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UBS Financial Services, Inc. v. Lacava

Court of Appeals of Ohio, Eighth District, Cuyahoga

August 2, 2018

UBS FINANCIAL SERVICES, INC. PLAINTIFF-APPELLEE
v.
ALBERT V. LACAVA, JR., ET AL. DEFENDANTS-APPELLANTS

          Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-16-868794

          ATTORNEY FOR APPELLANT Carol Dillon Horvath P.O. Box 42044 Brookpark, Ohio 44142

          ATTORNEYS FOR APPELLEE For UBS Financial Services, Inc.

          Joseph S. Simms Koehler Fitzgerald, L.L.C. 1301 East Ninth Street 3330

          Robert D. Barr Christine M. Cooper Koehler Fitzgerald, L.L.C.

          For Assurance Investment Management, L.L.C. Joseph J. Triscaro Triscaro & Associates,

          For Huntington National Bank Huntington National Bank, pro se Attn: Legal Department EA2W34 7 Easton Oval Columbus, Ohio 43219 For JP Morgan Chase Bank, N.A.

          JP Morgan Chase Bank, N.A., pro se Court Orders & Levies Department P.O. Box 183164 Columbus, Ohio 43218

          For Northwest Bank Northwest Bank, pro se Attn: Product Support Services 100 Liberty Street Warren, Pennsylvania 16365

          BEFORE: Boyle, P.J., Celebrezze, J., and Jones, J.

          JOURNAL ENTRY AND OPINION

          MARY J. BOYLE, PRESIDING JUDGE

         {¶1} Defendant-appellant, Mary Ellen Lacava, appeals the trial court's order granting summary judgment to the plaintiff-appellee, UBS Financial Services, Inc. She raises nine assignments of error for our review:

1. Trial court erred by ignoring Appellant __ Transferee's and Appellant __ Debtor Mr. Lacava submitted evidence satisfying the necessary two elements listed in R.C. 1336.08(A) for a transfer to not be fraudulent under R.C. 1336.04 by a Transferee, irrespective of the outcome to the claims against the debtor.
2. Trial court erred by ignoring Appellant __ Transferee's and Appellant __ Debtor Mr. Lacava submitted evidence satisfying the necessary element listed in R.C. 1336.08(E)(1) for a transfer to not be fraudulent under 1336.05 by a Transferee, irrespective of the outcome to the claims against the debtor.
3. Trial court erred by ignoring Appellant __ Transferee's and Appellant __ Debtor Mr. Lacava submitted evidence satisfying the necessary element listed in R.C. 1336.08(E)(2) for a transfer to not be fraudulent under section R.C. 1336.05 by a Transferee, irrespective of the outcome to the claims against the debtor.
4. Trial court erred by ignoring Appellant __ Transferee's submitted evidence satisfying the necessary element listed in R.C. 1336.08(C)(1) for her statutory law protected right to retain any interest in the asset transferred, irrespective of the outcome to the claims against the debtor.
5. Trial court erred by ignoring Appellant __Transferee's and Appellant __ Debtor Mr. Lacava submitted evidence satisfying the necessary element listed in R.C. 1336.08(C)(2) for her statutory law protected right to retain any interest in the asset transferred, irrespective of the outcome to the claims against the debtor.
6. Trial court erred in not following the statutory language of R.C. 1336.01(A)(3), (G), (K) in regards to Appellant Transferee Mrs. Lacava, irrespective of the outcome to the claims against the debtor.
7. Trial court erred in not applying the sections in R.C. 1336.08 detailed in Error #1, and either, #2 or #3, which nullifies R.C. 1336.08(B)(1)(a) in respect to Appellant __Transferee Mrs. Lacava, irrespective of the outcome to the claims against the debtor.
8. The trial court erred in violating the law under the Consumer Credit Protection Act ("CCPA") not allowing any income to the Transferee, Mrs. Lacava, and hence, the Lacava family.
9. Trial court erred in not following the statutory exemptions of R.C. 2329.66(A)(3) for Appellant Transferee Mrs. Lacava and dependent 60 year old brother with mental health issues and unable to work.

         {¶2} Finding no merit to her assignments of error, we affirm.

         I. Procedural History and Factual Background

         {¶3} Mrs. Lacava's husband, Albert Lacava, previously worked for UBS. During his employment, specifically on or around August 27, 2004, Mr. Lacava received two loans from UBS, secured through promissory notes. On July 17, 2008, UBS terminated Mr. Lacava's employment. As of his termination date, Mr. Lacava had not yet satisfied the full amount of the promissory notes.

         {¶4} On December 26, 2009, Mr. Lacava filed a Statement of Claim with the Financial Industry Regulatory Authority ("FINRA") against UBS and certain UBS employees, asserting claims for breach of contract, breach of covenant of good faith and fair dealing, failure to supervise, tortious interference, wrongful termination, libel, and slander. UBS filed an answer and a counterclaim, alleging that Mr. Lacava breached the promissory notes and still owed the outstanding and unforgiven balance on those notes. The FINRA panel held a six-day evidentiary hearing on the matter. On February 9, 2010, the FINRA panel denied and dismissed Mr. Lacava's claims and awarded UBS $196, 953.89 ("the Award") for its counterclaim.

         {¶5} Prior to the arbitration proceedings, on August 22, 2008, Mr. Lacava formed his own investment-management company, Assurance Investment Management, L.L.C. ("AIM"). According to the original operating agreement for AIM, AIM's principal place of business was his residential address.[1] Mr. Lacava was the sole member of AIM, had full management rights, and was entitled to all of the company's profits.

         {¶6} On January 21, 2010, however, before the FINRA panel announced its decision in favor of UBS, Mr. Lacava amended the operating agreement for AIM, changing it to a multimember limited liability company. Under the new operating agreement, Mr. Lacava's wife, Mary Ellen Lacava, not only became a member of AIM but also obtained 94.8 percent ownership interest. According to the amended operating agreement, Mrs. Lacava made a capital contribution of $140, 000 to AIM. Further, the operating agreement established Mr. Lacava as the president and treasurer of AIM and Mrs. Lacava as the secretary.

         {¶7} After the FINRA panel released its decision, UBS requested confirmation of the award from the Cuyahoga County Court of Common Pleas on April 1, 2010. On June 17, 2010, the common pleas court entered default judgment against Mr. Lacava, who failed to respond or contest UBS's request.

         {¶8} Despite UBS's multiple attempts to collect on its judgment against Mr. Lacava, it was unable to recover. While pursuing satisfaction of its judgment, UBS discovered AIM's restated January 21, 2010 operating agreement, which gave Mrs. Lacava majority ownership interest in AIM and effectively shielded Mr. Lacava's assets in AIM from UBS.

         {¶9} As a result, UBS filed a complaint in January 2012 against Mr. and Mrs. Lacava alleging that Mr. Lacava fraudulently transferred his ownership interest to his wife in an effort to defraud UBS. In June 2015, however, UBS voluntarily dismissed its complaint without prejudice.

         {¶10} On September 9, 2016, UBS filed a second complaint against Mr. Lacava, Mrs. Lacava, and AIM. In its complaint, UBS set forth one count for a request for charging order under R.C. 1705.19, one count for a request for appointment of receiver under R.C. 2735.01, and one count to set aside the transfer of ownership of AIM as a fraudulent transfer under R.C. 1336.04(A). UBS also subsequently filed a motion for appointment of receiver that the court denied.

         {¶11} All of the parties filed motions for summary judgment. The trial court granted UBS's motion for summary judgment, denied Mr. and Mrs. Lacava's motions for summary judgment, and granted AIM's motion for summary judgment on the issue of statute of limitations, but ordered AIM to "freeze any assets and accounts immediately[, which would] only be released to satisfy th[e] judgment." Additionally, in its order, the trial court stated:

The court grants the following relief in favor of UBS and against Mr. Lacava and Mrs. Lacava, and against AIM so far as it holds assets which are recoverable to satisfy this judgment and the prior judgment obtained by UBS:
1. The charging order against the member interests of Mr. Lacava and Mrs. Lacava in AIM is granted;
2. The transfer of money to AIM in the amount of $140, 000.00 is voided and the money is to be held for purposes of ...

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