Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Matthews v. Serafin

February 20, 2001

GARY MATTHEWS, PLAINTIFF-APPELLANT,
v.
CLAIRE L. SERAFIN AND CLAIRE WIEGAND, AS TRUSTEES OF THE MITCHELL C. SERAFIN TRUST; PIERRE SERAFIN, AS SPECIAL ADM'R FOR MITCHELL C. SERAFIN; AND CLAIRE SERAFIN, AS EX'R OF THE ESTATE OF MITCHELL C. SERAFIN, DECEASED. DEFENDANTS-APPELLEES.



Appeal from the Circuit Court for the 10th Judicial Circuit, Peoria County, Illinois No. 96--LM--2628 Honorable John A. Barra Judge, Presiding

The opinion of the court was delivered by: Justice Breslin

Plaintiff Gary Matthews brought this action claiming that Mitchell Serafin, deceased, unlawfully transferred his entire estate into a revokable trust to avoid paying a judgment. The action was filed against the trustees of Serafin's trust and the executors of his estate (collectively trustees). During a bench trial, the court entered an order at the close of Matthews' case directing a verdict in favor of the trustees. We affirm and hold that a debtor does not violate the Illinois Uniform Fraudulent Transfer Act (Transfer Act) (740 ILCS 160/1 et seq. (West 1998)) when he transfers his estate into a revocable trust so long as he is not made insolvent and does not act to defraud a creditor.

FACTS

In 1987, Northpoint, Inc. (Northpoint), leased property from Matthews located at 1500 North East Jefferson Street, Peoria, Illinois. Serafin, president of Northpoint, personally guaranteed Northpoint's obligation. The lease was to expire in the fall of 1990 but was extended to February of 1995 per an option agreement in the lease. The agreement extending the lease was not guaranteed by Serafin.

In January of 1992, Serafin signed a revokable trust agreement naming himself as trustee. The agreement transferred certain stock and a promissory note made by UFS Savings Center, Inc. (Savings Center), into the trust. The agreement provided that Serafin was to receive income from the trust in "quarterly or other convenient installments" but no less than once a year.

In the fall of that same year, Northpoint vacated the Peoria property, discontinued paying rent, and filed a declaratory judgment action against Matthews claiming it was constructively evicted. Matthews, in turn, filed an action against Serafin and Northpoint to determine the right to possession of the property and to collect the unpaid rent. The trial court gave Matthews possession of the property but reserved decision on the issues of unpaid rent and constructive eviction.

In December of 1992, Serafin transferred additional property into the trust. The property included his investments in Northpoint and Savings Center as well as his "clothing, jewelry, automobiles, household goods, provisions, furniture, furnishings and equipment and all interests in real estate." For four months the trust paid Serafin $5,200 a month until he died in May of 1993. Upon his death, the trust's assets were valued at $973,854 the majority of which remained in trust for Serafin's wife and daughter.

Several years after Serafin's death, the trial court found in favor of Matthews and against Serafin's estate regarding the issues of unpaid rent and constructive eviction. The court awarded Matthews $33,119.76, representing $6,300 for past rent and $26,819.76 for attorney fees and costs. The record provides no information regarding whether Matthews made a demand to the trustees to pay the judgment or whether the trustees refused to pay. Nevertheless, Matthews filed this action three months later to set aside Serafin's last transfer into his trust, claiming Serafin fraudulently transferred all his assets into the trust to avoid paying the judgment in violation of sections 6(a), 5(a)(1) and 5(a)(2) of the Transfer Act (740 ILCS 160/6(a), 5(a)(1), (a)(2) (West 1998)).

At the close of Matthews' case, the trustees made a motion for a directed verdict, which is governed by section 2-110 of the Code of Civil Procedure (Code) (735 ILCS 5/2-1110 (West 1998)). The trial court granted the motion, finding that Matthews failed to prove that Serafin was insolvent or that he became insolvent as a result of the transfer. The trial court's decision was based solely on section 6(a) of the Transfer Act. Shortly thereafter, Matthews filed a motion to reconsider his claim under sections 5(a)(1) and (a)(2) of the Transfer Act. The motion was denied and this appeal followed.

ANALYSIS

On appeal, Matthews disputes the trial court's determination that he failed to prove Serafin fraudulently transferred assets in violation of the Transfer Act. When a trial court examines the weight of the evidence at the close of a plaintiff's case, the court's determination will not be overturned unless it is against the manifest weight of the evidence. Evans v. Gurnee Inns, Inc., 268 Ill. App. 3d 1098, 645 N.E.2d 556 (1994).

Matthews first argues the trial court erred when it determined that he failed to establish Serafin was insolvent as required by section 6(a) of the Transfer Act. Section 6(a) states that "[a] transfer made or obligation incurred by a debtor is fraudulent *** if the debtor made the transfer *** without receiving a reasonably equivalent value in exchange for the transfer *** and the debtor was insolvent at that time or *** became insolvent as a result of the transfer or obligation." 740 ILCS 160/6(a) (West 1998).

After careful review of the record, we cannot say that the trial court's conclusion that Matthews failed to prove Serafin was insolvent was against the manifest weight of the evidence. No evidence was presented establishing that Serafin was not paying his debts as they became due, either before or after the transfer of assets to the trust. Serafin received $5,200-per-month income from the trust, and if this judgment had issued during his lifetime he could have paid it from these funds. Moreover, no evidence was presented that after Serafin's death and after the judgment was entered his estate could not pay the judgment. In fact, the record fails to indicate whether Matthews ever made a demand to the trustees or whether they refused to pay. Accordingly, we affirm the trial court's holding that Matthews failed to prove that Serafin was insolvent as required by section 6(a) of the Transfer Act.

Matthews argues that Serafin also violated section 5(a)(1) of the Transfer Act. Section 5(a)(1) establishes that a transfer by a debtor is fraudulent to a creditor if the debtor made the transfer "with actual intent to hinder, delay, or defraud any creditor of the debtor" either ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.