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State ex rel Hill v. Lawson

Court of Appeals of Indiana

June 26, 2019

State of Indiana ex rel. Curtis T. Hill, Jr., Attorney General of Indiana, Appellant-Plaintiff,
v.
Larry Lawson, Appellee-Defendant, Angela M. Lawson aka Angie M. Lawson, Appellee-Judgment-Defendant.

          Appeal from the Owen Circuit Court The Honorable Erik C. Allen, Special Judge Trial Court Cause No. 60C02-1502-PL-54

          Attorneys for Appellant Curtis T. Hill, Jr. Attorney General of Indiana Abigail R. Recker Deputy Attorney General Indianapolis, Indiana

          NAJAM, JUDGE.

         Statement of the Case

         [¶1] In April 2017, the trial court entered a default judgment against Angela Lawson on the State of Indiana's complaint to recover public funds stolen by Angela during her tenure as Owen County Auditor. In its complaint, the State alleged that, when her theft was about to be discovered, Angela had fraudulently conveyed to her husband, Larry Lawson, her interest in certain real estate. The State named Larry as a defendant and sought to void the allegedly fraudulent transfer. Following a bench trial on the State's claim against Larry, the trial court found that the conveyance was fraudulent, but the court ordered that Larry was entitled to one-half of the proceeds from a sale of the real estate for his "equitable interest in the Property." On appeal, the State presents a single dispositive issue for our review, namely, whether the trial court misinterpreted Indiana's Uniform Fraudulent Transfer Act when it awarded the State only one-half of the proceeds from the sale of Larry's interest in the property.

         [¶2] We reverse and remand with instructions.

         Facts and Procedural History

         [¶3] In 1995, Larry and Don Germain bought seven acres of undeveloped real estate in Owen County for approximately $21, 000 ("the property"). The two men made improvements to the property over the next few years, including excavating the land and installing a septic system, and they each spent approximately $7, 500 on the improvements. Eventually, Larry and Don each built a home on the property.

         [¶4] In 2001, Larry married Angela. Also that year, because someone was threatening to "harass [Larry] legally about [the] property," he transferred his one-half interest in the property to Angela's daughter. Tr. at 48. But Larry and Angela continued to live in their house on the property. In 2004, Angela told Larry that, "in order to run for Auditor she had to own property in Owen County," and Angela's daughter transferred her interest in the property to Angela. Id. at 49. Angela became the Owen County Auditor in 2005.

         [¶5] At some point, the State Board of Accounts ("SBOA") investigated Angela on suspicion of misappropriation of public funds. Angela became aware of the SBOA's investigation and, on August 6, 2014, Angela quitclaimed her one-half interest in the property to Larry. A few days later, the Indiana State Police executed a search warrant for the Auditor's office, and Angela's employment was terminated. The SBOA investigation revealed that, between June 2009 and July 2014, Angela had spent approximately $346, 000 on personal items using "numerous credit cards issued in the name of [Owen] County." State's Ex. 2 at 4.

         [¶6] The State filed a complaint against Angela to recover public funds, which it later amended to name both Angela and Larry as defendants. In relevant part, the State alleged that Angela had quitclaimed her interest in the property to Larry "with actual intent to hinder, delay, or defraud the State." Appellant's App. Vol. 2 at 52. In February 2017, by agreement of the parties, Germain bought Larry's interest in the property for $15, 000, and that money was "deposited with the court." Appellee's Br. at 6. On April 17, the trial court entered a default judgment against Angela and awarded the State $1, 159, 228.32, which included treble damages.

         [¶7] Following a bench trial on the State's claim against Larry, the trial court entered thorough findings and conclusions. The trial court found that Angela had fraudulently conveyed the property to Larry. The court then concluded as follows: "Considering the totality of the circumstances and evidence, the Court determines it is equitable to award $7, 500.00 of the proceeds [of the sale of the property] to [the State] and to release $7, 500.00 to [Larry] . . . for his equitable interest in the Property." Appellant's App. Vol. 2 at 118. This appeal ensued.

         Discussion and Decision

         [¶8] Initially, we note that Larry has not filed an ...


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