(Los Angeles Daily Journal)
Fraudulent Transfer of Real Property
CASE/NUMBER: Muse Family Enterprises, Ltd., Linda Ehlers as Co-Trustee for the Muse Children's GS Trust, JRM Interim Investors, LP, Oak Stream Investors II, Ltd., Wood Luxembourg Properties, SARL, Holbrook Properties, Inc., Strongback Holdings, ABF Note Holdco, LLC, A WF Note Holdco, LLC, BCC Note Holdco, LLC, BFC Note Holdco, LLC, DVB Note Holdco, LLC, FFC Note Holdco, LLC, IFC Note Holdco, LLC, NCC Note Holdco, LLC, RMA Note Holdco, LLC, TTMNote Holdco, LLC, TW Note Holdco, LLC, and VOC Note Holdco, LLC v. Mira Overseas Consulting Ltd., BTM Funding Inc., David Thomas Smith, Carmen Copple (Silva) Smith, an individual; Carmen Copple (Silva) Smith, as Trustee of the Carmen Copple Silva Revocable Trust dated Sept. 24, 2009, and Does 1 through 10, inclusive / BC445532.
COURT/DATE: Los Angeles Superior Central / Nov. 13, 2012.
JUDGE: Hon. Richard L. Fruin Jr.
ATTORNEYS: Plaintiff - Don Howarth, Jessica L. Rankin (Howarth & Smith, Los Angeles); F. Phillip Hosp, Jon L. Rewinski (Locke Lord, LLP, Los Angeles).
Defendant - Saied Kashani (Law Offices of Saied Kashani, Los Angeles) for David Smith, Carmen Copple Smith and Carmen Copple Silva Trust.
TECHNICAL EXPERTS: Plaintiff - John F. Van der Zee, real estate appraisal, Los Angeles
FACTS: David Smith is the sole shareholder of BTM Funding Inc. The Muse plaintiffs invested in loans made by BTM Funding Inc. to finance the construction of churches around the country. In 2009, the Muse plaintiffs discovered significant problems with the church loan program. The Muse plaintiffs also discovered that real property purchased by BTM Funding Inc. had been quitclaimed from BTM Funding Inc. to David Smith, from David Smith to his wife Carmen Copple Smith, and from Carmen Copple Smith to the Carmen Copple Silva Revocable Living Trust.
The Muse plaintiffs sued for breach of contract, fraud: intentional misrepresentation, fraud: concealment, negligent misrepresentation, breach of fiduciary duty, and for fraudulent transfer, alleging that David Smith was the alter ego of BTM Funding Inc. David Smith allowed BTM Funding Inc. to default and, faced with a summary judgment motion, agreed that BTM Funding Inc. was liable for $21 million for its breach of contract. Judgment for this amount was entered against BTM Funding Inc. The parties then tried to a jury the issue of whether the Kobe Bryant house in Pacific Palisades was fraudulently transferred to David Smith and whether David Smith was the alter ego of BTM Funding Inc.
PIAINTIFF'S CONTENTIONS: The Muse plaintiffs contended that David Smith is the alter ego of BTM Funding Inc. and liable for its debt of $21 million to the Muse Plaintiffs. The Muse Plaintiff also contended that the real property was fraudulently transferred.
DEFENDANTS CONTENTIONS: Defendants contended that the real property was not fraudulently transferred and that David Smith was not the alter ego of BTM Funding Inc.
JURY TRIAL: Length, 10 days; Deliberation, three hours.
RESULT: The jury found that BTM Funding Inc. had fraudulently transferred real property (the home formerly owned by Kobe Bryant in Pacific Palisades) to its sole shareholder, David Smith.
The jury found damages against David Smith in the amount of $10 million for the fraudulent transfer.
The jury also found that David Smith is the alter ego of BTM Funding Inc., making David Smith personally liable for the debts of the company, including Plaintiffs' judgment against BTM Funding Inc. in the amount of $21,061,219.