LaRosa v. LaRosa, 043012 FED4, 11-1234

Docket Nº:11-1234, 11-1306
Opinion Judge:GREGORY, Circuit Judge:
Party Name:JOSEPH LAROSA; DOMINICK LAROSA, Plaintiffs - Appellants, v. VIRGIL D. LAROSA; SANDRA LAROSA, Defendants-Appellees, and ANDREA PECORA, a/k/a Andrea Fucillo; JENNIFER LAROSA WARD; CHRIS WARD; CHEYENNE SALES COMPANY, INCORPORATED, Defendants, JOAN LAROSA, individually and as the Executrix of the Estate of Virgil B. LaRosa, Party-in-Interest. JOSEPH LA
Attorney:David Bruce Salzman, CAMPBELL & LEVINE, LLC, Pittsburgh, Pennsylvania, for Joseph LaRosa and Dominick LaRosa. James Strother Crockett, Jr., SPILMAN, THOMAS & BATTLE, PLLC, Charleston, West Virginia, for Virgil D. LaRosa and Sandra LaRosa. Mark S. Frank, Frederick D. Rapone, Jr., Erik Sobkiewicz, ...
Judge Panel:Before NIEMEYER, GREGORY, and FLOYD, Circuit Judges. NIEMEYER, Circuit Judge, dissenting:
Case Date:April 30, 2012
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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JOSEPH LAROSA; DOMINICK LAROSA, Plaintiffs - Appellants,

v.

VIRGIL D. LAROSA; SANDRA LAROSA, Defendants-Appellees,

and

ANDREA PECORA, a/k/a Andrea Fucillo; JENNIFER LAROSA WARD; CHRIS WARD; CHEYENNE SALES COMPANY, INCORPORATED, Defendants,

JOAN LAROSA, individually and as the Executrix of the Estate of Virgil B. LaRosa, Party-in-Interest.

JOSEPH LAROSA; DOMINICK LAROSA, Plaintiffs - Appellees,

v.

VIRGIL D. LAROSA; SANDRA LAROSA, Defendants-Appellants,

and

CHEYENNE SALES COMPANY, INCORPORATED; ANDREA PECORA, a/k/a Andrea Fucillo; JENNIFER LAROSA WARD; CHRIS WARD, Defendants,

JOAN LAROSA, individually and as the Executrix of the Estate of Virgil B. LaRosa, Party-in-Interest.

Nos. 11-1234, 11-1306

United States Court of Appeals, Fourth Circuit

April 30, 2012

UNPUBLISHED

Argued: March 21, 2012

Appeals from the United States District Court for the Northern District of West Virginia, at Clarksburg. Frederick P. Stamp, Jr., Senior District Judge. (1:07-cv-00078-FPS-JSK)

ARGUED:

David Bruce Salzman, CAMPBELL & LEVINE, LLC, Pittsburgh, Pennsylvania, for Joseph LaRosa and Dominick LaRosa.

James Strother Crockett, Jr., SPILMAN, THOMAS & BATTLE, PLLC, Charleston, West Virginia, for Virgil D. LaRosa and Sandra LaRosa.

ON BRIEF:

Mark S. Frank, Frederick D. Rapone, Jr., Erik Sobkiewicz, CAMPBELL & LEVINE, LLC, Pittsburgh, Pennsylvania, for Joseph LaRosa and Dominick LaRosa.

Matthew P. Heiskell, SPILMAN, THOMAS & BATTLE, PLLC, Morgantown, West Virginia, for Virgil D. LaRosa and Sandra LaRosa.

Before NIEMEYER, GREGORY, and FLOYD, Circuit Judges.

Reversed, vacated, and remanded by unpublished opinion. Judge Gregory wrote the opinion, in which Judge Floyd joined. Judge Niemeyer wrote a dissenting opinion.

Unpublished opinions are not binding precedent in this circuit.

GREGORY, Circuit Judge:

On appeal and cross-appeal from the district court's judgment, we address two issues. First, whether the plaintiffs' West Virginia Uniform Fraudulent Transfer Act ("WVUFTA") claim based on a corporation's drawdown on its line of credit and purchase of annuities was time-barred. Second, whether the district court's denial of the plaintiffs' Rule 59(e) motion to increase the damage award was an abuse of discretion. As to the first issue, we reverse the district court's determination that the WVUFTA claim was not time-barred. Regarding the second issue, we vacate the district court's denial of the plaintiffs' Rule 59(e) motion, and we remand this case to the district court for further proceedings consistent with this opinion.

I.

This case has an extensive history. Because in an unpublished opinion we write for only the parties, we set forth the facts only as necessary to treat the issues in this appeal.

Brothers Joseph LaRosa and Dominick LaRosa (the "Creditors"), made a loan in 1982 to their cousin Virgil B. LaRosa and his wife Joan LaRosa (the "Debtors") for $800, 000. Debtor Virgil B. was the sole shareholder of defendant Cheyenne Sales Company, Incorporated ("Cheyenne") until his death in 2006, at which time Debtor Joan LaRosa became the sole owner of Cheyenne, which is not a party here. The Debtors never made a payment on the loan, and on November 3, 1994, the Creditors obtained a judgment against them for $2, 844, 612.87 plus $10, 000 in attorneys' fees.

On November 19, 2003, the Debtors filed for a Chapter 11 bankruptcy. Three reorganization plans filed by the Debtors in their bankruptcy proceedings proposed that Cheyenne's operations would allow the Debtors' estate to make payments of $7, 000 per month for 60 months to repay the Debtors' obligation to the Creditors. As far as this Court is aware, none of the plans were confirmed, and the bankruptcy case was converted to a Chapter 7 bankruptcy.

After a series of disputes about the finality of the Creditors' judgment against the Debtors, settled by this Court's per curiam opinion LaRosa v. LaRosa, 108 F.App'x 113 (4th Cir. 2004), the Creditors tried to collect on the judgment by indexing it in counties in West Virginia where the Debtors owned real property.

Around that time, however, the Debtors initiated a series of transactions that fraudulently put their assets beyond the reach of the Creditors. Debtors used Cheyenne to funnel some of their assets toward Virgil D. LaRosa and Sandra LaRosa (the "Transferees"). Transferee Virgil D. is the son of the Debtors and the sole shareholder of Regal Coal Company, Inc. ("Regal"), though the company is not a party to this litigation because the claims against it have been severed due to a bankruptcy stay.

The Creditors sued the Transferees in the Northern District of West Virginia on June 12, 2007, to recover the alleged fraudulently transferred assets. After extensive discovery, a bench trial occurred in mid-2009. The parties filed proposed findings of law and fact and written closing arguments. At that time, the Creditors settled with the non-party defendants, and the parties filed supplemental proposed findings of fact and law.

On September 15, 2010, the district court issued its memorandum opinion, finding that the Transferees engaged in a series of intentionally fraudulent transfers designed to hinder, delay, and defraud the Creditors' efforts to collect on their judgment against the Debtors -- violations of the WVUFTA. The district court found that "Cheyenne [was] operated as a conduit through which a portion of debtor's wealth is passed on its way to defendants or others." J.A. 3669. There were three types of transfers alleged to be violations of the WVUFTA, and the district court found all three types were indeed violations. The court ordered judgment against the Transferees for $1, 191, 609 but attached the Transferees' property worth $6, 799, 161.42. The amount of the attachment was the amount owed to the Creditors by the Debtors after including interest.

The judgment in the amount of $1, 191, 609 is based on two categories of transfers. The first of these is based on a $491, 609 transfer from Virgil B. LaRosa to Cheyenne, which eventually found its way to the Transferees. Virgil B. LaRosa's transfer occurred a few weeks after the Creditors began to execute judgment against the Debtors. This transfer is not disputed on appeal. The second transfer was Cheyenne's purchase of annuities, the accounts of which were used for the benefit of Virgil D. LaRosa and Regal, using $700, 000 obtained from Cheyenne's line of credit that encumbered Debtors' securities. These transfers total the judgment awarded: $1, 191, 609.

The district court also found that the third category of transfers -- a series of business dealings between Cheyenne and Regal -- likewise constituted violations of the WVUFTA. The district court did not award an increased judgment consistent with that finding. This failure to assign a value to the Cheyenne-Regal transfers forms the basis of the Creditors' appeal.

Both parties filed Rule 59(e) motions. The Creditors requested a judgment worth $6, 799, 161.42, and the Transferees requested a reduction of the attachment to the amount of the judgment -- $1, 191, 609. The court agreed with the Transferees and reduced the...

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