial court. The factual findings of the trial court will not be disturbed on appeal if they are supported by the evidence. Tiger v. Anderson,
Accordingly, we reverse the order dismissing Schempp's claims and remand the cause for further proceedings consistent with the opinions expressed here.