July 17, 2015
This week, the Supreme Court issued no opinions, but did accept one Certified Question from the United States Court of Appeals for the Fifth Circuit in a high-stakes case brought under the Texas Uniform Fraudulent Transfer Act, reviewed below.
Janvey v. The Golf Channel, Case 15-0489
The case arises out of a contract between the Golf Channel, Inc. and Allen Stanford, a two-year agreement for an array of marketing services. Allen Stanford allegedly operated a multi-billion dollar Ponzi scheme through more than 130 affiliated entities centered around Stanford International Bank Limited. When the SEC uncovered Stanford’s alleged Ponzi scheme, the SEC filed a lawsuit in the Northern District of Texas against Stanford and related entities, and the court-appointed receiver filed suit to recover $5.9 million from the Golf Channel.
But as the district court asserted, “Golf Channel looks more like an innocent trade creditor than a salesman perpetrating and extending the Stanford Ponzi scheme.” The Golf Channel argued that it was entitled to an affirmative defense-although Standford’s payments were fraudulent-that it received the payments in good faith and for reasonably equivalent value (i.e., marketing on the Golf Channel).
With these issues in mind, the Fifth Circuit certified the following question to the Supreme Court of Texas:
Considering the definition of “value” in section 24.004(a) of the Texas Business and Commerce Code, the definition of “reasonably equivalent value” in section 24.004(d) of the Texas Business and Commerce Code, and the comment in the Uniform Fraudulent Transfer Act stating that “value” is measured “from a creditor’s viewpoint,” what showing of “value” under TUFTA is sufficient for a transferee to prove the elements of the affirmative defense under section 24.009(a) of the Texas Business and Commerce Code?
While the Court is not in conference again until August 27 and 28, so no new opinions are expected until that time, please tune in next Friday for more updates regarding the Court’s opinions and orders, and as always, we hope that our analysis has proved useful to your practice.
The Bassett Firm