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LLC v. Hunter

Supreme Court of Montana

December 20, 2016

623 PARTNERS, LLC, Plaintiffs and Appellees,
v.
GLENDA HUNTER, Individually and as Trustee of the R. LARRY TODD HUNTER and GLENDA HUNTER MONTANA REVOCABLE TRUST, Defendants, LARRY TODD HUNTER, Defendant and Appellant.

          Submitted on Briefs: November 2, 2016

         APPEAL FROM: District Court of the Nineteenth Judicial District, In and For the County of Lincoln, Cause No. DV-11-94 Honorable James B. Wheelis, Presiding Judge

          For Appellant: J. Tiffin Hall, Attorney at Law, Eureka, Montana

          For Appellees: Sean S. Frampton, Morrison & Frampton, PLLP, Whitefish, Montana

          Beth Baker Justice

         ¶1 623 Partners, LLC, obtained a judgment against Larry Hunter Development Co. and R. Larry Hunter (Larry) in 2011. In its effort to satisfy the judgment, 623 Partners claimed that property originally owned by Hunter Development was fraudulently transferred to Larry's son, Larry Todd Hunter (Todd), in order to avoid subjecting the property to 623 Partners' writ of attachment. The Nineteenth Judicial District Court concluded that the property was fraudulently transferred and that Todd was liable to 623 Partners for the proceeds he received from the sale of a parcel of the property. We upheld those determinations in 623 Partners, LLC v. Hunter, 2014 MT 282N, 377 Mont. 433, 348 P.3d 169 (Table) (hereafter Hunter I).[1] On remand, Todd argued that the property was exempt from execution or forced sale because he had claimed it as his homestead, and that he was entitled to an offset from the judgment amount based on the value of the improvements that he made to the property. The District Court rejected Todd's assertions.

         ¶2 We conclude that Todd is not entitled to a homestead exemption or an offset. We therefore affirm the District Court.

         PROCEDURAL AND FACTUAL BACKGROUND

         ¶3 Larry and Glenda Hunter owned and operated Hunter Development, which developed residential subdivisions in Georgia and Montana. Todd moved to Fortine, Montana, in 2002 and ran a contracting business. Shortly after Todd moved to Montana, Hunter Development purchased a number of parcels of land near Fortine. Todd built a home and made other improvements on a parcel of the Fortine property beginning in 2006.

         ¶4 Hunter Development executed and delivered a promissory note-the loan obligation underlying this action-to Georgia State Bank in May 2007. Hunter Development secured the promissory note with real property it owned in Georgia and with Larry's personal guaranty. The promissory note and guaranty were subsequently transferred and assigned to 623 Partners.

         ¶5 Shortly after executing the promissory note, Larry and Glenda formed the R. Larry Hunter and Glenda Hunter Montana Revocable Trust (Trust). In June 2007, Larry and Glenda conveyed three parcels of the Fortine property to the Trust through a quitclaim deed for no consideration. The parcels were to be held by the Trust and distributed to the Hunters' children when Larry and Glenda died.

         ¶6 Hunter Development and Larry defaulted on their payment obligations under the promissory note in May 2008. Later that month, the Trust and Todd entered into a purchase agreement for the parcels of the Fortine property held by the Trust. The Trust conveyed the parcels to Todd by warranty deed. Todd made only one payment to the Trust under the purchase agreement. Todd later sold one of the parcels but did not pay the Trust the full amount of the proceeds from the sale. In February 2011, Todd claimed as his homestead the parcel with his home and improvements, as provided in Title 70, Chapter 32, MCA.

         ¶7 623 Partners filed suit against Hunter Development and Larry in Georgia prior to Todd's homestead declaration. It obtained a judgment against them in the amount of $1.2 million. In April 2011, 623 Partners filed this claim in the Nineteenth Judicial District Court seeking to set aside alleged fraudulent transfers of the Fortine property. 623 Partners also recorded a lis pendens on the remaining parcels.

         ¶8 The District Court granted 623 Partners partial summary judgment. The court held: (1) that the Trust's conveyance of the Fortine property to Todd was a fraudulent transfer pursuant to § 31-2-334(2), MCA, and was "accordingly void, set aside, and annulled"; (2) that Larry and Glenda's conveyance of the Fortine property to the Trust was not a qualifying transfer under § 31-2-328(12), MCA, was made in violation of § 31-32-334(2), MCA, and was "accordingly void, set aside, and annulled"; (3) that the Fortine property was subject to 623 Partners' writ of attachment for purposes of satisfying its judgment against Hunter Development and Larry; and (4) that Todd was liable to 623 Partners for the proceeds he received from the sale of the parcel of the Fortine property. The ...


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