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CSX Transportation, Inc. v. Leggett

August 12, 2010

CSX TRANSPORTATION, INC., AND DALE R. F. GOODMAN, SUCCESSOR TRUSTEE OF THE BANKRUPTCY ESTATE OF BRIAN K. LEGGETT, PLAINTIFFS,
v.
BRIAN K. LEGGETT; TRACY T. LEGGETT; CHRIS A. LEGGETT; B&G PROPERTY HOLDINGS, LLC; LEGGETT, LEGGETT & TOWLER, LLC; LEGGETT HOLDINGS, LLC; PROMOTIONAL GROUP SERVICES, INC.; SEG, INC. A/K/A AND/OR D/B/A SOUTHERN EXCAVATION GROUP A/K/A/ AND/OR D/B/A SOUTHEASTERN EXCAVATION GROUP A/K/A AND/OR D/B/A SOUTHERN ENTERPRISE GROUP, INC.; CAPITAL FINANCIAL GROUP, LLC; L&M VENTURES, LLC; AND TRACY LEGGETT D/B/A REAL ESTATE MANAGEMENT GROUP, DEFENDANTS.



The opinion of the court was delivered by: William S. Duffey, Jr. United States District Judge

OPINION AND ORDER

This matter is before the Court on Plaintiff CSX Transportation, Inc.'s unopposed Motion for Summary Judgment against Tracy Leggett [102].

I. BACKGROUND FACTS

A. Prior Actions and Brian Leggett's Insolvency

Defendant Brian Leggett was the principal corporate officer and sole director and shareholder of Defendant B&L Financial Services, Inc. ("B&L"). Brian Leggett's wife is Tracy Leggett. From 1997 through August 2002, B&L provided debt collection services to Plaintiff CSX ("Plaintiff" or "CSX"). During this period, B&L collected funds on behalf of CSX, but failed to remit them to CSX.

On August 7, 2002, CSX commenced an action against B&L, Brian Leggett, and Tracy Leggett to recover the funds B&L failed to remit to CSX (the "2002 Case"). On June 14, 2005, B&L consented to entry of a final judgment against it in the amount of $3,158,035.81. On October 28, 2005, Brian Leggett consented to the entry of a final judgment against him in the amount of $1,930,058.93. As of the date of this Opinion and Order, Brian Leggett has substantially failed to satisfy the final judgment entered against him in the 2002 Case.

On April 25, 2005, while the 2002 Case was pending, Brian Leggett filed a voluntary Chapter 13 petition in the U.S. Bankruptcy Court for his district. On May 13, 2005, Brian Leggett filed a Statement of Financial Affairs with the Bankruptcy Court where he admitted his debts were greater than his assets. On August 19, 2005, the Bankruptcy Court dismissed Brian Leggett's case because he did not qualify for Chapter 13 relief. On October 9, 2007, Brian Leggett filed a second petition in his district, seeking relief under Chapter 7. In filing the petition, Brian Leggett again represented that his debts ($2,036,845.31) were greater than his assets ($144,552.00). On June 10, 2010, Brian Leggett was granted a discharge by the Bankruptcy Court pursuant to 11 U.S.C. § 727.

B. Alleged Fraudulent Conveyances

1. Transfer of Liquid Assets to Tracy Leggett

After 2000, Brian Leggett has transferred various real and personal property to his wife without consideration for the transfers. At all times relevant to this action, Tracy Leggett had two banking accounts at Linsco/Private Ledger (the "LPL Accounts"), a financial institution with an office in Atlanta, Georgia. While Tracy Leggett was the sole holder of the LPL Accounts, Brian Leggett exclusively managed them. Tracy Leggett was unaware that the LPL Accounts even existed.*fn1

Between January 1, 2006, and August 31, 2006, Brian Leggett transferred $118,759.76 into the LPL Accounts. Tracy Leggett was unaware these transfers occurred and she did not provide Brian Leggett, or any other person, goods, services, or any other consideration for these funds.

2. Transfer of the Fieldview Properties to Tracy Leggett

On October 27, 2005 Brian Leggett was the sole owner of two parcels of property on Fieldview Drive in Douglasville, Georgia (collectively the "Fieldview Properties"). The first parcel, located at 5110 Fieldview, was the residence of Brian and Tracy Leggett. As of October 28, 2005, Brian Leggett owed two mortgage loans on this property totaling $348,047.36. The second parcel, located at 5107 Fieldview, was an undeveloped, one acre, residential lot.*fn2

On October 28, 2005, the same day the final judgment in the 2002 Case was entered against Brian Leggett, Chris Leggett, Brian Leggett's brother, "purchased" the Fieldview Properties for $435,000. At the closing of this sale, Chris Leggett paid 20% of the sale price in cash and entered into a $348,000 mortgage loan secured by the 5110 Fieldview parcel. With the proceeds from the sale of the Fieldview Properties, Brian Leggett paid off the $348,047.36 on the two mortgage loans he owed on the 5110 Fieldview property, and he received $74,951.65 in cash for the sale.

Following sale of the Fieldview Properties, Brian Leggett immediately began refunding to Chris Leggett the "out of pocket costs" Chris Leggett paid in connection with his purchase of the properties. In a series of payments from November 2005 through January 2006, Brian Leggett refunded Chris Leggett nearly the entire down payment and closing costs, plus interest, that Chris Leggett tendered to purchase the Fieldview Properties. Brian Leggett also assumed Chris Leggett's mortgage payments for 5110 Fieldview.

On January 24, 2006, after entry of the final judgment in the 2002 Case, Chris Leggett, at the request of Brian and Tracy Leggett, executed two quitclaim deeds conveying the Fieldview Properties to Tracy Leggett. The mortgage loan secured by 5110 Fieldview remained in Chris Leggett's name. On November 29, 2006, Tracy Leggett refinanced 5110 Fieldview and received $353,600, using the property to secure the refinancing mortgage. The proceeds from the refinancing were used to pay off the mortgage on 5110 Fieldview that was in Chris Leggett's name. Through this series of transactions title to the Fieldview Properties was transferred from Brian Leggett, against who a large judgment had ...


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