Fradulent Transfers

[janetbracero]

What is the name of your state (only U.S. law)? South Carolina. An aunt who deceased several years ago left an inheritance for me and my siblings. My sister used a power of attorney to loot all her assets before she died. The state completed probating her will and obtained a judgement against her last year. Here is the problem. My understading is that South Carolina statues of limitations for fraudulent conveyance is three years. However, the transfer of my sisters real property and perhaps other unkonwn assets took place while the family court was probating my aunts will and before the court rendered a judgement against her. Does the clock start ticking from the date of "fraudulent transfer" or from the date the judgement was issued against her? I am concerned because somewhere online it said that the clock starts ticking upon the issuance of a judgement .However, Florida appelant court held that if the transfer was not in secret then it is the date of transfer whick in this case would put us past the statues of limitations. . I am confused at this point. A judgement to us as a creditor was issued only last year, but the transfers were done in the midst of the state trying to recoup my relatives estate back in 2010. When does the clock for statue of limitations actually begin?

 

[tranquility]

Why worry? The time to challenge the SOL is in court. You have a judgement. Besides, if mom was not alive when the transfers happened, it is not a fraudulent transfer but a theft. If she did it while a fiduciary, she breached her duties and there could be a multiplier on it.

 

[janetbracero]

Fraudulent Conveyance.

Why worry? The time to challenge the SOL is in court. You have a judgement. Besides, if mom was not alive when the transfers happened, it is not a fraudulent transfer but a theft. If she did it while a fiduciary, she breached her duties and there could be a multiplier on it.

Thank you for your response. Due to several overlaps in guardianship and the death of my aunt, no prosecution was brought against my sister. Yes, my sister looted my aunts estate while she was alive. The fraudulent transfer comes into play because my sister has her own assets in terms of real estate, and she transfered all her assests as soon as the state sued to recover my aunts assets. You ask why worry. I worry because I have reviewed the south carolina law and it states a three year SOL to bring actions to challenge transfers. However it does not state when the clock tolls i.e. from the date of transfer or from the date of the judgement. One would think it would be 3 years from the date of judgement because one does not have legal standing to challenge transfers prior to becomming a judgement creditor. The concern, as stated in my original post, is that the most recent holding in regards to the matter was florida appeals court which held that SOL tolls from the date of the transfer unless it was done "secretly". I am a lay person and confused as to whether this is worth pursuing. I mean I am talking about 120,000 dollars for me and each of my siblings. I don't have a lot of money, so if the SOL tolls from the date of transfer then I can not bring an action and succeed, can I? BTW I have never had an attorney in regards to this matter. The state my aunt lived in pursued and obtained the judgement.

 

[tranquility]

Thank you for your response. Due to several overlaps in guardianship and the death of my aunt, no prosecution was brought against my sister. Yes, my sister looted my aunts estate while she was alive. The fraudulent transfer comes into play because my sister has her own assets in terms of real estate, and she transfered all her assests as soon as the state sued to recover my aunts assets. You ask why worry. I worry because I have reviewed the south carolina law and it states a three year SOL to bring actions to challenge transfers. However it does not state when the clock tolls i.e. from the date of transfer or from the date of the judgement. One would think it would be 3 years from the date of judgement because one does not have legal standing to challenge transfers prior to becomming a judgement creditor. The concern, as stated in my original post, is that the most recent holding in regards to the matter was florida appeals court which held that SOL tolls from the date of the transfer unless it was done "secretly". I am a lay person and confused as to whether this is worth pursuing. I mean I am talking about 120,000 dollars for me and each of my siblings. I don't have a lot of money, so if the SOL tolls from the date of transfer then I can not bring an action and succeed, can I? BTW I have never had an attorney in regards to this matter. The state my aunt lived in pursued and obtained the judgement.

You wrote:

The state completed probating her will and obtained a judgement against her last year.

The SOL is a defense to a judgment. You have a judgment. (Or, the state does.)

What am missing? Why do you think you have any standing for anything more? Why don't you start from the beginning. Who has what? What do you think you can sue on?

 

[LdiJ]

You wrote:
The SOL is a defense to a judgment. You have a judgment. (Or, the state does.)

What am missing? Why do you think you have any standing for anything more? Why don't you start from the beginning. Who has what? What do you think you can sue on?

I think that I understand what she is getting at.

Sister looted aunt's estate. When sister found out that she was being sued for looting aunt's estate, sister transferred all of her assets out of her name, to attempt to protect them from the lawsuit. Now, the other siblings have won the lawsuit, and have a judgment against her, but no assets to attach the judgment to. So now, they have to do a fraudulent conveyance suit in order to recover the assets so that they can exercise the judgment they received.

That is the SOL she is worried about.

 

[tranquility]

I think that I understand what she is getting at.

Sister looted aunt's estate. When sister found out that she was being sued for looting aunt's estate, sister transferred all of her assets out of her name, to attempt to protect them from the lawsuit. Now, the other siblings have won the lawsuit, and have a judgment against her, but no assets to attach the judgment to. So now, they have to do a fraudulent conveyance suit in order to recover the assets so that they can exercise the judgment they received.

That is the SOL she is worried about.

Wow, I think you're right. She had two tries and didn't get me there.

Carr v. Guerard, 616 SE 2d 429 - SC: Supreme Court 2005 footnote:

Carr argues that the respondents are not entitled to summary judgment because there is a question of fact whether he brought this action within the time provided by the statute of limitations. Carr is correct that a three-year limitations period and the discovery rule apply to Statute of Elizabeth claims. See S.C.Code Ann. § 15-3-530 (Supp. 2003); Walter J. Klein Co. v. Kneece, 239 S.C. 478, 483-87, 123 S.E.2d 870, 873-74 (1962) (involving the 1952 Code); Home Port Rentals, Inc. v. Moore, 359 S.C. 230, 237, 597 S.E.2d 810, 813 (Ct.App.2004); Commercial Credit Loans, Inc. v. Riddle, 334 S.C. 176, 183-84, 512 S.E.2d 123, 127 (Ct.App.1999). Carr overlooks that Code section 1539-30 also applies, rendering the statute of limitations inapposite in this particular case.

Commercial Credit Loans, Inc. v. Riddle, 512 SE 2d 123 - SC: Court of Appeals 1999

Although due diligence will toll the six year statute of limitations within which a fraudulent conveyance case must be commenced, this is not such a case. Here we have an enforcement action wherein Commercial Credit seeks to foreclose its lien against Riddle's property pursuant to a judgment of limited duration. The public policy of this state is to limit the life of a judgment to ten years.[7] While this court does not condone efforts by judgment debtors to secrete assets to avoid payment of judgment, "[a] judgment creditor should recognize this [public] policy and proceed expeditiously to conclude his efforts to collect his judgment within the ten year period." Wells ex rel A.C. Sutton & Sons, Inc. v. Sutton, 299 S.C. 19, 22, 382 S.E.2d 14, 16 (Ct.App.1989) (enforcement period not tolled during pendency of appeals, even though litigation to trace and recover assets was continuous from the time judgment was entered until it expired ten years later); see also Garrison v. Owens, 258 S.C. 442, 446-7, 189 S.E.2d 31, 33 (1972) ("A judgment lien is purely statutory, its duration as fixed by the legislature may not be prolonged by the courts and the bringing of an action to enforce the lien will not preserve it beyond the time fixed by the statute, if such time expires before the action is tried."); accord TranSouth Fin. Corp. v. Cochran, 324 S.C. 290, 478 S.E.2d 63 (Ct.App.1996) (although ten year limitations period is absolute, this does not affect a guarantor's liability to secure a debt under a separate contract).

Home Port Rentals, Inc. v. Moore, 597 SE 2d 810 - SC: Court of Appeals 2004

Home Port additionally cites a number of cases which allow the tolling of a statute of limitations under a variety of circumstances involving the application of the discovery rule[3] to a potential cause of action, but none applies the discovery rule to delay or interrupt the running of the ten-year enforcement period in section 15-39-30 after entry of the judgment in South Carolina. The public policy in favor of extinguishment as set forth in Wells is much stronger than a policy allowing the tolling of the enforcement period once it commences. The burden lies with the judgment creditor to know the policy of South Carolina and to ensure collection on the judgment. Wells, 299 S.C. at 22, 382 S.E.2d at 16. The application of the discovery rule to "causes of action" prejudgment simply does not have the same efficacy postjudgment after the section 15-39-30 statutory enforcement period has commenced.[4]

With a footnote:

[3] Under the discovery rule, "the statute of limitations begins to run from the date the injured party either knows or should know, by the exercise of reasonable diligence, that a cause of action exists for the wrongful conduct." True v. Monteith, 327 S.C. 116, 119, 489 S.E.2d 615, 616 (1997).

WJ Klein Co. v. Kneece, 123 SE 2d 870 - SC: Supreme Court 1962

The appellants, for a second defense, affirmatively plead the statute of limitations, Section 10-143(7) of the 1952 Code of Laws, it being asserted that by reason of the lapse of six years from the date of the deed under attack, October 26, 1950, and the judgment obtained on August 9, 1951, the said statute bars any right of action by the respondent for relief on the ground of fraud. The appellants, for a third defense, affirmatively allege that the respondent is precluded from maintaining this action because of laches. The answer of the appellants demanded that the respondent be required to reply to the second and third defenses. The respondent duly filed a reply and alleged that the statute of limitations had no application to this action, and by an accompanying affidavit asserted that it had no knowledge of the transfer and conveyance of the real estate by Jack M. Kneece to Marjorie J. Kneece until June, 1960. The respondent, likewise, specifically denied that it was guilty of laches.

Holding:

It is provided in Section 57-301 of the 1952 Code, that every conveyance of lands which may be had or made, to or for any intent or purpose to delay, hinder or defraud creditors and others of their just and lawful actions, suits, debts, accounts, damages, penalties and forfeitures, shall be deemed and taken to be clearly and utterly void, frustrate, and of none effect. However, an action to set aside a conveyance of lands made contrary to Section 57-301 of the 1952 Code, must be instituted within six years and the cause of action in such case is not deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud. Section 10-143(7) of the 1952 Code. Under the cited section, the six year period begins to run at the time of the acquisition of knowledge of such facts that are sufficient to put the party on inquiry which, if developed, will disclose the alleged fraud. Tucker v. Weathersbee, 484*484 98 S.C. 402, 82 S.E. 638. A cause or right of action accrues, so as to start the running of the statute of limitations, as soon as the right to institute and maintain the action arises. Tuten v. Almeda Farms et al., 184 S.C. 195, 192 S.E. 153, and Wooten v. Standard Life & Casualty Insurance Company, supra.

With the analysis:

The law requires in an action by a creditor solely to set aside his debtor's voluntary deed, for legal fraud, allegation and proof that the debt was reduced to judgment, execution issued to enforce collection of the judgment, and a nulla bona return on the execution by the sheriff. Temple et al. v. Montgomery et al., 157 S.C. 85, 153 S.E. 640. The allegation of the complaint in this action conforms with this rule.

A proceeding to set aside a deed upon the ground of fraud, where the party seeking so to do is in a position to institute an action for that purpose, must be commenced within six years from the time when the facts constituting the fraud 485*485 are discovered by the aggrieved party. Kibler v. McIlwain, 16 S.C. 550.

 

[LdiJ]

Wow, I think you're right. She had two tries and didn't get me there.

I think I am just better at translating I-don't-know-anything-about-the-law-and-don't-know-how-to-explain-things-right-speak, than you are...LOL.

 

[anteater]

I think that I understand what she is getting at.

Sister looted aunt's estate. When sister found out that she was being sued for looting aunt's estate, sister transferred all of her assets out of her name, to attempt to protect them from the lawsuit. Now, the other siblings have won the lawsuit, and have a judgment against her, but no assets to attach the judgment to. So now, they have to do a fraudulent conveyance suit in order to recover the assets so that they can exercise the judgment they received.

That is the SOL she is worried about.

I don''t know. I did not pick up anything about the siblings taking any action yet. It sounded as if a state agency in South Carolina opened probate and went after the miscreant sister to attempt some sort of asset recovery for the state. The OP and siblings are trying to figure out whether they are part of the game or not.

I think the unknown is whether the state agency is after all the booty on behalf of the estate or just enough to satisfy the recovery.

 

[LdiJ]

I don''t know. I did not pick up anything about the siblings taking any action yet. It sounded as if a state agency in South Carolina opened probate and went after the miscreant sister to attempt some sort of asset recovery for the state. The OP and siblings are trying to figure out whether they are part of the game or not.

I think the unknown is whether the state agency is after all the booty on behalf of the estate or just enough to satisfy the recovery.

Even in a re-read I don't get that at all...I still think that my original interpretation is correct.

I hope that OP comes back and clarifies.

 

[tranquility]

I'd still like a timeline about what is going on and who and why would still need to worry about an SOL on a fraudulent transfer.

 

[anteater]

Even in a re-read I don't get that at all...I still think that my original interpretation is correct.

I hope that OP comes back and clarifies.

Yeah, I don't know. In re-reading, I spotted this that I glossed over and that makes me scratch my head:

A judgement to us as a creditor was issued only last year ...

I'm having difficulty wrapping my head around a "judgement as a creditor" when the OP and siblings were beneficiaries under a will. Not saying that it could not happen, but it does not sound right.

And, then, as Tranq has been saying, if there is a judgement, why worry about SOL. I get the feeling that OP is using "judgement" in a non-kosher sense.

 

[LdiJ]

Yeah, I don't know. In re-reading, I spotted this that I glossed over and that makes me scratch my head:


I'm having difficulty wrapping my head around a "judgement as a creditor" when the OP and siblings were beneficiaries under a will. Not saying that it could not happen, but it does not sound right.

And, then, as Tranq has been saying, if there is a judgement, why worry about SOL. I get the feeling that OP is using "judgement" in a non-kosher sense.

Like I said, I think that the SOL that the OP is worrying about is the SOL on the fraudulent transfer of sister's assets to protect them from the lawsuit.

They got a judgment against the sister for the looting of aunt's estate, but now they have to try to collect on that judgment.

 

[tranquility]

What do you mean by the aunt's "estate"? The estate when aunt was the attorney in fact or the estate which is an entity after aunt died? What money are we talking about? I'm still not sure where the fraudulent transfer is coming in here. In both cases this is simply theft and she never had a right to transfer anything. It seems property from either could be disgorged from the holder as aunt never had title. This is not a bona fide purchaser for value situation. Fraudulent transfer seems hiding stuff that is yours in order to defeat a creditor.

Where is the attorney in all this?

 

[LdiJ]

What do you mean by the aunt's "estate"? The estate when aunt was the attorney in fact or the estate which is an entity after aunt died? What money are we talking about? I'm still not sure where the fraudulent transfer is coming in here. In both cases this is simply theft and she never had a right to transfer anything. It seems property from either could be disgorged from the holder as aunt never had title. This is not a bona fide purchaser for value situation. Fraudulent transfer seems hiding stuff that is yours in order to defeat a creditor.

Where is the attorney in all this?

Which is what I believe that the OP is talking about. The fact that sister fraudulently transferred the SISTER's assets to make it difficult for her siblings to collect a judgment against her.

 

[janetbracero]

Fruadulent Transfer

Which is what I believe that the OP is talking about. The fact that sister fraudulently transferred the SISTER's assets to make it difficult for her siblings to collect a judgment against her.

Correct. Let me clarify. When the state realized that my sister had taken my aunts assets it sued and obtained what was called a "turnover order". My understanding is that the turnover order is in fact a judgement. Since my aunt owed a certain amount of money to the state, it is listed as a creditor I believe. Since my aunts will stated that my siblings and I were to receive a lot of money from her estate we were listed in the action as distributee and legatee. The state was not able to locate any of my sisters assets because she and her husband immediately opened an LLC and transfered all of their possessions i.e real estate holdings, into the LLC. The state attorney told me that the attempt to collect was returned "nova bollo" and that it was now up to us to pursue further action. As a heir and or legatee I guess we have standing to bring an action to have the transfers voided as fraud , and then attempt to collect the judgement. Does that make sense? and as a legatee do I have standing to sue?