Hinsley v. Boudloche

• Decision Date: 03 February 2000
• Docket Number: No. 99-20626,99-20626
• Citation: 201 F.3d 638
• Parties: (5th Cir. 2000) In The Matter Of: GEORGE R. HINSLEY Debtor. PATRICIA JO HINSLEY, Appellant, v. MIKE BOUDLOCHE, Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

Page 638

201 F.3d 638 (5th Cir. 2000)

In The Matter Of: GEORGE R. HINSLEY Debtor.

PATRICIA JO HINSLEY, Appellant, v. MIKE BOUDLOCHE, Appellee.

No. 99-20626

IN THE UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT

February 3, 2000

[Copyrighted Material Omitted] Appeal from the United States District Court Southern District of Texas

Before FARRIS¹, WIENER, and STEWART, Circuit Judges.

FARRIS, Circuit Judge:

Patricia J. Hinsley appeals the district court's grant of summary judgment and turnover order in favor of the trustee assigned to her husband's bankruptcy estate. We affirm.

BACKGROUND

In January and February 1989, George and Patricia Hinsley executed partition agreements which purported to divide their community estate into separate property pursuant to Texas Family Code 4.102. Although the Hinsleys remain married, they allege that partition was (1) done at a time when divorce was contemplated due to George's extramarital affairs, and (2) part of an effort at reconcilliation. Patricia Hinsley specifically alleges that she sought partition: (1) to avoid any future disputes over property should the marriage end in divorce; (2) to obtain income-generating assets that would not require much management, since she lacked financial sophistication; and (3) to retain stock in her son's business, Road Rescue, so that her husband's lover would not benefit from the son's success.

The partition agreements are at issue because Mr. Hinsley filed for bankruptcy on August 10, 1995 and the bankruptcy trustee sought to reach assets assigned to Mrs. Hinsley in the partition.² The trustee brought an adversary proceeding seeking a declaration that the partition is void. The district court, sitting as trial court, sua sponte granted summary judgment.

In a prior appeal, we affirmed the district court's determination that the partition was void as to Mr. Hinsley, but found that due process required separate consideration of Mrs. Hinsley's interest. She had not been a party to the underlying proceeding. See Hinsley v. Boudloche (In re Hinsley), No. 97-20967, slip op. at 39 (5th Cir. July 15, 1998) (unpublished). On remand, the district court granted partial summary judgment to the trustee and held the partition void as to Mrs. Hinsley. On May 13, 1999, the district court entered an interlocutory judgment restoring the Hinsleys' pre-partition community property interests, and passing Mr. Hinsley's pre-partition interest to the trustee.³On July 31, 1999, the district court issued a supplemental opinion which denied both parties' motions to alter and amend the judgment, reiterated the basis for its decision, and clarified that Mrs. Hinsley's pre-partition community interest is "subject to the community debts and the bankruptcy estate's control."

On July 1, 1999, the district court entered an order granting the trustee's June 29, 1999 motion to un-freeze Mrs. Hinsley's Merrill Lynch accounts, which contained proceeds of partitioned property, and transfer the balance to the trustee. Mrs. Hinsley filed a notice of appeal from this order on July 2, 1999. We granted Mrs. Hinsley's motion for a stay pending appeal on July 6, 1999.

DISCUSSION

A. Scope of Jurisdiction

The parties do not dispute that we have jurisdiction over this appeal pursuant to 28 U.S.C. 1292(a)(1).⁴ See Browning v. Navarro, 887 F.2d 553, 557 (5th Cir. 1989). However, we must sua sponte consider the scope of our jurisdiction. See Okpalobi v. Foster, 190 F.3d 337, 343 (5th Cir. 1999).

Rule 3(c) of the Federal Rules of Appellate Procedure requires that the notice of appeal specify the order from which appeal is taken. Nevertheless, "a policy of liberal construction of notices of appeal prevails . . . [when] the intent to appeal an unmentioned or mislabeled ruling is apparent and there is no prejudice to the adverse party." Warfield v. Fidelity & Deposit Co., 904 F.2d 322, 325 (5th Cir. 1990) (quoting C.A. May Marine Supply Co. v. Brunswick Corp., 649 F.2d 1049, 1056 (5th Cir. 1981) (per curiam)). Mrs. Hinsley specified only the July 1, 1999 order in her notice of appeal but seeks to address the merits of the May 13, 1999 summary judgment opinion and interlocutory judgment as well as the July 31, 1999 supplemental opinion and August 2, 1999 order.

Because the July 1, 1999 order merely allows execution on the May 13 interlocutory judgment,⁵ and both parties have briefed the substantive issues regarding summary judgment, we conclude that our jurisdiction extends to the May 13, 1999 opinion on summary judgment and interlocutory judgment. Cf. United States v. Lopez-Escobar, 920 F.2d 1241, 1244 (5th Cir. 1991). However, we lack jurisdiction over the district court's July 31, 1999 supplemental opinion and August 2, 1999 order. See Warfield, 904 F.2d at 326 (appellant could not have intended to appeal order not issued at time notice of appeal filed).

B. Summary Judgment - Was the Partition Void as to Mrs. Hinsley?

1. Standard of Review

We review a grant of summary judgment de novo, "applying the same criteria as the district court." King v. Ames, 179 F.3d 370, 373 (5th Cir. 1999) (citing Merritt-Campbell, Inc. v. RxP Prods., Inc., 164 F.3d 957, 961 (5th Cir. 1999)).

2. Merits

The trustee moved for summary judgment⁶ against Mrs. Hinsley under 11 U.S.C. 544(b) and, in reliance on Tex. Fam. Code 4.106(a),⁷ sought to void the partitions as fraudulent. The trustee submitted approximately 700 pages of financial documentation in support of his motion, arguing that the documentary evidence established numerous "badges of fraud" sufficient to prove Mr. Hinsley's fraudulent intent. The trustee did not submit any evidence regarding Mrs. Hinsley's intent, but argued only that the marital reasons put forth by Mrs. Hinsley as her intent in entering into partition do not constitute reasonably equivalent value and thus evince another badge of fraud.

In opposition to summary judgment, Mrs. Hinsley submitted only her own affidavit and that of Mr. Hinsley. Both affidavits flatly denied that the purpose of partition was to defraud creditors and recounted the marital troubles that partition was allegedly intended to address. On appeal, Mrs. Hinsley contends that the district court erred by (1) concluding that the affidavits did not create genuine issues of material fact sufficient to defeat summary judgment and (2) considering any of the trustee's evidence that conflicted with the Hinsleys' affidavits.

The district court held the partition void as to Mrs. Hinsley since it had previously been held void as to Mr. Hinsley, and held that her intent was therefore immaterial. It is significant, but perhaps overlooked by Mrs. Hinsley, that our prior decision finding the partition void was a final resolution. The remand was to permit her to rebut the facts on which the court concluded that the partition was void -- if she could. Due process required no more. If it was void, it was of necessity void as to both parties. The remand was solely to provide her an opportunity to rebut the factual basis for the conclusion. However, the district court also found that the evidence established Mrs. Hinsley's fraudulent intent in entering into partition.

a. Fraudulent Intent⁸

Section 24.005(b)⁹ of Tex. Bus. & Com. Code, the Texas Uniform Fraudulent Transfer Act ("UFTA"), lists eleven, non-exclusive, badges of fraud that may be used to prove the fraudulent intent of the transferor. The trustee contends that eight of the badges of fraud were present. The Hinsleys' affidavits do not address or dispute any of the evidence submitted by the trustee with the exception of their general statements as to the reasons for partition and Mrs. Hinsley's claims about the value of the property divided to each spouse.

In arguing that the affidavits are decisive on the issue of intent, Mrs. Hinsley has misconstrued the summary judgment standard. For purposes of summary judgment, "[a]n issue is 'material' if it involves a fact that might affect the outcome of the suit under the governing law." Merritt-Campbell, 164 F.3d at 961 (citation omitted). Mrs. Hinsley contends that the affidavits raise issues of materiality and credibility because they go to the issue of fraudulent intent. "Intent to defraud . . . can be decided as a matter of law." BMG Music v. Martinez, 74 F.3d 87, 90 (5th Cir. 1996). A party's self-serving and unsupported claim that she lacked the requisite intent is not sufficient to defeat summary judgment where the evidence otherwise supports a finding of fraud. See id.

1. Reasonably Equivalent Value

In her affidavit, Mrs. Hinsley avers that she believed the community estate at the time of partition to be approximately $8 million, based on the sale of a business in 1985. She further claims that the partition was equitable because she received $3.75 million in the partition while her husband received approximately $4 million.

One of UFTA's badges of fraud is whether the transferor received consideration reasonably equivalent in value to the asset transferred. See Tex. Bus. & Com. 24.005(b)(8). Intangible, non-economic benefits, such as preservation of marriage, do not constitute reasonably equivalent value. See Dietz v. St. Edward's Catholic Church (In re Bargfrede), 117 F.3d 1078, 1080 (8th Cir. 1997) (per curiam) (interpreting same phrase in bankruptcy code, 11 U.S.C. 548(a)); see also Leibowitz v. Parkway Bank & Trust Co., (In re Image Worldwide, Ltd.), 139 F.3d 574, 577 (7th Cir. 1998) (UFTA took phrase "reasonably equivalent value" from 11 U.S.C. 548(a)(2)); Viscount Air Svcs, Inc. v. Cole (In re Viscount Air Servs., Inc.), 232 B.R. 416, 434 (Bank. D. Ariz. 1998) (states that have adopted the UFTA interpret it similarly to 11 U.S.C. 548).

Mrs. Hinsley's "belief" about the value of her assets at the time of partition is insufficient to create a issue of material fact on this issue in light of the credible and undisputed evidence as to the actual value of the assets. In addition, at least with...