Appeal from the District Court of Lincoln County The Honorable Jere A. Ryckman, Judge
The opinion of the court was delivered by: Davis, Justice.
Before KITE, C.J., and HILL, VOIGT, BURKE, and DAVIS, JJ.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of any typographical or other formal errors so that correction may be made before final publication in the permanent volume.
[¶1] While a lawsuit by Appellees David and Elizabeth Speaks was pending against Rosemary and Byron Baker, the Bakers transferred two parcels of real property to their son Nathan. The original case resulted in a judgment against Byron, but a dismissal of the claims against Rosemary. Appellees' judgment against Byron was upheld on appeal. After learning of the decision in that case, Nathan Baker transferred the properties to a limited liability company he and his family controlled.
[¶2] Appellees filed this case under the Uniform Fraudulent Conveyance Act and its successor, the Uniform Fraudulent Transfer Act. While the case was pending, the limited liability company transferred the two pieces of property to trusts controlled by Rosemary Baker. Appellees moved for summary judgment.
[¶3] The district court found that all of the conveyances were fraudulent and granted a summary judgment permitting execution on the properties. We reverse and remand because although the district court correctly found the conveyances to be fraudulent, Appellees failed to make the required prima facie showing that the properties were subject to execution on a judgment against Byron Baker alone.
[¶4] 1. Did Appellees make the required prima facie showing that they were entitled to execute on the property in question under the Uniform Fraudulent Conveyance Act?
2. Are Appellants judicially estopped from arguing that Rosemary Baker owned an interest in the real property involved in this case?
[¶5] This appeal involves a confusing and apparently obfuscatory series of real estate transfers calculated to prevent the property from being executed upon to satisfy a judgment. The facts are complex, and the procedural history of this case is tortuous at best.
Prior Litigation and Property Transfers
[¶6] During 1999, Rex Byron Baker (Byron) entered into an agreement to build a log cabin for Appellees David and Elizabeth Speaks (the Speaks) on land they owned in Lincoln County.*fn1 Baker v. Speaks, 2008 WY 20, ¶ 3, 177 P.3d 803, 805 (Wyo. 2008)
(Baker I). The work went badly, and the Speaks sued Byron and Rosemary Baker (Rosemary) for damages related to poor workmanship as well as failure to complete the construction and to pay subcontractors in 2003 -- the date suit was filed is not clear in this record or in the opinion in the above case. Id. at ¶ 8, 177 P.3d at 805--06.
[¶7] The Speaks claimed that Rosemary was a partner with Byron in his construction business, and that she was therefore responsible in damages for the allegedly faulty and incomplete work. Rosemary's relationship to Byron at the time the suit was filed is unclear, and remains so to this day. A recorded warranty deed to Lot 16 of the Corsi Ranchettes Subdivision dated in 1998 conveyed the property to R. Byron Baker and Rosemary K. Baker, husband and wife as tenants by the entireties. The deed was not recorded until 2001. The record contains no pre-2003 conveyance to the Bakers of a second parcel involved in this case, Lot 5 of the Misty Meadows Subdivision, which adjoins the Corsi Ranchettes parcel.
[¶8] An affidavit executed by Rosemary and filed shortly after this action was commenced attests that at some unspecified point in time Rosemary and Byron owned the real property later conveyed, presumably referring to both lots, as tenants by the entireties. In an excerpt from Rosemary's deposition which was filed in this case, there is an oblique and incomplete reference to the possibility of a common law marriage in Utah.*fn2
[¶9] In its decision letter in Baker I, the trial court found that Rosemary and Byron were not married at the time the Speaks contract was negotiated or while the construction work was in progress. It did not specify whether the Bakers were ever married with proper formality or at common law in another state, whether they were married and then divorced, or whether they had been married, divorced, and then remarried at some point in time before the decision was rendered. The trial judge in Baker I did not need to make any of those findings.
[¶10] The record supporting the finding that Rosemary and Byron were
not married at certain times is not before us. It is clear that
Rosemary has gone by various names, including Rosemary Baker, Rosemary
Kenworthy, Rose Baker, and Rose Kenworthy. There is no doubt that
these are all the same person, but the nature of Rosemary's relationship to Byron at critical times remains a mystery.*fn3
It is undisputed, however, that whatever their legal
relationship may have been at certain times, Byron and Rosemary are in
fact the father and mother of Nathan Baker, who figures prominently in
events about to be described.
[¶11] On May 16, 2003, the trial judge entered a scheduling order setting Baker I for trial on October 15, 2003. Unbeknownst to the Speaks, Rosemary and Byron transferred whatever interests they held in both lots to Nathan by quitclaim deeds dated October 1, 2003. The conveyances do not describe Rosemary and Byron as husband and wife.
[¶12] The trial did not take place on October 15, 2003, but was instead ultimately rescheduled to April 26-28, 2005. The trial judge granted the Speaks judgment against Byron for the sum of $239,359.37. Baker I, ¶ 8, 177 P.3d at 805--06. It found that Rosemary was not a partner in Byron's construction business, and therefore dismissed the claims against her. Counterclaims by the Bakers were also dismissed. The net effect of this ruling was that Byron became a judgment debtor of the Speaks, while Rosemary did not.
[¶13] While the appeal in Baker I was being perfected, briefed, and then decided, Rosemary lived on one parcel of the conveyed property with the parties' daughters, while Nathan lived on the other. Byron occasionally lived with Rosemary. The Speaks evidently did not attempt to execute on the judgment while the appeal was pending.
[¶14] Baker I affirmed the trial court's decision on February 22, 2008. Five days later, on February 27, 2008, Nathan transferred the Corsi Ranchettes and Misty Meadows lots to Bryner Farms, L.L.C. Bryner Farms was a Nevada limited liability company. Its managing members were Rosemary and Nathan, as well as Byron and Rosemary's daughters. Nathan later testified in deposition that Bryner Farms was "destroyed by this lawsuit a month after its conception and dissolved shortly after." According to him, Bryner Farms never actually commenced doing business, but he transferred the two parcels described above to it with the intention of starting a "nursery business, garlic business, produce, furniture, the whole wide variety of things."
[¶15] In September of 2007, before the decision in Baker I, the Speaks obtained a title report which reflected the transfer of the Corsi Ranchettes lot to Nathan in October of 2003. They filed this action against Byron and Nathan on March 4, 2008, alleging that the conveyance was fraudulent as that term is defined by the Uniform Fraudulent Transfer Act. They sought an order permitting execution on the Corsi Ranchettes property to satisfy the judgment against Byron. At the time they were evidently unaware of the existence of the Misty Meadows parcel or of the transfer of either property to Bryner Farms.
[¶16] The Speaks' claims continued to evolve by amendment as they discovered additional transfers. Byron filed a Chapter 7 bankruptcy in Wyoming on September 22, 2008, and he was discharged on December 31, 2008. The record reflects no action by the United States Bankruptcy Court concerning any interest in the two lots Byron was accused of having fraudulently transferred. The parties have not addressed what impact, if any, a finding of a fraudulent conveyance might have on the discharge he was granted in that forum, and that is not an issue we must consider. Byron was dismissed from this case after the discharge, although he continued to play a role in it, as will be seen.
[¶17] On January 19, 2010, while this case was still pending in district court, a third set of transfers occurred. Bryner Farms transferred the Corsi Ranchettes lot to Pat's Dream Project Trust, and the Misty Meadows lot to the MME Trust by separate quitclaim deeds. Rosemary is the trustee of both trusts, and Nathan is a beneficiary of both. Nathan admitted in a later deposition that these transfers were made to protect the property from the Speaks, and that they were like "taking money from one pocket and sticking it in the other pocket." Rosemary continues to live in the house in the Corsi Ranchettes lot, along with her daughters, and at times, Byron. Nathan lives in an apartment attached to a workshop on the Misty Meadows lot, because, in his words, "I'm a man you know. I'm a bachelor guy, you know."
Proceedings in the Trial Court
[¶18] The trial court record could hardly be more confusing than it is, and we acknowledge the district judge's extraordinary patience with Nathan and Rosemary's repeated efforts at delay, their ever-shifting theories, and their overt lack of respect for the court. At least three attorneys were retained and discharged amid accusations that they had made reasonable accommodations or stipulations not approved by Nathan. Both Nathan and Rosemary attempted to represent Bryner Farms, an L.L.C., which the trial court would not permit them to do. Nathan unsuccessfully challenged the judge for cause. Numerous motions to dismiss were filed. We will not discuss all of the procedural maneuvering that took place because it is not important to the resolution of this appeal. We will attempt to summarize only the pertinent portions of the record.
[¶19] The Speaks amended their complaint a number of times to address the transfers as they discovered them. They ultimately joined Bryner Farms, and filed a motion for summary judgment. They claimed that each of the transfers, beginning with the transfer from Rosemary and Byron to Nathan in 2003, was fraudulent, and that they should be allowed to execute on the property as permitted by both the Uniform Fraudulent Conveyance Act and its successor, the Uniform Fraudulent Transfer Act. Because the Uniform Fraudulent Conveyance Act was replaced by the Uniform Fraudulent Transfer Act in 2006, each act applied, depending on the dates when transfers were made. See 2006 Wyo. Sess. Laws, ch. 55, § 2 (repealing the Uniform Fraudulent Conveyance Act and enacting the Uniform Fraudulent Transfer Act in its stead, effective July 1, 2006).
[¶20] Appellants' position evolved as the litigation proceeded. At one point, Nathan Baker pointed out in a motion to dismiss that Rosemary Baker had some interest in the properties involved in the case, and that her interest, which had been transferred to him in 2003, was not subject to execution on a judgment against Byron alone. He claimed that the Corsi Subdivision lot was supported by consideration in the form of the "sweat equity" he had put into the property. He also claimed that the transfer of the property had taken place much earlier, and that the deed in 2003 was just a belated formality, whatever that may mean.
[¶21] Counsel for the parties eventually arrived at a stipulation for purposes of a scheduled trial. The only issue of fact identified was "Whether R. Byron Baker transferred his interest in Lot # 16 of the Corsi Ranchettes, Second Filing and Lot # 5 of the Misty Meadows Subdivision to Rosemary K. Baker in 1998." This issue turned on two documents which made their appearance in the case on December 27, 2011. They were attached to an "Objection to Plaintiff's Motion for Summary Judgment" filed by Appellants' counsel.
[¶22] The documents are handwritten, and they were not notarized or recorded, although they do bear the illegible signature of a purported witness. The text of each is similar, and reads as follows in the case of the Corsi Ranchettes parcel:
I, Rex Byron Baker, in good faith, do hereby waive and release to Rosemary Kenworthy a/k/a Rosemary K. Baker, any and all interest in Lot #16 of Corsi Ranchettes Subdivision, (as recorded and platted in the Office of the Lincoln County Clerk, in Kemmerer Wyoming), for fair and valuable consideration in trade for Rosemary Kenworthy's aka Rosemary K. Baker's interest in Greys River Square, Lot 608C, Lakeview Estates Subdivision, real property located in Alpine, WY, County of Lincoln, State of Wyoming.
Dated this 30th day of ...