United States District Court, W.D. Wisconsin
OPINION AND ORDER
BARBARA B. CRABB District Judge.
From 2008 to 2010, plaintiff Primex Plastics Corporation sold various plastic products to defendant Trienda, LLC, under a credit agreement. However, Trienda started falling behind on its payments and failed to pay plaintiff approximately $2.7 million for invoiced goods. Plaintiff contends that Trienda, defendant Curtis Zamec (Trienda’s majority owner) and several Zamec family trusts may be held liable for breach of fiduciary duty and violating the Wisconsin Fraudulent Transfers Act. In addition, plaintiff asks the court to order defendants to hold in trust the amount of money that they owe plaintiff.
Plaintiff has filed a motion for partial summary judgment with respect to its claims under the Wisconsin Fraudulent Transfers Act and its request for a constructive trust. Dkt. #13. Plaintiff argues that defendants violated the Act when Trienda transferred $7 million to the Nancy Zamec Trust in December 2009 without getting anything of comparable value in return, even though defendants knew or should have known that the transfer would render Trienda unable to pay its debt to plaintiff. The parties recently agreed to dismiss the claims against Trienda, dkt. #41, but none of the parties suggest that Trienda’s dismissal has any effect on plaintiff’s claims against the other defendants. Both sides assume that the other defendants may be held jointly and severally liable for Trienda’s conduct, at least for the purpose of plaintiff’s motion, so I will do the same.
The parties agree that plaintiff must prove its claims under the Wisconsin Fraudulent Transfers Act by clear and convincing evidence. E.g., Operating Engineers Local 139 Health Benefits Fund v. Huml Contractors Inc., No. 08-C-1103, 2012 WL 664494, at *6 (E.D. Wis. Feb. 28, 2012); SJ Properties Suites v. STJ, P.C., 759 F.Supp.2d 1032, 1043 (E.D. Wis. 2010); Mann v. Hanil Bank, 920 F.Supp. 944, 950 (E.D. Wis. 1996). Although plaintiff has submitted some evidence in favor of its claims, defendants have cited evidence that points in the other direction. Because I conclude that plaintiff’s evidence is not sufficient to show as a matter of law that Trienda violated the Act and that there are genuine issues of material fact, I am denying plaintiff’s motion for partial summary judgment.
A. Subject Matter Jurisdiction
As a basis for jurisdiction, plaintiff relies on 28 U.S.C. § 1332, which requires diversity of citizenship between plaintiff and defendants and an amount in controversy more than $75, 000. Because plaintiff alleges that defendants owe millions of dollars, the amount in controversy requirement is met. As requested by the court, dkt. #40, plaintiff has filed supplemental materials showing diversity. Plaintiff is a citizen of New Jersey and Indiana, dkt. #29 at ¶ 1; Zamec is a citizen of Illinois and he is the sole trustee for each of the trusts. Dkt. ##42 and 43. Because Trienda has been dismissed from the case, I need not consider its citizenship.
Plaintiff raises claims under two related statutes that are both part of the Wisconsin Fraudulent Transfers Act, Wis.Stat. §§ 242.04(1) and 242.05(1):
A transfer made or obligations incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:
(a) With actual intent to hinder, delay or defraud any creditor of the debtor; or
(b) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:
1. Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or
2. Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor's ...