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In re Pfister

United States Court of Appeals, Fourth Circuit

April 17, 2014

In Re: PATRICIA SUSAN PFISTER, Debtor. ROBERT F. ANDERSON, Plaintiff - Appellant,
v.
ARCHITECTURAL GLASS CONSTRUCTION, INC., Defendant - Appellee

Argued December 11, 2013

Appeal from the United States District Court for the District of South Carolina, at Spartanburg. (7:12-cv-01825-HMH; 09-05670-hb; 10-80162-hb). Henry M. Herlong, Jr., Senior District Judge; Helen E. Burris, Bankruptcy Judge.

ARGUED: Richard I. Simons, ANDERSON & ASSOCIATES, P.A., Columbia, South Carolina, for Appellant.

William Norman Epps, III, EPPS, NELSON & EPPS, Anderson, South Carolina, for Appellee.

ON BRIEF: Marilyn E. Gartley, ANDERSON & ASSOCIATES, P.A., Columbia, South Carolina, for Appellant.

Before MOTZ, KING, and SHEDD, Circuit Judges. Judge Motz wrote the opinion, in which Judge King joined. Judge Shedd wrote a dissenting opinion.

OPINION

Page 295

DIANA GRIBBON MOTZ, Circuit Judge:

Seven months before declaring bankruptcy, Patricia Pfister transferred her interest in real property to Architectural Glass Construction, Inc. (" AGC" ), a corporation wholly owned by her husband. After a trial, the bankruptcy court made findings of fact and concluded on the basis of those findings that this conveyance was constructively fraudulent. The bankruptcy court therefore ordered AGC to reimburse the bankruptcy estate in the amount of $43,500. The district court found no fault in the bankruptcy court's findings of fact, but nonetheless reversed. For the reasons that follow, we reverse in part, vacate in part, and remand the case to the district court for further proceedings consistent with this opinion.

I.

The following facts were found by the bankruptcy court or are otherwise undisputed.

On May 10, 2001, Mrs. Pfister and her husband, Phillip Pfister, acquired undeveloped

Page 296

real property in Greer, South Carolina. Branch Banking & Trust (" BB& T" ), as mortgagee, entirely financed the transaction. Under the terms of the mortgage, Mr. and Mrs. Pfister granted the bank a security interest in the property and undertook to repay the loan.

Originally, Mr. Pfister intended to have his wholly owned corporation, AGC, buy the property. The company, not Mr. and Mrs. Pfister, would utilize the land. An initial contract specified AGC as the buyer, but on the date of purchase, Mr. Pfister changed his mind. On the advice of his accountant, Mr. Pfister opted to buy the land himself, then lease the property to AGC. This, he believed, would lower the company's taxes, benefiting him as the company's sole owner. In furtherance of this intent, Mr. Pfister titled the property in the name of himself and Mrs. Pfister. As Mr. and Mrs. Pfister both testified on repeated occasions, the decision to title the property in their names -- not AGC's -- was considered and intentional.

Ultimately, AGC never paid any rent to the Pfisters. Instead, AGC made mortgage payments directly to the bank. The Pfisters did not transfer title to AGC. Thus, although the company paid for the land, Mr. and Mrs. Pfister remained its record owners.

On January 24, 2002, the Pfisters refinanced their mortgage. In an agreement with South Trust Bank (" South Trust" ), the Pfisters granted South Trust a security interest in the property in exchange for $168,000. In contrast to the mortgage with BB& T, the agreement with South Trust listed AGC as the borrower. As a result, the company bore legal responsibility for making the loan repayments. Of course, the new obligation did not change the parties' pattern of practice: AGC continued, as it always had, to shoulder the property's mortgage expense.

Over the next six years, the property was mortgaged several more times. In each case, Mr. and Mrs. Pfister granted the bank a security interest in the property. The mortgages differed, however, with respect to the identity of the borrower. One contract specified Mr. and Mrs. Pfister as the borrowers; others ...


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