Tuggle v. Ameris Bank
| Decision Date | 06 April 2022 |
| Docket Number | A22A0256 |
| Parties | TUGGLE et al. v. AMERIS BANK. |
| Court | Georgia Court of Appeals |
William H. Arroyo, Tucker, for Appellant.
Jeremy Thomas McCullough, Atlanta, for Appellee.
Phipps, Senior Appellate Judge.
In this action to set aside fraudulent transfers, defendants Jessie Tuggle and his wife DuJuan Tuggle appeal from the trial court's order denying their motion for summary judgment and granting summary judgment to plaintiff Ameris Bank, as successor of Hamilton State Bank ("HSB"). The Tuggles challenge several of the trial court's rulings under Georgia's Uniform Fraudulent Transfers Act ("UFTA" or the "Act"), OCGA § 18-2-70 et seq. (2014).1
They also argue that the trial court erred when it (a) rejected their claims that OCGA § 9-12-93 and the doctrine of laches bar Ameris's action and (b) awarded attorney fees to Ameris under OCGA § 13-6-11. For the reasons that follow, we reverse the OCGA § 13-6-11 attorney fee award but otherwise affirm the trial court's rulings.
The record shows that, in February 2012, Hammer Investments LLC executed a renewal promissory note in favor of Douglas County Bank ("DCB") in the amount of $464,138.94. At that time, Jessie — Hammer Investments's sole member — executed a guaranty of the indebtedness on the note in favor of DCB. As security for the indebtedness, Hammer Investments granted DCB security interests in parcels of real property in Spalding and Fayette Counties. HSB acquired the promissory note in 2013. Hammer Investments and Jessie subsequently failed to make payments as required under the promissory note, and, in April 2014, HSB foreclosed on the Spalding and Fayette County properties. In June 2016, HSB obtained a default judgment totaling $149,019.43 against Jessie and Hammer Investments, representing the remaining balance due on the promissory note following the foreclosure sales. Ameris Bank subsequently acquired HSB. In the interim, on November 14, 2014, Jessie executed quitclaim deeds transferring two parcels of real property in Johns Creek to DuJuan for one dollar each and for "Love and Affection," as "Deed[s] of Gift."2 The Tuggles estimated the two properties to be worth a total of more than $1 million at the time of the transfers.
The current action began in April 2019, when Ameris, as successor of HSB, sued the Tuggles, seeking to set aside the transfers of the Johns Creek properties as fraudulent under OCGA §§ 18-2-74 and 18-2-75. Ameris alleged, in relevant part, that the purpose of the transfers was to place the properties beyond the reach of Jessie's creditors, including Ameris, which currently is owed more than $150,000 from the June 2016 default judgment. Ameris also sought attorney fees under OCGA § 13-6-11.
Following discovery, Ameris moved for summary judgment on its claims for fraudulent conveyance under OCGA § 18-2-75 (a) and attorney fees under OCGA § 13-6-11. The Tuggles filed a cross-motion for summary judgment, presumably on all claims against them, arguing that Jessie's conveyances to DuJuan were valid and binding and that any liens on the transferred properties were discharged four years after the conveyances under OCGA § 9-12-93. In their opposition to Ameris's summary judgment motion, the Tuggles also contended that the doctrine of laches barred Ameris's claims.
The trial court granted summary judgment to Ameris and denied summary judgment to the Tuggles. As to the fraudulent conveyance claims, the court concluded that: (i) Jessie's indebtedness to Ameris arose before he transferred the Johns Creek properties; (ii) the transfers were not for "reasonably equivalent value"; and (iii) Jessie became insolvent as a result of the transfers. See OCGA § 18-2-75 (a). The court further rejected the Tuggles’ claims that Ameris was guilty of laches for failing to levy on the Johns Creek properties earlier and that OCGA § 9-12-93 barred Ameris's suit. Finally, the court granted Ameris's request for OCGA § 13-6-11 attorney fees after finding that the Tuggles acted in bad faith by fraudulently transferring the properties. This appeal followed.
1. The Tuggles first challenge the grant of summary judgment to Ameris, contending that the trial court erred when it (a) ruled that Jessie did not receive reasonably equivalent value when he transferred the Johns Creek properties, (b) determined that Jessie was insolvent following the transfers, and (c) awarded OCGA § 13-6-11 attorney fees to Ameris. We agree that the trial court erred by awarding attorney fees in this case but otherwise reject the Tuggles’ claims.
We review de novo a grant or denial of summary judgment, viewing the evidence and all reasonable conclusions and inferences drawn from it in the light most favorable to the nonmovants. City of St. Marys v. Reed , 346 Ga. App. 508, 508-509, 816 S.E.2d 471 (2018). Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Id. at 508, 816 S.E.2d 471 ; see OCGA § 9-11-56 (c). "[T]he burden on the moving party may be discharged by pointing out by reference to the affidavits, depositions and other documents in the record that there is an absence of evidence to support the nonmoving party's case." Ellison v. Burger King Corp. , 294 Ga. App. 814, 819 (3) (a), 670 S.E.2d 469 (2008) (citation and punctuation omitted); see OCGA § 9-11-56 (c). If the movant meets this burden, the nonmovants "cannot rest on [their] pleadings, but rather must point to specific evidence giving rise to a triable issue." Ellison , 294 Ga. App. at 819 (3) (a), 670 S.E.2d 469 (citation and punctuation omitted); see OCGA § 9-11-56 (e).
(a) At the time the transfers at issue here were made, fraudulent transfers under Georgia's UFTA "were broadly separated into two classifications: actual fraud and constructive fraud." Agricommodities, Inc. v. Moore , 359 Ga. App. 1, 2-3 (1), 854 S.E.2d 781 (2021) (citations and punctuation omitted). The Code section for constructive fraud, OCGA § 18-2-75 (a) — the statute primarily at issue here — provided:
A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.
Thus, while a creditor proceeding under OCGA § 18-2-75 (a) need not show an actual intent to defraud, "the creditor must show that the debtor did not receive ‘reasonably equivalent value’ for the exchange." Agricommodities, Inc. , 359 Ga. App. at 3 (1), 854 S.E.2d 781. In that regard, the UFTA provided that "[v]alue is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or an antecedent debt is secured or satisfied...." OCGA § 18-2-73 (a). The Act defined "property" as "anything that may be the subject of ownership." OCGA § 18-2-71 (10).
(i) The Tuggles first maintain that Ameris cannot satisfy the elements of this claim because the transfers of the Johns Creek properties "were made for Love and Affection," which, they claim, constitutes "valuable consideration." They also assert that the conveyances were predicated, in part, on cognitive impairments experienced by Jessie.
The UFTA is modeled on the Uniform Fraudulent Transfer Act promulgated by the National Conference of Commissioners on Uniform State Laws and adopted in various forms by 43 states and the District of Columbia. For this reason, and in light of the dearth of Georgia decisions construing the provisions of the Georgia UFTA, we look to the decisions of other jurisdictions for guidance.
Truelove v. Buckley , 318 Ga. App. 207, 209 (1), 733 S.E.2d 499 (2012) (citations and punctuation omitted).
We first note that the question presented here is not — as the Tuggles suggest — whether "love and affection" may constitute "valuable consideration" under the UFTA. Rather, the question is whether "love and affection" may constitute "reasonably equivalent value" for the property exchanged. See OCGA § 18-2-75 (a). The parties have not cited, and research has not revealed, any Georgia appellate decisions addressing this question. Several decisions from other jurisdictions, however, each have answered this question in the negative. See In re Marlar , 267 F.3d 749, 752, 755-756 (II) (8th Cir. 2001) (); Truist Bank v. Farmer , No. 2:20-cv-00139, 2021 WL 1240091, at *3, 2021 U.S. Dist. LEXIS 64484, at *3, 5 (II) (B), 9-10 (III) (B) (S.D. W. Va. Apr. 2, 2021) (); In re Blair , 594 B.R. 712, 752 (V) (A) (7) (Bankr. D. Colo. 2018) (); DWC3, Inc. v. Kissel , 246 N.C. App. 361, 784 S.E.2d 237, 2016 WL 1006133, at *6, 2016 N.C. App. LEXIS 261, at *11 (II), n. 1, 13-16 (II) (2016) ("love and affection" do not constitute "reasonably equivalent value" with respect to a transfer of real property and other assets for purposes of the North Carolina UFTA); see also In re Treadwell , 699 F.2d 1050, 1051 & n. 1 (11th Cir. 1983) (...
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