United States District Court, N.D. Alabama, Southern Division
OWEN BOWDRE CHIEF UNITED STATES DISTRICT JUDGE
III, LLC, as successor-in-interest to the Federal Deposit
Insurance Corporation, sued John Brooks Klingenbeck, Jennie
Brooks Klingenbeck, and Eula T. Brooks, seeking to set aside
an alleged fraudulent conveyance of land under two theories:
Alabama's fraudulent conveyance statute and that the deed
in question was not valid. CadleRock has moved for partial
summary judgment with leave to later prove damages. (Doc.
27). CadleRock is seeking a determination that either the
conveyance was fraudulent or the deed ineffective.
Florida Deficiency Judgment
Brooks Klingenbeck was a member of Global Southern, LLC.
Global Southern entered into a series of loan agreements with
GulfSouth Bank. Global Southern borrowed approximately $1.9
million, and John Klingenbeck personally guaranteed this
18, 2012, Global Southern defaulted on its loans from
GulfSouth, and so the bank filed suit against Global
Southern, John Brooks Klingenbeck, and others in Walton
County, Florida. The case was removed to the United States
District Court for the Northern District of Florida. On
February 25, 2014, the federal court issued a final
deficiency judgment against John Brooks Klingenbeck for $1,
040, 985.11. The bank filed copies of the judgment in the
probate courts of Shelby and Etowah counties in Alabama.
Etowah County Property Transfer
October 30, 2007, John Brooks Klingenbeck became the owner of
property located on Wharton Road in Gadsden, Alabama. After
obtaining title, a house was built on the land and the
property was insured for nearly $500, 000. The named insured
on the policy was Eula Brooks, John Brooks Klingenbeck's
grandmother. In August of 2012, the house on the property was
destroyed by fire. Eula Brooks collected four insurance
checks totaling a little over $700, 000.
Brooks Klingenbeck purported to convey the property to his
mother, Jennie Brooks Klingenbeck, via a document entitled
“Quickclaim [sic] Deed.” The deed was dated
October 15, 2007, fifteen days before John Brooks Klingenbeck
acquired the property. The document is also signed by notary
public Dianne Turner. Curiously, Ms. Turner wrote under her
signature that her commission expired on June 1, 2013. Under
Ala. Code § 36-20-1, a notary public's commission
lasts four years.
Brooks Klingenbeck recorded the deed on February 20, 2013 in
the Probate Court for Etowah County, Alabama. On March 17,
2014, Jennie Brooks Klingenbeck attempted to transfer the
property through a deed to her brother Ronnie Brooks and his
wife, Beckie Brooks.
Bankruptcy Proceeding and Post-Judgment Discovery D
post-judgment discovery in the Florida federal court action
in 2014, John Brooks Klingenbeck did not mention the property
in Etowah County as an asset. In December of 2014, John
Brooks Klingenbeck filed for Chapter 13 Bankruptcy and did
not disclose the deficiency judgment against him or the
Etowah County property.
STANDARD OF REVIEW
district court reviews a motion for summary judgment, it must
determine two things: whether any genuine issues of material
fact exist, and whether the moving party is entitled ...