Facts: Respondent Chad Thompson obtained a judgment against Paul V. Hanson, Inc. after Paul V. Hanson, Inc. failed to close the sale of a home to Thompson. As Paul V. Hanson, Inc. was insolvent at the time of the judgment, Thompson subsequently filed suit against petitioner Paul Hanson in his personal capacity, asserting that Paul V. Hanson, Inc.’s conveyance of two lots to Hanson was constructively fraudulent and that Hanson was therefore liable for the judgment against Paul V. Hanson under Washington Revised Code §19.40. The trial court agreed and entered a judgment against Hanson. Upon appeal, the Washington Court of Appeals affirmed the trial court’s decision, ruling that Thomspon could obtain a judgment against Hanson pursuant to §19.40 despite the fact that the conveyance had not been made with the intent to delay or hinder collection of the judgment against Paul V. Hanson, Inc. Hanson appealed this decision to the Supreme Court of Washington.

Question(s): Is a transferee who accepts a constructively fraudulent transfer subject to personal liability under §19.40 despite a lack of actual intent to delay or hinder?

Conclusion: Justice Owens’ opinion for the Court affirmed the Washington Court of Appeals, concluding that once the transfer of the lots was found to be constructively fraudulent Hanson could be held personally liable to Thompson without regard to his intent. The Court also held that the judgment against Hanson should not be offset by the debt Hanson assumed in the transfer as to do so would be inconsistent with the purpose of §19.40 and allow debtors to frustrate creditors.

Docket No. 81311-6 (from Court of Appeals Division I Case No. 58577-1)

Petitioner: HANSON, et ux.

Respondent: CHAD A. THOMPSON, et al. v. PAUL

Briefs:

Argument: Thursday, June 25, 2009 9:00am

[Source: TVW, http://tvw.org]

Decided: Thursday, October 22nd, 2009

Prevailing Party: CHAD A. THOMPSON, et al. v. PAUL (Respondent)

Vote: 9-0

Citation: Pending

Alexander

Johnson

Madsen
(Concurs)

Sanders

Chambers

Owens
(Majority)

Fairhurst

Johnson

Stephens

Opinion

Concurrence