Fire Sale Fraudulent, But Damages Amount Unsupported
February 8, 2013The court reversed and remanded for a new trial a judgment for the plaintiff on its fraudulent transfer claims. MacArthur Ranch sued the owners of a nail salon for missed rent payments under their commercial lease. Just before summary judgment, the owners conveyed two assets to the two Hos, a parent and brother of the owners. MacArthur Ranch then filed a fraudulent transfer suit against the Hos under the Texas Uniform Fraudulent Transfer Act. The trial court found that the transfers were fraudulent and awarded damages and ordered execution on the transferred assets.
On appeal, the Hos argued that the evidence was factually and legally insufficient to support the finding of fraudulent transfers. But the court held that there was sufficient evidence that the transfers were intended to “hinder, delay, or defraud” MacArthur Ranch because they were made to insiders, without consideration, and before a substantial judgment, and thus were fraudulent. The court held, however, that the amount of MacArthur Ranch’s damages was not supported by the evidence because the expert testimony of MacArthur Ranch’s property manager was conclusory as to the fair market value of the assets. The manager provided no testimony as to how she reached those values, merely answering “yes” to counsels leading questions regarding those values. Because the record showed that the value of the assets was undetermined, but greater than zero, and liability was contested, the court remanded for a new trial.
