          Case: 14-14034   Date Filed: 10/16/2015   Page: 1 of 31


                                                        [DO NOT PUBLISH]

           IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                            No. 14-14034
                        Non-Argument Calendar
                      ________________________

      D.C. Docket Nos. 1:13-cv-00210-JRH-BKE; 11-bkc-01021-SDB


In Re: THOMAS J. MCFARLAND,

                                                                         Debtor.
     ______________________________________________________

A. STEPHENSON WALLACE,

                                                              Plaintiff-Appellee,

                                 versus

THOMAS J. MCFARLAND,

                                                         Defendant-Appellant,

SHERRY H. MCFARLAND,

                                                                     Defendant.

                      ________________________

               Appeal from the United States District Court
                  for the Southern District of Georgia
                     ________________________

                           (October 16, 2015)
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Before JORDAN, ROSENBAUM, and JILL PRYOR, Circuit Judges.

PER CURIAM:

      This case concerns two primary questions: whether a debtor made a transfer

of his interest in property to his non-debtor wife, and, if so, whether the bankruptcy

trustee could avoid the transfer as fraudulent under 11 U.S.C. § 548(a)(1). The

bankruptcy court answered “yes” to both questions, thereby bringing the property

at issue within the bankruptcy estate. The debtor in this action, Thomas McFarland

(“Thomas”), contends that the purported transfer did not convey his own interest

but rather conveyed only bare legal title to an equitable interest held by his wife

Sherry McFarland (“Sherry”) since the property was purchased in 1968 and that

the trustee failed to produce sufficient evidence that the transfer was fraudulent.

After careful review, we affirm the bankruptcy court.

                                          I.

A.    Underlying Factual Background

      The factual background for this appeal is largely undisputed. Thomas and

Sherry were married in 1968. Thomas was 26 years old at the time; Sherry was 19.

Shortly after their marriage, the McFarlands, at Sherry’s suggestion, decided to

purchase the property at issue in this appeal, which consists of three parcels of land

in Chatham County, Georgia (the “Property”). The Property was located near

where Sherry grew up and where her parents lived, and Sherry had always wanted


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to live in the area. Thomas was from California and had no other connection to the

area before marrying Sherry.

      The Property was purchased for $15,000, financed with a $5,000 loan from

Sherry’s father, taken from a fund for Sherry’s college education, and a $10,000

loan from Atlantic Savings and Trust. The McFarlands repaid the loans from a

joint bank account in which they both deposited their earnings. Only Thomas’s

name appears on the documentation of the purchase, including the warranty deed,

security deed, and the notes. The McFarlands lived on the Property until 1970.

      According to the McFarlands, the absence of Sherry’s name from any of the

purchase documentation reflected societal customs and practices of the era, as well

as the “traditionalist” view of Sherry’s father, who loaned a portion of the purchase

price and was involved in the purchase. They contend that, despite the way the

documents were prepared, it was always their intention that the Property be jointly

owned. Nonetheless, legal title to the Property remained solely in Thomas’s name

until 2009, when Thomas executed the “Deed of Gift” at issue in his appeal.

      The execution of the 2009 Deed of Gift was triggered by a personal-injury

lawsuit, arising from a car accident, filed against Thomas in 2008. Following an

unsuccessful mediation of the lawsuit, Thomas became concerned that the plaintiff

and her attorney were going to try to “ruin” him financially. In his words, he

executed the 2009 Deed to prevent the personal-injury plaintiff from pursuing what


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he believed to be Sherry’s one-half interest in the Property. According to Thomas,

the purpose of the 2009 Deed was merely to correct legal title to the Property. The

McFarlands stated that they did not see a reason to correct the legal records to the

Property until the 2008 lawsuit, but they had discussed doing so before 2008.

      The personal-injury lawsuit proceeded to a jury trial where the jury awarded

the plaintiff approximately $1 million in damages against Thomas. Soon after

judgment was entered against him, Thomas filed for bankruptcy protection under

Chapter 7.

B.    Adversary Proceeding by Trustee to Set Aside the 2009 Deed of Gift

      After Thomas filed for bankruptcy, the bankruptcy trustee filed an adversary

complaint against the McFarlands to avoid the 2009 Deed of Gift as a fraudulent

transfer of property under 11 U.S.C. § 548(a)(1). The McFarlands responded to

the complaint and asserted that Sherry’s one-half interest in the Property could not

be included within the bankruptcy estate because the 2009 Deed of Gift did not

transfer any equitable title to the Property, but rather, merely corrected legal title to

reflect Sherry’s existing ownership of the Property.

      The bankruptcy court held a bench trial at which both Thomas and Sherry

testified. Following the trial, the court granted the trustee’s action to set aside the

transfer under § 548(a)(1)(A) or (B). See generally Wallace v. McFarland, (In re

McFarland), No. 11-1021, 2013 WL 5442406 (Bankr. S.D. Ga. Sept. 30, 2013).


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The court explained that, in order to avoid the transfer, the trustee had to satisfy the

burden to prove that the conveyance was made with actual intent to hinder, delay,

or defraud a creditor, § 548(a)(1)(A) (“actual fraud”), or that the debtor did not

receive “reasonably equivalent value” for the transfer and believed that he would

incur “debts that would be beyond the debtor’s ability to pay,” § 548(a)(1)(B)(i)

and (ii)(III) (“constructive fraud”).

      The bankruptcy court first determined the “threshold issue” that the 2009

Deed of Gift was a transfer of Thomas’s own interest in the Property, not simply a

recognition of Sherry’s existing equitable interest. Looking to Georgia state law,

the court concluded that the evidence did not support the McFarlands’ contention

that Thomas had held a one-half interest in trust for Sherry by operation of an

implied purchase money resulting trust or otherwise. Therefore, according to the

court, the one-half interest deeded to Sherry in the 2009 Deed of Gift was properly

considered part of Thomas’s bankruptcy estate under 11 U.S.C. § 541.

      Next, the bankruptcy court determined that Thomas transferred the interest

in the Property with actual fraudulent intent under § 548(a)(1)(A). The trustee,

according to the court, produced evidence of multiple “badges of fraud,” see, e.g.,

Dionne v. Keating (In re XYZ Options, Inc.), 154 F.3d 1262, 1271-72 (11th Cir.

1998), including that Thomas transferred the Property to an “insider,” his wife, that

he did not receive reasonably equivalent value in exchange for the transfer, and


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that the timing of the transfer was suspicious in that it occurred shortly after the

failed mediation of the then-pending lawsuit.

      The bankruptcy court went on to conclude that the trustee could also avoid

the transfer as constructively fraudulent under § 548(a)(1)(B), because Thomas did

not receive reasonably equivalent value, and he believed he would incur debts

beyond his ability to pay. The court found that Thomas did not receive any

“value” in exchange for the transfer, let alone value that would be “reasonably

equivalent” to the value of a one-half interest in the Property, given that Thomas

valued his one-half interest at $350,000.00 in his bankruptcy schedules. And the

court determined that Thomas’s belief that he would incur debts beyond his ability

to pay was demonstrated by evidence of the following: Thomas executed the 2009

Deed of Gift days after a failed mediation of a personal-injury lawsuit; he knew

that the plaintiff in that suit sustained extensive damages; he believed that the

plaintiff intended to “ruin” him financially; and the Deed was admittedly executed

for the purpose of protecting his wife’s purported interest in the Property.

      Finally, the bankruptcy court rejected Sherry’s counterclaim, pursuant to 11

U.S.C. § 548(c). Sherry had argued that she should be entitled to recover half of

any proceeds realized from the trustee’s sale of the Property because she was a

good-faith transferee who took an interest in the Property for value. 1


      1
          The McFarlands do not contest the resolution of the § 548(c) claim on appeal.
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      The McFarlands appealed to the district court pursuant to 28 U.S.C.

§ 158(a)(1), and the court affirmed the bankruptcy court’s order. Thomas now

brings this appeal. We have jurisdiction under 28 U.S.C. § 158(d)(1).

                                         II.

      As the second court of review in bankruptcy cases, we examine the

judgment of the bankruptcy court independently of the district court.         Senior

Transeastern Lenders v. Official Comm. of Unsecured Creditors (In re TOUSA,

Inc.), 680 F.3d 1298, 1310 (11th Cir. 2012). We review the bankruptcy court’s

findings of fact for clear error and its conclusions of law de novo. Id. A factual

finding is not clearly erroneous unless, after reviewing all the evidence, we are

“left with a definite and firm conviction that a mistake has been made.” Id.

(citation omitted).

                                        III.

      The trustee’s power to avoid fraudulent transfers or obligations derives from

11 U.S.C. § 548. Section 548(a)(1) provides, in pertinent part, as follows:

             (a)(1) The trustee 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 [bankruptcy] petition, if the debtor voluntarily or
             involuntarily—

                (A) made such transfer . . . with actual intent to
                hinder, delay, or defraud any entity to which the
                debtor was or became, on or after the date that such
                transfer was made . . . , indebted; or
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                   (B)(i) received less than a reasonably equivalent value
                   in exchange for such transfer . . . ; and

                              ....

                   (ii)(III) intended to incur, or believed that the debtor
                   would incur, debts that would be beyond the debtor’s
                   ability to pay as such debts matured[.]

Thus, the trustee may avoid a transfer either as actual fraud, under § 548(a)(1)(A),

or as constructive fraud, under § 548(a)(1)(B). Both parties agree that the trustee

bears the burden of proving that a transfer is fraudulent under § 548(a)(1). See,

e.g., Sullivan v. Welsh (In re Lumbar), 457 B.R. 748, 753 (B.A.P. 8th Cir. 2011).

       We divide our discussion into two parts. First, we address the “threshold”

issue of whether the 2009 Deed of Gift was a transfer of “an interest of the debtor

in property,” § 548(a)(1). Concluding that the bankruptcy court did not err in

determining that it was, we then proceed to the second question: whether the

bankruptcy court erred in concluding that the transfer was actually or

constructively fraudulent.2

A.     Transfer of an Interest of the Debtor in Property

       A debtor’s estate in bankruptcy includes “all legal or equitable interests of

the debtor in property as of the commencement of the case.”                           11 U.S.C.

§ 541(a)(1). Section 541, however, excludes from the bankruptcy estate property

       2
           No dispute exists that the purported transfer occurred within two years of the filing of
the petition. See 11 U.S.C. § 548(a)(1).
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in which the debtor holds only legal title and not an equitable interest.                Id.

§ 541(d). By the same token, property the debtor holds only in trust for another is

not an “interest of the debtor in property” under § 548(a)(1). See Begier v. Internal

Revenue Serv., 496 U.S. 53, 58-59 & n.3, 110 S. Ct. 2258, 2263 & n.3 (1990)

(holding that property a debtor holds only in trust for another is not “an interest of

the debtor in property” under 11 U.S.C. § 547(b), which authorizes the trustee to

avoid certain preferential payments to creditors made before bankruptcy); see also

Bank of Am. v. Mukamai (In re Egidi), 571 F.3d 1156, 1160-61 (11th Cir. 2009);

Nordberg v. Sanchez (In re Chase & Sanborn Corp.), 813 F.2d 1177, 1180-81

(11th Cir. 1987) (discussing the similarities and differences between §§ 547 and

548 in other circumstances).

       In other words, if the 2009 Deed of Gift conveyed only bare legal title to an

interest Thomas held in trust for Sherry, as the McFarlands contend, it appears that

there would have been no transfer of “an interest of the debtor,” because Sherry’s

equitable interest would have been excluded from Thomas’s bankruptcy estate.3

See 11 U.S.C. § 541(a)(1) & (d).

       The nature of a debtor’s interest in property under § 541 is determined by

state law. Musolino v. Sinnreich (In re Sinnreich), 391 F.3d 1295, 1297 (11th Cir.

2004). Under Georgia law, trusts may be either express or implied. In general,

       3
         The trustee does not contend that the interest would have been included in Thomas’s
bankruptcy estate on another basis.
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“[t]rusts are implied whenever the legal title is in one person, but the beneficial

interest, either from the payment of the purchase money or other circumstances, is

either wholly or partially in another.” Bullard v. Bullard, 103 S.E.2d 570, 572 (Ga.

1958). Implied trusts are either resulting or constructive. Hall v. Higgison, 149

S.E.2d 808, 810 (Ga. 1966). Resulting trusts are primarily a product of the parties’

intent, whereas constructive trusts are an equitable remedy where there is

fraudulent conduct. Id.

       The McFarlands rely on two theories of implied trust: “purchase money

resulting trust” and constructive trust.4 We address each theory separately.

       1.      Purchase Money Resulting Trust

       The McFarlands argue that the evidence before the bankruptcy court was

sufficient to show that they intended to jointly own the Property at the time of

purchase and that Sherry contributed sufficient consideration to establish a

purchase money resulting trust. They also contend that the trustee failed to prove

that Sherry did not own a joint interest in the Property and that the court absolved

the trustee’s evidentiary failures by improperly shifting the burden of proof to the

McFarlands to show the existence of an implied trust.




       4
           It is undisputed that Sherry did not obtain an equitable interest in the Property solely by
virtue of marriage. Miller v. Fulton Cnty., 375 S.E.2d 864, 865 (Ga. 1989) (“[N]o property
rights are created in the assets of the marriage while the parties are still married.”).
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      “A purchase money resulting trust is a resulting trust implied for the benefit

of the person paying consideration for the transfer to another person of legal title to

real or personal property.” O.C.G.A. § 53–12–131 (formerly codified at O.C.G.A.

§ 53–12–92); see O.C.G.A. § 53–12–130(3); Dodd v. Scott, 550 S.E.2d 444, 447

(Ga. Ct. App. 2001). In order to establish a purchase money resulting trust, the

party claiming the benefit of the trust must show either (1) that the party

contributed purchase money at or before the time of purchase or (2) an agreement

at the time of purchase for the party claiming the benefit to contribute purchase

money so as to create a resulting trust. Thompson v. Bearden, 453 S.E.2d 20, 21

(Ga. 1995) (quoting Loggins v. Daves, 40 S.E.2d 520 (Ga. 1946)).

      Courts may consider all facts and circumstances surrounding the transaction

to determine whether the parties intended a purchase money resulting trust.

O.C.G.A. § 53–12–133; Harrell v. Harrell, 290 S.E.2d 906, 907 (Ga. 1982). An

implied resulting trust must be proved by “clear and convincing evidence.” Lee v.

Lee, 392 S.E.2d 870, 871-72 (Ga. 1990).

      Here, both Sherry and Thomas testified during trial that they had no

agreement for Sherry to contribute half of the purchase price. (Trial Tr. at 21:24–

22:11 & 54:18–55:2). Therefore, while the McFarlands may have intended to

jointly own the property, that intent does not equate to intent to create a purchase




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money resulting trust. 5 See, e.g., Bullard, 103 S.E.2d at 573-74 (plaintiff’s belief

in joint ownership was insufficient to establish a purchase money resulting trust).

       Turning to whether Sherry contributed consideration for the purchase of the

Property, Georgia law provides that the party claiming the benefit of a purchase

money resulting trust “must show with certainty what part of the total purchase

price [she] paid.” Brown v. Leggitt, 174 S.E.2d 889, 891 (Ga. 1970); Bullard, 103

S.E.2d at 574 (“In order to establish an implied trust, it must be shown that some

definite portion of the purchase price was furnished by the party claiming the

trust.”). In general, the payment of consideration for the transfer of legal title to

another person “create[s] a presumption in favor of a resulting trust, but such

presumption shall be rebuttable by a preponderance of the evidence.” O.C.G.A.

§ 53–12–131(b). However, where the payor of consideration and transferee of the

property are husband and wife, the presumptions are flipped, and “a gift shall be

presumed, but such presumption shall be rebuttable by clear and convincing

evidence.” Id. § 53–12–131(c).6



       5
          Likewise, the third-party testimony that the McFarlands presented at trial supports their
position that they believed the property was jointly owned but not that there was an agreement to
create a purchase money resulting trust.
       6
           The presumption of a gift between spouses did not apply when the Property was
purchased in 1968. See Woodward v. Woodward, 266 S.E.2d 170, 171-72 (Ga. 1980) (holding
that there was no presumption of a gift where the wife’s money was used to make the purchase
but title was placed in the name of the husband, and finding the facts sufficient to establish a
purchase money resulting trust in favor of the wife). But the code section relied on in Woodward
was repealed in 1981, and the Supreme Court of Georgia has indicated that the presumption of a
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       On appeal, the McFarlands point to several pieces of evidence, which, they

assert, establish Sherry’s contribution of purchase money: (1) the $5,000 loan

from Sherry’s college fund; (2) Sherry’s wage contributions to the joint account;

and (3) payments Sherry made from the McFarlands’s joint account while Thomas

served in the U.S. Army in Vietnam.

       We find that the bankruptcy court did not clearly err in finding that the

$5,000 loan from Sherry’s college-education fund was not money contributed by

Sherry.    While the loan would not have occurred but for Sherry, the record

supports the court’s findings that the money was loaned by Sherry’s father with the

expectation that the money would be repaid, that Sherry never received the money

from the fund, and that Thomas was the only party obligated on the note.

       We find, however, that the court erred in determining that Sherry’s

contributions to the McFarlands’s joint account were “vague” and insufficient to

establish with certainty what amount Sherry contributed to the purchase price. The

testimony presented at trial demonstrated that Sherry held several minimum-wage

jobs from 1968 to 1971 and that she earned about one-third of the McFarlands’

total wages in 1968. Thomas testified that when the couple was first married, he




gift applies in all cases tried after 1981. See Owens v. Owens, 286 S.E.2d 25, 27 (Ga. 1982)
(directing the trial court to apply the presumption of a gift on retrial, where the presumption did
not apply when the case was first tried). Therefore, the bankruptcy court did not err in applying
the presumption of a gift in this case.
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made $150 per week as a salesman, and Sherry made $80 per week (minimum

wage). Thomas’s pay rose significantly when he rejoined the Army late in 1969,

but Sherry continued to earn at least minimum wage for the first three years of

their marriage. Sherry did not contribute any outside earnings to the couple’s joint

bank account from 1971 to 1989. 7

       Based on these facts, the bankruptcy court found that it was unclear how

much of Sherry’s wages were used to pay off the loans but that Sherry contributed

“significantly less” than Thomas. Although Sherry “cannot retrace all of her

financial records from 1968 to calculate exactly the amount she paid,” the record is

clear that her wages earned during the first three years of marriage were used to re-

pay the loans taken in order to purchase the Property. The evidence also clearly

established that between February 1968 and November 1969, when Thomas’s pay

increased an unknown amount, the McFarlands repaid at least $2,250 on the loan

to Sherry’s father.8 During this period, Sherry contributed about $80 per week to

the joint bank account, while Thomas deposited $150 per week. On a pro rata

basis, then, from February 1968 through November 1969, Sherry contributed at




       7
         The McFarlands had their first child in 1971, and Sherry raised their children and
managed the assets of the family.
       8
         The McFarlands testified that they repaid Sherry’s father $50 per month after
purchasing the Property in February 1968, except that in May and June 1969, they paid him $100
per month.
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least $782.61 towards repayment of the loans on the Property. 9                While we

recognize that the decision in Brown suggests that Sherry would need to establish

that the amount contributed by her was half of the purchase price, it does so in

dicta. See Brown, 174 S.E.2d at 891. This is not the holding in Brown.

      Next, we conclude that that the bankruptcy court erred in finding that

payments made on the loans by Sherry from the McFarlands’ joint account while

Thomas was serving overseas were not Sherry’s contribution towards the purchase

price but rather were Sherry’s payment of Thomas’s contribution. Under Georgia

law, “A joint account belongs, during the lifetime of all parties, to the parties in

proportion to the net contributions by each to the sums on deposit, unless there is

clear and convincing evidence of a different intent.” O.C.G.A. § 7–1–812. Thus,

“the statute creates a presumption that one funding a joint account does not intend

to make a gift of the funds of the account during life, although this presumption

may be rebutted by clear evidence to the contrary.” Parker v. Kennon, 530 S.E.2d

527, 529-530 (Ga. Ct. App. 2000). Authority to withdraw funds from a joint

account does not equate to ownership of the funds. See id.




      9
          80/(80 + 150) = x/2,250. This total does not include the amounts that Sherry
contributed after November 1969, when Thomas’s salary increased. Because there is no
evidence regarding the amount to which Thomas’s salary increased in November 1969, we
cannot on this record evaluate the minimum amount that Sherry must have contributed between
that time and 1971, when Sherry stopped working outside the home.
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         Although we agree that the bankruptcy court did not err in determining that

Sherry’s access to and mere management of the funds in the joint account did not

establish her contribution to the purchase of the Property, see Parker, 530 S.E.2d at

529-30, we conclude that the bankruptcy court did err when it concluded that the

McFarlands failed to show by clear evidence that Thomas made a “gift” to Sherry

of the money deposited in the joint account and used to make payments on the

loans.     During trial, Thomas testified with respect to his contribution to the

couple’s joint bank account as follows:

         Q:    Once that money was in the (joint) account what restrictions, if any,
         did you put on the account that would have prevented your wife from
         spending money any way she saw fit?

         A:    None.

         Q:    And while you were in Vietnam, what restrictions did you have that
         would have prevented her from, say, maybe buying a car in her name instead
         of making payments on the land?

         A:    None.

         Q:    Was that also the case in 1971 when only your money was being
         deposited when she no longer had a salary?

         A:    Yes, sir. . . .

         Q:    Did you ever or what indications did you ever give to her that she
         couldn’t use the money that you earned for any purpose she decided?

         A:    Never.




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      Thomas’s testimony regarding Sherry’s ability to spend the funds in their

joint account however she desired—even for her own personal benefit only—

clearly established that the amounts deposited by him in the account were a gift to

his wife.   The trustee emphasizes that nowhere in his testimony did Thomas

specifically state that he intended his earnings to be a “gift” to Sherry. But the fact

that Thomas did not use the word “gift” during his testimony does not necessarily

mean that he did not make a gift to his wife of the monies in their joint account

while he was in Vietnam. There is nothing magical about the word “gift”—it is the

intent behind Thomas’s actions that is significant. Here, the evidence showed that

Thomas intended to and in fact made a voluntary transfer of his financial property

to Sherry. See Gift, Black’s Law Dictionary (10th ed. 2014). Although O.C.G.A.

§ 7-1-812 creates a presumption that the person funding a joint account does not

intend to make a gift of funds to the joint account holder, here, the record was

sufficient to rebut that presumption.

      Because the funds in the joint account constituted a “gift,” any payment of

the loan amount out of the account by Sherry was a payment made by her.

Typically, a purchase money resulting trust is implied for the benefit of the person

paying consideration for the property. See O.C.G.A. § 53-12-131(a). But, as noted

previously, where the payor of consideration and transferee of the property are

husband and wife, “a gift shall be presumed, but such presumption shall be


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rebuttable by clear and convincing evidence.” Id. § 53–13–131(c). Accordingly,

although we find that Sherry paid consideration for the Property, we must presume

that any payment from the account on the Property were a gift to Thomas since the

property was in his name alone, unless the couple can rebut this presumption by

clear and convincing evidence.

      We agree with the bankruptcy court that the McFarlands failed to present

“clear and convincing” evidence to rebut the presumption that Sherry’s

contributions to the purchase of the Property were a gift to Thomas. See O.C.G.A.

§ 53-13-131(c); Owens v. Owens, 286 S.E.2d 25, 27 (Ga. 1982).              Thus, the

McFarlands did not prove the existence of an implied resulting trust by clear and

convincing evidence. See Lee, 392 S.E.2d at 871-72. Here, the bankruptcy court

acknowledged the McFarlands’ testimony that they always intended the Property

to be held jointly. But, the court essentially found that the McFarlands’ purported

intent was negated by other record evidence. For instance, the court pointed to the

fact that Sherry’s parents knew how title was vested, and the McFarlands

“knowingly went along with this structure for more than forty years.” They did

this despite the fact that, setting aside the Property at issue in this case, the

McFarlands owned at least one other property that was titled jointly in both of their

names.




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      The bankruptcy court also noted that the McFarlands’ intent to own the

Property as husband and wife does not necessarily equate to intent to create a

purchase money resulting trust.       Rather, to establish this type of trust, the

McFarlands must have intended at the time of the purchase that Sherry would

supply the money for the Property and that, even though Thomas had legal title to

the Property, she would have equitable interest in the Property. See Rosado v.

Rosado, 662 S.E.2d 761, 763 (Ga. Ct. App. 2008). And, the intention must have

been contemplated in an understanding or agreement. The court found that no

such agreement or understanding to create a resulting trust was shown.

      There was no indication that Atlantic Savings and Trust—the bank that

loaned two-thirds of the purchase price—considered the Property to be joint

property. And no evidence was presented as to whether the bank would have

financed the Property if jointly owned. Thomas was the main financial earner for

the household at the time. The bankruptcy court further emphasized that the sellers

were directed to vest title in Thomas’s name alone. On these facts, the court

determined that “the evidence surrounding the intent of the parties is insufficient to

rebut the presumption of a gift here.” Under the circumstances presented, we

cannot say that this finding constituted clear error. Indeed, we are not left with the

a “definite and firm conviction that a mistake has been made.” In re TOUSA, Inc.,

680 F.3d at 1310. (citation omitted). Because the McFarlands did not rebut the


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presumption of a gift, the bankruptcy court was correct in finding that Thomas

made a transfer of his interest in the Property when he executed the 2009 Deed of

Gift.

        The McFarlands argue that the bankruptcy court impermissibly shifted the

burden of proof away from the trustee by applying the presumptions under Georgia

law explained above and by requiring the McFarlands to show that a purchase

money resulting trust was created at the time of purchase. We disagree.

        Here, the trustee put forward competent evidence showing that there was a

transfer of an interest of the debtor. Specifically, the trustee presented evidence

that in 2009 Thomas executed a Deed of Gift transferring one-half of an interest in

the Property, which was titled solely in his name since the time of purchase in

1968, to Sherry. As an affirmative defense pled in their answer to the trustee’s

complaint, the McFarlands contended that Sherry held an interest by operation of a

purchase money resulting trust. 10 To resolve this dispute, the bankruptcy court was

required to look to Georgia law, In re Sinnreich, 391 F.3d at 1297, and Georgia

law clearly provides that “[t]he burden of proving the existence of a resulting trust

is on the party claiming to be the beneficiary of such a trust,” Freeman v. Saxton,

255 S.E.2d 28, 30 (Ga. 1979). It also provides for the presumptions applied by the



        10
           The McFarlands then agreed in a subsequent consolidated pre-trial order, filed on
August 17, 2012, that they bore the burden of establishing any defenses at trial.
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bankruptcy court, as explained above. Therefore, the bankruptcy court did not

impermissibly shift the burden of proof away from the trustee.

       For the foregoing reasons, the bankruptcy court did not err in concluding

that the McFarlands failed to establish the existence of an implied purchase money

resulting trust.

       2.     Constructive Trust

       Next, the McFarlands contend that equitable considerations support finding

a constructive trust in these circumstances. They argue that a constructive trust

arose because Sherry made contributions to the purchase and upkeep of the

property with the understanding that she would jointly own the property with

Thomas.

       Constructive trusts occur “whenever the circumstances are such that the

person holding legal title to property, either from fraud or otherwise, cannot enjoy

the beneficial interest in the property without violating some established principle

of equity.” O.C.G.A. § 53–12–132 (formerly codified at O.C.G.A. § 53–12–93);

Dodd, 550 S.E.2d at 447. In other words, “a constructive trust is a remedial device

created by a court of equity in order to prevent unjust enrichment.” Lee v. Lee, 392

S.E.2d 870, 871 (Ga. 1990).

       Our review of the underlying bankruptcy court record, including the

consolidated pre-trial order, the McFarlands’ proposed findings of fact and


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conclusions of law, and their post-trial brief, shows that the McFarlands did not

present the constructive trust arguments they raise on appeal to the bankruptcy

court for resolution. (See Bankr. Dkt. Entries 43, 53, & 76). Nor did they make

these arguments in their brief on appeal to the district court. (See Dist. Dkt. Entry

6).   Rather, they asserted throughout the underlying proceedings only that a

resulting trust was established. Therefore, the McFarlands cannot now complain

that the bankruptcy court failed to address whether a constructive trust was

established, and we decline to consider these arguments for the first time on

appeal. See In re Egidi, 571 F.3d at 1163 (holding that an argument not raised

before the bankruptcy court will not be considered for the first time on appeal).

      In any case, the McFarlands’ arguments do not show that the bankruptcy

court erred. First, there has been no allegation of fraudulent conduct between

Sherry and Thomas. See, e.g., Hall, 149 S.E.2d at 810 (“There being no allegation

of fraud in the petition before us, this opinion will be limited to a consideration of

the resulting trust only.”).

      Second, Sherry was not induced to make valuable improvements to the land

based on a representation that she would acquire an interest in the land by making

the improvements. See Lathem v. Hestley, 514 S.E.2d 440, 441-42 (Ga. 1999)

(“When . . . a party is induced to make valuable improvements on real property, a

constructive trust may be imposed.”). The McFarlands’ reliance on Sharp v.


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Sumner, 528 S.E.2d 791, 792 (Ga. 2000), and similar cases is likewise unavailing

because Sherry made no improvements based on a promise to convey, see id. (“A

donee of land under a parol gift who enters into possession and makes valuable

improvements upon the faith of the gift, acquires a perfect equity as against the

donor, his heirs and those claiming under him with notice.” (ellipsis, citation, and

internal quotation marks omitted; emphasis in original)). These theories are also

inconsistent with the McFarlands’ testimony that they believed Sherry’s interest

arose at the moment of purchase.

      No evidence exists that the McFarlands purchased the Property pursuant to

some joint business venture or partnership. See, e.g., Antoskow & Assoc., LLC v.

Gregory, 629 S.E.2d 1, 3-4 (Ga. Ct. App. 2005).           Rather, the intent of the

McFarlands on purchasing the Property, as they assert in their brief, was personal,

not for profit—“to subsequently build a house upon their retirement and to live

together next to Mrs. McFarland’s parents.” See, e.g., Manget v. Carlton, 130 S.E.

604, 605 (Ga. Ct. App. 1925) (explaining that an implied trust may arise when “the

parties made a contract to enter into a joint adventure, if not a partnership, for the

purpose of dealing or trading in lands for profit.”).

      Finally, because legal title to the Property remained solely in Thomas’s

name for over forty years, Sherry likely “waived the right to a constructive trust by

subsequent ratification or long acquiescence.” O.C.G.A. § 53-12-132.


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      In short, the McFarlands have not shown that Georgia law permits finding a

constructive trust in these circumstances, nor have they explained how Thomas’s

holding of the beneficial interest in the Property violates an “established principle

of equity.” O.C.G.A. § 53–12–132. Therefore, the bankruptcy court did not abuse

its discretion in concluding that equitable considerations did not support the

establishment of a constructive trust. See In re TOUSA, Inc., 680 F.3d at 1310

(“We review equitable determinations of the bankruptcy court for abuse of

discretion.”).

B.    Actual or Constructive Fraud under 11 U.S.C. § 548(a)(1)

      Here, the bankruptcy court determined that the trustee could avoid the

transfer effected by the 2009 Deed of Gift either as actually fraudulent,

§ 548(a)(1)(A), or as constructively fraudulent, § 548(a)(1)(B).            Because we

conclude that the court did not err in finding that the transfer could be avoided as

constructively fraudulent under § 548(a)(1)(B), we do not address actual or

intentional fraud under § 548(a)(1)(A).

      To avoid the transfer in this case under § 548(a)(1)(B), the trustee bore the

burden of proving, under the circumstances of this case, that Thomas (1) “received

less than a reasonably equivalent value in exchange” for the transfer, and (2)

believed that he would incur “debts that would be beyond [his] ability to pay.”

Gen. Elec. Credit Corp. of Tenn. v. Murphy (In re Rodriguez), 895 F.2d 725, 726


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n.1 (11th Cir. 1990). Whether “reasonably equivalent value” or “fair consideration

has been given for a transfer is largely a question of fact, as to which considerable

latitude must be allowed to the trier of the facts.” In re TOUSA, Inc., 680 F.3d at

1311 (internal quotation marks omitted). Therefore, in In re TOUSA, Inc., we

reviewed the bankruptcy’s court’s determination of “reasonably equivalent value”

for clear error. See id. at 1310-13.

      1.     Reasonably Equivalent Value

      Thomas contends that the trustee failed to establish the element of

“reasonably equivalent value” because the trustee put forth no evidence of the

Property’s value at the time of the 2009 Deed of Gift. The bankruptcy court

reversibly erred, he asserts, by improperly using judicial notice to establish the

value of the Property and fill the evidentiary hole.

      “The purpose of voiding transfers unsupported by ‘reasonably equivalent

value’ is to protect creditors against the depletion of a bankrupt’s estate.” In re

Rodriguez, 895 F.2d at 727 (citation omitted). If a transfer results in an economic

benefit to the debtor, either directly or indirectly, the transfer cannot be avoided.

Id.; see Crumpton v. Stephens (In re Northlake Foods, Inc.), 715 F.3d 1251, 1257

(11th Cir. 2013) (“The concept of reasonably equivalent value does not require a

dollar-for-dollar transaction.”). We scrutinize the value of transfers more closely

where, as here, the transfer was made to an insider. Advanced Telecomm. Network,


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Inc. v. Allen (In re Advanced Telecomm. Network, Inc.), 490 F.3d 1325, 1336-37

(11th Cir. 2007); see 11 U.S.C. § 101(31)(A)(i) (defining the term “insider” as a

“relative of the debtor”).

      The bankruptcy court determined that no “value,” as defined by 11 U.S.C.

§ 548(d)(2)(A), was given by Sherry in exchange for the transfer of Thomas’s

interest in the Property. The court further found that, even if some value were

given, such value was plainly not equivalent to the value of a one-half interest in

the Property, which the court found was $350,000. In determining the value of the

Property, the bankruptcy court took judicial notice of Schedule A of Thomas’s

bankruptcy petition, which listed Thomas’s one-half interest in the Property at

$350,000 as of the petition date in February 2011.

      After review, we conclude that the bankruptcy court did not clearly err in

finding that no “reasonably equivalent value” was provided for the transfer of

interest in the Property because the record supports a determination that no “value”

was given “in exchange for” the transfer. 11 U.S.C. § 548(a)(1)(B)(i); see Pummill

v. Greensfelder, Hemker & Gale (In re Richards & Conover Steel, Co.), 267 B.R.

602, 612 (B.A.P. 8th Cir. 2001) (stating that the concept of reasonably equivalent

value “requires analysis of whether: (1) value was given; (2) it was given in

exchange for the transfers; and (3) what was transferred was reasonably equivalent

to what was received”); see also In re Advanced Telecomm. Network, Inc., 490


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F.3d at 1337 (concluding that certain value did not count because it was not given

“in exchange for” for the transfer).

       For purposes of § 548, the term “value” “means property, or satisfaction or

securing of a present or antecedent debt of the debtor.” 11 U.S.C. § 548(d)(2)(A).

The 2009 Deed of Gift recites the following as consideration for the transfer: (1)

Thomas’s love and affection for Sherry; (2) Sherry’s contribution to the purchase

of the Property by obtaining a loan from her father; (3) payments Sherry made on

the loans while Thomas was overseas; and (4) maintaining the Property over the

years. No consideration was given for the 2009 Deed of Gift other than what was

stated on the face of the Deed.

       This Court has held that “love and affection” are inadequate consideration to

be reasonably equivalent value for a transfer.             Walker v. Treadwell (In re

Treadwell), 699 F.2d 1050, 1051 (11th Cir. 1983). In addition, Sherry did not give

Thomas any property or satisfy or secure any of his debts.               Id.; 11 U.S.C.

§ 548(d)(2)(A). And the face of the Deed identifies the transfer as a “Deed of

Gift.” See In re Treadwell, 699 F.2d at 1051 (“[A] debtor’s gifts . . . are voidable

by the trustee.”). In other words, Thomas received nothing in exchange for the

transfer that would be valuable to his creditors. See In re Rodriguez, 895 F.2d at

727.




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      Thomas contends that, without evidence of the value of the Property, the

bankruptcy court could not analyze whether reasonably equivalent value was

given. But we must give considerable latitude to the trier of facts, In re TOUSA,

Inc., 680 F.3d at 1311, and the totality of the circumstances in this case supports a

finding that the Property had substantial, or at least some, value, even without

considering the value listed in Thomas’s bankruptcy schedules. At trial, Thomas

explained that he believed his own assets, which included a one-half interest in the

Property, would be sufficient to cover the plaintiff’s initial $500,000 settlement

request. And once the mediation failed, Thomas transferred the one-half interest to

his wife in order to protect her purported interest in Property, indicating that both

Thomas and the personal-injury plaintiff believed the Property was valuable at the

time of transfer.

      Therefore, we do not address the issue of whether the bankruptcy court erred

in taking judicial notice of Thomas’s bankruptcy schedules because calculating the

precise value of the Property is unnecessary to our analysis. See, e.g., Pension

Transfer Corp. v. Beneficiaries Under the Third Amendment to Fruehauf Trailer

Corp. Retirement Plan No. 003 (In re Fruehauf Trailer Corp.), 444 F.3d 203, 214

(3d Cir. 2006) (stating that where there is sufficient evidence to conclude under the

totality of the circumstances that the benefits to the debtor are minimal and plainly

not equivalent to the value of a transfer of a substantial asset, the precise value of


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the benefit is unnecessary to the court’s analysis). Any error the bankruptcy court

made in judicially noticing and admitting the bankruptcy schedules as evidence

was harmless under the circumstances. See 28 U.S.C. § 2111 (directing appellate

courts to disregard harmless errors); Fed. R. Civ. P. 61.

      In short, the totality of the circumstances supports the bankruptcy court’s

determination that no value, as defined by § 548(d)(2)(A), was given in exchange

for the transfer of a valuable asset of the debtor. See 11 U.S.C. § 548(a)(1)(B)(i).

We therefore conclude that the bankruptcy court did not clearly err in finding that

Thomas received “less than a reasonably equivalent value,” despite the fact that the

trustee did not introduce evidence of the value of the interest transferred. See In re

TOUSA, Inc., 680 F.3d at 1310-11; In re Fruehauf Trailer Corp., 444 F.3d at 214.

      2.     Incurring Debts Beyond Debtor’s Ability to Pay

      Finally, Thomas argues that the trustee failed to introduce sufficient

evidence to show that he believed that his assets were insufficient to satisfy a

potential judgment against him. Specifically, Thomas contends, the trustee failed

to establish the value of his assets or his ability to pay the judgment at the time of

the 2009 Deed.

      Constructive fraud may be shown when the debtor received less than

reasonably equivalent value in exchange and “intended to incur, or believed that

the debtor would incur, debts that would be beyond the debtor’s ability to pay as


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such debts matured.” 11 U.S.C. § 548(a)(1)(B). The trustee need not show that

the debtor was insolvent at the time, § 548(a)(1)(B)(i)(I), which is an alternative

basis for finding constructive fraud, or that debtor intended to defraud creditors by

the transfer, § 548(a)(1)(A).

      After a careful review of the entire record, we are not left with a “definite

and firm conviction” that the bankruptcy court erred in finding that Thomas

conveyed the interest in the Property to his wife at a time when he believed that he

would incur debts beyond his ability to pay. See 11 U.S.C. § 548(a)(1)(B)(ii)(III).

According to the court, “[Thomas] was well aware at the time of the transfer that

[the personal-injury plaintiff] had been seriously injured, had suffered substantial

lost wages, and required substantial medical treatment as a result of the traffic

incident.” In re McFarland, 2013 WL 5442406, at *15.

      Thomas points out that he believed that his assets would cover the $500,000

settlement amount initially requested by the plaintiff and that the judgment would

not exceed $500,000. But, as the court explained, the 2009 Deed came shortly

after the mediation failed, when Thomas believed that the plaintiff intended to

“ruin” him financially, and Thomas testified that he undertook the transfer to

protect Sherry’s purported one-half interest in the Property from creditors. Thus,

the fact of transfer indicates that Thomas believed that the judgment could exceed

his own assets and put Sherry’s purported one-half interest in jeopardy. Although


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no judgment had yet been entered in the personal-injury lawsuit at the time of

transfer, the bankruptcy court concluded that the circumstances showed “a belief

that the judgment would exceed the value of [Thomas’s] assets at the time

[Thomas] initiated the transfer to [Sherry].” Id. at *16.

      In view of these facts and the bankruptcy court’s explanation of its findings,

we cannot say that the court clearly erred in determining that Thomas believed he

would incur debts beyond his ability to pay under § 548(a)(1)(B)(ii)(III).

                                         IV.

      In sum, we hold that the bankruptcy court did not err in granting the trustee’s

motion to avoid the transfer effected by the 2009 Deed of Gift under 11 U.S.C.

§ 548(a)(1). Therefore, we affirm.

      AFFIRMED.




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