                                                                            FILED
                                                                  U.S. Bankruptcy Appellate Panel
                                                                        of the Tenth Circuit

                                                                        July 20, 2015
                                      PUBLISH                         Blaine F. Bates
                                                                          Clerk
            UNITED STATES BANKRUPTCY APPELLATE PANEL
                           OF THE TENTH CIRCUIT



IN RE EXPERT SOUTH TULSA, LLC,                  BAP No.     KS-14-027
             Debtor.


EXPERT SOUTH TULSA, LLC,                        Bankr. No. 10-20982
                                                Adv. No.   11-06208
             Plaintiff – Appellant,               Chapter 11
      and
E.H. HAWES REVOCABLE TRUST
             Intervenor-Plaintiff –
             Appellant,

      v.                                                OPINION
CORNERSTONE CREEK PARTNERS,
LLC,
             Defendant – Appellee.


                 Appeal from the United States Bankruptcy Court
                            for the District of Kansas

Eric L. Johnson of Spencer Fane Britt & Browne LLP (Andrea M. Chase of
Spencer Fane Britt & Browne LLP and Jonathan A. Margolies of McDowell,
Rice, Smith & Buchanan PC, with him on the briefs), Kansas City, Missouri, for
Plaintiff – Appellant Expert South Tulsa, LLC and Intervenor-Plaintiff-Appellant
E.H. Hawes Revocable Trust.
John Henry Rule of GableGotwals (Sidney K. Swinson and Brandon C. Bickle of
GableGotwals and John W. McClelland of Armstrong Teasdale, LLP, Kansas
City, Missouri with him on the brief), Tulsa, Oklahoma, for Defendant – Appellee
Cornerstone Creek Partners, LLC.
Before THURMAN, Chief Judge, MICHAEL, and ROMERO, Bankruptcy Judges.

THURMAN, Chief Judge.
      In this appeal, both the debtor, Expert South Tulsa, LLC (“EST”), and the
E.H. Hawes Revocable Trust (the “Trust”)1 challenge the bankruptcy court’s order
granting Cornerstone Creek Partners, LLC (“Cornerstone”)’s motion for summary
judgment in the appellants’ fraudulent transfer claim against it. We affirm.
      I.     BACKGROUND
      The basic facts are simple. EST sold real property (the “Commons”) to
Cornerstone in January 2010 for $3 million. Approximately ten days later,
Cornerstone sold the Commons to South Memorial Development Group, LLC
(“South Memorial”) for approximately $4.42 million. An involuntary Chapter 7
petition was filed against EST on March 30, 2010, which EST later had converted
to a Chapter 11. On September 1, 2011, EST2 filed an adversary action against
Cornerstone, pursuant to 11 U.S.C. § 548(a)(1)(B) (the “§ 548 Claim”) and
§ 544(b), asserting a claim under Oklahoma’s Uniform Fraudulent Transfer Act
(the “UFTA Claim”).3 The complaint sought to avoid EST’s sale of the Commons
to Cornerstone on the grounds that EST was insolvent at the time of the sale and
Cornerstone had not provided “reasonably equivalent value” for the property.
      The first prong of the adversary claim, insolvency, is uncontested on
appeal. However, the parties disagree on the second prong, i.e., regarding the
value that was given and received for the Commons. Nonetheless, the bankruptcy


1
      The Trust is technically a creditor of EST, but it is a revocable trust settled
by the father of one of EST’s two principals.
2
       The adversary was initially brought by EST, but the Trust, which is a
creditor of EST, later intervened.
3
      Oklahoma’s Uniform Fraudulent Transfer Act, Okla. Stat. Ann. tit. 24,
§§ 112-123, will hereafter in this opinion be called the “UFTA” or the “Act.”

                                         -2-
court found that the uncontroverted facts established that EST could not prevail
on its § 548 Claim because it had received reasonably equivalent value for the
sale. The bankruptcy court also ruled, as a matter of law, that EST could not
prevail on its UFTA Claim because the Commons was not an “asset” subject to
that Act, as it was fully encumbered at the time of the sale. 4
      The details of the challenged sale transaction are quite complex, and EST
relies heavily on that complexity in an effort to establish contested issues of fact. 5
The principals of EST are Lawrence McLellan (“McLellan”) and Trey Hawes
(“Hawes”). The Trust is an inter-vivos revocable inheritance device settled by
Hawes’ father, and is a creditor of EST. The Trust periodically advanced money
to EST and other entities owned by McLellan and Hawes, but the total amount of
those advancements is a contested issue. McLellan and Hawes were also the
principals of three other limited liability companies, Expert Owasso, LLC
(“Owasso”), which owned approximately 2.57 acres of property in Owasso,
Oklahoma, Expert SWC Rockwell Memorial, LLC (“Rockwell”), which owned
approximately 41 acres of property in Oklahoma City, Oklahoma, and Expert
Development, LLC (“Development”), which was the manager of EST, Owasso,
and Rockwell. 6




4
       “Asset” is a statutorily defined term in this context. Clearly, the Commons
was an asset for balance statement purposes. However, the UFTA excludes a
debtor’s property from its definition of an “asset,” to which fraudulent transfer
restrictions are applicable, “to the extent it is encumbered by a valid lien.” Okla.
Stat. Ann. tit. 24, § 113(2)(a) (1986).
5
       For example, EST contests many extraneous facts, and has also apparently
included every document filed in the bankruptcy court in the appellate record. As
a result, both the relevant facts and documents are more difficult to find than they
probably should be. Especially since it is only “material” fact disputes that
preclude summary judgment rulings. Fed. R. Civ. P. 56(a).
6
       EST, Owasso, Rockwell, and Development will at times be referred to in
this opinion as the “Expert LLCs.”

                                          -3-
      EST was formed to purchase and develop real property located in South
Tulsa, Oklahoma (the “Tulsa Property”), and it obtained a loan to purchase and
develop the Tulsa Property from M&I Marshall & IIsley Bank (“M&I”) in early
2007. That loan (the “Tulsa Loan”) was secured by the Tulsa Property, a
$12,329,500 promissory note (the “Note”), and the personal guaranties of
McLellan and Hawes. The Note was renewed, modified, and/or transferred many
times. EST purchased the Tulsa Property for $10.3 million, and then divided it
into three separate parcels: 1) an 11-acre parcel that was sold, pre-petition, to Life
Time Fitness; 2) a 2.5-acre parcel, also sold pre-petition to an individual buyer
for construction of a hotel; and 3) the Commons, a 21.5-acre parcel that is the
subject of the present dispute.
      In 2008, EST sold the first two of the three Tulsa Property parcels, using
the proceeds of those sales to pay M&I approximately $2.5 million on the Tulsa
Loan. EST and M&I were in the process of negotiating a restructure of the Tulsa
Loan, which was in default. Ultimately, the parties were unable to reach an
agreement, and M&I elected to sell the Tulsa Loan at auction. The Tulsa Loan
(along with some loans M&I had made to the other Expert LLCs) was purchased
at auction by OKL 18, LLC (“OKL”) in March 2009. At all times relevant to this
appeal, the principals of OKL were Steve Perry (“Perry”) and Scott Asner
(“Asner”).
      Shortly after OKL purchased the Expert LLC loans, including the Tulsa
Loan, the Expert LLCs (including EST) entered into a forbearance agreement (the
“Forbearance Agreement”) with OKL. In the Forbearance Agreement, OKL
agreed to cease collection efforts on the purchased loans until July 22, 2009, upon
its receipt of a $500,000 forbearance fee. In addition, the Forbearance Agreement
provided that a payment of $5.5 million (plus accrued interest) to OKL by July
22, 2009 would fully satisfy the obligations of the debtors and the guarantors on


                                          -4-
the Expert LLC loans. Payment to OKL of $1 million would extend the
forbearance period to September 20, 2009.
      The $500,000 forbearance fee was paid by the Expert LLCs with funding
provided by the Trust. On July 23, 2009, as no additional payments had been
made by the Expert LLCs, OKL declared the Forbearance Agreement to be
terminated, and requested full payment of all Expert loans. On the same day,
Owasso and Rockwell executed a new forbearance agreement with OKL, which
related only to loans of those LLCs, for which they paid $100,000. The new
forbearance agreement allowed Owasso and Rockwell to eliminate their loans by
paying $4.25 million to OKL by August 5, 2009. Although this forbearance
agreement was extended twice, it also terminated pursuant to its terms due to
Owasso and Rockwell’s failure to pay the agreed satisfaction amount.
      In August 2009, OKL filed a state court action against EST, seeking both to
recover on the Note and to foreclose its lien on the Commons. At that time, a
state court mechanic’s lien action was already pending against EST, and the new
foreclosure action was consolidated with that case. While the Tulsa Loan was in
default, McLellan and Hawes discussed with OKL (via Perry) the potential for the
Trust to purchase the Tulsa Loan.7 As a result, OKL and the Trust reached an
agreement, executed on November 9, 2009, that gave the Trust an option to
purchase the Tulsa Loan (the “Trust Option”).8 Under the Trust Option, the Tulsa
Loan could be purchased by the Trust for approximately $1.65 million, plus
interest and costs, but only if that amount was paid to OKL on or before
December 31, 2009. The Trust Option included the following provisions:



7
      Apparently, although the Trust was technically a creditor of EST, Hawes
acted on the Trust’s behalf, at least in this transaction.
8
       Because EST was not a party to the Option, the Trust intervened as a
plaintiff in the adversary proceeding against OKL.

                                        -5-
      1. Grant of Option. Lender [OKL] does hereby grant to Purchaser
      [the Trust] the option (the “Option”) to purchase the Tulsa Loan at a
      purchase price of $1,645,108 as of the date of this Agreement plus:
      (a) if the Option is exercised after the date hereof but on or before
      November 30, 2009, an additional amount equal to $1,519.45 per
      diem, and (b) if the Option is exercised on or after December 1, 2009
      but on or before December 31, 2009, an additional amount equal to
      $2,019.45 per diem in addition to the amount payable pursuant to the
      preceding subparagraph (a), and (c) an additional amount equal to all
      legal fees, costs and expenses incurred by Lender with respect to the
      Tulsa Loan through the date of the exercise of the Option
      (collectively, the “Option Price”).
      2. Exercise of Option. Purchaser may exercise the Option by paying
      the Option Price in full to Lender on or before December 31, 2009, 2
       p.m. Kansas City, Missouri time.
      3. Closing Documents. Upon payment of the Option Price, Lender
      (contemporaneous with such funding) shall provide (I) an
      Assignment of Loan Documents, (ii) an Assignment of Mortgage (in
      recordable form), (iii) an allonge to the original promissory note(s)
      for the Tulsa Loan and (iv) any and all other reasonable documents
      customary for a loan conveyance. Purchaser acknowledges and
      agrees that Lender is making no representations or warranties of any
      kind in connection with the sale and assignment of the Tulsa Loan,
      including but not limited to the outstanding principal balance thereof
      or interest accrued and payable thereon, and that such sale and
      assignment shall be without recourse to Lender.
      8. Amendment. The provisions of this Agreement may be amended or
      waived only by an instrument in writing signed by the parties hereto.
      11. No Oral Agreements. The Parties each acknowledge that the
      other Party has no obligation except as set forth herein and that it is
      not relying on any agreement, representation or warranty of the other
      Party in entering into this Agreement, other than the agreements of
      such Party expressly and specifically set forth in this Agreement.
      12. Time is of Essence. Time is of the essence of each and every
      covenant, condition and  provision of this Agreement to be performed
      by the parties hereto. 9
      Throughout the negotiations with OKL, EST was attempting to sell the
Commons. On December 11, 2009, EST and Sitton Properties, LLC (“Sitton
LLC”) entered into a purchase contract, under which Sitton LLC agreed to buy

9
       Option to Purchase Promissory Note and Related Loan Documents in Joint
Appendix of Appellants Expert South Tulsa, LLC and E.H. Hawes Revocable
Trust, vol. 10 (“Appx 10”) at 2589-591.

                                         -6-
the Commons for $3.2 million (the “Sitton Contract”). The principal of Sitton
LLC was Mike Sitton (“Sitton”). As part of the Sitton Contract, EST agreed to
take ownership of certain Tulsa real property that was owned by Sitton LLC (the
“Riverside Property”). The sale to Sitton was originally set to close by February
11, 2010, but the Sitton Contract was modified to shorten the closing period to
December 30, 2009. 10
      Eighteen days later, on the day before the closing deadline for the Sitton
Contract, EST was informed that Sitton LLC had assigned its interest in the Sitton
Contract to South Memorial, and that South Memorial would not be bound by the
December 30 closing date. Moreover, if EST insisted on closing the sale by
December 30, South Memorial would terminate the Sitton Contract. The next
day, December 30, South Memorial terminated the Sitton Contract. EST
continued trying to secure a sale of the Commons throughout that day and the
next. On December 31, OKL assigned its interest in the Tulsa Loan to GTMI,
LLC (“GTMI”), apparently for tax reasons. Despite the assignment, EST
continued to discuss the Tulsa Loan and the Trust Option with Perry, who acted
as the lender representative. The assignment of the Tulsa Loan mortgage to
GTMI was not recorded, nor did GTMI substitute for OKL in the pending
foreclosure action.
      Also on December 31, Hawes notified Perry by email that a new sale had
been negotiated with Sitton and his partner, Rob Phillips (“Phillips”). On that
basis, Hawes requested that the Trust Option be extended to January 8, 2010.
Perry responded by email, “I will let you know as soon as I can get an answer.”
No further contact was had until Perry notified Hawes on January 5 that he was


10
      This change was apparently intended to allow use of the sale proceeds to
pay OKL the $1.65 million purchase price for the Tulsa Loan by December 31.
However, although sale of the Commons was between EST and Sitton LLC, the
Trust Option was between OKL and the Trust.

                                        -7-
“still waiting for final sign off,” and proffered an amended payoff amount “if
funds are received prior to 2 p.m. this Friday [1/8]. I need to see a draft
settlement statement from the title company [re Sitton/Phillips purchase] ASAP so
I can get final sign off on my end. After Friday, no deal.” Also on January 5,
EST’s counsel was notified that the Sitton Contract would be assigned to
Cornerstone11 and would be amended to both reflect a purchase price of $3
million and exclude the Riverside Property.12 The next day, January 6, Perry
notified Hawes by email that Cornerstone would be ready to close on January 8.
      Cornerstone and EST executed a new contract for the purchase and sale of
the Commons (the “Cornerstone Contract”), specifying a purchase price of $3
million, to be paid on January 8, and including a representation by EST that there
would be no pending or threatened claims against the property, except as may be
provided in the title commitment. Thus, EST was required to deliver clean title to
Cornerstone, and was required to obtain dismissal of the pending foreclosure
action as a condition to issuance of a title policy. 13
      At the closing on January 8, 2010, Cornerstone paid $3 million to the title
company, from which it made the following payments:
      •       $1,742,170.16 to GTMI (as holder of the Tulsa Loan);
      •       $17,002.42 to OKL for its legal fees;
      •       $114,999.77 to mechanic’s lien holders for lien releases;



11
      Cornerstone was formed as a limited liability company by counsel for OKL
and GTMI for the purpose of acquiring and developing the Commons. Phillips
signed the sale agreement on behalf of Cornerstone.
12
      The Sitton Contract had already been terminated by South Memorial on
December 30. However, Sitton and Phillips continued to push EST to take
ownership of the Riverside Property, which was apparently transferred to EST
sometime after the January 8 sale to Cornerstone.
13
      It should be noted that the Trust never held any secured interest in the
Tulsa Property.

                                           -8-
      •      $15,000 to Paisley Properties, LLLP (“Paisley”); 14
      •      $686,000 to EST’s unsecured creditors (including EST’s attorney’s
                  fees of $42,500, and $415,000 to the Trust); and
      •      $137,330 in miscellaneous closing costs.
The $415,000 paid to the Trust was credited by it to EST’s outstanding debt. The
remainder of the $3 million purchase price, a total of $261,477, was paid directly
to EST, which subsequently paid it to Sitton LLC for the Riverside Property.
      On January 27, 2010, only nineteen days after the EST/Cornerstone sale
closing, Cornerstone closed its own sale of the Commons to South Memorial. 15
The purchase price under the Cornerstone/South Memorial sale contract was
$4,421,230. 16
      Team Viva, LLC, an EST creditor, filed an involuntary Chapter 7 petition
against EST on March 30, 2010, which case was later converted to Chapter 11 at
EST’s request. EST filed the adversary proceeding from which this appeal arose
in September 2011, seeking to recover approximately $1.42 million from
Cornerstone pursuant to either Oklahoma law (through § 544(b)) or
§ 548(a)(1)(B). Cornerstone moved for summary judgment on EST’s complaint,
which was ultimately granted by the bankruptcy court. For purposes of summary
judgment, the parties agreed that the value of the Commons at the time of its sale
to Cornerstone was $4.99 million.




14
    Paisley held an undivided 5% interest in the Commons as a tenant-in-
common.
15
      South Memorial had previously purchased the Sitton Contract and then
revoked it when EST would not agree to extend the closing date past December
31, 2009.
16
       This Court has no information regarding the reason why South Memorial,
which had been unwilling to purchase the subject property for $3.2 million if the
sale had to close by December 30, was willing to buy the same property at a 44%
higher price less than one month later.

                                        -9-
      II.    APPELLATE JURISDICTION
      This Court has jurisdiction to hear timely filed appeals from “final
judgments, orders, and decrees” of bankruptcy courts within the Tenth Circuit,
unless one of the parties elects to have the district court hear the appeal. 17 A
decision is considered final “if it ‘ends the litigation on the merits and
leaves nothing for the court to do but execute the judgment.’”18 An order granting
summary judgment disposing of the plaintiff’s claims against the defendant is a
final order for purposes of appeal.19 The bankruptcy court order granting
summary judgment to Cornerstone was entered on June 9, 2014, and EST and the
Trust filed a notice of appeal from that order on June 23, 2014. The notice of
appeal was therefore timely. 20
      At the same time, appellants also filed a Rule 9023 motion to alter or
amend the bankruptcy court’s judgment, purportedly to resolve any problems with
the judgment that might be caused by the United States Supreme Court’s June 9,
2014 Executive Benefits decision.21 The parties and the bankruptcy court agreed
to an order granting appellants’ motion and to entry of an amended memorandum


17
       28 U.S.C. § 158(a)(1), (b)(1), and (c)(1); Fed. R. Bankr. P. 8001(e) (now
also at Fed. R. Bankr. P. 8005, effective December 1, 2014); 10th Cir. BAP L.R.
8001-3 (now at 10th Cir. BAP L.R. 8005-1, effective December 1, 2014).
18
      Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 712 (1996) (quoting Catlin
v. United States, 324 U.S. 229, 233 (1945)).
19
       Tanner v. Barber (In re Barber), 326 B.R. 463, 466 (10th Cir. BAP 2005)
(order granting summary judgment disposed of adversary proceeding and was
final and appealable).
20
      Fed. R. Bankr. P. 8002(a)(1) (notice of appeal must be filed within fourteen
days of entry of final order).
21
       Executive Benefits Ins. Agency v. Arkison, 134 S. Ct. 2165 (2014) (setting
parameters of bankruptcy courts’ non-core jurisdiction). Rule 9023 of the federal
bankruptcy rules makes Rule 59 of the Federal Rules of Civil Procedure
applicable to bankruptcy cases. We see no different result under the Supreme
Court’s more recent case on this issue, Wellness Int’l Network, Ltd. v. Sharif, 135
S. Ct. 1932 (2015).

                                          -10-
decision, nunc pro tunc, specifically finding that the parties had consented to the
bankruptcy court hearing and determination of the adversary proceeding, pursuant
to 28 U.S.C. § 157(c)(2). 22
       Neither the appellants nor the appellee elected to have this appeal heard by
the district court, and the parties have therefore consented to appellate review by
this Court. 23
       III.      ISSUES AND STANDARDS OF REVIEW
       1.        Did the bankruptcy court properly determine, as a matter of law,
                 that the Commons was not an “asset” and, therefore, not subject
                 to avoidance under the UFTA?
       2.        Did the bankruptcy court properly determine, as a matter of law,
                 that EST received “reasonably equivalent value” for the
                 Commons from Cornerstone, such that the sale    was not subject
                 to avoidance under 11 U.S.C. § 548(a)(1)(B)? 24
       Both of these issues arise from a decision on summary judgment. Such
judgments are reviewed by this Court de novo, applying the same legal standard
as was used by the bankruptcy court.25 De novo review requires an independent
determination of the issues, giving no special weight to the bankruptcy court’s
decision. 26




22
      Whether the appeal time runs from entry of the order granting appellants’
Rule 9023 motion or from either order granting summary judgment, the notice of
appeal filed on June 23, 2014 was timely. See Fed. R. Bankr. P. 8002(b)(2) and
9023.
23
      28 U.S.C. § 158(c)(1); Fed. R. Bankr. P. 8001(e) (now also at Fed. R.
Bankr. P. 8005, effective December 1, 2014).
24
       Unless otherwise indicated, all further statutory references in this decision
will be to the Bankruptcy Code, which is Title 11 of the United States Code.
25
      Rushton v. Bank of Utah (In re C.W. Min. Co.), 477 B.R. 176, 180 (10th
Cir. BAP 2012), aff'd, 749 F.3d 895 (10th Cir. 2014).
26
       Salve Regina Coll. v. Russell, 499 U.S. 225, 238 (1991).

                                         -11-
      IV.    DISCUSSION
             A.     Summary Judgment Standard
      The appealed order was decided as a matter of summary judgment.
Summary judgment is appropriate only if “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any,” when
viewed in the light most favorable to the non-moving party, “show that there is no
genuine issue as to any material fact and that the moving party is entitled to
judgment as a matter of law.”27 A dispute about a material fact is “genuine” if the
evidence is such that a reasonable jury could return a verdict for the non-moving
party.28 In making its determination, the court must draw all justifiable inferences
in favor of the non-moving party.29 “Statutory interpretation is a matter of law
appropriate for resolution on summary judgment.” 30
             B.     Applicability of the UFTA
      Section 544(b)(1) of the Bankruptcy Code (the “strong-arm statute”) allows
a trustee (or a debtor-in-possession)31 to avoid transfers of the debtor’s property
that would be voidable by an unsecured creditor pursuant to applicable state law.
This provision makes state fraudulent transfer laws applicable in bankruptcy.
Oklahoma law applies to the EST/Cornerstone sale, and Oklahoma has adopted
the UFTA. That Act describes a “fraudulent transfer” as follows:


27
      Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986) (internal
quotations omitted); Fed. R. Civ. P. 56(a) (made applicable to bankruptcy
adversary proceedings by Fed. R. Bankr. P. 7056)).
28
      Anderson, 477 U.S. at 248.
29
      Id. at 255.
30
      Thomas v. Metro. Life Ins. Co., 631 F.3d 1153, 1160 (10th Cir. 2011).
31
       Although §§ 544 and 548 grant avoidance power only to the bankruptcy
trustee, a debtor-in-possession is given the trustee’s power to avoid transfers by
§ 1107(a). Se. Waffles, LLC v. United States Dep’t of Treasury (In re Se. Waffles,
LLC), 702 F.3d 850, 856 n.3 (6th Cir. 2012) (debtor-in-possession has trustee’s
avoidance powers).

                                         -12-
      A transfer made or obligation incurred by a debtor is fraudulent as to
      a creditor whose claim arose before the transfer was made or the
      obligation was incurred if the debtor made the transfer or incurred
      the obligation without receiving a reasonably equivalent value in
      exchange for the transfer or obligation and the debtor was insolvent
      at that time or the debtor became insolvent as a result of the transfer
      or obligation. 32
Significantly, the UFTA avoidance power is only available when the property
“transfer” was of a debtor’s “asset.” The Act defines those terms, as follows:
      “Transfer” means every mode, direct or indirect, absolute or
      conditional, voluntary or involuntary, of disposing of or parting with
      an asset or an interest in an asset, and includes payment of money,
      release, lease, and creation of a lien or other encumbrance.
      “Asset” means property of a debtor, but the term does not include . . .
      property to the extent it is encumbered by a valid lien. 33
The UFTA also provides that it “shall be applied and construed to effectuate its
general purpose to make uniform the law with respect to the subject of this act
among states enacting it.” 34
      EST’s position is that the bankruptcy court erroneously determined that the
Commons was not an “asset” at the time of its sale to Cornerstone because it was
fully secured and, therefore, not subject to the UFTA. EST does not contest that
real properties subject to liens equal to or in excess of their value are not “assets”
subject to the UFTA.35 Rather, relying almost entirely on a Connecticut UFTA

32
      Okla. Stat. Ann. tit. 24, § 117 (1986).
33
      Okla. Stat. Ann. tit. 24, § 113(2)(a) and (12) (1986) (emphasis added).
34
       Okla. Stat. Ann. tit. 24, § 123 (1986). Thus, courts in states that have
adopted the UFTA typically consider other states’ interpretations of the Act’s
language when construing the Act’s provisions. See, e.g., Brown v. ARP &
Hammond Hardware Co., 141 P.3d 673, 680 (Wyo. 2006) (decisions of other
courts are persuasive with respect to uniform or model acts).
35
       See, e.g., Noranda Aluminum, Inc. v. Golden Aluminum Extrusion, LLC,
No. M2013-02274-COA-R3-CV, 2014 WL 4803149, at *6 (Tenn. Ct. App. Sept.
26, 2014) (“property encumbered by a lien is excluded from the UFTA's
definition of an asset to the extent of the encumbrance”); Jecker v. Hidden Valley,
Inc., 27 A.3d 964, 971 (N.J. Super. Ct. App. Div. 2011) (transfer of fully
encumbered property is not subject to the UFTA); In re Valente, 360 F.3d 256,
                                                                      (continued...)

                                         -13-
decision, World Properties,36 EST contends that the value of the Commons
actually exceeded the liens on it at the time of the Cornerstone sale. Accordingly,
a careful review of the World Properties decision is in order.
      In World Properties an unsecured creditor filed an action to avoid its
debtor’s transfer of real property to a related entity, claiming the transfer to be
fraudulent under the UFTA. One of the defendants, Antonio Reale, was a
contractor/developer who controlled several business entities primarily owned by
his wife and children. Three Reale businesses were World Properties, World, and
LAN. World had no assets and did not conduct business, as it was used primarily
to funnel funds between other Reale companies and Reale’s wife, who had neither
income nor creditors. However, LAN and Reale owned real property in New
Jersey that was subject to a mortgage held by the FDIC. The FDIC foreclosed the
mortgage on the New Jersey property in 1994, but that property was of
insufficient value to satisfy the mortgage, resulting in an award to the FDIC of a
$7 million deficiency judgment against LAN and Reale. The FDIC later
transferred the deficiency judgment to National.
      LAN also borrowed money from Chase Bank in order to develop real
property in Enfield, Connecticut (the “Property”), giving Chase a mortgage on the
Property as security for the loan. LAN defaulted on that mortgage, which led to
foreclosure of Chase’s mortgage in 1995, from which Chase obtained a $17
million judgment against LAN and Reale. Around the same time, LAN managed
to lease the Enfield property, on which a 113,000 square foot building had been
constructed, to a supermarket chain. The lease terms favored the lessor such that,
with the lease, the property value increased to $14.5 million.


35
      (...continued)
260 (1st Cir. 2004) (over-encumbered real property is not “asset” under UFTA).
36
      Nat’l Loan Investors, L.P. v. World Props., LLC, 830 A.2d 1178 (Conn.
App. Ct. 2003).

                                         -14-
      Once the lease was in place, Reale reached an agreement with WLL,
Chase’s successor-in-interest to the foreclosure judgment, under which WLL
accepted payment of $5.2 million “in full satisfaction of the debt.” LAN and
Reale obtained a mortgage loan from People’s Bank in order to fund the payment
to WLL. People’s Bank was directed to pay the loan proceeds to World
Properties, an entity that Reale had recently formed, which then paid the $5.2
million settlement amount to WLL. In return, according to the defendants, World
Properties received the $17 million Chase judgment, which it proceeded to
foreclose. In response, LAN transferred both the property and the lease to World
Properties, which left it without any assets and, thus, no ability to pay the
FDIC/National deficiency judgment from the year before.
      Predictably, National filed suit against LAN, World Properties, World, and
Reale, alleging that LAN’s transfer to World Properties was fraudulent under the
UFTA. The trial court agreed, and entered judgment avoiding the World
Properties transfer. Defendants appealed, asserting that the property was not an
“asset” subject to a transfer avoidance under the UFTA because it was secured by
the Chase/National/World Properties $17 million judgment lien, which exceeded
the property’s value, when it was transferred. All parties and the court agreed
that a transfer of property subject to liens that equaled or exceeded its value
would not be subject to avoidance under the UFTA. The defendants’ claim was
rejected by the trial court, which was affirmed by the Connecticut Court of
Appeals, based on a finding that the property had not been subject to a $17
million lien when it was transferred because the defendants’ settlement with WLL
had discharged that lien and substituted the $5.2 million lien in its stead, and
“[t]hat settlement occurred prior to the transfer between LAN and World.” 37

37
       Id. at 733 (emphasis added). Although the appellate court mistakenly
stated that the Property was transferred to World rather than to the actual
                                                                       (continued...)

                                         -15-
      The property transferor in World Properties unsuccessfully argued that its
transfer of property to a related company could not be avoided as a fraudulent
transfer because the transferee held a lien on the property that exceeded the
property’s value. In the present case, relying on World Properties, EST seeks to
avoid its own transfer of property to an unrelated company, claiming that a lien
exceeding the property’s value was compromised prior to the transfer, leaving the
property with some equity and, therefore, an “asset” subject to the UFTA. 38
However, EST misconstrues the applicability of World Properties to this appeal.
Here, as in World Properties, the property transferor attempts to manipulate
applicability of the UFTA to its advantage, using a “friendly” separate entity as
the means to either avoid or ratify a property transfer. Such a result is most
certainly not supported by the World Properties decision, in which the court
determined that such conduct would not be sanctioned.
      The essence of the World Properties decision is that a security interest that
is compromised prior to transfer of the secured property will be included in a
determination of the property’s security status at the compromised value.
However, the undisputed facts in the present appeal establish that no such
compromise took place prior to the Cornerstone sale closing. The present
transaction was, effectively, a “short sale.” Such sales are common and involve
an agreement by a property lien holder to accept less than full repayment of its
loan in exchange for its full release of a property lien in order to facilitate a sale
of the secured property. Short sales typically involve mortgage obligations that
are in default, and lenders enter into such agreements based on the economic



37
       (...continued)
transferee, World Properties, that misstatement did not affect its analysis.
38
       This position is somewhat contrary to EST’s second appellate argument,
which is that the lien was transferred to the Trust, and thus it was error to include
a lien reduction in the value obtained by EST for the transfer.

                                          -16-
reality that the certainty of partial repayment from sale proceeds is usually
preferable to an uncertain recovery from foreclosure and resale. 39
      Short sales are often preceded by lenders’ attempts to either sell the loan to
another lender at a discount or to rewrite the mortgage terms with the borrower.
If such an agreement is reached without involving the property’s sale, the parties’
conduct will thereafter be dictated by the terms of the new agreement. In World
Properties, the trial court found that just such a compromise agreement had been
made prior to any transfer of the property by the debtor. Thus, when the debtor
did transfer the property, it was subject only to the compromised mortgage and
had value beyond the security. As such, the property was an “asset” that debtor
could only transfer in exchange for “reasonably equivalent value” under the
UFTA. Debtor’s receipt of less than equivalent value for the property led the
Connecticut court to avoid the sale.
      In the present case, however, although OKL had indicated its willingness to
accept less than full value for the Tulsa Loan, either from the debtor or from a
third party, no compromise deal was ever consummated prior to the sale of the
Commons to Cornerstone. In fact, the Trust did not make any payment to either
OKL or GTMI after it paid to obtain the Trust Option. The only payments that
were made to those entities came directly from EST’s sale proceeds. Thus, the
Trust undeniably did not exercise the Trust Option prior to the Cornerstone sale
closing, whether or not its time to do so had been extended.
      Appellants respond that the parties’ communications leading up to the sale
at least create a disputed issue of fact as to whether the Trust Option had been
extended prior to the sale, and thus requiring a denial of the motion for summary
judgment and a reversal by this Court. Indeed, whether or not OKL and/or GTMI


39
       Significantly, such debt reductions then become part of the “value” the
seller receives from the sale, which is an issue that will be discussed in the
section of this opinion dealing with “reasonably equivalent value.”

                                         -17-
extended the Trust Option’s payment deadline was and is a hotly contested matter
between these parties. However, only “material” fact disputes preclude entry of
summary judgment, and resolving that dispute in appellants’ favor does not
change the result since, whether or not the Trust was granted additional time to
exercise the option, it did not do so. Moreover, even if the Trust did somehow
exercise the option, it did not do so prior to the Cornerstone sale. Therefore, “at
the time of the sale,” the Commons was subject to a $7.75 million mortgage that
exceeded its value, which means it was not an “asset” under the UFTA and its
transfer to Cornerstone was not subject to avoidance under that Act.
             C.     Reasonably Equivalent Value
      EST asserted avoidance claims under both the UFTA and § 548(a)(1)(B).
These two fraudulent transfer provisions are essentially identical, except that
§ 548 does not require transfer of an “asset,” as does the UFTA. Instead, § 548
covers transfers of “an interest of the debtor in property” or the incurrence by the
debtor of “an obligation” that are not in exchange for “reasonably equivalent
value.”
      The relevant portions of § 548 provide:
      (a)(1) The trustee [or the debtor in possession] may avoid any
      transfer . . . of an interest of the debtor in property . . . that was made
      or incurred on or within 2 years before the date of the filing of the
      petition, if the debtor voluntarily or involuntarily--
      (B)(I) received less than a reasonably equivalent value in exchange
      for such transfer or obligation; and
      (ii)(I) was insolvent on the date that such transfer was made or such
      obligation was incurred, or became insolvent as a result of such
      transfer or obligation.
This provision allows a property transfer that was made within the two-year
period immediately preceding the petition filing to be avoided, but only if the
plaintiff establishes both that the transfer was not supported by debtor’s receipt of
“reasonably equivalent value” and that the transfer took place when the debtor
was insolvent (or the debtor became insolvent due to the transfer). Such transfers


                                          -18-
are considered “constructively fraudulent,”40 and are avoidable on behalf of the
estate’s unsecured creditors.
      In seeking to avoid the Cornerstone sale, EST claims, in essence, that
Cornerstone (and, by implication, OKL) took advantage of its foundering
financial situation to profit from a back-to-back purchase and resale of the
Commons. Considering only the following basic facts of the sale and the resale,
EST’s assertion may appear to be well-taken:
      EST agreed to sell the Commons to Sitton LLC for a purchase price
      of $3.2 million. Prior to closing, Sitton LLC inexplicably transferred
      its interest in the sale agreement to South Memorial. South
      Memorial then canceled the sale, purportedly over the closing date.
      EST returned to negotiations with the Sitton LLC principals and
      worked out a “new” deal on the same terms, but with a slightly later
      closing date. EST was then told that its deal with the Sitton LLC
      principals would be executed by Cornerstone rather than Sitton, and
      that the purchase price would be $3 million, rather than the
      previously agreed-upon $3.2 million. The deal closed, on time and
      for a price of $3 million. Almost immediately thereafter,
      Cornerstone (which was apparently set up by the Sitton LLC
      principals for the sole purpose of buying and selling the Commons)
      resold the property to South Memorial (EST’s original buyer) for
      $4.4 million.
However, the issue before the bankruptcy court and this Court is not the validity
of the resale transaction. It is simply whether EST received “reasonably
equivalent value” in exchange for its transfer of the Commons to Cornerstone.
      Although “reasonably equivalent value” is not defined in the Bankruptcy
Code, it is not a simple calculation of purchase price versus the property’s
appraised value.41 If it were, then payment of $3 million for a property worth

40
      Sender v. Buchanan (In re Hedged-Invs. Assocs., Inc.), 84 F.3d 1286, 1287
(10th Cir. 1996) (§ 548(a)(2) claim defined as “constructive fraudulent” transfer);
Weinman v. Walker (In re Adam Aircraft Indus., Inc.), 510 B.R. 342, 352 (10th
Cir. BAP 2014) (same).
41
      LTF Real Estate Co. v. Expert S. Tulsa, LLC (In re Expert S. Tulsa, LLC),
522 B.R. 634, 652 (10th Cir. BAP 2014) (reasonably equivalent value
determination involves three questions: “(1) whether value was given; (2) if value
was given, whether it was given in exchange for the transfer; and (3) whether
what was transferred was reasonably equivalent to what was received”). See also
                                                                     (continued...)

                                        -19-
$4.99 million would certainly fail to meet the standard. Rather, reasonably
equivalent value is measured by all benefits received by the seller, direct and
indirect:
             The authorities are in agreement that Congress did not
             provide a definition reasonably equivalent value
             (“REV”) in the federal bankruptcy statutes. Thus, the
             courts have been left with the responsibility of defining
             the term. A review of the case law reveals four precepts
             in construing REV. First, the fair market value of the
             property in question cannot usually be used as the sole
             determinant, especially in foreclosure actions. Second,
             although not wholly determinative, the market value of
             the property at issue is an important query and will often
             serve as a starting point for deciding whether REV was
             received by the debtor. Third, the property at issue must
             be disposed of in a manner consistent with the law of the
             forum state. Finally, a bankruptcy court should consider
             all of the facts of each case, one of which may be the
             market value of the property. 42
Determination of reasonably equivalent value is ordinarily a finding of fact. 43
However, where the facts of the transaction are undisputed, the issue presented is
whether or not those facts fit within the statutory parameters, which is an issue of
law.44 Finally, the party seeking to avoid the transfer bears the burden of proving




41
       (...continued)
11 U.S.C. § 548(d)(2) (defining “value” to include satisfaction of present or
antecedent debt of the debtor); Jobin v. McKay (In re M & L Bus. Mach. Co.), 84
F.3d 1330, 1341 (10th Cir. 1996) (since “value” includes satisfaction of existing
debt, the amount of debt that is satisfied must be included in determining
reasonably equivalent value); Parks v. Persels & Assocs., LLC (In re
Kinderknecht), 470 B.R. 149, 170 (Bankr. D. Kan. 2012) (reasonably equivalent
value is determined at the time of the transfer and is viewed from the standpoint
of the debtor’s creditors).
42
      McCanna v. Burke, 197 B.R. 333, 338-39 (D. N.M. 1996) (citations
omitted).
43
       See, e.g., Weinman v. Walker (In re Adam Aircraft Indus., Inc.), 510 B.R.
342, 354 (10th Cir. BAP 2014) (the determination of reasonably equivalent value
is largely a question of fact).
44
      United States v. Telluride Co., 146 F.3d 1241, 1244 (10th Cir.1998)
(construction and applicability of federal statutes reviewed de novo).

                                        -20-
that reasonably equivalent value was not received. 45
      A determination of whether a transfer involved the exchange of reasonably
equivalent value requires consideration of whether or not the transferor’s
unsecured creditors were better off before or after the transfer. In other words,
courts must calculate the net value received from a transaction, and include any
benefit received by the transferor, regardless of its source. 46 The bankruptcy
court’s determination of value received by EST in exchange for the Commons
included the following amounts: 1) the $3 million purchase price paid by
Cornerstone; 2) satisfaction of the Tulsa Loan promissory note and release of the
mortgage, totaling $7,754,151;47 and 3) releases of mechanic’s liens that totaled
$499,740. 48



45
      In re Kinderknecht, 470 B.R. at 169.
46
       See, e.g., Sharp v. Chase Manhattan Bank, USA, N.A. (In re Commercial
Fin. Servs., Inc.), 350 B.R. 559, 577-78 (Bankr. N.D. Okla. 2005) (citing Harman
v. First American Bank (In re Jeffrey Bigelow Design Group, Inc.), 956 F.2d 479,
484 (4th Cir.1992) and Jack F. Williams, “Revisiting the Proper Limits of
Fraudulent Transfer Law,” 8 Bankr. Dev. J. 55, 80 (1991)).
47
        Since the purchase price was used to pay GTMI (the owner of the Tulsa
Loan at the time of the Cornerstone closing) $1.74 million and OKL $17,000 (for
its attorney’s fees), the value received by EST from satisfaction of its Tulsa Loan
obligation would necessarily be reduced by those amounts. Even so, since the
loan reduction provided a net benefit of nearly $6 million, adding that amount to
the $3 million purchase price results in a net gain of approximately $9 million.
48
       The net benefit from the mechanic’s lien releases may have been
overstated. Approximately $500,000 in mechanic’s liens were removed from the
property for payment of approximately $115,000 out of the purchase price, for a
net return of $385,000. However, since EST no longer owned the property after
the transfer, lien releases arguably only benefitted it to the extent that the sale
was dependent upon them. Although the Cornerstone sale clearly did depend on
providing a clean title, it would be difficult to quantify the benefit to EST. On
the other hand, to the extent that the lien releases were also full satisfactions of
the underlying claims, EST would benefit, but only to the extent that the claim
released exceeded the payment made to the lien holder. It appears that many of
the lien releases were also satisfactions of the lien holders’ claims. However, the
largest lien claim was made by the general contractor, and that release does not
appear to resolve the underlying claim. In light of these issues, this Court does
not include a value for the mechanic’s lien releases in its consideration of
reasonably equivalent value.

                                        -21-
      Appellants, however, contend that the only value EST received in exchange
from the sale was the $3 million purchase price, based on its claim that the Tulsa
Loan was not discharged in that transaction but was instead transferred to the
Trust. Under appellants’ version of the transaction, then, EST remains obligated
on the Tulsa Loan.49 At the very least, appellants argue, there are disputed issues
of material fact regarding the value received, which should have precluded
summary judgment.
      We disagree. First, it is undisputed that the Trust never paid the option
amount, and thus never obtained the loan.50 A lender may grant an option to
purchase a loan, but the loan remains owed to the lender unless and until the
option is exercised. In this case, the option was not exercised by the Trust,
whether or not it was granted an extension of the time it had to do so. At closing,
as part of a global transaction, OKL/GTMI accepted payment of $1.74 million in
full satisfaction of the loan. The transaction documents made it clear that the


49
       We note that such a transaction would ordinarily require the Trust to pay
the amount requested by the lender, for which it would receive an assignment of
the full $7.75 million promissory note obligation. However, in this case, it was
actually EST that paid that amount, and it would be entitled to a credit on the note
in the amount of that payment, leaving the Trust with a $6 million unsecured
claim against it. However, appellants also claim, with respect to the property’s
status as an “asset, that the Tulsa Loan was compromised prior to the Cornerstone
sale. If, as Cornerstone, OKL, and GTMI all claim, the payment at closing was in
“full satisfaction” of the Tulsa Loan, then there was nothing left to transfer to the
Trust. Likewise, if the loan was reduced from $7.75 million to $1.74 million by
agreement with the lender, the Trust would still have no claim on the note
because EST had already paid that amount. In response to these issues, appellants
contend that only the loan security was compromised prior to the sale, leaving an
unsecured obligation for the full amount of the note. This allows appellants to
argue: 1) the property had value that exceeded the liens to which it was subject
when it was transferred, so the UFTA is applicable, and 2) since compromise of
the security without also compromising the underlying obligation doesn’t benefit
the property seller and, therefore, should not be considered in the “reasonably
equivalent value” determination. This argument requires EST to put the Trust’s
interests ahead of the interests of all of its other unsecured creditors; which
certainly does not appear to be a legitimate use of the § 548 avoidance power.
50
      Not only did the Trust not pay the money it now claims entitles it to
recover the loan amount from EST’s bankruptcy estate, it actually was paid
$415,000 from the sale proceeds.

                                        -22-
loan was being extinguished rather than transferred, and appellants were privy to
all of the sale documentation. There is simply no other way to interpret the
phrase “in full satisfaction” than as a full extinguishment of the debt,
notwithstanding appellants’ assertion that they did not interpret the transaction
that way. Ironically, it is the lender that claims the debt was extinguished in the
transaction, while the debtor contends that it was not.
      Significantly, whatever any of the parties may have believed to be the
effect of the sale transaction on the Tulsa Loan was rendered moot by OKL’s
filing of a dismissal with prejudice of the foreclosure action. OKL had asserted
two causes of action in that lawsuit – one for recovery of the debt evidenced by
the promissory note, and the other for foreclosure of the mortgage. Dismissal
with prejudice of the claim on the note rendered that note unenforceable by
anyone.51 Moreover, Oklahoma law allows a plaintiff to dismiss its action
without a court order prior to a pretrial hearing, and such dismissal may be
expressly “with prejudice.”52 Finally, Oklahoma law also allowed OKL to
continue as the plaintiff in the foreclosure action, despite its transfer of the Tulsa




51
      See, e.g., Perfect Invs., Inc. v. Underwriters at Lloyd’s, 782 P.2d 932, 933
(Okla. 1989) (dismissal with prejudice operates as a bar to future action on the
claim). Appellants contend that the fact that the promissory note was never
marked as cancelled and is now in possession of the Trust renders it still
enforceable. However, § 3-601 of the Uniform Commercial Code (Okla. Stat. tit.
12A, § 3-601) allows negotiable instruments to be discharged “by an act or
agreement” with the obligor, and that discharge is effective unless the instrument
is acquired by a “holder in due course.” The Trust cannot be a holder in due
course because it had notice that the note was compromised in connection with
the Cornerstone sale. See Okla. Stat. tit. 12A, § 3-302, defining “holder in due
course.”
52
       Okla. Stat. tit. 12, § 684(A) provides: “An action may be dismissed by the
plaintiff without an order of court by filing a notice of dismissal at any time
before pretrial. After the pretrial hearing, an action may only be dismissed by
agreement of the parties or by the court. Unless otherwise stated in the notice of
dismissal or stipulation, the dismissal is without prejudice.” In this case, in
addition to being prior to the pretrial, the parties (OKL and EST) did in fact agree
to the dismissal, as part of the Cornerstone sale.

                                         -23-
Loan to GTMI.53 Thus, the dismissal with prejudice of the foreclosure action was
a bar to any further action on either the promissory note or the mortgage,
effectively and permanently eliminating any claim of liability against EST based
on the Tulsa Loan.
      V.     CONCLUSION
      The undisputed facts lead inevitably to the legal conclusion that the
Cornerstone sale may not be avoided as constructively fraudulent under either the
UFTA or § 548. Accordingly, in the absence of disputes regarding material fact
issues, this Court affirms the bankruptcy court’s summary judgment.




53
       Okla. Stat. tit. 12, § 2025(C): “In case of any transfer of interest, the action
may be continued by or against the original party, unless the court upon motion
directs the person to whom the interest is transferred to be substituted in the
action or joined with the original party.”

                                         -24-
