DZ Bank AG Deutsche Zentral-Genossenschaft Bank, Frankfurt AM Main, New York Branch, Plaintiff-Appellant,
Louis Phillipus Meyer; Lynn Meyer, Defendants-Appellees.
Submitted May 19, 2017
from the United States District Court for the Western
District of Washington James L. Robart, Senior District
Judge, Presiding D.C. No. 2:14-cv-00869-JLR
Alexander Darcy (argued) and Michael W. Debre III, Askounis
& Darcy PC, Chicago, Illinois, for Plaintiff-Appellant.
S. Stern (argued), Seattle, Washington; for
Before: Michael Daly Hawkins, Ronald M. Gould, and Richard A.
Paez, Circuit Judges.
panel reversed the district court's decision affirming
the bankruptcy court's judgment in favor of a creditor in
the creditor's adversary proceeding alleging that the
debtors fraudulently transferred assets in order to place the
assets out of the creditor's reach, and that the debt
therefore was non-dischargeable under 11 U.S.C. §
panel held that the bankruptcy court correctly found that,
under the Washington Uniform Fraudulent Transfer Act, the
debtors engaged in fraudulent transfers and, therefore,
actual fraud, to the creditor's detriment. The bankruptcy
court erred, however, in limiting relief to the value of the
assets that were directly traceable to the creditor's
security interest. The panel held that the non-dischargeable
debt resulting from the fraudulent transfers was the full
amount that the creditor would have recovered if it had been
able to execute against the debtor's ownership interest
in the closely-held corporation from which the debtor
transferred the assets.
case arises from a dispute between DZ Bank AG Deutsche
Zentral-Genossenschaftsbank ("DZ Bank"), as
creditor, and Louis and Lynn Meyer ("the
Meyers"), as debtors. DZ Bank filed an
adversary action against the Meyers in bankruptcy court,
alleging that the Meyers had fraudulently transferred assets
in order to place them out of the bank's reach. The
bankruptcy court agreed, but limited the judgment to the
value of the assets that were directly traceable to DZ
Bank's security interest. The district court affirmed,
reasoning that DZ Bank could not recover the value of the
other assets because those assets were not the property of
the Meyers, but rather, were the property of Louis
Meyer's closely-held corporation. We have jurisdiction
pursuant to 28 U.S.C. § 1291, and we reverse.
January 2008, Louis Meyer was the sole member and manager of
Choice Cash Advance LLC ("Choice"). Choice purchased
five insurance agencies and their books of business in a sale
arranged by Brooke Credit Corporation and its associated
entities (collectively, "Brooke"). As part of the
purchase, Brooke loaned Choice $1, 771, 715.20. The loan
itself was financed pursuant to a credit and security
agreement that Brooke entered into with a third-party entity,
whose agent was DZ Bank. Under the terms of that agreement,
Brooke granted DZ Bank a security interest in, among other
things, its right, title, and interest to the Choice loan.
Choice executed a promissory note ...