PJC Business

F RAUD AND N EGLIGENT M ISREPRESENTATION

PJC 105.29

“whenever feasible” mandates broad-form submission in any or every instance in which it is capable of being accomplished). Good faith. Notice of fraudulent intent can be either actual or constructive. Hahn v. Love , 394 S.W.3d 14, 31 (Tex. App.—Houston [1st Dist.] 2012, pet. denied). “A transferee must show that its conduct was honest in fact, reasonable in light of known facts, and free from willful ignorance of fraud.” Janvey v. GMAG, L.L.C. , 592 S.W.3d 125, 129 (Tex. 2019). A transferee who takes property with knowledge of such facts as would excite the suspicions of a person of ordinary prudence and put him on inquiry of the fraudulent nature of an alleged transfer does not take the property in good faith. Hahn , 394 S.W.3d at 31. See also Janvey , 592 S.W.3d at 129–32; GE Capital Com mercial, Inc. v. Worthington National Bank , 754 F.3d 297, 312–13 (5th Cir. 2014). A transferee on inquiry notice of fraud must conduct a diligent investigation to prove good faith. Janvey , 592 S.W.3d at 131. Burden of proof. Like other affirmative defenses, the burden of proof is on the defendant transferee/obligee. See Hahn , 394 S.W.3d at 30. Subsequent transferees. Even if a transfer from the debtor is voidable, no judg ment can be entered against subsequent transferees (those following the first trans feree) if they took in good faith for value. See Tex. Bus. & Com. Code § 24.009(b)(2). In suits against subsequent transferees, the above question may be used with appropri ate modifications to submit that question. Reasonably equivalent value. “Value” and “reasonably equivalent value” are addressed in Code section 24.004. Whether a debtor obtained reasonably equivalent value in a particular transaction is determined from a reasonable creditor’s perspective at the time of the exchange, without regard to the subjective needs or perspectives of the debtor or transferee and without the wisdom hindsight often brings. Janvey v. The Golf Channel, Inc. , 487 S.W.3d 560, 582 (Tex. 2016). The requirement of reasonably equivalent value can be satisfied with evidence that the transferee (1) fully performed under a lawful, arm’s-length contract for fair market value, (2) provided consideration that had objective value at the time of the transaction, and (3) made the exchange in the ordinary course of the transferee’s business. Janvey , 487 S.W.3d at 564. Other instructions or definitions may be necessary depending on the facts of the case. For example, if there is evidence regarding a range of values, the following instruction regarding reasonably equivalent value may be appropriate: “Reasonably equivalent value” means an amount that at the time of the transfer was within the range of values for which such trans fers [ or obligations ] would occur in an arm’s-length transaction.

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