X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:Jose Flores suffered a brain injury while working for M&B Contracting. M&B was a contractor of Robinson Roofing Co., so Flores and his wife sued M&M, Robinson Roofing and others for personal injury damages. M&B filed for bankruptcy. Robinson Roofing, meanwhile, changed its name to R&B Roofing, and R&B filed for bankruptcy. Flores was listed as a creditor, holding a $6.9 million disputed unsecured claim, and Flores’ lawsuit was abated due to the automatic stay in R&B’s bankruptcy. At this time, Robinson Roofing and Construction Co. (RRC) was formed. Flores sued RRC, alleging that Robinson Roofing fraudulently transferred intangible assets � the company’s logo, advertising, graphics, telephone number and goodwill � to RRC to avoid Flores’ suit. In support of his claim, Flores pointed out that Robinson Roofing were operated by the same principals: Marshall Robinson and Bret Barnett. In turn, Barnett was married to Robinson’s daughter, Melissa, and was also president and a shareholder of M&B. Melissa Barnett was RRC’s registered agent and had been a director and shareholder of M&B. Flores also brought forth phone book ads ranging from 1984 to 2001, which showed the RRC ads using the same logo, insignia and phone number as had been in the ads for Robinson Roofing. RRC’s 2001-2002 ad in the phone book also stated that it had been “Family Owned and Operated for Over 35 Years,” even though RRC as an entity had been in business only three years. The trial court granted RRC’s motion for summary judgment, in which it asserted that no transfer was made with the intend to defraud Flores, and that the goodwill had no value. Flores appeals. HOLDING:Reversed and remanded. Referring to the Texas Uniform Fraudulent Transfer Act, the court finds that the question of whether a debtor conveyed property with the intent to defraud creditors is ordinarily a question for the trier of fact. Only in limited circumstances may the issue of intent to defraud be decided as a matter of law, such as when the debtor admits fraud, the conveyance instrument is fraudulent on its face, or the undisputed evidence proves that the debtor retained an interest in the property that is inconsistent with the conveyance alleged. The court further notes TUFTA’s list of 11 “badges of fraud,” that is, signs that a particular transfer was made fraudulently. Among those badges is the situation where the transfer was to an insider. Here, the transfer was to an insider because all of the principals were either the same people or related. Furthermore, Robinson Roofing was sued just before it made the transfer, another badge of fraud. The court also finds that the issue of whether there was a transfer of intangible property, including the company’s goodwill, is a question that is properly left to the trier of fact, as is the value of that goodwill (if any). OPINION:Anne Gardner, J.; Cayce, C.J., Livingston and Gardner, JJ.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.