Folmar & Associates LLP v. Holberg
Folmar & Associates LLP v. Holberg
Opinion
This is an interlocutory appeal, pursuant to Rule 5(a), Ala.R.App.P., from the denial of the defendants' motions for a summary judgment. The trial court provided this Court a statement of two "controlling questions of law": 1) Whether the plaintiff Pamela Holberg's divorce judgment creates a "contractual" or "business" relationship that will support her claim alleging intentional interference with a business or contractual relationship; and 2) Whether the plaintiff can state a claim for money damages for conspiracy to fraudulently transfer property. We reverse the order *Page 114 denying the defendants' summary judgment motions.
Pamela Holberg and William Cagle were married on March 26, 1993, and were divorced on October 7, 1993. The divorce judgment ordered Cagle to pay Holberg, as alimony in gross, the amount of $960,000, payable monthly, at the rate of $4,000 per month, beginning November 1, 1993. The judgment of divorce also provided:
"Mr. Cagle covenants and agrees that he shall not take any action with respect to his estate as it now presently exists which would cause any real property or partnership interests now owned by him to pass outside his probate estate, nor shall he acquire title to any property in the future with right of survivorship or other method which would have the same or similar result as to such future-acquired property. The preceding sentence shall not be construed so as to prohibit the transfer of any property in an [arm's-length] sale of any such property for adequate consideration."
The divorce judgment also obligated Cagle to maintain a $100,000 life insurance policy, with Holberg as the beneficiary.
On August 12, 1995, Cagle married Regina Wrigley. On October 25, 1995, Cagle suffered a bilateral stroke, which caused him to lose the use of his arms and legs and, eventually, to lose his ability to eat. Cagle was one of three partners in Folmar Associates ("Folmar"), a real-estate-development firm. Before he married Holberg, Cagle had begun taking "draws" or "cash-advance" loans from Folmar against his ownership interest in the partnership. These draws or advances were to be repaid by deductions from Cagle's interest in the partnership's future earnings. At the time of Cagle's stroke, he owed Folmar more than his interest in the partnership was worth; he had three unsecured loans payable to AmSouth Bank; and he had credit-card debt of approximately $100,000, all in addition to his financial obligations to Holberg. Furthermore, Cagle had allowed his life insurance policy to lapse and, after his stroke, his financial advisors could find no company that would insure him.
In late 1995 or early 1996, Cagle and his wife Regina met with Jimmy Folmar, one of Cagle's partners; Harold Parkman, the attorney for the partnership; and John Gill, an independent C.P.A. adviser for the partnership. On January 22, 1996, Cagle, who was not able to sign his name, marked an "X" on a durable power of attorney prepared by Parkman in favor of Regina. The Cagles hired Michael Strojny, an agent of the Strojny Corporation (hereinafter referred to collectively as "Strojny"), as a financial adviser in January or February 1996. Cagle was generating $7,000 to $10,000 per month in uninsured costs for round-the-clock nursing care, supplies, and medications. Folmar began advancing the Cagles $20,000 per month for Cagle's living expenses. Folmar also advanced other amounts of money for the Cagles to pay credit-card indebtedness, to purchase a car, and to use for other purposes. Regina Cagle used some of the money to take vacations and to pay for cosmetic surgery.
In March 1997, Folmar, after consulting with Regina Cagle and Strojny, decided to reduce the monthly advance to $11,000 per month. The first reduced payment was made in May 1997. At that point, Cagle stopped making alimony payments to Holberg. Cagle died on September 25, 1997. Between October 1995 and September 1997, Folmar had advanced $779,641.05 to the Cagles, in the form of advances against Cagle's partnership interest. Folmar recovered all of the funds it had furnished Regina by offsetting the advances against Cagle's future draws on his partnership interest. Cagle's estate was declared insolvent.
Holberg sued Regina Cagle, alleging intentional infliction of emotional distress, interference with a business relationship, fraudulent transfers, breach of fiduciary duty, self-dealing, and conspiracy. Holberg later amended her complaint to add *Page 115 Folmar, the Strojny Corporation, and Michael A. Strojny, making the same claims against them. The trial court granted the defendants' motion to dismiss Holberg's claim alleging intentional infliction of emotional distress. The trial court denied the defendants' motions for summary judgment as to the remaining claims. This Court granted Folmar and Strojny permission to appeal the denial of the motions for summary judgment, pursuant to Rule 5(a), Ala.R.App.P.
"(1) The existence of a contract or business relation;
"(2) Defendant's knowledge of the contract or business relation;
Gross, 494 So.2d at 597. The defendants argue that the first element is not satisfied because, they contend, there is no contract or business relationship with which they could have interfered."(3) Intentional interference by the defendant with the contract or business relation;
"(4) Absence of justification for the defendant's interference; and
"(5) Damage to the plaintiff as a result of defendant's interference."
Holberg contends that this Court has impliedly held that a judgment of divorce is a contract that can be the subject of a claim alleging intentional interference, citing Braswell v.Braswell,
In Braswell, this Court upheld the trial court's holding that the term "sale" encompassed the exchange of stock. This Court then remanded the case for a trial on the merits of the wife's remaining claims, including the claim alleging intentional interference, stating that those claims were "ripe for consideration by the trial court." 574 So.2d at 794. Holberg contends that because in Braswell this Court remanded the intentional-interference claim, a judgment of divorce must constitute a contract upon which one can base an intentional-interference claim. We disagree. This Court specifically stated in Braswell that the intentional-interference cause of action "could have accrued only after May 25, 1988, which is the date the trial court determined that Cay Braswell became a stockholder in D.C. Braswell Construction Company, Inc." 574 So.2d at 794. Thus, the intentional-interference claim was premised on the creation of a business relationship — the wife's ownership of stock in the company — rather than on the judgment of divorce.
Holberg also cites Rabun v. Kimberly-Clark Corp.,
Alabama courts have previously held that a judgment is not a contract in the strict sense of the word. Knight v. Knight,
Killen v. Akin,"If there is an agreement between the parties and it is not merged or superseded by the judgment of the court, it remains a contract between the parties and may be enforced as any other contract. However, any part of the agreement that is merged into the judgment is subject to the equity power of the court and is no longer of a contractual nature."
In Knight, the Court of Civil Appeals determined that a judgment of divorce falls within the class of judgments ex delicto
rather than ex contractu. In that case, the wife had pursued a garnishment pursuant to §
This Court has never held that a judgment of divorce could be the subject of a claim of intentional interference with a contract or business relationship. In fact, that cause of action is based on the theory that "an unlawful invasion of or interference with the pursuit or progress of one's trade, profession, or business is a wrong for which an action lies." Sparks v. McCreary,
We decline to extend the cause of action for intentional interference with a contract or business relationship to reach claims of interference with a judgment of divorce. Judgments are enforceable through the courts, and other remedies are provided for circumstances in which the judgment debtor fails to satisfy the judgment. For example, § 10-8-42 and §
Holberg argues that this Court should give the fraudulent-transfer statute a liberal construction and apply it to her claims against the defendants. She quotes Taylor v. Peoples FertilizerCo.,
Aucoin v. Aucoin,"Although the fraudulent conveyance statute is given a liberal construction, see Jesse P. Evans, Alabama Property Rights and Remedies, § 31.1, 470 (1994), and `[t]he manner or form of the transfer or conveyance is generally immaterial so long as the debtor, through a fraudulent device, puts his or her property beyond the ordinary reach of the creditor,' id. at § 31.2, 473, every conveyance that frustrates a creditor is not a fraudulent conveyance under the statute."
Holberg has cited no cases in which someone other than the debtor has been held liable under the fraudulent-transfer statute. Holberg simply argues that her claims should be valid under the statute because, she argues, Folmar was fraudulently transferring Cagle's assets to Regina; Regina was acting on behalf of Cagle when she used the power of attorney to transfer his assets into her name; and Strojny was "concocting schemes for Regina to fraudulently put Cagle's assets into her name." However, Holberg's claims are missing one essential element for a cause of action pursuant to the Alabama Uniform Fraudulent Transfer Act: The transfer of property by the debtor.
The purpose of the Alabama Uniform Fraudulent Transfer Act is to prevent fraudulent transfers of property by a debtor who intends to defraud creditors by placing assets beyond their reach. The plain language of the statute makes it applicable only to transfers "made by a debtor." In previous cases involving statutory interpretation, this Court has stated:
Blue Cross Blue Shield v. Nielsen,"`Words used in a statute must be given their natural, plain, ordinary, and commonly understood meaning, and where plain language is used a court is bound to interpret that language to mean exactly what it says. If the language of the statute is unambiguous, then there is no room for judicial construction and the clearly expressed intent of the legislature must be given effect.'"
DeKalb County LP Gas Co. v. Suburban Gas, Inc.,"It is true that when looking at a statute we might sometimes think that the ramifications of the words are inefficient or unusual. However, it is our job to say what the law is, not to say what it should be. Therefore, only if there is no rational way to interpret the words as stated will we look beyond those words to determine legislative intent. To apply a different policy would turn this Court into a legislative body, and doing that, of course, would be utterly inconsistent with the doctrine of separation of powers."
We have found no case in which the provisions of the Alabama Uniform Fraudulent Transfer Act, §§
The trial court should have granted the defendants' motions for a summary judgment. The order denying those motions is reversed, and the cause is remanded.
REVERSED AND REMANDED.
Maddox, Houston, Cook, See, Lyons, Brown, and England, JJ., concur.
Reference
- Full Case Name
- Folmar Associates LLP v. Pamela Holberg.
- Cited By
- 26 cases
- Status
- Published