Westwood Ltd. v. Grayson

Decision Date08 September 2017
Docket NumberCL-2016-09728
CourtCircuit Court of Virginia
PartiesRE: Westwood Limited Partnership v. Alan M. Grayson, et al.
BRUCE D. WHITE, CHIEF JUDGE RANDY I. BELLOWS ROBERT J. SMITH JAN L. BRODIE BRETT A. KASSABIAN MICHAEL F. DEVINE JOHN M. TRAN GRACE BURKE CARROLL DANIEL E. ORTIZ PENNEY S. AZCARATE STEPHEN C. SHANNON THOMAS P. MANN RICHARD E. GARDINER DAVID BERNHARD JUDGES
THOMAS A. FORTKORT JACK B. STEVENS J. HOWE BROWN F. BRUCE BACH M. LANGHORNE KEITH ARTHUR B. VIEREGG KATHLEEN H. MACKAY ROBERT W. WOOLDRIDGE, JR. MICHAEL P. McWEENY GAYLORD L. FINCH, JR. STANLEY P. KLEIN LESLIE M. ALDEN MARCUS D. WILLIAMS JONATHAN C. THACHER CHARLES J. MAXFIELD DENNIS J. SMITH LORRAINE NORDLUND DAVID S. SCHELL RETIRED JUDGES
LETTER OPINION

Matthew D. Ravencraft, Esq.

Matthew D. Baker, Esq.

REES BROOME, PC

1900 Gallows Road, Suite 700

Tysons Corner, VA 22182

MRavencraft@reesbroome.com

Counsel for Plaintiff Westwood Buildings Limited Partnership

Daniel Schumack, Esq.

Schumack Ryals PLLC

3900 Jermantown Road, Suite 300,

Fairfax, VA 22030

DS@schumack.com

Counsel for Defendants Alan M. Grayson, AMG TR PC, GL CTR., P.C.,

Grayson Consulting, Inc., Victor A. Kubli, Kubli & Associates PC, Law

Office of Victor A. Kubli, P.C., and The GSA Telecommunications Trust

Tucker H. Byrd, Esq.

Byrd Campbell, P.A

180 Park Avenue North, Suite 2A

Winter Park, FL 32789

TByrd@byrdcampbell.com

Co-counsel pro hac vice for Defendants Alan M. Grayson, AMG TR PC,

GL CTR., P.C., Grayson Consulting, Inc., and The GSA Telecommunications
Trust

Kevin E. Smith, Esq.

Slater & Smith PLLC

104 West Main Street

Orange, VA 22960

Kevin@slatersmith.com

Counsel for Defendant Carla G. Coleman

Dear Counsel:

The Court has before it claims by the Plaintiff against various Defendants asserting Fraudulent Conveyance, Voluntary Conveyance and Conversion. After careful consideration of the evidence and argument of counsel, assessing the demeanor and credibility of each witness presented, and for the reasons as further stated in this letter opinion, the Court finds Plaintiff is entitled to judgment against Defendants Alan M. Grayson, AMG TR PC, Carla G. Coleman, GL CTR. P.C., Victor A. Kubli, Kubli & Associates PC, and The GSA Telecommunications Trust, as further set forth herein, with consideration of the amount of attorney's fees awarded left for further argument by agreement of the parties. The Court also finds Plaintiff is not entitled to judgment against Defendants Law Office of Victor A. Kubli, P.C., and Grayson Consulting, Inc., and claims against such entities must therefore be dismissed.

FACTS
The Relevant Parties

Plaintiff Westwood Buildings Limited Partnership ("Westwood"), is a Virginia Limited Partnership with its principal place of business in Vienna, Virginia.

Defendant Alan M. Grayson ("Grayson"), is an individual domiciled in Florida who also at times resides in Virginia. Grayson is a duly licensed attorney in Virginia, who regularly transacted business in Fairfax County, Virginia. From January 2009 until January 2011, Grayson served as a member of the U.S. House of Representatives for Florida's 8th Congressional District. From January 2013 until at least the filing of this action on July 11, 2016, Grayson served as a member of the U.S. House of Representatives for Florida's 9th Congressional District. At times relevant to this suit, Grayson was a business associate of Defendant Victor A. Kubli, an officer and/or director and the sole shareholder of Defendants AMG TR PC, GL Ctr., P.C., Grayson Consulting, Inc., and is also the Trustee of Defendant The GSA Telecommunications Trust.

Defendant Victor A. Kubli ("Kubli"), is an individual residing in Maryland. Kubli is a duly licensed attorney who regularly transacted business in Fairfax County, Virginia. At times relevant to this suit, Kubli was a business associate of Grayson, a principal of Defendant AMG TR PC prior to 2009, president, director and sole shareholder of Defendant Kubli & Associates, P.C. since January 2009, an employee of GL Ctr., P.C., from January 2011 through at least December 2012, and president, director and sole shareholder of Defendant Law Office of Victor A. Kubli, P.C. since January 2013 until at least July 2016.

Defendant AMG TR PC, formerly known as Grayson & Kubli, P.C. ("AMG") is a Virginia professional corporation which has ceased business operations. From approximately November 2007 to April 2011, AMG transacted business at its principal office located at 8605 Westwood Center Drive, Suite 410, Vienna, Virginia, 22182 (hereinafter referred to as "the Premises"). AMG was formed by Grayson for the purpose of conducting the private practice of law in Virginia and elsewhere, and prior to January 2009, Grayson and Kubli practiced law together at such entity.

From November 2007 to at least January 2009, AMG's principal place of business consisted of the Premises, which was leased from Westwood pursuant to a written lease executed November 14, 2007 ("the Lease"). During the Lease negotiations, Grayson and AMG represented to Westwood that AMG was debt free and that AMG had not borrowed money from any source. Westwood did not seek a personal guarantee of the Lease from Grayson. The Lease terms granted Westwood a security interest in all of AMG's inventory and assets used in connection with AMG's business, and further, if AMG assigned its interest in the Lease to an assignee, AMG assigned to Westwood any amount due to AMG from such assignee.

Defendant Kubli & Associates, P.C. ("K&A"), is a corporation organized under the laws of the State of Maryland, is owned and controlled by Kubli, and has ceased business operations. From approximately January 2009 to April 2011, K&A transacted business at its principal office located at the Premises. K&A was formed by Grayson and Kubli as a result of Grayson's election to Congress in November of 2008, for the purpose of acquiring AMG's assets, succeeding to its business, and continuing its law practice.

On January 2, 2009, AMG assigned its interest in the Lease to K&A. Also in January of 2009, AMG sold, conveyed or otherwise transferred to K&A AMG's business and assets (hereinafter collectively referred to as "Assets"), including but not limited to receivables and business expectancies.

Defendant GL Ctr., P.C., formerly known as Grayson Law Center, P.C. ("GLC"), is a Virginia corporation, owned and controlled by Grayson and has ceased business operations.

Defendant The GSA Telecommunications Trust ("GSA"), is a Virginia business trust, which at all times relevant to this cause transacted business in Virginia and was controlled by Grayson.

Defendant Grayson Consulting, Inc. ("GCI"), is a Virginia corporation owned and controlled by Grayson which was first registered as such with the Virginia State Corporation Commission in 2014 (Pl.'s Ex. 45), after the times of transactions relevant to this cause.

Defendant Law Office of Victor A. Kubli, P.C. ("LOVAK"), is a Maryland professional corporation with its principal place of business in Germantown, Maryland. At all times relevant to this cause, LOVAK transacted business in Virginia and elsewhere, and was owned and controlled by Kubli.

Defendant Carla G. Coleman ('Coleman") is an individual residing in Virginia. At all times relevant to this cause, Coleman was an officer and/or manager and bookkeeper of K&A and GCI. Coleman has also served as personal assistant, attorney-in-fact and/or authorized agent of Grayson, exercising duties including but not limited to signing drafts and other documents with Grayson's signature with authority to do so.

Nature of the case

The action was brought by Westwood to set aside numerous conveyances made by AMG" (or "G&K") and "K&A" to their respective owners, Grayson and Kubli, and to other entities they controlled. The Complaint alleges claims to set aside the transfers as Fraudulent Conveyances (Count I) and Voluntary Conveyances (Count II), and a separate claim against Grayson for Conversion with respect to transfers relating to the Halldorson case (Count IV).

The case is a follow-on enforcement action to collect amounts due pursuant to two prior suits for unpaid rent wherein Westwood obtained judgments ("Judgments") against G&K and K&A. The outstanding amounts of the Judgments with interest now total more than $452,599.76 against K&A and $398,921.19 against AMG. (Pl.'s Ex. 30B). During post-Judgments collection efforts, Grayson and Kubli entered into a series of transactions in which most of the assets of K&A and G&K were assigned or transferred to either themselves or entities they owned or controlled. This had the effect of leaving little from which Plaintiffs could satisfy their Judgments. An eleven day bench trial ensued at which Plaintiff detailed the following five transfers it alleged are reachable through its conveyance claims:

1. The "GSA Loan" and Confessed Judgment;

2. The "2011 G&K Transfers";

3. The Transfers relating to the "Halldorson Settlement Proceeds";

4. The "IDT Payments"; and

5. The Cancellation of K&A Debt and "Asset Take-Back."

Defendants asserted as an affirmative defense that such transfers constituted lawful preferences because all of the assets of K&A and/or G&K were purportedly the object of two perfected security interests, one in favor of G&K, and the other in favor of Grayson, which they argue place such assets beyond the reach of Plaintiff.

Relevant Transactions

Both Plaintiff and Defendants filed detailed post-trial memorandums in summation of the evidence adduced at trial. The relevant transactions are largely accurately recounted in Plaintiff's Post-Trial Memorandum:

1. The GSA Loan and Confessed Judgment (Pl.'s Exs. 31, 32, 44, 49A):

Pursuant to a written Loan Agreement (the "GSA Loan" -- Pl.'s Ex. 31) made "as of January 12, 2009," GSA Telecommunications Trust ("GSA") agreed "to lend or cause to be lent, funds to K&A" through various Grayson "related persons or entities." (Pl.'s Ex. 31, at p. 1). Regardless of the...

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