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Aliant Bank v. Davis

Alabama Court of Civil Appeals

July 17, 2015

Aliant Bank, a division of USAmeriBank
Shirley A. Davis

Appeal from St. Clair Circuit Court (CV-12-900066)

THOMPSON, Presiding Judge.

Aliant Bank, a division of USAmeriBank ("Aliant"), appeals from a judgment of the St. Clair Circuit Court ("the trial court") in favor of Shirley A. Davis. Aliant filed this civil action against Davis seeking to obtain property that she had been awarded in a March 14, 2012, divorce judgment ("the divorce judgment") that incorporated an agreement reached between Davis and her husband, Alfred Davis ("Alfred").[1] In its complaint, Aliant alleged that the transfer of property from Alfred to Davis in the divorce judgment constituted a fraudulent transfer.

The record indicates the following. Davis and Alfred married in 1955 and had six children.[2] Davis and Alfred jointly owned Alfred Davis, Inc., which did business as Comfort Air Company, Inc. ("Comfort Air").[3] Although Davis was primarily a housewife who reared the children, she did bookkeeping for Comfort Air. Alfred was also one of two owners of A&D Builders, LLC ("A&D"), a real-estate development company.

During the course of the marriage, Davis, who was 76 years old at the time of the trial of this matter, and Alfred, who was 78 years old at the time of the trial, lived in a home on a parcel of property that had belonged to Davis's family. Alfred testified that Davis inherited a portion of that property and that Alfred and Davis had purchased her siblings' interest in the property. The property contains a barn and a second house, which was built in the 1960s. Additionally, Davis and Alfred owned what the parties referred to as the "Henderson Road house" and a house in Pigeon Forge, Tennessee. They also acquired other assets during the marriage.

In June 2007, Aliant made a loan of $250, 000 to A&D. The loan was secured by a mortgage on a parcel of property consisting of 52 lots in a subdivision that A&D was developing. In addition to the mortgage, Alfred signed a personal guaranty of the loan. Davis did not sign the guaranty or the promissory note for the loan.

In December 2008, after 53 years of marriage, Alfred moved out of the marital residence and began living with his then girlfriend, Carol Jean ("Carol"), whom he married later married. Davis testified that she was not satisfied with the property Alfred offered to her when he left her, and she and Alfred did not immediately divorce. Instead, they began protracted settlement negotiations. In the meantime, on March 25, 2011, Aliant filed an action against A&D and Alfred alleging that A&D had defaulted on the loan and owed Aliant bank $132, 634.93.

On January 11, 2012, Alfred conveyed the marital residence and the surrounding 16 acres of property, which included the barn and the second house, what the parties call the marital compound ("the marital compound"), to Davis as part of a property settlement in anticipation of divorcing. About one week later, on January 17, 2012, Alfred filed a complaint seeking a divorce from Davis. The settlement agreement Alfred and Davis had reached had been reduced to writing, and a copy of the agreement was filed with the divorce complaint. The settlement agreement was incorporated in the divorce judgment, which was entered on March 14, 2012.

Pursuant to the divorce judgment–-and the agreement between Davis and Alfred–-Davis would receive the marital compound Alfred conveyed on January 11 as alimony in gross. The property composing the marital compound was valued at approximately $711, 000. The judgment stated that Davis was responsible for the mortgage indebtedness on the marital compound, as well as payments for upkeep, insurance, utilities, and taxes. Davis received no periodic alimony; however, the issue of periodic alimony was reserved. Alfred was awarded the house in Tennessee, valued at approximately $125, 000. In addition, Davis agreed to make no claim of interest in the house where Alfred and Carol were living. Alfred and Davis equally divided the investment accounts held in both their names, and each was awarded the entirety of any investment account held only in his or her name. Alfred testified that he had a certificate of deposit worth $100, 000. Alfred and Davis were each awarded the vehicle in his or her possession at the time the divorce judgment was entered. Alfred also received a four-wheeler, a boat, two tractors, an all-terrain vehicle, a camper, and all items of personal property in his name or in his possession. Davis was awarded all items of personal property in her name or in her possession. Each was ordered to "pay and be solely responsible for any debts presently in his [or her] name, and ... shall agree to indemnify and hold [the other] harmless for said debts." Neither Alfred nor Davis appealed from the divorce judgment.

Although the Henderson Road house was not mentioned in the divorce judgment, Davis testified that she told Alfred to sell the Henderson Road house so that he could use the proceeds to pay off the loan A&D had received from Aliant. Alfred testified that he sold the Henderson Road house and received approximately $100, 000 from the sale. Alfred acknowledged that he received assets of approximately $420, 000 in the divorce, which does not include the house where he and Carol were living at the time of the divorce. The divorce judgment also did not mention the lots remaining in the subdivision that A&D was attempting to develop and that was the subject of the mortgage securing the loan.

The same day the divorce judgment was entered, March 14, 2012, Aliant obtained a judgment in its action against A&D and Alfred in the amount of $132, 634.93. On May 23, 2012, Aliant filed the current action against both Alfred and Davis, alleging that the award of property to Davis in the divorce action, made in accordance with the parties' settlement agreement, constituted a fraudulent transfer of property. Specifically, Aliant alleged that the conveyance of the marital property to Davis was made with the intent to defraud Aliant. Aliant asked the trial court to set aside the transfer of property from Alfred to Davis. In support of its position, Aliant asserted, among other things, that Davis had paid only nominal consideration for the property she received in the divorce settlement. It alleged that the transfer of the marital compound to Davis was made "without reasonably equivalent value."

After a hearing at which the trial court heard ore tenus evidence, the trial court entered a judgment in favor of Davis. The trial court concluded that, among other things, there was no evidence to indicate that the divorce, or the property settlement awarded to Davis in the divorce judgment, was fraudulent or collusive. Aliant appealed the judgment to our supreme court, which transferred the appeal to this court pursuant to § 12-2-7(6), Ala. Code 1975.

Aliant contends that the trial court misapplied the law regarding fraudulent transfers in determining that the property award to Davis in the divorce judgment did not constitute a fraudulent transfer. Specifically, Aliant argues that the marital compound Alfred transferred to Davis as part of the settlement agreement and divorce judgment was fraudulent because, it says, Alfred did not receive "reasonably equivalent value" for the marital compound and he was not insolvent at the time of the transfer or made insolvent because of the transfer.

In its appellate brief, Aliant cites five reasons it believes that the trial court erred in determining that Alfred did receive "reasonably equivalent value" for the marital compound. Those reasons include the methods the trial court used for determining the value of the property. Aliant also takes exception with the trial court's statement that the award of alimony in gross, i.e., the property award to Davis, "relieved [Alfred] of the obligation to pay periodic alimony." Aliant contends that the trial court's statement is incorrect and, thus, was an improper matter ...

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