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Janvey v. GMAG, L.L.C. No. 17-11526

http://www.ca5.uscourts.gov/opinions/pub/17/17-11526-CV0.pdf

Before STEWART, Chief Judge, DENNIS, and WILLETT, Circuit Judges.

REVERSED and RENDERED. (January 9, 2019).

 

This case was the latest to arise out of the Stanford International Bank Ponzi scheme. It required the Fifth Circuit to determine whether the Texas Uniform Fraudulent Transfer Act’s good faith affirmative defense allowed defendants to retain fraudulent transfers received while on inquiry notice of the Ponzi scheme. In making an Erie guess, the Fifth Circuit answers in the negative. The Court explains that TUFTA good faith affirmative defense is an exception to the rule that fraudulent transfers must be returned. But no prior court considering TUFTA good faith has applied a futility exception to this exception, and the Fifth Circuit declines to hold that the Supreme Court of Texas would do so. Because the jury in this case determined that defendants were on inquiry notice when they received $79 million in fraudulent transfers, their TUFTA good faith defense was defeated. In consequence, the Fifth Circuit reverses the District Court’s judgment and renders judgment in favor of the Court-appointed Receiver for the Stanford International Bank.

On Appeal from the United States District Court for the Northern District of Texas (David C. Godbey).
Attorney for Appellant – Evan A. Young, Austin, TX
Attorney for Appellee – Rachel R. Mentz, Denver, CO

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