Developer Can’t Scoot|From $24 Million Debt

     WEST PALM BEACH, Fla. (CN) – A South Florida developer owes $24 million on a loan for a condo project he fraudulently transferred to a trust in his wife’s name, a federal judge ruled.
     German American Capital Corp. sued Dean F. Morehouse and the Linda W. Morehouse Living Trust, seeking to set aside fraudulent real estate conveyances allegedly made by the judgment debtor, Dean Morehouse, prior to the time of entry of final judgment in the guaranty action.
     In 2005, Branch Banking & Trust Company issued Brampton Plantation LLC a $21 million loan and a $7 million letter of credit, according to U.S. District Judge Daniel Hurley’s 6-page order granting summary judgment, from which the following summary is taken.
     Both documents were signed by Morehouse, Brampton’s managing member. Morehouse also personally guaranteed repayment of the loan.
     When Brampton began defaulting on payments, BB&T called on Morehouse to honor his guaranty but Morehouse would not pay.
     The bank sued for $24 million in damages, then sold the debt to GACC.
     In 2013, the court entered a judgment in favor of GACC and against Morehouse personally for $23,966,217. Morehouse has yet to satisfy the balance.
     Six months before the judgment in 2012, Morehouse executed two quitclaim deeds on property he owned in West Palm Beach, to the Linda M. Morehouse Trust in consideration of $10 per conveyance. As of January 2012, one of the units was valued for tax assessment purpose, at $77,385.00, and the other unit valued at $66,437.00.
     Last year, GACC sought to impose an equitable lien on the properties and requested an injunction enjoining Dean Morehouse and the Linda M. Morehouse Trust from selling, transferring or encumbering the units.
     GACC claimed Morehouse fraudulently conveyed the condos in his wife’s name, which would constitute a badge of fraud to void a sale.
     Morehouse argued that GACC’s claim is moot because he transferred the condos back to himself. Morehouse contends that the determination of a fraudulent conveyance is factual matter, and that the presence of various “badges of fraud” does not necessarily determine the matter of fraudulent intent.
     Judge Hurley wrote: “As Morehouse correctly points out, the existence of these factors does not constitute fraud per se, it is sufficient to raise a strong inference of fraud, one on which summary judgment may rest if no other evidence is proffered to plausibly suggest another explanation for the transfer. In this case, defendant does not suggest any facially plausible or legitimate explanation for the conveyances in question. Because he offers no evidence to overcome the strong inference of fraud created by this evidence, he does not raise a genuine issue of material fact for a jury on the issue of fraudulent intent. Put another way, given the uncontested evidence on the badges of fraud, and the defendant’s failure to identify and offer competent proofs on an alternative plausible explanation for the transfers, a reasonable jury could only find that the transfers were made with intent to hinder, delay or defraud GACC.”
     Hurley rejected Morehouse’s notion that the lawsuit was moot after the re-conveyance because there was still misconduct and fraudulent intent.
     Hurley granted GACC’s motion for summary judgment on fraudulent conveyance claims.
     Morehouse’s condo unit conveyances were voided and he cannot sell or transfer the units until GACC exercises its rights to foreclose on them to partially satisfy the judgment.

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