Opinion
Civil No. JFM-04-634.
July 9, 2004
MEMORANDUM
Business Loan Express, LLC., has instituted this action against Hekyong Pak and H K Family Trust, LLC. Alleging that the transfer of two properties to H K was fraudulent, plaintiff seeks a declaratory judgment setting aside one of the transfers and a monetary judgment against defendant Pak. Plaintiff has filed a motion for summary judgment. The motion will be granted. However, the amount of the monetary judgment entered against defendant Pak will be $200,000 rather than the $1,106,178.56 judgment requested by plaintiff.
Defendant Hekyong Pak has filed a "Response Memorandum in Opposition to Plaintiff's Reply Memorandum" which is, in reality, a surreply memorandum. Although the filing of such a memorandum is unauthorized without leave of court, see Local Rule 105.2.a, I have nevertheless considered it before issuing this opinion.
I.
The relevant facts may be briefly stated. Hosurl and Kyuryon Pak ("Mr. and Mrs. Pak") executed personal guarantees in favor of plaintiff in connection with a loan made by plaintiff to Mepa Acquisition, LLC., a limited liability company in which the Paks were principals. Mepa defaulted on the loan. On June 9, 2003 plaintiff filed a confessed judgment complaint in this court against Mr. and Mrs. Pak. On July 7, 2003, Mr. and Mrs. Pak filed a motion to dismiss the confessed judgment complaint.Hekyong Pak, the defendant in this action, is the only child of Mr. and Mrs. Pak. She is an attorney, and although she did not enter an appearance on behalf of her parents, she prepared the motion to dismiss the confessed judgment complaint filed on July 7, 2003. Approximately five months later, on December 9, 2003, this court entered a judgment in favor of plaintiff against Mr. and Mrs. Pak in the amount of $1,106,178.56. The judgment remains unpaid.
On July 15, 2003, approximately one week after the motion to dismiss the confessed judgment complaint was filed by Mr. and Mrs. Pak, Hekyong Pak caused to be formed H K, which she admits she controls. The following day Mr. and Mrs. Pak transferred to H K, for no consideration, their home at 4 Summer Fields Court, Lutherville, Maryland, and an investment property at 29 W. North Ave., Baltimore, Maryland
In their response to plaintiff's requests for admission, defendants state that there was consideration for these transfers. However, the only consideration cited by them is a note allegedly executed by Mrs. Pak in favor of her brother dated May 10, 1995. This note obviously provided no consideration for a transfer from Mr. and Mrs. Pak to H K.
On August 29, 2003, H K sold the Lutherville property and caused to be transferred to Mrs. Pak's brother a sum of not less than $200,000 realized from the sale. Mrs. Pak's brother lives in Korea, and the money was transferred by wire to a bank account in that country.
II.
Section 15-207 of the Commercial Law Article of the Maryland Code provides:
Every conveyance and every obligation incurred with actual intent, as distinguished from intent presumed in law, to hinder, delay or defraud present or future creditors, is fraudulent as to both present and future creditors.
Here, the undisputed record demonstrates that while a confessed judgment action was pending against them, Mr. and Mrs. Pak — with the assistance of their daughter, Hekyong Pak — transferred two properties to H K, a newly formed limited liability company. These transfers were without consideration. Later, one of the properties was sold and the net proceeds of the sale were wired to a bank in Korea in payment of an alleged obligation owed by Mrs. Pak to her brother. Although defendants argue that this transfer was for consideration, the argument is without support in the record because defendants have presented absolutely no evidence that H K owed anything to Mrs. Pak's brother.
This series of transactions self evidently were a subterfuge to transfer to a family member assets owned by Mr. and Mrs. Pak, who were facing the entry of judgment against them. Indeed, a confessed judgment had previously been filed against them shortly before the transfer of their assets to H K, which occurred shortly after the motion to dismiss the confessed judgment action was filed.
Hekyong Pak used her professional skills as an attorney to effect these transactions for her parents. She controlled H K herself when it transferred the $200,000 to Mrs. Pak's brother. Nevertheless, she contends that she acted without fraudulent intent. That averment is an empty one because the only reasonable inference that can be drawn from the objective circumstantial evidence is that she and her parents did act with fraudulent intent. Mr. and Mrs. Pak apparently were insolvent at the time of the transfer; there was no consideration either for the conveyance of the two properties from Mr. and Mrs. Pak to H K or of the Lutherville property from H K to Mrs. Pak's brother in Korea; litigation against Mr. and Mrs. Pak was pending; the transactions were concealed; defendants have come forward with no evidence to indicate that H K had any purpose other than to serve as a conduit for the conveyance of the property; and, although Mr. and Mrs. Pak apparently ceded control over their properties, they vested control in their daughter who by her own admission controlled H K. These "badges of fraud" are unmistakable and dispositive. See, e.g., United States v. Bowser, 1989 WL 516920 (D. Md. Apr. 3, 1989); Wellcraft Marine Corp. v. Roeder, 314 Md. 186, 550 A.2d 377 (1988); Berger v. Hi-Gear Tire Auto Supply, Inc., 257 Md. 470, 263 A.2d 507 (1970).
Hekyong Pak is the only defendant who has opposed plaintiff's summary judgment motion. H K has not.
The question remains as to the nature of the relief to which plaintiff is entitled. As to H K, because the conveyance of the North Avenue property from Mr. and Mrs. Pak to H K was fraudulent, plaintiff is entitled to have that conveyance set aside. As to Hekyong Pak, because she willfully and intentionally was a member of a conspiracy to defraud plaintiff, plaintiff is entitled to a money judgment against her for the amount of damage she caused it to suffer. Plaintiff claims that the amount of those damages was $1,106,178.56, the amount of her parents' indebtedness to plaintiff. The record establishes, however, that the only damage that Hekyong Pak's actions caused plaintiff to suffer was the $200,000 transferred from H K to Mrs. Pak's brother in Korea. There is no evidence that Mr. and Mrs. Pak had other assets that she caused them to conceal or fraudulently convey that would have been available to satisfy the remainder of Mr. and Mrs. Pak's debt to plaintiff. Accordingly, the amount of the monetary judgment entered against Hekyong Pak will be $200,000, plus interest running from July 16, 2003, the day on which, with Hekyong Pak's assistance, Mr. and Mrs. Pak transferred the Lutherville property to H K.
A separate order effecting the rulings made in this memorandum is being entered herewith.
ORDER
For the reasons stated in the accompanying memorandum, it is, this 9th day of July 2004ORDERED
1. Plaintiff's motion for summary judgment is granted;
2. Judgment is entered in favor of plaintiff against Hekyong Pak in the amount of $200,000, plus interest at the legal rate running from July 16, 2003;
3. The transfer of the property known as 29 W. North Ave., Baltimore, Maryland from Hosurl and Kyuryon Pak to H K Family Trust, LLC. is declared null and void, and title to that property shall revest in the name of Hosurl and Kyuryon Pak; and
4. Costs are awarded in favor of plaintiff against defendants.