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Plausibility of Claim Pertinent to Survive a Motion to Dismiss

Heath v. Evans (In re Evans), Nos. 15-00090 (Chapter 7), 16-00002, 2016 Bankr. LEXIS 3999 (U.S. Bankr. D. Guam Nov. 10, 2016)
Debtor Myrna Castro Evans allegedly quitclaimed two parcels of real property to her husband, Defendant Roy Kenneth Evans, when she executed a divorce and property settlement agreement. Allegedly, the transfer of these two properties was quitclaimed to the Defendant, under duress, for either absent or inadequate consideration within one year of the date she filed for bankruptcy. The Trustee brought a complaint against the Defendant Evans for the avoidance of these fraudulent transfer under §548 of the Bankruptcy Code. The Defendant moved to dismiss the Trustee’s complaint, arguing that the Trustee failed to allege specific facts to state a plausible claim and inadequately plead facts sufficient to satisfy the elements of causes of action related to purported fraudulent transfers of real property. The Trustee contended that the complaint met the pleading requirements of the FRCP, but requested leave to amend his complaint if the Defendant’s motion to dismiss was granted.
The Court found that the Defendant was correct that the Trustee failed to plead facts forming the basis for the assertion that the Debtor or Evans knew that the value of the consideration received by the Debtor in exchange for the properties was not of reasonably equivalent value. Additionally, the complaint generally referenced that the properties at issue were quitclaimed to her husband under duress, under either absent or inadequate consideration within one year of the date she filed for bankruptcy. The Court also found that the facts asserted by the Trustee in opposition to the motion to dismiss was outside the complaint and were improper. The Trustee did not allege those facts in the complaint, i.e., the properties were held jointly, that the spouse misrepresented, that the debtor would be criminally prosecuted unless the spouse dismissed the complaint and that the terms of a divorce settlement were fair and equitable. The Court granted Evans motion to dismiss the complaint with leave to amend the complaint.