Opinion
No. 1 CA-CV 14-0303
05-28-2015
DALE D. ULRICH, as Trustee for the bankruptcy estate of Aaron and Patricia Rodriguez, Plaintiff/Appellee, v. AARON RODRIGUEZ and PATRICIA RODRIGUEZ, individually and on behalf of their marital community; CHRISTINA RODRIGUEZ and JOHN DOE RODRIGUEZ, individually and on behalf of their marital community; THE A ON 12TH ST., LLC, a Nevada Limited liability company; and AARON RODRIGUEZ HOMES, LTD, a Nevada corporation, Defendants/Appellants.
COUNSEL Clark Hill, PLC, Scottsdale, Phoenix By Darrell E. Davis, Joshua J. McClatchey Counsel for Plaintiff/Appellee Ernest S. Bustamante & Associates, PLLC, Phoenix By Ernest S. Bustamante Counsel for Defendants/Appellants
NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE. Appeal from the Superior Court in Maricopa County
No. CV2012-051217
The Honorable Thomas L. LeClaire, Judge
AFFIRMED
COUNSEL Clark Hill, PLC, Scottsdale, Phoenix
By Darrell E. Davis, Joshua J. McClatchey
Counsel for Plaintiff/Appellee
Ernest S. Bustamante & Associates, PLLC, Phoenix
By Ernest S. Bustamante
Counsel for Defendants/Appellants
MEMORANDUM DECISION
Judge Patricia A. Orozco delivered the decision of the Court, in which Presiding Judge Samuel A. Thumma and Chief Judge Diane M. Johnsen joined. OROZCO, Judge:
¶1 Aaron and Patricia Rodriguez (the Rodriguezes), Christina and John Doe Rodriguez, The A on 12th St., LLC. (A12), and Aaron Rodriguez Homes, Ltd. (AR Homes) (collectively Appellants), appeal the trial court's grant of Dale D. Ulrich's motion for summary judgment. For the reasons that follow, we affirm.
FACTS AND PROCEDURAL HISTORY
¶2 In August 2007, the Rodriguezes and Jet Creative, LLC (Jet Creative) entered into a contract whereby the Rodriguezes agreed to build a house at cost on land Jet Creative owned. The contract further required the house to be sold after construction was completed and that the parties would equally share in any profit or loss from the sale. The house was sold on July 12, 2010, for a net loss of $475,000 (the Sale). The Rodriguezes contributed $35,000 towards the loss, but did not pay their remaining share of the loss as required by the contract.
¶3 Jet Creative sued the Rodriguezes and others, alleging breach of contract, breach of the implied covenant of good faith, and unjust enrichment. On July 13, 2011, Jet Creative obtained a judgment against the Rodriquezes for $213,509.60 plus interest.
¶4 Before judgment was entered, Aaron purchased another parcel of property free and clear in Maricopa County (the Property). The Property had an approximate value of $200,000. However, on July 16, 2010, four days after the Rodriguezes and Jet Creative incurred the $475,000 loss from the Sale, AR Homes, an entity the Rodriquezes owned along with their daughter, Christina, transferred the Property to A12 via quit-claim deed "for the consideration of Ten Dollars, and other valuable considerations."
¶5 Jet Creative brought suit alleging Appellants fraudulently transferred the Property in violation of Arizona Revised Statute (A.R.S.) section 44-1004.A and sought an injunction preventing Appellants from further transferring the Property. A few months later, the Rodriguezes filed for bankruptcy. They listed AR Homes as a valueless asset but did not include their interest in A12 or the Property in their bankruptcy schedules. Aaron did not file personal or business tax returns on behalf of the Rodriguezes or their entities for more than five years, claiming he was "getting behind" and "didn't get to them."
¶6 Jet Creative requested that Ulrich, trustee of the Rodriguezes' bankruptcy estate, include the Rodriguezes' interest in A12 and the Property in the estate. The bankruptcy court subsequently authorized Ulrich to employ special counsel "to proceed with the investigation and prosecution of fraudulent conveyance claims."
¶7 Appellants argued Aaron created a business plan to develop the Property in December 2009, seven months before the Sale. Moreover, they argued that A12 was created "solely to hold title to the [Property] so it may develop a LEED Gold Certified townhouse project." Thus, Appellants contended that A12 "expressed an unequivocal intention to hold title to the [Property] for land construction purposes" before the Sale and the entry of Jet Creative's subsequent judgment.
¶8 After discovery, the trial court granted Ulrich's motion for summary judgment, voided the transfer, and vested "[a]ll right, title and interest" to the Property in Ulrich as trustee of the bankruptcy estate. Appellants timely appealed and we have jurisdiction pursuant to Article 6, Section 9 of the Arizona Constitution and A.R.S. §§ 12-120.21.A.1 and - 2101.A.1 (West 2015).
We cite the current version of applicable statutes when no revisions material to this decision have since occurred.
DISCUSSION
¶9 We review the grant of summary judgment de novo. Lewis v. Debord, 236 Ariz. 57, 59, ¶ 5 (App. 2014). "[W]e review the facts in the light most favorable to the party opposing the summary judgment." Kaufmann v. M & S Unlimited, L.L.C., 211 Ariz. 314, 315, ¶ 2 (App. 2005).
¶10 Appellants contend the trial court improperly granted summary judgment because they presented evidence of a preexisting business plan, thereby raising genuine issues of material fact as to whether they intended to defraud Jet Creative by transferring the Property. Under A.R.S. § 44-1004.A (West 2015):
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 under any of the following:
1. With actual intent to hinder, delay or defraud any creditor of the debtor.
2. Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor either:
(a) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction.
(b) Intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to pay as they became due.
¶11 Although Appellants correctly note that proof of actual intent to defraud is necessary to prevail on a claim under A.R.S. § 44-1004.A.1, it is not required under § 44-1004.A.2. Under A.R.S. § 44-1004.A.2, "every conveyance made . . . by a person who is or will thereby be rendered insolvent is fraudulent as to creditors without regard to his actual intent if the conveyance is made . . . without fair consideration." Zellerbach Paper Co. v. Valley Nat'l Bank, 13 Ariz. App. 431, 433 (App. 1970) (emphasis added).
¶12 Without citing authority, Appellants contend that because the trial court's order discussed the legitimacy of the transfer of the Property, its ruling was based on a finding of actual intent to defraud under A.R.S. § 44-1004.A.1. The trial court made no such finding, and it did not specify upon which provision it awarded summary judgment; however, "[w]e will affirm a grant of summary judgment if the superior court was correct for any reason." Craven v. Huppenthal, 236 Ariz. 217, 218-19, ¶ 5 (App. 2014).
¶13 In the absence of any genuine issues of material fact surrounding the Property's transfer and Appellants' insolvency, the trial court did not err in granting summary judgment under A.R.S. § 44-1004.A.2. First, there is no dispute that AR Homes transferred the Property to A12 four days after the Sale and thus, four days after Jet Creative's claim as a creditor arose. See A.R.S. § 44-1001.2 (West 2015). Second, Appellants concede "a monetary exchange did not occur" when AR Homes transferred the Property, valued at approximately $200,000, to A12. Thus, AR Homes did not receive "reasonably equivalent value in exchange" for the Property. See A.R.S. § 44-1004.A.2.
¶14 Lastly, Aaron testified that he had not filed personal or business tax returns on behalf of AR Homes or any other entities in over five years. "A debtor who is generally not paying his debts as they become due is presumed to be insolvent." A.R.S. § 44-1002.B (West 2015). Moreover, the Rodriquezes clearly "[i]ntended to incur, or believed or reasonably should have believed that [they] would incur, debts beyond [their] ability to pay as they became due" because they filed for bankruptcy a few months after Jet Creative brought suit. See A.R.S. § 44-1004.A.2(b).
¶15 Appellants further contend that the trial court improperly weighed factors listed in A.R.S. § 44-1004.B. when determining Appellants possessed an actual intent to defraud Jet Creative. As noted above, however, the trial court made no such determination and a finding of actual intent was not required to grant summary judgment on this record. See supra ¶¶ 11-12. Thus, we need not address this argument. See KZPZ Broad., Inc. v. Black Canyon City Concerned Citizens, 199 Ariz. 30, 38, ¶¶ 28-29 (App. 2000) (finding that a dispositive holding on one issue renders it unnecessary to address other issues).
CONCLUSION
¶16 For the above stated reasons, we affirm the trial court's grant of summary judgment.