JESSIE TUGGLE v. AMERIS BANK AS SUCCESSOR OF HAMILTON STATE BANK

Citation: Not availableDocket: A22A0256

Court: Court of Appeals of Georgia; April 6, 2022; Georgia; State Appellate Court

Original Court Document: View Document

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Motions for reconsideration must be physically received in the clerk’s office within ten days of the decision date to be considered timely. In the case A22A0256, Tuggle et al. v. Ameris Bank, the Court of Appeals of Georgia reviewed the trial court's denial of defendants Jessie and DuJuan Tuggle's motion for summary judgment and the granting of summary judgment to Ameris Bank, successor to Hamilton State Bank (HSB), in a fraudulent transfer action. The Tuggles contested several rulings under Georgia’s Uniform Fraudulent Transfers Act (UFTA), including claims that the action was barred by OCGA 9-12-93 and the doctrine of laches, and challenged the award of attorney fees to Ameris under OCGA 13-6-11. The appellate court reversed the award of attorney fees but affirmed the trial court's other rulings.

The case arose from a 2012 promissory note executed by Hammer Investments LLC, guaranteed by Jessie Tuggle, which provided security interests in real property. After failing to make payments, HSB foreclosed on the properties in 2014 and obtained a default judgment against the Tuggles in 2016. In 2014, Jessie transferred two properties in Johns Creek to DuJuan for nominal consideration, which Ameris later sought to invalidate, alleging the transfers were fraudulent to evade creditors. 

Following discovery, Ameris moved for summary judgment regarding the fraudulent conveyance claims and attorney fees, while the Tuggles filed a cross-motion asserting the validity of the transfers and arguing that any liens were discharged under OCGA 9-12-93. The trial court found in favor of Ameris, concluding that Jessie’s indebtedness existed prior to the property transfers, that the transfers lacked "reasonably equivalent value," and that Jessie became insolvent as a result. The court dismissed the Tuggles’ defenses of laches and the statute of limitations, ultimately granting Ameris attorney fees on the basis of bad faith. The Tuggles subsequently appealed.

The Tuggles challenge the summary judgment granted to Ameris on three grounds: (a) the trial court's ruling that Jessie did not receive reasonably equivalent value from the transfer of Johns Creek properties, (b) the determination of Jessie's insolvency following the transfers, and (c) the award of attorney fees to Ameris under OCGA 13-6-11. The court agrees that the award of attorney fees was erroneous but rejects the other claims. 

The review of summary judgment is conducted de novo, favoring the nonmovants, and is appropriate when no genuine issue of material fact exists. The moving party can fulfill its burden by demonstrating a lack of supporting evidence for the nonmoving party's case, which then requires the nonmovants to identify specific evidence that creates a triable issue. 

Under Georgia’s Uniform Fraudulent Transfer Act (UFTA), transfers are categorized as actual or constructive fraud. The relevant statute, OCGA 18-2-75 (a), states that a transfer is fraudulent if the debtor did not receive reasonably equivalent value in exchange and was insolvent at the time or became insolvent due to the transfer. The UFTA defines "value" and "property" broadly, allowing for transfers that satisfy antecedent debts or involve property ownership.

The Tuggles argue that the transfers were made for "Love and Affection," which they claim qualifies as "valuable consideration," and they also suggest that cognitive impairments affected Jessie's decision-making. However, the critical issue is whether "love and affection" can be considered "reasonably equivalent value" under the UFTA, a question not previously addressed by Georgia appellate courts. The document indicates a reliance on interpretations from other jurisdictions due to the lack of specific Georgia case law on this matter.

Numerous judicial decisions from various jurisdictions have consistently ruled that transfers made for 'love and affection' do not qualify as 'reasonably equivalent value' under the Uniform Fraudulent Transfer Act (UFTA) and related statutes. For instance, in *In re Marlar*, the Eighth Circuit found that a nominal payment of 'ten dollars with love and affection' for over 700 acres of farmland did not meet the value standard. Similarly, in *Truist Bank v. Farmer*, the court ruled that 'love and affection' did not suffice as equivalent value for two real property interests valued at $90,750 each. The Colorado UFTA was interpreted in *In re Blair* to state that 'love and affection' lacks the economic benefit required to constitute reasonably equivalent value. North Carolina courts echoed this sentiment in *DWC3, Inc. v. Kissel*, rejecting 'love and affection' in the context of property transfers.

Additional cases, such as *In re Treadwell* and *McPherson Oil Co. v. Massey*, further established that transfers made for nominal amounts or familial affection could be avoided under fraudulent transfer provisions as they did not reflect a fair market exchange. The overarching principle from these decisions is that the adequacy of consideration is assessed from the creditor's perspective, emphasizing the UFTA's purpose of protecting creditors from the depletion of the debtor’s estate. Courts interpreting UFTA statutes often reference analogous Bankruptcy Code provisions, particularly Section 548, drawing parallels in definitions and purposes regarding what constitutes reasonably equivalent value.

The focus remains on preserving the transferor's net worth and ensuring that the value exchanged reflects a fair market transaction, rather than subjective or emotional considerations.

Under the North Carolina Uniform Fraudulent Transfer Act (UFTA), 'value' is assessed to protect a debtor’s estate from depletion to the detriment of unsecured creditors. In Texas, the 'reasonably equivalent value' standard can be met if the transferee has (1) fully performed under a lawful, arm's-length contract at fair market value, (2) provided objective value at the transaction time, and (3) made the exchange in the normal course of business. In this case, a consideration of one dollar and love and affection for the Johns Creek properties did not meet the 'reasonably equivalent value' requirement under Georgia law (OCGA 18-2-75(a)). The Tuggles' claims regarding Jessie’s dementia affecting value determination were not substantiated with adequate argument or authority, resulting in abandonment of that claim. As per court rules, unsupported enumerations of error can be dismissed. The trial court's ruling that the property transfers lacked 'reasonably equivalent value' is affirmed.

The Tuggles further argued that Ameris could not satisfy the UFTA because its claim arose after the property transfers. However, a claim is defined broadly, encompassing any right to payment, regardless of its legal status. The Tuggles did not dispute that Ameris held a right to payment under a promissory note, with obligations dating back to April 2014, contradicting their claim of no antecedent debt during the November 2014 transfers. Additionally, the Tuggles contested the trial court’s finding of Jessie’s insolvency post-transfers. Under Georgia law, insolvency occurs when debts exceed assets, and failure to pay debts as they become due presumes insolvency. Jessie acknowledged having only one asset, his pension, and a significant unpaid debt during the relevant period, supporting the trial court's conclusion of insolvency.

Jessie's acknowledgment of a past-due debt and absence of liquid assets established a presumption of his insolvency at the time of the property transfers in Johns Creek. The Tuggles failed to contest this presumption effectively, providing no evidence to rebut it or to demonstrate that Jessie's pension payments could cover his significant debt. Although insolvency is generally a jury question, it can be decided via summary judgment, as established in prior cases. The Tuggles did not meet the burden of proving error in the trial court's ruling regarding insolvency.

Regarding attorney fees, the trial court’s award under OCGA 13-6-11 was deemed improper, as the statute requires jury determination for both the entitlement and amount of such fees. A trial court lacks authority to grant attorney fees at the summary judgment stage since it does not act as a fact-finder in these motions. Consequently, the award of attorney fees was reversed.

Additionally, the Tuggles challenged the denial of their summary judgment motion, asserting that the trial court wrongly ruled that love and affection do not qualify as sufficient consideration under the UFTA, disregarded a psychologist’s affidavit, and rejected their claims regarding statutory bar and laches. However, they did not demonstrate reversible error on these points, and the earlier ruling regarding love and affection as consideration resolved their argument.

The Tuggles submitted an affidavit from a licensed clinical psychologist indicating that Jessie has significant cognitive and psychological issues, which necessitate that important business decisions be made with assistance. They argued that the trial court erred by not considering this affidavit when denying their summary judgment motion. However, they failed to explain how the psychologist's opinions relate to the court's conclusion that Jessie did not receive 'reasonably equivalent value' in the transfer of Johns Creek properties to DuJuan, leading to the issue being deemed abandoned.

The Tuggles also claimed that Ameris's fraudulent transfer claim is barred by OCGA 9-12-93, which protects property from liens if it has been possessed for a specified period after a bona fide purchase. They asserted that the lien from a June 2016 default judgment against Jessie is discharged since DuJuan has possessed the properties for over four years. However, it was undisputed that the properties were gifted to DuJuan, which disqualifies him as a 'purchaser' under the statute. The court reiterated that the burden of proving good faith and valuable consideration lies with the purchaser, and noted that the four-year period does not commence while the properties are mortgaged. Thus, the Tuggles did not demonstrate that OCGA 9-12-93 bars Ameris’s claims, affirming the trial court's ruling.

The Tuggles also argued that Ameris's claims are barred by laches but did not provide legal support for this claim, resulting in it being deemed abandoned as well. The court affirmed the trial court's ruling regarding both the statute and laches, with the judgment affirmed in part and reversed in part.