Tolle v. Fenley

• Citation: 2006 UT App 78,132 P.3d 63
• Decision Date: 02 March 2006
• Docket Number: No. 20041045-CA.,20041045-CA.
• Parties: Jeanne TOLLE, Plaintiff and Appellee, v. Mary Dagmar FENLEY, John Fenley, Ralph Eugene Tolle, Juan H. Hernandez, and Sherry A. Hernandez, Defendants and Appellants.
• Court: Court of Appeals of Utah

Page 63

132 P.3d 63

2006 UT App 78

Jeanne TOLLE, Plaintiff and Appellee, v. Mary Dagmar FENLEY, John Fenley, Ralph Eugene Tolle, Juan H. Hernandez, and Sherry A. Hernandez, Defendants and Appellants.

No. 20041045-CA.

Court of Appeals of Utah.

March 2, 2006.

Jared Coleman, Law Office of Jared G. Coleman, Salt Lake City, for Appellants.

Kenneth Parkinson and Ryan D. Tenney, Howard Lewis & Petersen, Provo, for Appellee.

Before Judges BENCH, McHUGH, and THORNE.

OPINION

BENCH, Presiding Judge:

¶ 1 Appellants Mary Dagmar Fenley and John Fenley (collectively, the Fenleys) assert that the trial court erroneously voided the transfer of real properties from Robert Tolle under the Utah Uniform Fraudulent Transfer Act (UFTA). See Utah Code Ann. §§ 25-6-1 to -13 (1998). We affirm.

BACKGROUND

¶ 2 Appellee Jeanne Tolle was born in Ohio in 1958 to Robert and Wilma Tolle. Approximately one year later, the family moved to Florida. During Jeanne's childhood and adolescence, Robert raped and abused her on numerous occasions. Later, Robert and Wilma divorced. Jeanne reported the rape incidents to the Florida police in 1973, and Robert returned to Ohio. From 1973 to 2001, Jeanne was unable to locate Robert because his exact whereabouts were unknown to her.

¶ 3 In 1987, Robert married Mary Dagmar Fenley in Utah. The couple amicably divorced in 2001. Later that year, Jeanne's cousin gave her Robert's phone number and told her that Robert had been living in Utah for the previous fourteen years. In the process of discovering her father's address, Jeanne contacted Ralph Tolle, Robert's brother, and Mary, Robert's ex-wife. Jeanne told them both about her past abuse and rape incidents and informed them that she had three goals: first, to make sure no other children were hurt by Robert; second, to make sure Robert went to prison for raping and abusing her; and third, to take away Robert's possessions for what he did to her. Jeanne then contacted a Florida police detective. The detective instructed her to telephone Robert to see if he would acknowledge the rape incidents and asked her to record the conversation.

¶ 4 In October 2001, Jeanne called Robert. During the conversation, Robert acknowledged that he had raped her on several occasions. He told her that he was sorry. Robert also told Jeanne that he owned a two-hundred acre ranch and a five-bedroom house in Utah and invited her to come to visit him.¹ Jeanne accepted the invitation to visit and came to Utah in November 2001. During the visit, Robert put Jeanne's name on several of his bank accounts. After the Thanksgiving holiday, she returned to Florida.

¶ 5 On November 30, 2001, Robert was arrested in Utah. At the time of his arrest, Robert telephoned Jeanne and "told her that he was being arrested and that he knew she was responsible" for his arrest. The next day Jeanne flew to Utah. While in Utah, Jeanne withdrew all of the money in the joint bank accounts. Jeanne also met with Juan and Sherry Hernandez, Robert's friends and caretakers, and told them her three goals.

¶ 6 Following Robert's incarceration, several of the Defendants wrote letters to Robert "indicating an interest in protecting [his] property from Jeanne."² Five days after his arrest, Robert asked Ralph to "pick[] up quit-claim deeds on the way" to the jail "for Robert's signature." Robert signed and deeded all of his real properties to Ralph and Mary, as joint tenants. The trial court later found that this "made [Robert] insolvent by virtue of the transfer."

¶ 7 Robert was extradited from Utah and indicted in Florida. In February 2002, Jeanne filed a civil action against Robert in Florida, which ultimately resulted in a default judgment in the amount of $1,704,610.75, plus interest. While awaiting his criminal trial, Robert died in Florida in June 2002.

¶ 8 Ralph later signed a quit-claim deed to Juan and Sherry Hernandez, as joint tenants, for part of his interests in the properties previously deeded to him by Robert. The Hernandezes paid Ralph nothing for the deed. Mary also signed a quit-claim deed to establish joint ownership with her son, John Fenley, for all of her interests in the properties previously deeded to her by Robert. John paid nothing to Mary for this transfer.

¶ 9 In March 2003, Jeanne filed a complaint against all of the Defendants seeking to void the alleged fraudulent transfer of properties from Robert to the Defendants, pursuant to the UFTA. See Utah Code Ann. § 25-6-1 to -13. The trial court found that Jeanne's "right to payment" or claim "arose before any transfer of the land from Robert Tolle." The court specifically found that although "Plaintiff, Jeanne Tolle, did not file civil suit until February, 2002 in Florida and procure a judgment until September 24, 2004, the Plaintiff made her intentions clear to Robert Tolle and the other defendants prior to any transfers." Additionally, the trial court found that the Defendants did not give any consideration for the transfers and concluded that "[t]he transfer of all the ... property was a fraudulent transfer made with the intent to keep the property from the reach of the Plaintiff, Jeanne Tolle's judgment" and is "therefore void." The Fenleys now appeal.

ISSUES AND STANDARDS OF REVIEW

¶ 10 The Fenleys present several issues on appeal. First, the Fenleys assert that the trial court erroneously concluded that Jeanne was a "creditor" and that she had a "claim" to the transferred properties under the UFTA. Second, the Fenleys assert that the trial court erroneously concluded that Robert had "actual intent" to fraudulently transfer the properties under Utah Code section 25-6-5(1)(a) of the UFTA. Utah Code Ann. § 25-6-5(1)(a). Third, the Fenleys assert that the trial court erroneously concluded that Robert was "insolvent" under the UFTA at the time the properties were transferred. Id. §§ 25-6-3, -6(2).

¶ 11 These issues present mixed questions of fact and law. We review factual questions under the clearly erroneous standard and legal questions under the correctness standard. See Jeffs v. Stubbs, 970 P.2d 1234, 1244 (Utah 1998). Although questions of law are reviewed for correctness, we "may still grant a trial court discretion in its application of the law to a given fact situation." Id. Questions of statutory interpretation are questions of law that are reviewed for correctness and no deference is given to the trial court's determination. See Department of Pub. Safety v. Robot Aided Mfg. Ctr., Inc., 2005 UT App 199, ¶ 6, 113 P.3d 1014.

ANALYSIS

I. "Creditor" under the UFTA

¶ 12 The Fenleys first argue that the trial court erred by incorrectly classifying Jeanne as a creditor under the UFTA because she initially only threatened civil action and did not obtain a judgment until after Robert transferred his properties to Mary and Ralph. See Utah Code Ann. § 25-6-2(3), (4).

¶ 13 For the UFTA to apply, the statute requires a "creditor-debtor relationship." Bradford v. Bradford, 1999 UT App 373, ¶ 14, 993 P.2d 887. The UFTA provides a remedy against debtors who seek to "defraud a creditor or avoid a debt." Id. "[T]ransfers of property designed to place a debtor's assets beyond the reach of the debtor's creditors are void as to the creditors." National Loan Investors, L.P. v. Givens, 952 P.2d 1067, 1069 (Utah 1998) (citation and quotations omitted). Because the UFTA "is remedial in nature," the Utah Supreme Court has held that the statute "should be liberally construed." Id. The UFTA "broadly defines the word `creditor' to mean any person who has a claim." Id. (citing Utah Code Ann. § 25-6-2(4)). A "claim" is also broadly defined under the UFTA as a "right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured." Utah Code Ann. § 25-6-2(3).

¶ 14 Based on the broad definition of a claim under the UFTA and the direction from our supreme court to construe the statute liberally, we hold that Jeanne was "indeed, a creditor of [Robert], given that [her] claim to the [properties]—although not reduced to judgment [at the time]—had arisen through recent threats [of civil action]." Bradford, 1999 UT App 373 at ¶ 16, 993 P.2d 887. Jeanne's numerous threats of suit and Robert's awareness of probable legal action against him amount to a "claim" for purposes of the UFTA. See United States v. Green, 201 F.3d 251, 257 (3d Cir.2000) (citing Baker v. Geist, 457 Pa. 73, 321 A.2d 634 (1974), for the holding that mere "awareness of a probable legal action against a debtor amounts to a debt" for purposes of the Pennsylvania Uniform Fraudulent Conveyances Act); Bradford, 1999 UT App 373 at ¶ 16, 993 P.2d 887; 37 Am.Jur.2d Fraudulent Conveyances and Transfers § 3 (2001) ("The existence of a debt is a requirement for bringing a fraudulent conveyance action and generally speaking, the awareness of probable legal action against a debtor amounts to a `debt.'" (footnotes omitted)). The trial court found that "[w]hile the Plaintiff, Jeanne Tolle, did not file civil suit until February, 2002 in Florida and procure a judgment until September 24, 2004, the Plaintiff made her intentions clear to Robert Tolle and the other defendants prior to any transfers." For purposes of the UFTA, Jeanne is therefore a creditor whose claim arose before Robert transferred the properties.

¶ 15 The Fenleys also argue that Jeanne's Florida judgment does not qualify as a claim under the UFTA because it allegedly was sought in violation of Florida's statute of limitations and obtained through the collusion of her half-sister.³ These arguments constitute collateral attacks on the Florida judgment. "The general rule of law is that a judgment may not be drawn in question in a collateral proceeding and an attack upon a judgment is regarded as collateral if made when the judgment is offered as the basis of a claim in a subsequent proceeding." Olsen v. Board of...