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The Alabama Civil Court of Appeals recently issued a decision, International Management Group, Inc. v. Bryant Bank, No. 2170744, which, among other things, limits the potential for summary judgment in fraudulent transfer cases, especially where actual fraud must be proven.

In this case, Bryant Bank sued International Management Group (“IMG”) following its alleged insolvency, seeking to void a series of insider transfers of mortgages securing promissory notes to Bryant Bank. IMG’s principal, Michael Carter had personally guaranteed the promissory notes prior to filing personal bankruptcy. Ultimately, IMG and Mr. Carter defaulted on the promissory notes, and Bryant Bank obtained a default judgment against both IMG and Mr. Carter. Prior to the default judgment, however, Mr. Carter, through a series of insider transactions, transferred the mortgages to his parents, who subsequently passed away. Mr. Carter, as executor of his mother’s estate, then transferred the mortgages to himself following his bankruptcy. Bryant Bank claimed that IMG’s first transfer to another Carter-controlled company in 2010 was without any consideration and rendered IMG insolvent, thus rendering the transfers constructively fraudulent and void under the Alabama Uniform Fraudulent Transfer Act (“AUFTA”). If Bryant Bank could not void the transfers, its judgments against IMG and Mr. Carter were likely worthless, as neither party had sufficient assets to satisfy the judgments.  Following discovery, the trial court granted Bryant Bank’s motion for summary judgment and voided the transactions, which had the effect of voiding the transfers without the need for trial and made IMG no longer judgment-proof.

Continue Reading Alabama Court of Civil Appeals Clarifies The Requirements (and limitations periods) for Fraudulent Transfer Action

In a win for defendants, the Eleventh Circuit recently held that a party does not waive its right to compel arbitration for the claims of unnamed class members even if it has waived that right as to the named class representatives. In Gutierrez v. Wells Fargo Bank, NA, the plaintiffs filed a putative class action against Wells Fargo alleging it had committed certain unlawful practices related to the charging of overdraft fees. The plaintiffs were all former Wells Fargo customers who had accounts governed by customer agreements containing arbitration provisions with class action waivers. After the trial court consolidated similar cases in late 2009, it ordered the defendant banks to file all “merits and non-merits motions directed to the operative complaints,” including motions to compel arbitration, by December 2009. Wells Fargo replied to the trial court’s order stating it would not seek to compel arbitration as to the named plaintiffs but reserved its right to compel arbitration against any plaintiffs “who [might] later join, individually or as putative class members, in this litigation.” Wells Fargo then filed its answer and proceeded with discovery.

Continue Reading Eleventh Circuit: No waiver of arbitration rights despite waiting for class certification