Feuerbacher v. Moser

• Decision Date: 29 March 2012
• Docket Number: CIVIL ACTION NO. 4:11-CV-272
• Parties: ALAN LANE FEUERBACHER, Appellant, v. CHRISTOPHER J. MOSER, Appellee.
• Court: U.S. District Court — Eastern District of Texas

ALAN LANE FEUERBACHER, Appellant,

v.CHRISTOPHER J. MOSER, Appellee.

CIVIL ACTION NO. 4:11-CV-272

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS

Dated: March 29, 2012

MEMORANDUM AND ORDER

Pending before the court is Alan Lane Feuerbacher's ("Feuerbacher") appeal from the Judgment of the United States Bankruptcy Court, entered March 21, 2011, in which final judgment was granted in favor of Appellee Christopher J. Moser ("Trustee" or "Bankruptcy Trustee") as to the Trustee's claims brought pursuant to 11 U.S.C. §§ 544(b) and 548. Having reviewed the judgment, the record, the submissions of the parties, and the applicable law, the court is of the opinion that the bankruptcy court's decision should be affirmed.

I. Background

On October 6, 2009, Billie M. Feuerbacher ("Billie") filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code in the Eastern District of Texas. See In re Billie M. Feuerbacher, No. 09-43180. Billie's husband, Feuerbacher, did not seek bankruptcy relief.

On November 9, 2009, the Bankruptcy Trustee filed an adversary proceeding in the bankruptcy court against Feuerbacher to avoid and recover two transfers of real estate Billie made to her husband before she filed for bankruptcy. See Moser v. Feuerbacher, Adv. No. 09-04198. The bankruptcy judge ruled in favor of the Trustee, holding that the transfers of Billie's interestsin both properties were avoidable as fraudulent transfers under § 548 of the Bankruptcy Code and the Texas Uniform Fraudulent Transfer Act ("TUFTA"), TEX. BUS. & COM. CODE § 24.001 et seq.

A. The Adversary Proceeding

The facts presented to the bankruptcy court in the adversary proceeding, excerpted from the parties' Joint Pretrial Order and the bankruptcy court's Findings of Fact and Conclusions of Law, dated February 10 and 11, 2011, respectively, are as follows:

1. The Homestead Property

At all times relevant to this case, Billie and Feuerbacher lived at 7012 Nicki Street, Dallas, Collin County, Texas 75252 (the "Homestead Property"). Both individuals claimed a homestead exemption as allowed by state law.

2. The Mills County Property

On May 3, 2001, the Feuerbachers jointly acquired approximately 241 acres of non-homestead real property in Mills County, Texas (the "Mills County Property"), by Warranty Deed With Vendor's Lien. They executed a Promissory Note, dated May 11, 2001, in the original principal amount of $242,000.00 payable to the order of Capital Farm Credit, FLCA (the "Mills County Property Note"), which evidenced a loan that was used to purchase the property. The deed of trust was recorded in the real property records of Mills County on May 21, 2001.

The following payments were made to Capital Farm Credit on the Mills County Property Note from an account held jointly by the couple: (a) $14,298.76 on December 1, 2003, and (b) $17,993.53 on November 26, 2008. On December 2, 2005, Billie made a payment to CapitalFarm Credit on the Mills County Property Note from an account held solely in her name in the amount of $17,641.55.

3. The Colorado Property

On February 1, 2002, Billie and Feuerbacher jointly acquired a non-homestead house in Mineral County, Colorado (the "Colorado Property"), by Warranty Deed, which was recorded in the real property records of Mineral County on February 13, 2002.

The Feuerbachers executed a deed of trust on February 1, 2007, in the original principal amount of $375,000.00 payable to EverHome Mortgage Company (the "Colorado Property Note"), which evidenced a loan that was used to refinance the Colorado Property.¹ The deed was recorded in the real property records of Mineral County on February 27, 2007. Eighteen payments, totaling more than $40,000.00, were made on the Colorado Property Note from 2007 through 2009 from an account held jointly by the Feuerbachers.

4. Pre-Petition Lawsuits Against Billie

T.S. Printing filed a lawsuit against Billie in Dallas County Court at Law No. 4 on August 12, 2005.² The county court's docket report indicates that this lawsuit remained pending through the date of Billie's bankruptcy filing on October 6, 2009; however, in an amended statement of financial affairs, dated October 12, 2009, Billie stated that a judgment (amount undetermined) had been filed. A copy of the judgment was not made part of the record.

On October 27, 2008, Valuable Investments LLC, filed a lawsuit against Billie in the 40th Judicial District Court of Ellis County, Texas. A month later, on November 26, 2008, David Allen Guerra filed suit against Billie in the same court. Both lawsuits remained pending through the date of Billie's bankruptcy filing on October 6, 2009.

On May 6, 2009, TBW Land & Cattle, LLC, obtained a judgment against Billie for more than $4.2 million in the 40th Judicial District Court of Ellis County, Texas. That judgment remained in effect through the date of her bankruptcy filing on October 6, 2009.

5. The Partition Agreements and Equity Values of the Properties

On July 19, 2003, Billie executed a document entitled Release and Conveyance of Properties of Billie Morse Feuerbacher (the "Debtor Release and Conveyance"), which stated that she revoked all claim to the Mills County Property and the Colorado Property and gifted and conferred any and all of her community property interest in those properties to Feuerbacher. In addition, the Debtor Release and Conveyance stated that the Mills County Property and the Colorado Property would be her husband's separate property and that the Homestead Property would be her separate property.

The same day, Feuerbacher executed a document entitled Release and Conveyance of Properties of Alan Lane Feuerbacher (the "Appellant Release and Conveyance"), which stated that he revoked all claim to the Homestead Property and gifted and conferred any and all community property interest in the Homestead Property to Billie. The Appellant Release and Conveyance also stated that the Homestead Property would be Billie's separate property and that the Mills County Property and the Colorado Property would be Feuerbacher's separate property.

The Debtor Release and Conveyance was first recorded in Mills County on September 16, 2009, at which time the fair market value of the Mills County Property was $590,000.00. The balance owed on the property was $222,306.60; therefore, the equity value of the Mills County Property on that date was $367,693.40.

On September 23, 2009, Billie executed a Quit Claim Deed conveying her interest in the Colorado Property to Feuerbacher. The deed was recorded in the real property records of Mineral County the same day. As of September 23, 2009, the fair market value of the Colorado Property was $438,000.00, and the balance owed on the note was $363,163.69. Thus, the equity value on the Colorado Property on that date was $74,836.31.

As of September 16 and 23, 2009, the fair market value of the Homestead Property was approximately $325,582.00, and the balance of the loan secured by a lien on the property was approximately $323,840.88.³ Therefore, the equity value of the Homestead Property on those dates was $1,741.12.

6. Billie's Insolvency

According to the information provided in her bankruptcy schedules, Billie had total assets of $366,305.00 on the date she filed for bankruptcy. In her statement of financial affairs, Billie swore under penalty of perjury that her transfers during the ninety days preceding the bankruptcy filing date totaled less than $50,000.00.

Further, Billie had liabilities exceeding $4.2 million at all times during the ninety days leading up to and including the bankruptcy filing date. Indeed, according to Schedule F (CreditorsHolding Unsecured Non-Priority Claims), Billie owed an undisputed debt of $4,241,438.01 to TBW Land & Cattle LLC on the date of her bankruptcy filing based on the judgment rendered against her five months earlier.

Billie's liabilities, therefore, were more than the value of her assets at all times during the ninety days leading up to and including the bankruptcy filing date, excluding the Mills County Property and the Colorado Property. Even including these properties, Billie's liabilities exceeded the value of her assets during that time period.

7. The Bankruptcy Court's Rulings and Final Judgment

On February 10, 2011, the parties submitted the case to the bankruptcy judge on the facts stated in the Joint Pretrial Order and trial exhibits admitted into evidence by agreement. No witness testimony was offered at trial, either live or by deposition.

The bankruptcy judge entered Findings of Fact and Conclusions of Law on February 11, 2011, ruling in favor of the Trustee. Specifically, the bankruptcy judge determined the following:

a. The "transfers" of Billie's interests in the Mills County Property and the Colorado Property to Feuerbacher for purposes of § 548 of the Bankruptcy Code and TUFTA occurred on September 16, 2009, and September 23, 2009, respectively, when the conveyance documents were recorded in each county's property records.

b. The Mills County Property and the Colorado Property were jointly managed community property of Billie at the time of the transfers.

c. The Trustee had standing to pursue avoidance of both transfers under 11 U.S.C. § 544(b)(1) and TUFTA.

d. Both transfers were avoidable as constructively fraudulent transfers under § 548 of the Bankruptcy Code because Billie received less than reasonably equivalent value in exchange for the transfers and was insolvent at the time of the transfers.e. The transfer of Billie's interest in the Mills County Property was avoidable as a constructively fraudulent transfer under TUFTA because she received less than reasonably equivalent value in exchange for the transfer and was insolvent at the time of the transfer.

f. The transfer of Billie's interest in the Colorado Property was avoidable as a constructively fraudulent transfer under TUFTA because she received less than reasonably equivalent value in exchange for the transfer and

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