PJC Business

F RAUD AND N EGLIGENT M ISREPRESENTATION

PJC 105.32

PJC 105.32 Remedies for Fraudulent Transfers

(Tex. Bus. & Com. Code § 24.008) (Comment)

The remedy for a fraudulent transfer will often be a question of law for the court. This comment describes the remedies available, the circumstances in which additional jury findings may be appropriate to support those remedies, and the questions that should then be submitted. The defrauded creditor need not be the plaintiff, and defen dants may include the debtor and the transferee. See Tex. Bus. & Com. Code §§ 24.005(a)(1), 24.008. Remedies for fraudulent transfers generally. A creditor affected by a fraudu lent transfer can seek equitable remedies under section 24.008 or money damages under section 24.009(b). Tex. Bus. & Com. Code §§24.008, 24.009(b); Chu v. Hong , 249 S.W.3d 441, 446 (Tex. 2008) (“[T]he Act provides for equitable remedies to rescind the fraudulent transfer, or a damage assessment limited to the amount of the property transferred.”). Equitable remedies under Code section 24.008. The equitable remedies allowed under section 24.008 are “avoidance of the transfer or obligation to the extent necessary to satisfy the creditor’s claim” (Tex. Bus. & Com. Code § 24.008(a)(1)); “an attachment or other provisional remedy against the asset transferred or other property of the transferee” (§ 24.008(a)(2)); “an injunction against further disposition . . . of the asset transferred or of other property” (§24.008(a)(3)(A)); “appointment of a receiver” (§24.008(a)(3)(B)); “any other relief the circumstances may require” (§ 24.008(a)(3)(C)); or, if the creditor has obtained a judgment against the debtor, per mission to “levy execution on the asset transferred or its proceeds” (§ 24.008(b)). Additional jury findings not generally required for equitable remedies under Code section 24.008. While litigants are entitled to a trial by jury when pursuing equitable remedies, the jury may decide only factual questions that predicate the avail ability of equitable relief and not the ultimate question of whether and what form of equitable relief should be granted. The latter question is reserved for the court. Longview Energy Co. v. Huff Energy Fund LP , 533 S.W.3d 866, 874 (Tex. 2017). In most cases, the factual questions that predicate the availability of equitable relief under section 24.008 will be submitted in the liability questions. Cf. Caballero v. Cen tral Power & Light Co. , 858 S.W.2d 359, 361 (Tex. 1993) (analogous statutory scheme under Texas Commission on Human Rights Act, in which juries find liability and judges craft equitable relief). A separate remedies question is thus rarely required if the creditor seeks relief under only section 24.008. In particular, and with one exception, additional jury findings are not required to support equitable relief under section 24.008. For example, a jury finding on the value of the fraudulently transferred asset is not required to support relief under section 24.008 because none of the remedies in section 24.008 is predicated on such a finding.

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