Facts

Plaintiff Steven M. Speier was the Trustee in bankruptcy for a subsidiary of a real estate developer and sought over $6 million in damages. Several defendants settled prior to trial and a default judgment in excess of $7 million was obtained against four defendants. Defendants proceeding to trial were a mortgage broker and its principal. The mortgage broker arranged financing for a co-defendant's acquisition of real property owned by the Debtor.

PLAINTIFF'S CONTENTIONS:
Plaintiff alleged that the real property was transferred for less than adequate consideration and therefore constituted a fraudulent conveyance under the Bankruptcy Code and that the broker defendants were a partner in the transferee and owed a fiduciary duty to the Debtor.

DEFENDANT'S CONTENTIONS:
Defendants contended that there was no fiduciary duty between the debtor and the mortgage broker and even if the conveyance constituted a fraudulent conveyance under the code, defendants were not "transferees" under the code and, therefore, were not liable to the trustee for the conveyance.

Result

Fraudulent conveyance was found, but nonsuit for the two defendants proceeding to trial, as their agreement to become partners in transferee entity was never finalized.

Other Information

FILING DATE: July 23, 2007.