623 Partners, LLC v. Bowers
| Decision Date | 10 September 2021 |
| Docket Number | 1191084 |
| Citation | 349 So.3d 230 |
| Parties | 623 PARTNERS, LLC v. Bart BOWERS ; Tabitha Adcock Bowers; the Estate of Betty Meeks, deceased; and Dolphin Tales, LLC |
| Court | Alabama Supreme Court |
Stuart M. Maples and Mary Ena J. Heath of Maples Law Firm, PC, Huntsville, for appellant.
D. Robert Stankoski, Jr., of Stankoski Myrick, LLC, Fairhope, for appellees Bart Bowers, Tabitha Adcock Bowers, and Dolphin Tales, LLC.
This case addresses fraudulent-conveyance claims that are now moot. In an earlier action, 623 Partners, LLC, obtained a default judgment against Bart Bowers. But 623 Partners never collected on that judgment. About nine years after obtaining the judgment, 623 Partners filed this case, alleging that Bart and members of his family had orchestrated the fraudulent conveyance of a property that should be used to pay the judgment. While this case was pending, the judgment in the earlier action reached the 10-year mark, meaning the judgment was presumed satisfied. 623 Partners tried but failed to revive the judgment. The defendants in this case then moved for summary judgment on the sole basis that 623 Partners could not enforce the judgment -- effectively arguing that 623 Partners’ fraudulent-conveyance claims were moot. The trial court granted that motion. Because we must presume that the judgment against Bart and its underlying debt are satisfied, we affirm.
JBV Enterprises, LLC, took out a loan to develop a subdivision, which was secured by a mortgage on real property in Baldwin County ("the subdivision property"). Bart, a principal of JBV Enterprises, jointly owned a separate parcel of real estate in Gulf Shores ("the parcel") with his wife, Tabitha Adcock Bowers. In 2008, the Bowerses conveyed the parcel to Tabitha's mother, Betty Meeks.
A few months later, 623 Partners purchased the loan secured by the mortgage that JBV Enterprises had obtained for the development of the subdivision property. But that subdivision was never completed. After JBV Enterprises defaulted on the loan and mortgage, 623 Partners foreclosed on the subdivision property. To recover the difference between the amount of the foreclosure sale and the remaining balance JBV Enterprises owed, 623 Partners sued JBV Enterprises and some of its principals, including Bart, in the Baldwin Circuit Court ("the original action"). The trial court entered separate default judgments against Bart and the other defendants in the original action in December 2009.
In 2017, shortly before she died, Meeks transferred the parcel to Dolphin Tales, LLC -- an entity in which Tabitha is listed as the "president/owner." The next year, 623 Partners brought this action against Bart, Tabitha, Meeks's estate, and Dolphin Tales ("the defendants"). 623 Partners alleged that the defendants had orchestrated two fraudulent transfers of the parcel -- first from the Bowerses to Meeks, then from Meeks to Dolphin Tales -- to avoid the debt Bart owed 623 Partners through the default judgment entered against him in the original action.
The default judgments that had been entered against Bart and the other defendants in the original action reached the 10-year mark in December 2019. Under § 6-9-191, Ala. Code 1975, a judgment over 10 years old "must be presumed satisfied, and the burden of proving it not satisfied is upon the plaintiff." Because over 10 years had passed since entry of the default judgments, 623 Partners filed a motion in the original action seeking to revive the judgments. In doing so, 623 Partners took on the burden of proving that the judgments had not been satisfied. The trial court in the original action determined that 623 Partners had not met its burden and, thus, denied its motion.
After 623 Partners failed to revive the lapsed judgments in the original action, the defendants in this case moved for summary judgment on the fraudulent-conveyance claims against them. The defendants’ only argument was that they were entitled to summary judgment on the fraudulent-conveyance claims because 623 Partners could no longer execute on the default judgment against Bart. In effect, their argument was that the fraudulent-conveyance claims 623 Partners brought to attempt to satisfy the default judgment against Bart were moot because the default judgment itself was unenforceable. The trial court granted the defendants’ motion.
623 Partners appealed the trial court's summary judgment and, then, less than a month later, appealed the trial court's denial of its motion to revive the default judgments in the original action. We considered the appeal in the original action first and affirmed, without an opinion, the trial court's denial of 623 Partners’ motion to revive. See 623 Partners, LLC v. JBV Enters., LLC (No. 1200035, June 11, 2021), ––– So. 3d –––– (Ala. 2021) (table). We now consider whether the trial court properly entered summary judgment on the fraudulent-conveyance claims in this case.
We review the trial court's summary judgment de novo. In doing so, we apply the same standard that the trial court applied -- we must determine " ‘whether the movant has made a prima facie showing that no genuine issue of material fact exists and that the movant is entitled to a judgment as a matter of law.’ " Shoals Extrusion, LLC v. Beal, 288 So. 3d 448, 450 (Ala. 2019) (citation omitted). In making that determination, " ‘we must review the evidence in the light most favorable to the nonmovant.’ " Id. (citation omitted). " ‘Once the movant makes a prima facie showing that there is no genuine issue of material fact, the burden then shifts to the nonmovant to produce "substantial evidence" as to the existence of a genuine issue of material fact.’ " Id. at 450-51 (citation omitted).
This case presents a question of first impression before this Court: whether a creditor may maintain claims under the Alabama Uniform Fraudulent Transfer Act ("the Act"), § 8 -9A-1 et seq., Ala. Code 1975, when the debt has been reduced to a judgment and that judgment is presumed satisfied.1 The principles set out in our caselaw, and the weight of authority from other courts that have considered similar issues, guide us to the answer -- 623 Partners’ fraudulent-conveyance claims are moot and cannot be considered further.
Once 10 years had passed since the entry of the default judgments in the original action, those judgments were presumed satisfied. See § 6-9-191. This presumption "is a substantial statutory right accorded the debtor in a stale judgment as a shield to defeat recovery until opposing evidence is reasonably sufficient in the opinion of the court to overcome it." Gambill v. Cassimus, 247 Ala. 176, 178, 22 So. 2d 909, 910 (1945). Importantly, it is also " ‘equivalent to direct proof of payment’ " that " ‘prima facie obliterates the debt, and is conclusive in the absence of any evidence tending to show nonpayment.’ " Id. (emphasis added) (citation omitted); see also id. at 179, 22 So. 2d at 910 (). Put simply, the presumption of satisfaction does not merely apply to the judgment -- it also extends to the debt that formed the basis for the judgment. Accordingly, the debt does not exist separate and apart from the judgment -- satisfaction of the judgment satisfies the underlying debt as well. Although 623 Partners attempted to revive the default judgments, its efforts fell short. Thus, we presume that the debt no longer exists.
The defendants raise an obvious question: Because we must presume that the default judgment against Bart and the underlying debt are satisfied, what is there to remedy? 623 Partners never squarely addresses that question.2 Instead, 623 Partners recites some of the remedies available to creditors in the Act and argues that those remedies "do not rest upon the status of the certificate of judgment in the 2009 case and should not be swept away by summary judgment that arguably relies on said status." But 623 Partners cites no authority for that proposition. Nor does it explain why any relief -- including its attempt to undo the transfers of the parcel to "fully satisfy its creditor claims" against Bart -- would be appropriate when the default judgment against Bart and the underlying debt are presumed satisfied. In short, there is no basis to grant a remedy for a debt that no longer exists -- and 623 Partners offers none.3
The cases on which 623 Partners relies likewise fail to address the core questions before us -- why a remedy would be appropriate or how its fraudulent-conveyance claims could remain viable. But at least five courts in other jurisdictions that have adopted the Uniform Fraudulent Transfer Act ("the UFTA") have concluded that fraudulent-conveyance claims cannot proceed in circumstances similar to those in this case.4 Those cases are especially relevant in light of § 8-9A-11, Ala. Code 1975, which provides that the Act "shall be applied and construed to effectuate its general purpose to make uniform the law with respect to the subject of [the Act] among states enacting [statutes based on the UFTA]."
We agree with the clear majority of fellow UFTA jurisdictions that have examined issues similar to this one. When 623 Partners commenced its fraudulent-conveyance action in 2018, it had not yet been 10 years since the entry of the default judgments in the original action. Consequently, the default judgment against Bart was not presumed satisfied at that time and there remained a live controversy -- whether the defendants orchestrated fraudulent transfers of the parcel and, if so, whether the transfers of the parcel should be set aside, or damages awarded, to satisfy Bart's debt to 623 Partners. But in December 2019, the presumption of satisfaction attached to the default judgment against Bart and the underlying debt, rendering the parties’ dispute moot because there was no longer a debt to remedy. See Ex parte Carter...
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