Arlene M. Lamarca v. Shari Streit Jansen , 580 F. App'x 740 ( 2014 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
Nos. 14-10826; 14-11149
Non-Argument Calendar
________________________
D.C. Docket No. 8:13-cv-02197-JDW,
Bkcy No. 8:12-bk-00562-MGW
IN RE: RONALD BIFANI,
Debtor.
________________________________________________________
ARLENE M. LAMARCA,
Plaintiff-Appellee
Cross Appellant,
versus
SHARI STREIT JANSEN,
Chapter 7 Trustee,
Defendant-Appellant
Cross Appellee.
________________________
Appeals from the United States District Court
for the Middle District of Florida
________________________
(September 11, 2014)
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Before WILSON, ROSENBAUM and KRAVITCH, Circuit Judges.
PER CURIAM:
Chapter 7 Trustee Shari Streit Jansen appeals the district court’s reversal of
the bankruptcy court’s imposition of an equitable lien against property the
bankruptcy court concluded was fraudulently transferred from debtor Ronald
Bifani to defendant Arlene LaMarca. LaMarca cross-appeals the bankruptcy and
district courts’ conclusions that Bifani fraudulently transferred the property to her
under the Florida Uniform Fraudulent Transfer Act (FUFTA), Fla. Stat. § 726.101et seq. After a thorough review, we affirm in part and reverse in part.
I.
Ronald Bifani owed several properties in the Breckenridge, Colorado area.
In 2000, Bifani met LaMarca and, within a few years, LaMarca moved into a home
Bifani owned. In 2006, Bifani transferred this property at 207 North Ridge Street
to LaMarca. In 2009, LaMarca sold the property, paid off the outstanding
mortgage, and gave half the $341,297 profit to Bifani.
Shortly thereafter, in June 2009, Bifani transferred additional properties at
1400 Golden Eagle Road and 988 Bald Eagle Road to LaMarca. It is these
transfers that form the basis of the Trustee’s action. LaMarca sold the Golden
Eagle Road property, paid off the mortgage, and in September 2009, used the
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$669,233 proceeds to purchase a home in Sarasota, Florida where she and Bifani
currently reside.1
Between 2001 and the time of these transfers, Bifani was involved in a state-
court lawsuit brought against him by a former business partner. After the case had
been dismissed and reinstated several times, in June 2009, the state court scheduled
a status conference. In December 2012, the state court ruled against Bifani and
ordered him to pay judgment in excess of $166,000. The following month, Bifani
filed for Chapter 7 bankruptcy.
In the bankruptcy proceeding, LaMarca filed claims as a creditor based on
promissory notes Bifani signed in connection with a line of credit and various
loans LaMarca made to him. Specifically, LaMarca indicated that Bifani owed her
over $171,000 for a loan she made after the sale of the North Ridge Street
property; over $450,000 for a line of credit she gave Bifani; and in excess of
$131,000 in personal loans. Bifani also owed her over $242,000 for mortgages on
the Bald Eagle and Golden Eagle properties. Jansen, as the Chapter 7 Trustee,
filed a second amended complaint in the bankruptcy proceeding, seeking to recoup
the money received from the transfers of the Bald Eagle and Golden Eagle
properties and the sale of the Golden Eagle property. Jansen alleged that the
transfers were fraudulent because they were made with the actual intent to hinder,
1
LaMarca admitted that she used the proceeds from the Golden Eagle sale to purchase the
Sarasota property.
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delay, or defraud creditors under FUFTA, Fla. Stat. §§ 726.105(1)(a) and
726.106(1). Jansen also sought an equitable lien against the Sarasota property
because the funds obtained as a result of the fraudulent transfer of Golden Eagle
were used to purchase the Sarasota property.
The bankruptcy court granted summary judgment in Jansen’s favor, finding
that Bifani made the transfers with actual intent to delay or hinder. In reaching this
conclusion, the bankruptcy court focused on the following facts: the relationship
between Bifani and LaMarca, Bifani’s continued possession of the property, the
pending lawsuit, and the lack of any reasonably equitable value for the transfers.
The bankruptcy court noted that there was no evidence to show that LaMarca
credited Bifani’s outstanding loans with the value of the properties. As to the
equitable lien, the bankruptcy court found that a lien was proper when the property
was obtained through ill-gotten proceeds, even if the property was subject to a
homestead exemption. In an amended judgment, the bankruptcy court imposed the
equitable lien on the Sarasota property and awarded Jansen $661,000.
LaMarca appealed to the district court, arguing that summary judgment was
improper on factual questions such as actual fraud, and that the imposition of an
equitable lien against a homestead was not permitted by the Florida Constitution
Article X, section 4. The district court affirmed the bankruptcy court’s conclusions
as to actual fraud, but reversed the equitable lien as unconstitutional. Jansen now
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appeals the denial of the equitable lien. LaMarca cross-appeals the determination
that the transfers were fraudulent.
II.
We have jurisdiction over this matter under 28 U.S.C. § 158(d). “As the
second court of review of a bankruptcy court’s judgment, we independently
examine the factual and legal determinations of the bankruptcy court and employ
the same standards of review as the district court.” In re Int’l Admin. Servs., Inc.,
408 F.3d 689, 698 (11th Cir. 2005) (internal citation and quotation marks omitted).
Because the district court made no factual findings in its function as an appellate
court, our review is de novo. Id. We review the findings of fact made by the
bankruptcy court for clear error. Id. A factual finding is not clearly erroneous
unless “this court, after reviewing all of the evidence, [is] left with the definite and
firm conviction that a mistake has been committed.” Id. (internal citation omitted).
We review de novo “determinations of law, whether from the bankruptcy court or
the district court.” Id. Summary judgment is appropriate where there is no
genuine issue of material fact as to whether there was any actual intent to hinder,
delay, or defraud the creditors. See, e.g., In re XYZ Options, Inc., 154 F.3d 1262,
1272 (11th Cir. 1998) (reversing summary judgment where there were genuine
issues of fact).
III.
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Under FUFTA’s actual fraud provision, a
transfer made or obligation incurred by a debtor is fraudulent as to a
creditor, whether the creditor’s claim arose before or after the transfer
was made or the obligation was incurred, if the debtor made the
transfer or incurred the obligation: (a) [w]ith actual intent to hinder,
delay, or defraud any creditor of the debtor . . . .
Fla. Stat. § 726.105(1)(a). In determining whether a transfer was made with an
actual intent to hinder, delay, or defraud, courts look to the statutory “badges of
fraud.” See Fla. Stat. § 726.105(2). These include, relevant to this appeal,
whether: the transfer was to an insider, the debtor retained control of the property
after the transfer, before the transfer occurred the debtor had been sued, and the
value of consideration was reasonably equivalent to the value of the asset or the
amount of the obligation incurred. Fla. Stat. § 726.105(2)(a)-(k); see also Wiand v.
Lee, 753 F.3d 1194, 1200 (11th Cir. 2014).
“The existence of badges of fraud creates a prima facie case and raises a
rebuttable presumption that the transaction is void.” Gen. Elec. Co. v. Chuly Int’l,
LLC, 118 So.3d 325, 327 (Fla. Dist. Ct. App. 2013) (citation and internal quotation
omitted). Once there has been a showing of a prima facie case under FUFTA, the
burden shifts to the debtor to show the transfer was not made to hinder or delay or
defraud creditors. Mejia v. Ruiz, 985 So.2d 1109, 1113 (Fla. Dist. Ct. App. 2008).
Although “[a] single badge of fraud may only create a suspicious
circumstance and may not constitute the requisite fraud to set aside a conveyance
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[,] several of them when considered together may afford a basis to infer fraud.”
Wiand, 753 F.3d at 1200 (citation omitted). And although FUFTA lists a number
of badges of fraud, “[i]t is clear from the language of the statute that in determining
intent, consideration may be given to factors other than those listed.” Id. (citation
and internal quotation omitted). Thus, “[c]ourts may take into account the
circumstances surrounding the conveyance.” Gen. Elec. Co., 118 So.3d at 327(citation omitted). Nevertheless, “in fraud cases, summary judgment is available
only in extraordinary circumstances.” Nationsbank, N.A. v. Coastal Utils., Inc.,
814 So.2d 1227, 1231 (Fla. Dist. Ct. App. 2002).
LaMarca challenges the bankruptcy court’s conclusion that the transfers of
the Golden Eagle and Bald Eagle properties were fraudulent. She contends that
questions of fraud are fact-specific and thus the court erred by granting summary
judgment. LaMarca asserts that she has a good faith defense—Bifani’s repayment
of a debt to her—to rebut the badges of fraud.
Here, the bankruptcy court found four badges of fraud present, satisfying the
prima facie showing of actual fraud. The court then found that LaMarca had
offered no evidence to rebut this presumption and, because the evidence was one
sided, granted summary judgment. We will address each finding in turn.
First, the bankruptcy court found that LaMarca was the functional equivalent
of an “insider” based on her long-term relationship and cohabitation with Bifani.
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The FUFTA defines an “insider” to include relatives of the debtor or the debtor’s
general partner. Fla. Stat. § 726.102(8)(a). But nothing in the statute limits the
definition to exclude close personal friends. See id. (using the language
“includes”); see also United States v. Howard, 742 F.3d 1334, 1348 (11th Cir.
2014) (“The items that follow each use of the word ‘includes’ in the statute are
non-exhaustive examples . . . .” (internal citation omitted)).
Even if the definition of “insider” did not include LaMarca, the courts
were permitted to consider LaMarca’s relationship and cohabitation with
Bifani along with the other badges of fraud. See Gen. Elec. Co., 118 So.3d
at 327 (“Courts may take into account the circumstances surrounding the
conveyance.”). Moreover, “[a] close relationship between a transferor
debtor and a transferee is a factor equivalent to a badge of fraud which
should be considered in determining fraudulent intent.” Gen. Trading Inc. v.
Yale Materials Handling Corp., 119 F.3d 1485, 1499 (11th Cir. 1997)
(noting that a close relationship, whether personal or business, can equate to
a badge of fraud). Thus, the bankruptcy court did not err in considering the
relationship between Bifani and LaMarca as the equivalent of a badge of
fraud.
The court next considered whether Bifani retained control of the
property after the transfer. The record in this case shows that, even after
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Bifani deeded the North Ridge property to LaMarca, he continued to reside
there, and he received half the profit once LaMarca sold the property.
Neither Bifani nor LaMarca offered an explanation as to why the property
was transferred in this manner. Moreover, LaMarca used the proceeds from
the sale of Golden Eagle to purchase the Sarasota property in which she and
Bifani currently live, giving Bifani at least some control over the various
properties after the transfers. Thus, the bankruptcy court did not err when it
concluded that Bifani retained some control over property he transferred to
LaMarca.
Additionally, the court looked at the timing of the transfer in relation
to the lawsuit filed against Bifani. Bifani does not dispute that he was being
sued by his former business partner at the time of the transfers, but he noted
that the case had been pending since 2001. But, the week before Bifani
transferred the properties to LaMarca, the state court had scheduled a status
conference in that case. This timing, as the bankruptcy court found, calls
into question Bifani’s motive for transferring property, and thus was
properly considered as a badge of fraud.
Finally, the court evaluated whether the value of consideration was
reasonably equivalent to the value of the asset or the amount of the
obligation incurred. In his deposition, Bifani admitted that LaMarca
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provided no consideration in exchange for the deeds to the properties and
that he transferred the properties to calm her insecurities about money she
had lent him. 2 Both Bifani and LaMarca claimed in their depositions that
the amount LaMarca loaned Bifani exceeded one million dollars, but the
properties Bifani transferred to LaMarca only covered part of that amount.
They asserted that the remaining sum of about $130,000 was not paid and
thus was listed as debt in Bifani’s bankruptcy proceeding. These statements
were not supported by the record, which showed that LaMarca never
credited Bifani for payment on the debt. In light of this evidence, the
bankruptcy court properly concluded that the transfers lacked any reasonably
equivalent consideration.
We cannot conclude that the bankruptcy court erred when it found
that the badges of fraud established a prima facie case that the transfers were
fraudulent. The presence of these badges of fraud and the attendant
circumstances were sufficient to meet the trustee’s burden.
2
There are discrepancies in the record between Bifani’s and LaMarca’s account of the transfers,
the reasons for them, and the basis of their relationship. For example, Bifani stated in his
deposition that the two lived together to share expenses because they were both on social
security. But LaMarca stated that the two were good friends and traveled together, and she
described herself as a “spoiled little rich kid.” Additionally, LaMarca seemed to have endless
funds with which to bankroll Bifani, an unlikely scenario if the two lived together simply to
share expenses. Moreover, once they moved to the Sarasota property, Bifani paid only the phone
and internet; LaMarca paid the rest of the expenses. Bifani also stated that he paid LaMarca a
commission to sell the North Ridge property, but LaMarca denied this. Finally, Bifani testified
that LaMarca gave him half the proceeds of the North Ridge sale, but LaMarca characterized this
as yet another loan.
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Thus, the burden shifted to LaMarca to show the transfers were not
fraudulent. LaMarca argued that the transfers were made in good faith to
pay off debts and lines of credit Bifani owed her. But, as the bankruptcy
court found, there was no evidence in the record to support her claim.
Rather, the evidence showed that Bifani rarely made payments on the loans
he owed LaMarca, neither Bifani nor LaMarca kept track of the payments
made, and LaMarca never demanded payment or put the loans into default.
Moreover, even after the transfers of property, LaMarca still considered the
loan outstanding, and she filed a claim for the loan amount in Bifani’s
bankruptcy proceeding. In light of the one-sided evidence, we conclude that
the material facts were not genuinely in dispute and thus the bankruptcy
court properly granted summary judgment on the issue of actual fraud.
IV.
Having concluded that the bankruptcy court properly granted summary
judgment in favor of the Chapter 7 Trustee, we turn to the Trustee’s request for an
equitable lien, which the bankruptcy court granted and the district court reversed.
Under Florida law,
[t]here shall be exempt from forced sale under process of any court,
and no judgment, decree or execution shall be a lien thereon, except
for the payment of taxes and assessments thereon, obligations
contracted for the purchase, improvement or repair thereof, or
obligations contracted for house . . . the following property owned by
a natural person: (1) a homestead . . . .
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Fla. Const. Art. X, § 4. This homestead exemption is liberally construed, but not
so liberally construed “so as to make it an instrument of fraud or imposition on
creditors.” Town of Lake Park v. Grimes, 963 So.2d 940, 942 (Fla. Dist. Ct. App.
2007). Thus, Florida law is well-settled: A homestead “cannot be employed as a
shield and defense after fraudulently imposing on others.” Jones v. Carpenter, 106
So. 127, 130 (Fla. 1925); Palm Beach Savs. & Loan Ass’n, F.S.A. v. Fishbein, 619
So.2d 267, 270 (Fla. 1993); cf. Havoco of Am., Ltd. v. Hill, 790 So.2d 1018 (Fla.
2001) (holding the equitable lien is still a viable remedy for creditors in cases
where funds obtained fraudulently were used directly to purchase a homestead, but
the homestead exemption will apply to property purchased using funds legitimately
obtained even if the property is used to shield funds from creditors).
Although the state constitution lists only three specific exemptions, Florida
courts have “invoked equitable principles to reach beyond the literal language of
the excepts” where “funds obtained through fraud or egregious conduct were used
to invest in, purchase, or improve the homestead.” Havoco, 790 So.2d at 1028; see
also Zureikat v. Shaibani, 944 So.2d 1019, 1024 (Fla. Dist. Ct. App. 2006)
(affirming an equitable lien placed on a homestead where proceeds obtained from
fraudulent conduct were used to invest in, purchase, or improve the homestead).
Jansen argues that the bankruptcy court properly applied the lien and the
district court erred by reversing it because this case falls outside of Havoco.
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LaMarca argues that the district court properly denied the equitable lien because in
cases in which an equitable lien on the homestead was permitted, the homeowner
engaged in some type of criminal conduct.
We agree with the bankruptcy court’s analysis and conclude that the
equitable lien on the Sarasota property was proper. Under Florida law, homestead
property purchased with funds obtained by fraud is not exempted from equitable
liens. See Havoco, 790 So.2d at 1028. The facts of this case do not fall within
Havoco’s exception because the funds used to purchase the Sarasota property were
obtained through Bifani’s fraudulent transfers. See id.; cf. In re Chauncey, 454
F.3d 1292, 1294 (11th Cir. 2006) (noting the Havoco rule and concluding that an
equitable lien was improper because the debtor had obtained the funds used to
purchase the homestead legitimately and not by fraud).
LaMarca and Jansen argue whether an equitable lien is only available in
cases of equitable subrogation. Although several cases discuss liens in the context
of subrogation, none of the cases limits the availability of an equitable lien to cases
of subrogation. See, e.g., Smith v. Smith, 761 So.2d 370, 373 (Fla. Dist. Ct. App.
2000) (“[T]he supreme court has limited the exception allowing an equitable lien
on homestead to those cases where the owner of the property has used the proceeds
from fraud or reprehensible conduct to either invest in, purchase, or improve the
homestead.”). We reiterate, under well-settled Florida law, an equitable lien is
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available where the property owner seeks a homestead exception for property
purchased with funds obtained by fraud.
That the fraud occurred in a bankruptcy proceeding rather than a criminal
offense is irrelevant. The purpose of the lien is to prevent unjust enrichment.
Allowing Bifani to fraudulently transfer property to LaMarca to avoid his
creditors, allowing LaMarca to use the proceeds from the properties to purchase a
home, and then allowing Bifani to live in that home with LaMarca rent free with
no remedy for the bankruptcy trustee is entirely unjust. Accordingly, we conclude
that the bankruptcy court properly imposed an equitable lien on the Sarasota
property, and the district court erred by reversing. The district court’s order is
affirmed in part, reversed in part, and remanded for the district court to impose the
equitable lien.
AFFIRMED in part, REVERSED in part.
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