United States District Court, E.D. Arkansas, Western Division
OPINION AND ORDER
LEON HOLMES, UNITED STATES DISTRICT JUDGE
Holdings, LLC, commenced this action against William J.
Gauthier (“Bill”) and Linda Gauthier on October
7, 2016, seeking to avoid and recover certain transfers of
real property and personal property made by Linda to Bill.
Edgefield is the holder of a $364, 425.52 judgment against
Linda. The amended complaint includes three counts: Count I
alleges that certain transfers were fraudulent under Ark.
Code Ann. §§ 4-59-204(a) and 205(a); Count II
alleges that, as the victim of a crime, Edgefield is entitled
to recover its costs and attorneys' fees from the
Gauthiers under Ark. Code Ann. § 16-118-107; and Count
III alleges that certain transfers were fraudulent under Ark.
Code Ann. § 4-59-205(b). Edgefield has moved for partial
summary judgment pursuant to Federal Rule of Civil Procedure
56 on Counts I and III. For the following reasons, the motion
following facts are undisputed. On April 12, 2011, the
Circuit Court of Saline County, Arkansas, granted a default
judgment in favor of Regions Bank against Vinson Paradise
Golf, LLC, Linda B. Turner (now Linda Gauthier), and Robert
J. Shell jointly and severally in the amount of $364, 425.52.
Document #7-1. Linda and Bill married on August 3, 2011.
Documents #15-4 and #15-5. The bank assigned the judgment to
Edgefield Holdings on January 12, 2016. Document #7-2. In
February of 2016, Edgefield attempted to collect on the
judgment by filing writs of garnishment and conducting
discovery. Document #8 at 2, ¶16. Linda has never made a
payment. Document #8 at 1, ¶1.
brings this action in part under the Arkansas Fraudulent
Transfer Act, which prevents fraudulent transfers by a debtor
who tries to avoid creditors by placing assets beyond their
reach. See Ark. Code Ann. §§ 4-59-201-13.
There are three transfers at issue in the case: one transfer
of real property and two transfers of personal property.
First, Linda transferred her interest in real property to
Bill. Linda acquired a joint interest with Bill in real
property located at 7016 Ore Trail, Bauxite, Arkansas, on
August 7, 2014. Document #8 at 3, ¶18; Document #15-2.
On April 28, 2016, she transferred her undivided one-half
interest in the Ore Trail property to Bill. Document #8 at 3,
¶19. Second, Linda transferred funds from her Scottrade
account 5663 to a Boeing Employees' Credit Union (BECU)
account on two different occasions. Linda was the sole owner
of the Scottrade account. Document #8 at 4, ¶23.
Scottrade issued a check to Linda for $22, 000 on June 16,
2015. Document #7-7. On June 22, 2015, Linda endorsed the
check, and funds in the amount of $22, 000 were then
deposited into the BECU account. Document #7-8 at 2. At the
time, Linda and Bill were joint-account holders of the BECU
account and had been since August 21, 2012, when Bill added
Linda to the account. Document #7-6 at 1; Document #8 at 4,
¶25. Scottrade issued another check to Linda on April
28, 2016, for $27, 521.17. Document #7-4. The next day, Bill
removed Linda as a joint-account holder of the BECU account.
Document #7-6 at 3-4. Linda endorsed the second Scottrade
check, and funds in the amount of $27, 521.17 were deposited
into the BECU account on May 4, 2016. Document #7-5 at 2.
should grant summary judgment if the evidence demonstrates
that there is no genuine dispute as to any material fact and
the moving party is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(a). The moving party bears the initial burden
of demonstrating the absence of a genuine dispute for trial.
Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106
S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). If the moving party
meets that burden, the nonmoving party must come forward with
specific facts that establish a genuine dispute of material
fact. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89
L.Ed.2d 538 (1986); Torgerson v. City of Rochester,
643 F.3d 1031, 1042 (8th Cir. 2011) (en banc). A genuine
dispute of material fact exists only if the evidence is
sufficient to allow a reasonable jury to return a verdict in
favor of the nonmoving party. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91
L.Ed.2d 202 (1986). The Court must view the evidence in the
light most favorable to the nonmoving party and must give
that party the benefit of all reasonable inferences that can
be drawn from the record. Pedersen v. Bio-Med.
Applications of Minn., 775 F.3d 1049, 1053 (8th Cir.
2015). If the nonmoving party fails to present evidence
sufficient to establish an essential element of a claim on
which that party bears the burden of proof, then the moving
party is entitled to judgment as a matter of law.
alleges that the transfer of the Ore Trail property to Bill
was fraudulent under Ark. Code Ann. §§ 4-59-204(a)
and 205(a). Document #7 at 6-7, ¶¶35-39. If
the transfer was fraudulent and no defenses provided by Ark.
Code Ann. § 4-59-208 apply, then Edgefield is entitled
to avoid the transfer to the extent necessary to satisfy its
claim and recover judgment for the value of the asset
transferred. Ark. Code Ann. § 4-59-207. The Gauthiers
have conceded that Edgefield is entitled to an undivided
one-half interest in the Ore Trail property. Document #16 at
4. They argue that the property should be sold and the net
proceeds divided between Bill and Edgefield. Id.
Edgefield, on the other hand, asks the Court for the
fair-market value of its one-half interest in the property.
Document #19 at 2.
alleges in the amended complaint that according to the Saline
County Assessor's tax assessment in 2016, the Ore Trail
property is worth $109, 100. Document #7 at 3, ¶18. The
Gauthiers admit that the property was assessed at $109, 100,
but do not admit that the assessment accurately reflects the
fair-market value of the property. Document #8 at 3,
¶18. Edgefield has not submitted the assessment. Because
the fair-market value is disputed, the Court orders the
parties to sell the Ore Trail property and divide the
proceeds equally between Bill and Edgefield.
III alleges that the transfers from Linda's Scottrade
account to the BECU account were fraudulent under Ark. Code
Ann. § 4-59-205(b). Section 205(b) provides:
A transfer made by a debtor is fraudulent as to a creditor
whose claim arose before the transfer was made if the
transfer was made to an insider for an antecedent debt, the
debtor was insolvent at that time, and the insider had
reasonable cause to believe that the debtor was insolvent.
Gauthiers argue that there was no transfer of funds and no
payment of an antecedent debt because “Linda did not
owe Bill the money; rather it was his money all of the time,
despite the accounts into which the money was
deposited.” Document #8 at 4, ¶23; Document #16 at
3, 5-8 (“Even in Linda's Account 5663, the assets
belong to Bill.”). They rely on Hayden v.
Gardner, in which the Arkansas Supreme Court held that a
joint bank account is garnishable only in proportion to the
debtor's ownership of the funds. 238 Ark. 351, 355, 381
S.W.2d 752, 754 (1964). Hayden is inapplicable to
this case. It is undisputed that Linda was the sole owner of
the 5663 Scottrade account and therefore the funds ...