Digitally signed by Susan P. Williams Reason: I attest to the accuracy and integrity of Cite as 2019 Ark. 371 this document Date: SUPREME COURT OF ARKANSAS No. CV-18-566 2021.07.13 16:00:54 -05'00' Opinion Delivered December 12, 2019 HERITAGE PROPERTIES LIMITED PARTNERSHIP APPELLANT APPEAL FROM THE PULASKI COUNTY CIRCUIT COURT V. [NO. 60CV-16-6419]
WALT & LEE KEENIHAN HONORABLE TIMOTHY DAVIS FOUNDATION, INC. FOX, JUDGE APPELLEE
REVERSED AND REMANDED.
KAREN R. BAKER, Associate Justice
Appellant Heritage Properties Limited Partnership (“Heritage”) appeals the Pulaski
County Circuit Court’s order granting appellee Walt & Lee Keenihan Foundation, Inc.’s
(the “Foundation”) motion for summary judgment and dismissing Heritage’s complaint
with prejudice. Heritage’s complaint sought to set aside an alleged fraudulent conveyance
to the Foundation pursuant to a Transfer on Death (“TOD”) beneficiary designation on an
account owned by Leta Keenihan.1 Heritage presents two arguments on appeal: (1) the
circuit court has jurisdiction under the Fraudulent Transfers Act (the “Act”)2 to hear claims
1 Throughout the record, Ms. Keenihan is referred to as both Lee Keenihan and Leta Keenihan. 2 Although Heritage refers to this Act as the “Uniform Voidable Transactions Act,” we note that the amendment which substituted the “Uniform Voidable Transactions Act” subchapter heading for “Fraudulent Transfers” did not occur until 2017. Several other amendments to the Act were also made in 2017. However, the alleged fraudulent to pursue assets from a transferee that received assets pursuant to a payable-on-death clause;
and (2) the circuit court erred in granting the Foundation’s motion for summary judgment.
We hold that the circuit court erred in deciding this case by summary judgment and reverse
and remand for trial.
I. Facts and Procedural History
On May 13, 2014, Leta Keenihan created an Ameriprise SPS Advantage Account in
the amount of $500,000 at Ameriprise Financial and designated the Foundation as the
beneficiary of the account on her death. On June 9, 2014, Leta executed a TOD beneficiary
form naming the Foundation as beneficiary of the account. Leta died on December 8, 2015,
and the balance of the Ameriprise account, $1,114,000, was transferred to the Foundation
pursuant to the TOD beneficiary designation.
On February 22, 2016, the Pulaski County Circuit Court, Fifteenth Division,
entered an order probating Leta’s will and appointing John B. Peace as personal
representative of the Leta Keenihan Estate (the “Estate”).3 Peace accepted appointment, and
he was issued letters testamentary authorizing him to act as executor for and on behalf of
conveyance was triggered by Leta’s death on December 8, 2015. Additionally, the complaint was filed on November 22, 2016. Thus, we will rely on the statutes in effect at the time of the alleged fraudulent conveyance. See Clark v. Bank of Bentonville, 308 Ark. 241, 246, 824 S.W.2d 358, 361 (1992) (although citing Ark. Stat. Ann. §§ 68-1301 and 68-1302 (Repl. 1979), we applied the statutes applicable at the time of the alleged fraudulent conveyance). 3 We recognize that pursuant to Amendment 80 to the Arkansas Constitution, which became effective on July 1, 2001, our state courts are no longer “probate courts” and “circuit courts.” These courts have merged and now carry the designation of “circuit court.” Alexander v. Alexander, 351 Ark. 359, 93 S.W.3d 688 (2002). However, for ease of discussion, The Estate of Leta Mae Keenihan, Deceased, No. 60PR-16-197 (Pulaski Cty. Cir. Ct. Feb. 22, 2016), which was filed in the probate division of the circuit court, will be referred to as the probate case. 2 the Estate. On August 22, 2016, Heritage filed three claims against the Estate based on
various contracts with Leta. Heritage’s claims totaled approximately $851,000.
On November 22, 2016, after learning that the Estate was insolvent—tax claims and
claims of other creditors will exceed the reasonable value of the estate—Heritage filed its
complaint in the Pulaski County Circuit Court, Sixth Division, against the Foundation.
Heritage alleged that it is a creditor of the Estate; the Foundation was a nonprofit
corporation Leta established prior to her death; and the transfer in excess of $1,000,000 from
Leta to the Foundation was a fraudulent conveyance and should be set aside. Heritage
alleged that its claim is for approximately $851,000, the Foundation should be ordered to
pay the $851,000 claim to Heritage, and the Estate is entitled to the remaining funds to pay
off creditors. Heritage also sought a lien on the recovery to the extent of its claim and
asserted that the balance should be paid to the Estate. Finally, Heritage asserted that it is
entitled to a restraining order against the Foundation to prevent the Foundation from
spending the transferred funds.
On December 19, 2016, the Foundation filed its answer. The Foundation
acknowledged that Heritage has filed a claim against the probate estate but noted that the
claim has not been allowed. The Foundation denied that Heritage is a creditor of the
Foundation within the meaning of the Act. For its four affirmative defenses, the Foundation
asserted that (1) Heritage does not have standing to bring its claim against the Foundation;
(2) Heritage’s complaint should be dismissed pursuant to Rule 12(b)(6) of the Arkansas
Rules of Civil Procedure for failure to state facts upon which relief can be granted; (3)
Heritage’s complaint should be dismissed pursuant to Rule 9(b) and 10(d) of the Arkansas
3 Rules of Civil Procedure for failure to plead the alleged fraudulent conveyance with
particularity; and (4) Heritage’s complaint should be dismissed pursuant to Arkansas Code
Annotated section 4-59-210 based on estoppel and the terms of the beneficiary designation
of the Ameriprise Financial account. The Foundation requested that the circuit court dismiss
Heritage’s complaint with prejudice. Attached as exhibit A to its answer were letters from
Ameriprise Financial to Leta that listed her primary beneficiary designation for her
Ameriprise Brokerage account and SPS Advantage accounts as follows: WALT & LEE
KEENIHAN FOUNDATION, INC., FOUNDATION 100%.
On December 26, 2017, the Foundation filed its motion for summary judgment on
Heritage’s complaint. The Foundation argued that Heritage did not have standing to bring
the present action. The Foundation asserted that Heritage was required to bring its claim
pursuant to Arkansas Code Annotated section 28-49-109 (Repl. 2012), which authorizes
the personal representative of a grantor who has fraudulently transferred any interest in real
or personal property to apply to a court of competent jurisdiction to have the conveyance
or transfer set aside and to recover the property, or the value thereof, for the use and benefit
of all persons having an interest in the estate of the alleged fraudulent grantor. The
Foundation argued that Heritage has not presented proof that either Peace or the probate
court had authorized it to bring the current action. Further, the Foundation argued that
Heritage’s complaint, which seeks preference for Heritage to the alleged transfer to the
exclusion of other estate creditors, is not for the use and benefit of all persons having an
interest in the Estate. Finally, the Foundation argued that the transfer pursuant to a TOD
beneficiary designation was not a fraudulent transfer as a matter of law and undisputed fact.
4 On January 15, 2018, Heritage filed its response to the Foundation’s motion for
summary judgment. Heritage argued that it has standing under the Act for it to pursue its
claims against the Foundation, despite the personal representative’s option to pursue
fraudulent conveyances by the decedent pursuant to Arkansas Code Annotated section 28-
49-109. On February 13, 2018, Heritage filed a cross-motion for summary judgment. In
support of its motion, Heritage contended that there is no genuine issue of material fact that
the transfer of the account funds constitutes a fraudulent transaction under Arkansas law and
Heritage is entitled to a voidance of the transfer to the extent necessary to satisfy its claims
against the Estate. In its brief in support of its motion for summary judgment, Heritage
asserted that several claims have been filed in the probate case, including three claims by
Heritage. Heritage attached the July 10, 2017 joint amended petition for approval and
classification of claims and petition for instructions by trustee filed in the probate case. The
petition was filed by Peace in his capacity as the executor of the Estate, and it acknowledged
that Heritage had filed affidavits of secured claims against the Estate in the following
amounts: $170,000, $181,376, and $500,170. Heritage also attached its three affidavits of
secured claims against the Estate and supporting documents that were filed in the probate
case. These documents also demonstrated that the Estate was subject to other claims,
specifically, a 2005 claim by the IRS for tax deficiencies in excess of $350,000. Heritage
argued that because the federal government was entitled to be paid first, the remaining claims
would not be satisfied due to insolvency of the Estate. Heritage contended that Leta “knew
or should have known that she had debts beyond her ability to pay as they came due.”
Further, neither Leta nor her Estate received anything in exchange for the transfer to the
5 Foundation, and her Estate was rendered insolvent based on the transfer. Accordingly,
Heritage asserted that once the transfer occurred, its only remedy was to seek a voidance of
the transfer under the Act.
On March 2, 2018, the Foundation filed its response to Heritage’s motion for
summary judgment. The Foundation asserted that as demonstrated by the July 10, 2017
joint petition filed by Peace, the issue of whether Heritage has standing to assert a valid
claim against the Estate is disputed by the executor. The Foundation stated that, at most,
Heritage has a disputed unsecured, nonpriority claim against the Estate. Based on this
position, the Foundation contended that Heritage cannot establish that it is a creditor with
a claim within the meaning of Arkansas Code Annotated section 4-59-201(4). Further, the
Foundation asserted that the transfer pursuant to a TOD beneficiary designation was not a
fraudulent transfer as a matter of law and undisputed fact.
On March 14, 2018, after a hearing on the motions, the circuit court entered its
order denying Heritage’s motion for summary judgment and granting the Foundation’s
motion for summary judgment. The order stated in pertinent part:
1. With regard to [Heritage’s] standing, the court finds that the probate court has exclusive jurisdiction over claims against a decedent, and that this Court lacks jurisdiction to make a determination of the merits of this lawsuit.
2. With regard to [Heritage’s] claim against [the Foundation] under the Uniform Voidable Transaction Act, the court finds that [Heritage] has failed to provide proof of the decedent’s intent at the time of her execution of the transfer on death beneficiary form in May 2014.
The circuit court dismissed Heritage’s complaint with prejudice. Heritage appealed to the
Arkansas Court of Appeals. Our court of appeals certified the present case to this court
6 pursuant to Arkansas Supreme Court Rules 1-2(b)(1), (4), (5), and (6) as an issue of first
impression; an issue of substantial public interest; a significant issue needing clarification or
development of the law; and an appeal involving the interpretation of an act of the General
Assembly. On February 14, 2019, we granted certification of the appeal.
II. Law and Analysis
The basic rule of statutory construction is to give effect to the intent of the legislature
by giving words their usual and ordinary meaning. Ark. Soil & Water Conservation Comm’n
v. City of Bentonville, 351 Ark. 289, 92 S.W.3d 47 (2002). “When a statute is clear, it is given
its plain meaning, and we will not search for legislative intent; rather, that intent must be
gathered from the plain meaning of the language used. In other words, if the language of
the statute is plain and unambiguous, the analysis need go no further.” Yamaha Motor Corp.,
U.S.A. v. Richard’s Honda Yamaha, 344 Ark. 44, 52, 38 S.W.3d 356, 360 (2001). This court
is very reluctant to interpret a legislative act in a manner contrary to its express language,
unless it is clear that a drafting error or omission has circumvented legislative intent. Id., 38
S.W.3d at 360. Further, we must give effect to the specific statute over the general. Searcy
Farm Supply, LLC v. Merchants & Planters Bank, 369 Ark. 487, 256 S.W.3d 496 (2007).
“This court has long held that a general statute must yield to a specific statute involving a
particular subject matter.” Comcast of Little Rock, Inc. v. Bradshaw, 2011 Ark. 431, at 9, 385
S.W.3d 137, 142–43.
We now turn to the circuit court’s finding as set forth above:
1. With regard to [Heritage’s] standing, the court finds that the probate court has exclusive jurisdiction over claims against a decedent, and that this Court lacks jurisdiction to make a determination of the merits of this lawsuit. 7 On appeal, Heritage argues that the circuit court erroneously ruled that the probate
court has exclusive jurisdiction over the claims against a decedent because the Act expressly
allows a creditor to pursue a claim against a transferee as a result of a voidable transfer. Ark.
Code Ann. § 4-59-207. Heritage argues that the debtor, whether alive or deceased, is not
required to be a part of an action by a creditor to recover under the Act. Additionally, there
is no requirement that an action under the Act be brought within the probate court.
A. Jurisdiction
As set forth above, the circuit court ruled that the probate court has exclusive
jurisdiction over the claims against a decedent and that it lacks jurisdiction to make a
determination of the merits of this lawsuit. We disagree. First, pursuant to Amendment 80,
section 6(A) of the Arkansas Constitution, “Circuit Courts are established as the trial courts
of original jurisdiction of all justiciable matters not otherwise assigned pursuant to this
Constitution.” In First National Bank of DeWitt v. Cruthis, 360 Ark. 528, 203 S.W.3d 88
(2005), we explained:
As a consequence of Amendment 80, courts that were formerly chancery and circuit courts are now referred to as circuit courts. Because Amendment 80 states that circuit courts assume the jurisdiction of chancery courts, circuit courts simply have added to their already existing jurisdiction as a court of law the equitable jurisdiction which chancery courts held prior to adoption of the Amendment. Ark. Prof’l Bail Bondsman Licensing Bd. v. Frawley, 350 Ark. 444, 453, 88 S.W.3d 418 (2002). In other words, no new or expanded jurisdiction beyond that formerly existing in the chancery and circuit courts was created through Amendment 80. Rather, circuit court jurisdiction now includes all matters previously cognizable by circuit, chancery, probate, and juvenile court. See Amendment 80, § 19(B)(1); Administrative Order No. 14, §§ 1(a) and (b), 344 Ark. Appx. 747–48 (2001). See also Moore v. Sipes, 85 Ark. App. 15, 146 S.W.3d 903 (2004).
360 Ark. at 533, 203 S.W.3d at 91–92. 8 Second, TOD accounts are governed by the Uniform TOD Security Registration
Act, Arkansas Code Annotated sections 28-14-101 et seq. (Repl. 2012). Pursuant to section
28-14-106, the designation of a TOD beneficiary on a registration in beneficiary form has
no effect on ownership until the owner’s death; therefore, a registration of a security in
beneficiary form may be canceled or changed at any time by the owner without the consent
of the beneficiary. A TOD resulting from a registration in beneficiary form “is effective by
reason of the contract regarding the registration between the owner and the registering
entity and this chapter and is not testamentary.” Ark. Code Ann. § 28-14-109(a). Pursuant
to section 28–14–107, TOD accounts are payable to the beneficiary or beneficiaries upon
the death of the owner; they do not become assets of the owner’s estate unless no designated
beneficiary survives the death of the owner. See also Ginsburg v. Ginsburg, 359 Ark. 226, 230,
195 S.W.3d 898, 901 (2004).
In the present case, the Foundation, as the beneficiary of the TOD account, received
the money on transfer. Stated differently, the transfer did not become an asset of the Estate
and passed directly from the TOD account to the Foundation. Accordingly, we disagree
with the circuit court’s finding regarding the exclusivity of the probate court’s jurisdiction.
Pursuant to Amendment 80 and the fact that the money transferred from the TOD account
did not become part of the Estate, the circuit court clearly had jurisdiction in the present
case.
B. Standing
Next, Heritage contends that it has standing because the Act expressly provides that
certain transfers are voidable as to creditors of the transferor and grants remedies to the
9 creditors, including voiding the transactions to the extent necessary to satisfy its claim against
the debtor. Therefore, Heritage has standing to bring the claim.
In response, the Foundation argues that Heritage should not be allowed to bypass
the provisions set forth in the probate code that allow for the pursuit of an alleged fraudulent
transfer. Specifically, the Foundation argues that Heritage is improperly attempting to obtain
preference for itself, which is contrary to the probate code. In sum, the Foundation contends
that Heritage lacks standing to assert its fraudulent-conveyance claim. Instead, relying on
Arkansas Code Annotated section 28-49-109, the Foundation maintains that John Peace, as
the executor of the Estate, has standing to assert the fraudulent-conveyance claim. Further,
the Foundation contends that Heritage has failed to allege or present proof that it has
received authorization from the Pulaski County Probate Court in the Estate matter to file
or prosecute the present action in the place of Mr. Peace as a special administrator pursuant
to Arkansas Code Annotated section 28-48-103.
We acknowledge that the procedures set forth in Arkansas Code Annotated sections
28-49-109 and 28-48-103 allow for the personal representative or a special administrator to
pursue claims. However, Arkansas Code Annotated section 28-14-109, which is also
contained within the probate code, governs nontestamentary transfers on death:
(a) A transfer on death resulting from a registration in beneficiary form is effective by reason of the contract regarding the registration between the owner and the registering entity and this chapter and is not testamentary.
(b) This chapter does not limit the rights of creditors of security owners against beneficiaries and other transferees under other laws of this state.
10 Ark. Code Ann. § 28-14-109 (emphasis added).4 Thus, with regard to a TOD, our probate
code makes clear that it does not limit the right of creditors against beneficiaries and other
transferees. In fact, the statute plainly allows creditors to pursue their claims against
transferees under other laws of this state. Clearly, the Act is encompassed within the meaning
of “other laws of this state.” In sum, while there are procedures within the probate code
that would allow for the challenge of an alleged fraudulent conveyance, Arkansas law
provides that a creditor may also pursue its claim under the Act.
We now turn to whether Heritage has standing to pursue its claim under the Act.
The question of standing is a matter of law for this court to decide, and this court reviews
questions of law de novo. Farm Bureau Ins. Co. of Ark., Inc. v. Running M Farms, Inc., 366
Ark. 480, 237 S.W.3d 32 (2006). Heritage argues that as Leta’s creditor, it has standing
pursuant to the Act. As defined in the Act, a “creditor” is a person who has a claim. Ark.
Code Ann. § 4-59-201(4) (Repl. 2011). A claim means a right to payment, whether or not
the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured. Id. § 4-59-201(3).
The Foundation agrees that Heritage “would technically meet the definition of a creditor
with a claim in the context of Ark. Code Ann. §§ 4-59-204 and 205.” Arkansas Code
4 The Foundation devotes a large portion of its argument to the Uniform Transfer on Death Security Registration Act. Subsection (a) of Arkansas Code Annotated section 28- 14-109 is contained in section 6-309 of the uniform act, however, subsection (b) is not. The Foundation goes on to explain that section 6-102 of the Uniform Probate Code provides for liability of nonprobate transferees for creditor claims and statutory allowances. A review of this Uniform Probate Code provision demonstrates that it would be helpful and would provide a roadmap for creditors to pursue claims. However, our legislature has not adopted this provision. 11 Annotated section 4-59-204, which governs fraudulent transfers as to present and future
creditors, provides in pertinent part:
(a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:
(1) with actual intent to hinder, delay, or defraud any creditor of the debtor; or
(2) without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
(i) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
(ii) intended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they became due.
Ark. Code Ann. § 4-59-204 (emphasis added). Arkansas Code Annotated section 4-59-205,
which governs transfers fraudulent as to present creditors, provides in pertinent part:
(a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.
Ark. Code Ann. § 4-59-205. Further, a transfer takes place “when the transfer is so far
perfected that a creditor on a simple contract cannot acquire a judicial lien otherwise than
under this subchapter that is superior to the interest of the transferee.” Ark. Code Ann. §
4-59-206(1)(ii). Once the transfer has occurred, pursuant to Arkansas Code Annotated
section 4-59-208(b)(1), the creditor may recover judgment . . . for the amount necessary to
satisfy the creditor’s claim. The judgment may be entered against the first transferee of the 12 asset or the person for whose benefit the transfer was made. Ark. Code Ann. § 4-59-
208(b)(1). Finally, section 4-59-207 governs the remedies of the creditors as follows:
(a) In an action for relief against a transfer or obligation under this subchapter, a creditor, subject to the limitations in § 4-59-208, may obtain:
(1) avoidance of the transfer or obligation to the extent necessary to satisfy the creditor’s claim;
(2) an attachment or other provisional remedy against the asset transferred or other property of the transferee in accordance with the procedure prescribed by §§ 16-110-201 – 16-110-211;
(3) subject to applicable principles of equity and in accordance with applicable rules of civil procedure,
(i) an injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property;
(ii) appointment of a receiver to take charge of the asset transferred or of other property of the transferee; or
(iii) any other relief the circumstances may require; and
...
(b) If a creditor has obtained a judgment on a claim against the debtor, the creditor, if the court so orders, may levy execution on the asset transferred or its proceeds.
Ark. Code Ann. § 4-59-207. The preceding provisions clearly allow for a creditor to seek
avoidance of a fraudulent transfer against the transferee to the extent necessary to satisfy the
creditor’s claim. Thus, we hold that Heritage, as a creditor, has standing to pursue its claim
under the Act against the Foundation as the transferee.
C. Summary Judgment
Having found that Heritage is a creditor as defined in the Fraudulent Transfer Act
and that it has standing to bring a claim against the Foundation, we now turn to whether 13 the circuit court erred in granting the Foundation’s motion for summary judgment on the
basis that Heritage failed to present evidence of Leta’s intent at the time of the TOD
designation.
Despite the circuit court’s finding that it lacked jurisdiction to “make a determination
of the merits of this lawsuit” the circuit court went on to find that
2. With regard to [Heritage’s] claim against [the Foundation] under the Uniform Voidable Transaction Act, the court finds that [Heritage] has failed to provide proof of the decedent’s intent at the time of her execution of the transfer on death beneficiary form in May 2014.
Summary judgment is appropriate when the pleadings, depositions, answers to
interrogatories and admissions on file, together with any affidavits, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a
matter of law. Ark. R. Civ. P. 56(c). Ordinarily, on appeal from a summary-judgment
disposition, the evidence is viewed in the light most favorable to the party resisting the
motion, and any doubts and inferences are resolved against the moving party. Hobbs v. Jones,
2012 Ark. 293, 412 S.W.3d 844. However, in a case where the parties agree on the facts,
we simply determine whether the appellee was entitled to judgment as a matter of law. Id.
As to issues of law presented, our review is de novo. Id. The filing of cross-motions for
summary judgment, however, does not necessarily mean that there are no material issues of
fact in dispute. In some cases, a party may concede that there is no issue if the party’s legal
theory is accepted and yet maintain that there is a genuine dispute as to material facts if the
opponent’s theory is adopted. Wood v. Lathrop, 249 Ark. 376, 459 S.W.2d 808 (1970).
On appeal, Heritage argues that the circuit court erroneously found that Heritage
did not provide proof of Leta’s intent when she executed the TOD designation in May 14 2014. Specifically, Heritage asserts that the circuit court applied the incorrect standard for
fraudulent transfers under the Act by ruling that Heritage must demonstrate Leta’s intent.
As Heritage correctly points out, it is not necessary to prove actual intent under either
section 4-59-204 or section 4-59-205. While section 4-59-204(a)(1) does require that the
debtor intend to defraud his or her creditors, section 4-59-204(a)(2)(ii) does not require
actual intent. Instead, the standard under that provision is whether the debtor made the
transfer without receiving a reasonably equivalent value in exchange for the transfer and the
debtor intended to incur, or “believed or reasonably should have believed that he or she
would incur debts beyond his or her ability to pay as they became due.” Ark. Code Ann.
§ 4-59-204(a)(2)(ii). In other words, here, there are two ways to set aside the transfer: (1)
demonstrate Leta’s intent; or (2) demonstrate that Leta made the transfer without receiving
a reasonably equivalent value in exchange for the transfer, and Leta intended to incur, or
believed or reasonably should have believed that she would incur, debts beyond her ability
to pay as they became due. Pursuant to section 4-59-205(a), the creditor may prove that the
“debtor made the transfer or incurred the obligation without receiving a reasonably
equivalent value in exchange for the transfer or obligation and the debtor was insolvent at
that time or the debtor became insolvent as a result of the transfer or obligation.”
Here, based on the record, the circuit court failed to consider Heritage’s argument
pursuant to either section 4-59-204(a)(2)(ii) or section 4-59-205(a). As stated above, these
provisions do not require Heritage to demonstrate Leta’s actual intent. Heritage presented
proof that the IRS had a claim for tax deficiencies dating back to 2005, that Leta had
multiple creditors, and that her Estate was likely insolvent. The evidence, considered in the
15 light most favorable to Heritage, raises a factual issue precluding summary judgment as to
whether Leta reasonably should have believed that she would incur debts beyond her ability
to pay. Given our discussion above and our standard of review, we hold that the circuit
court erred in granting the Foundation’s motion for summary judgment. Therefore, we
reverse the order of summary judgment for the Foundation and remand the case for trial.
WOOD and WOMACK, JJ., concur in part and dissent in part.
RHONDA K. WOOD, Justice, concurring in part and dissenting in part. I
agree with the majority that the circuit court had jurisdiction over Heritage’s underlying
fraudulent-conveyance claim and that Heritage had standing to bring suit. But I dissent
because the circuit court’s ultimate disposition remained correct. I have serious concerns
about this court’s failure to enforce Rule 56 and the effects its liberal application in this case
will have on estate planning in Arkansas. I would therefore affirm the circuit court’s order
granting the Foundation’s motion for summary judgment and dismissing Heritage’s
complaint.
The Foundation filed a motion for summary judgment. It specifically argued two
grounds for summary judgment. First, it asserted that Heritage lacked standing. Second, it
argued that “the alleged transfer by virtue of a transfer on death (“TOD”) beneficiary
designation was not a fraudulent transfer.” As the majority details in its “Facts and Procedural
History” section, Heritage’s response to the summary-judgment motion addressed only the
Foundation’s standing argument. Heritage did not attach supporting affidavits or exhibits.
16 Subsequently, the Foundation filed a reply that noted Heritage failed to “address this
separate ground for summary judgment or the summary judgment proof that the Foundation
submitted.” Heritage, apparently recognizing the procedural error, filed a motion to
supplement its deficient response. This motion was not ruled on. Almost two months later,
Heritage filed a separate motion for summary judgment arguing that the transfer was
voidable under either Arkansas Code Annotated section 4-59-204 or section 4-59-205. The
majority maintains that the statements and exhibits attached to Heritage’s separate motion
filed almost sixty days later are sufficient “proof” to create a material fact worthy of a full
trial.
Once a moving party establishes a prima facie entitlement to summary judgment, the
opposing party must meet proof with proof and demonstrate the existence of a material issue
of fact. Stokes v. Stokes, 2016 Ark. 182, at 8, 491 S.W.3d 113, 120. This is done in a
responsive motion. See Evans v. Hamby, 2011 Ark. 69, at 9, 378 S.W.3d 723, 729. Our
procedural rules provide that any response and supporting materials must be filed within
twenty-one days after the initial motion is served. Ark. R. Civ. P. 56(c). “The nonmoving
party must then move beyond formal allegations of pleadings and meet proof with proof by
showing that a genuine issue of material fact remains to be litigated.” Mack v. Sutter, 366
Ark. 1, 5, 233 S.W.3d 140, 144 (2006). Heritage failed to respond, at all, to a dispositive
point in the Foundation’s motion for summary judgment. Heritage cannot rectify this failure
to meet proof with proof by filing a new, separate motion for summary judgment. The
majority’s decision improperly permits Heritage’s later filings to bolster Heritage’s failure to
meet proof with proof in response to the Foundation’s motion.
17 Even if Heritage had adequately responded to the Foundation’s motion, summary
judgment would still have been proper. It is unclear what material facts remain to be
adjudicated under the majority’s analysis. Heritage failed to present any proof that Leta’s
TOD designation was anything more than standard estate planning. Heritage did not submit
any proof or even allege that Leta anticipated her death, that her death was imminent, that
she was suffering an acute illness, or any other fact that could have reasonably established
that the transfer on death would occur prior to her debts to Heritage becoming due. Absent
Heritage factually pleading and submitting proof of this sort, the Foundation was entitled to
summary judgment.
My gravest concern with the majority’s decision to remand for trial is the door it has
opened for creditors to threaten TOD beneficiaries with litigation without having to plead
any facts beyond the estate’s insolvency. Such a regime would upend much of the estate
planning in this state and could lead to unwarranted litigation. I would affirm the circuit
court’s order.
WOMACK, J., joins.
Davidson Law Firm, by: Charles D. “Skip” Davidson and Drew C. Benham, for
appellant.
Friday, Eldredge & Clark, LLP, by: William A. Waddell, Jr., for appellee.