Delta Gypsum, LLC v. Michael Felgemacher

A supplier of drywall was a creditor of a company that installed drywall. The owner of the indebted company signed a promissory note in the amount of $370,615 payable to the supplier and paid a small portion of the note before selling the business to his son for $12,000. The supplier filed suit to obtain a judgment for the balance owed on the promissory note after the transfer of the business to the son. The supplier obtained a judgment against the former owner, but not against the company, for the amount owed on the note. The supplier then filed this action against the son in an effort to have the sale set aside on the basis that it was a fraudulent conveyance. The trial court found the supplier was unable to satisfy the elements of either the actual fraud statute, Tenn. Code Ann. § 66-3-305(a)(1), or the constructive fraud statute, Tenn. Code Ann. § 66-3-306(a). We agree and affirm the trial court’s judgment.