Opposition Brief — Rolleston v. Estate of Simms

No. 99-575

In The

Supreme Court of the United States

MORETON ROLLESTON, JR. LIVING TRUST, ET AL.,

Petitioners,

THE ESTATE OF REBECCA WIGHT CHERRY SIMS,

JOHN RANDOLPH CHERRY, EXECUTOR,

Respondent.

On Petition For A Writ Of Certiorari

To The Court Of Appeals Of The State Of Georgia

¢

RESPONDENT’S BRIEF IN OPPOSITION

SHELBY A. OUTLAW

Attorney of Record for Respondent

Ga. Bar No. 555740

THE OutTLaw Firm

315 Sycamore Street

Decatur, GA 30030

(404) 371-9588

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

PARTIES TO THE PROCEEDING

The Petitioners are Moreton Rolleston, Jr., individu-

ally, the Moreton Rolleston, Jr. Living Trust, and Moreton

Rolleston, Jr. in his capacities as Grantor, Trustee and

Beneficiary of the Moreton Rolleston, Jr. Living Trust.

Respondent Estate of Rebecca Wight Cherry Sims is

represented by Decedent's personal representative, John

Randolph Cherry, Executor.

ll

TABLE OF CONTENTS

Page

Parties to the PunceeGit é ois ccincce necks fos kash sen i

Fabee of Comheeety os cicncendsceae eden ewes. li

Sable Of AmOeOs «oc nekccaeeeseease ce eae ees ili

Stabemmamt OF WATMRGRCOG. 6 coos ccccck sss niwncaacnucs 1

Goorgia Statute MOUGRIOE os ss0nscncce ccna issvannes 1

Errors and Omissions in Petitioners’ Statement of the

CODD oo a 0nccnaeeadceu eee ete: lene 2

Reasons for Denying the Writ ..................... 8

ASQUMARE . «oo 0050588 6nebede Ree enGteed eieaa eens

CORGMIOIGN 2. 63:5 60544n6d6 ee 15

Appendix A — Judgment on Jury Verdict, Fulton

superior Court, D61176............. A-1

Appendix B - Judgment on Jury Verdict, Fulton

Superior Court, D97003............. B-1

Appendix C - Interlocutory Injunction, July 7,

i PP ry et Pre rr ere C-1

Appendix D - Findings of Fact, Conclusions of

Law and Judgment, Superior

Court of Fulton County, E37496..... D-1 ,

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=

ili

TABLE OF AUTHORITIES

Page

CASES

Aiken v. Richardson, 207 Ga. 735, 64 S.E.2d 54

nw SP ne ene 6, 12, 15

Chambers v. Citizens and Southern National Bank,

242 Ga. 498, 249 S.E.2d 214 (1978), citing New

England Mutual Life Ins. Co. v. Childs, 185 Ga.

vie ie A | Ey) oy 14

Dye v. Georgia, 205 Ga. App. 781, 423 S.E.2d 713

gag 60-05 04h x Wo 6 dds eww cde she 6, 12, 15

Grupo Mexicano de Desarrollo, S.A. et al. v. Alliance

Bond Fund, Inc., et al., __ U.S. ___ (Docket No.

98-231, decided June 19, 1999)................ passim

Heart of Atlanta Motel v. United States, 370 U.S. 241,

85 S.Ct. 348, 13 L.Ed.2d 258 (1964)................ 13

Rolleston v. Cherry, 226 Ga. App. 750, 487 S.E.2d

ag MA ETI lr rae ae 4,12

Rolleston v. Cherry, 226 Ga. App. 908 (Table) (1997) ..... 4

Rolleston v. Cherry, U.S. cert. den., 523 U.S. 1107,

118 S.Ct. 1677, 140 L.Ed.2d 815 (1998) ............. 4

Rolleston v. Cherry, 466 S.E.2d 866 (1996) ............. 5

Rolleston v. Cherry, 237 Ga. App. 733 (1999) ....... =

Westmoreland v. Powell, 59 Ga. 256 (1877)............ 14

STATUTES

I 6b ike kp eds aa ks CAs yee wees passim

Re OMI, 6 crc ceca ccnnesrscvasciecn 7

aie fu halk Vices obs de aces Saeki 7

I En. eve nn snes ks cases cteetceun. 7

iv

TABLE OF AUTHORITIES - Continued

Page

CONSTITUTIONAL PROVISION

Constitution of the United States, Art. I, J 8......... 5

FEDERAL STATUTES AND RULES

Be: Ws SRT 4 6 6 chads hon cab keen sae ewan esa ceens 1

a Ge UD ee oo an cso a ee aa ee eee 11

STATEMENT OF JURISDICTION

A. The Order on Summary Judgment was entered by the

Superior Court of Fulton County, State of Georgia, on

July 7, 1995.

B. The Court of Appeals, State of Georgia, affirmed the

trial court and rendered its opinion with all judges con-

curring, on April 12, 1999.

C. Respondent acknowledges that if the case below oth-

erwise presented a proper case for certiorari, jurisdiction

would be proper under 28 U.S.C. §1257(a) but denies that

Petitioner presents a proper case for the grant of writ of

certiorari.

2

GEORGIA STATUTE INVOLVED

O.C.G.A. 18-2-22

The following acts by debtors shall be fraudulent in law

against creditors and others and as to them shall be null and

void:

(1) Every assignment or transfer by a debtor, insolvent

at the time, of real or personal property or choses in action of

any description to any person, either in trust or for the benefit

of or on behalf of creditors, where any trust or benefit is

reserved to the assignor or any person for him;

(2) Every conveyance of real or personal estate, by writ-

ing or otherwise, and every bond, suit, judgment and execution

or contract of any description had or made with intention to

delay or defraud creditors, where such intention is known to

the taking party; a bona fide transaction on a valuable consid-

eration, where the taking party is without notice or ground for

reasonable suspicion of said intent of the debtor, shall be valid;

(3) Every voluntary deed or conveyance, not for a valu-

able consideration, made by a debtor who is insolvent at the

time of the conveyance.

&

ERRORS AND OMISSIONS IN PETITIONERS’

STATEMENT OF THE CASE

Petitioner has substantially misrepresented to this

Court essential material facts in the history of this con-

tinuing litigation and the appeals thereof, either by direct

misstatement or by omission. Rather than attempting to

identify each specific misrepresentation or omission,

Respondent hereinafter sets forth an accurate summation

of the litigation between the parties with each relevant

superior court order or appellate opinion referenced to

the record or included in the Appendix to Respondent's

Brief.

Petitioners’ application for certiorari in the case at

bar is the culmination of three lawsuits and numerous

appeals occasioned by Petitioner Moreton Rolleston, Jr.’s

professional negligence and active legal malpractice in

rendering advice to Respondent’s Decedent, Rebecca

Wight Cherry Sims, concerning the ownership of certain

accreted beach front land on St. Simon’s Island, Georgia.

The cases are as follows:

1985-1991 Civil Action D27179 (subsequently D81176),

Superior Court of Fulton County, State of Georgia,

Sandease, Ltd. and Coasthouse, Ltd., versus Rebecca

Wight Cherry Siims. Petitioner Moreton Rolleston, Jr. rep-

resented Defendant Sims in the underlying real estate

transaction and counseled her not to attend the multi-

million dollar closing. Her failure to attend coupled with

Petitioner’s inability to perform in her absence gave rise

to the lawsuit for specific performance and damages.

Petitioner managed to delay trial for years until he was

replaced by other counsel shortly before Mrs. Sims was

murdered. On March 1, 1991, six years after the initial

acts of malpractice, the jury returned a verdict against

Mrs. Sims’ Estate in the amount of $3,800,000.00 as dam-

ages for abusive litigation. [See Respondent’s Appendix

“A”, Judgment on Jury Verdict, Civil Action D81176,

March 1, 1991.]

1992-1998 Civil Action D97003, Superior Court of Fulton

County, The Estate of Rebecca Wight Cherry Sims (here-

inafter “Estate”) versus Petitioner Moreton Rolleston,

Jr. The Estate sought damages for malpractice, fraud and

fraudulent concealment, breach of fiduciary duty, indem-

nity and contribution as the result of Petitioner Moreton

Rolleston, Jr.’s advice and actions in the underlying trans-

action and lawsuit (D27179 and D81176). The jury

returned a verdict in favor of the Estate and against

Moreton Rolleston, Jr. in the amount of $5,200,000.00 on

March 22, 1995 and judgment was entered on April 7,

1995. [See Respondent’s Appendix “B”, Judgment on Jury

Verdict D97003.] Between the rendering of the verdict and

the entry of judgment, Petitioner recorded deeds transfer-

ring millions of dollars of unencumbered real estate from

himself to an entity created by him one week before trial,

the Moreton Rolleston, Jr. Living Trust (hereinafter

“Trust”), of which he is Grantor, Trustee and Beneficiary.

Subsequently, deeds were recorded transferring the

remainder of his known real estate holdings to the Trust.

1995-1999 Civil Action E37496, Superior Court of Fulton

County, The Estate (Respondent herein) versus Moreton

Rolleston, Jr. et al. (Petitioners herein) The case at bar

was filed by the Estate against Petitioners herein on April

12, 1995 immediately upon learning of the above-refer-

enced transfers of property in avoidance of judgment.

This lawsuit petitioned the court to set aside all transfers

to the Trust recorded post-judgment as fraudulent con-

veyances in violation of O.C.G.A. §18-2-22. The lawsuit

also seeks damages arising from the tort of fraud, as well

as a permanent injunction to prevent further transfers.

1995-1998 Appeals challenging the judgment in Civil

Action D97003. Petitioner appealed the verdict in Civil

Action D97003 to the Georgia Court of Appeals which

affirmed the lower Court on March 6, 1997. [Rolleston v.

Cherry, 226 Ga. App. 750, 487 S.E.2d 354 (1997)]. Peti-

tioner Rolleston applied for Writ of Certiorari to the

Supreme Court of Georgia, which was denied, [Rolleston

v. Cherry, 226 Ga. App. 908 (Table) (1997)] and subse-

quently to the Supreme Court of the United States. The

last attempted appeal was denied by this Honorable

Court on May 4, 1998, conclusively establishing the

award of $5.2 Million Dollars in damages in Civil Action

D97003. [U.S. cert. den., 523 U.S. 1107, 118 S.Ct. 1677, 140

L.Ed. 2d 815 (1998)]

1995-1999 Appeals challenging the Injunction and sum-

mary judgment on liability in Civil Action E37496. The

trial court entered a preliminary injunction on July 7,

1995 which prevented Petitioners from transferring prop-

erty from the Trust to bona fide purchasers without prior

approval from the Court. [See Respondent’s Appendix

“C”, Interlocutory Injunction, July 7, 1997.] Petitioners

appealed this injunction directly to the Supreme Court of

Georgia which affirmed the injunction on January 22,

1996. [Rolleston v. Cherry, 466 S.E.2d 866 (1996)]

Following the denial of Petitioner’s Petition for Writ

of Certiorari to this Court in underlying Civil Action

D97003, the Superior Court of Fulton County granted

summary judgment to Respondent on July 7, 1998 on the

issue of Petitioners’ liability for fraudulent conveyances

in avoidance of judgment. [See Respondent’s Appendix

“D", Findings of Fact, Conclusion of Law and Judgment,

Superior Court of Fulton County, E37496.] The Georgia

Court of Appeals affirmed the trial court on April 12,

1999, four years to the day from the filing of the suit. [See

Rolleston v. Cherry, 237 Ga. App. 733 (1999)]. The Supreme

Court of Georgia denied Petitioner’s Request for Writ of

Certiorari on September 17, 1999.

Petitioners’ application for certiorari is predicated on

two questions: whether this Court’s recent decision in

Grupo Mexicano de Desarrollo, SA, et al. v. Alliance Bond

Fund, Inc., et al., _ U.S. ___ (Docket No. 98-231, decided

June 17, 1999) renders the trial court’s preliminary injunc-

tion fatally defective and whether such injunction poses

an impermissible burden on interstate commerce in viola-

tion of the Commerce Clause of the United States Consti-

tution, Const. U. S., Art I. §8. Both questions must be

answered in the negative as is more fully shown here-

after.

The injunction entered by the Superior Court of Ful-

ton County in Civil Action E37496 was in the nature of a

post-judgment injunction because Petitioner had already

been adjudicated liable for $5.2 Million Dollars in dam-

ages in the underlying lawsuit which his transfers were

intended to avoid. Moreover, the injunction was entered

in a case relying expressly on Petitioners’ violation of

O.C.G.A. §18-2-22, Georgia’s fraudulent conveyance stat-

ute, and was not a suit in equity as distinguished from

Grupo Mexicano, supra.

Although Petitioner claims that a federal question is

also presented, he raised no constitutional issue in the

trial court, and it is well-settled that a court of review will

not address questions not presented in the first instance

of appeal, Dye v. Georgia, 205 Ga. App. 781, 423 S.E.2d 713

(1992); Aiken v. Richardson, 207 Ga. 735, 64 S.E.2d 54

(1951). In their enumerations of error to the Court of

Appeals of the State of Georgia, Petitioners contended

that the trial court misapplied the statute, O.C.G.A.

§18-2-22, and failed to consider certain evidence in ruling

that Petitioner’s conveyances were fraudulent in law.

Petitioners did not raise a question of interstate com-

merce in their appeal to the Georgia Court of Appeals,

nor was such issue addressed by that court. The Georgia

Court of Appeals merely affirmed the lower court's grant

of summary judgment in the Estate’s favor.

In its consideration of Petitioners’ arguments, this

Court should be aware of Petitioner Rolleston’s blatant

misrepresentations of fact to this Court. Contrary to Peti-

tioners’ allegation that the Estate once offered to settle for

$300,000.00, the only party to ever offer $300,000.00 was

Petitioner Moreton Rolleston, Jr.’s own insurance carrier.

The Estate did make an unliquidated demand for policy

limits which was rejected.

Petitioners also failed to advise this Court of their

blatant violation of the interlocutory injunction, resulting

in a contempt citation and a fine affirmed by the Georgia

Court of Appeals. Despite the existence of the interlocu-

tory injunction which prohibited Petitioners from trans-

ferring or conveying any property without prior court

approval, within the month following the trial court's

grant of final summary judgment on July 7, 1998 on the

issue of liability, the Trust transferred all real and per-

sonal property by 100 year lease to a new entity, to wit:

the Moreton Rolieston, Jr., Limited Partnership, wholly

owned and controlled by Petitioner Moreton Rolleston, Jr.

Although Petitioners argued to the Court of Appeals

in their Motion to Reconsider that a lease does not trans-

fer an interest in land, Petitioner Rolleston had admitted

in court on October 5, 1998 that he had obtained a pur-

chaser for the property and Chicago Title Company had

already agreed to issue good marketable title on the basis

of property rights conferred by a long-term lease. It is

well-settled in Georgia law that a long-term lease conveys

an interest in land. O.C.G.A. §§ 44-6-100; 44-6-102; 44-7-1.

Had that fraud not been discovered in time to halt the

subsequent transfer, the Moreton Rolleston, Jr., Limited

Partnership, of which Petitioner Rolleston is the general

partner and Petitioner Rolleston Living Trust is the sole

limited partner, would have been in position to convey

good marketable title to a bona fide purchaser without

notice and thereby defeat Respondent's judgment.

Respondent also excepts to Petitioners’ misstating

the date of the term of its petition as October 2000, when

the petition was docketed in the October, 1999 term and is

ripe for consideration in this Court’s October 1999 Term.

Petitioner Moreton Rolleston, Jr.’s actions in the

underlying case and appeals thereof, as set forth above

and as documented in Respondent's Appendices and the

present Petition to this Court are evidence of Petitioners’

disregard for the facts and the law. This case does not

present any question entitling Petitioners to review in

this Court.

REASONS FOR DENYING THE WRIT

There are no compelling reasons for review of the

lower state court’s decision on writ of certiorari, and

multiple reasons for denying the writ:

e Petitioner cites no conflict with any decision of the

United States court of appeals or a state court of last

resort or any departure from the accepted and usual

course of judicial proceeding so as to call for an exer-

cise of this Court’s supervisory power;

e Petitioner cites no decision of a federal question by a

state court of last resort that conflicts with another

state court of last resort or of a United States court of

appeals;

e Petitioner cites no important question of federal law

that has not been but should be settled by this Court,

or that has been decided in a way that conflicts with

relevant decisions of this Court.

°

\O

ARGUMENT

A. The Superior Court of Fulton County Had Express

Statutory Authority to Restrain and Enjoin Peti-

tioners From Transferring Property.

Petitioner’s First Question fails to set forth any

grounds for an appeal to this Court because the recently

decided case, upon which Petitioners rely, has no applica-

tion to the case at bar. In Grupo Mexicano, supra, this

Court held that there was no precedent in a suit in equity

to issue an injunction preventing a pre-judgment transfer

of property before the entitlement to money damages is

judicially established. The case at bar is founded on

express statutory authority, to wit: O.C.G.A. §18-2-22, the

Georgia fraudulent conveyance statute, which is in dero-

gation of the common law and excludes this instant case

trom the rule of equity.

The Grupo Mexicano, supra, case is distinguishable on

multiple levels from the case at bar. Specifically, Respon-

dent was forced to file suit for the express purpose of

setting aside transfers in order to satisfy the money judg-

ment previously awarded. Petitioner Moreton Rollestcn,

Ir, an admitted multi-millionaire, transferred all of his

real and personal property to a living trust wholly owned

and controlled by him after money damages in the

amount of $5.2 Million Dollars were awarded to Respon-

dent by the jury, but before the judgment was signed and

entered. Although the Trust’s title to said property is a

legal fiction, said transfers nonetheless prevented

Respondent from executing on its judgment for more

than four years.

10

Not only do Petitioners’ unclean hands prevent them

froni seeking relief in a court of equity, it is also clear in

Grupo Mexicano, supra, that said case has no application

where express statutory authority exists to enjoin the acts

contemplated by Petitioner.

Pursuant to O.C.G.A. § 18-2-22, “The following convey-

ances shall be fraudulent in law against creditors and

” in three enumerated instances. The trial

court, in granting summary judgment, specifically found

others. . ..

that it was not necessary for Respondent to prove all

elements of the statute, and that it sufficed to prove any

one of the three elements to entitle Respondent to have

the conveyances declared null and void and set aside.

The Court of Appeals of the State of Georgia confirmed

that Respondent’s burden of proof was satisfied by pro-

ving any one of the statutory elements. [Rolleston v.

Cherry, 237 Ga. App. 733 (1999)]

Petitioners, in formulating their argument, addressed

only the third element of the fraudulent conveyance stat-

ute, to wit:

Every voluntary deed or conveyance, not for a valu-

able consideration, made by a debtor who is insolvent

at the time of the conveyance. O.C.G.A §18-2-22(3)

Moreover, their argument failed to address the fact that

the transfers by Petitioner Moreton Rolleston, Jr., were

voluntary and entirely devoid of consideration. Therefore,

even if Petitioner Moreton Rolleston, Jr. had been solvent

at the time of the conveyances, the lack of consideration

and the voluntariness of the transfers rendered them

fraudulent in law.

11

Judge Blackburn, writing for the Court of Appeals,

specifically noted that Petitioners’ contention that Peti-

tioner Rolleston was insolvent at the time of the transfers

not only lacked merit, but was superfluous since Respon-

dent had already fully satisfied the second statutory pro-

hibition, to wit:

Every conveyance of real or personal estate, by writ-

ing or otherwise, and every bond, suit, judgment and

execution or contract of any description had or made

with intention to delay or defraud creditors, where

such intention is known to the taking party; a bona

fide transaction on a valuable consideration, where

the taking party is withvut notice or ground for

reasonable suspicion of said intent of the debtor, shall

be valid; O.C.G.A. 18-2-22(2)

As previously stated, the existence of the Georgia

prohibition against fraudulent transfers, codified as

O.C.G.A. §18-2-22, distinguishes Petitioners’ claim from

Grupo Mexicano, supra, since that case is narrowly con-

fined to instances of pre-judgment injunction in a case

founded in equity. In fact, in footnote 7, Justice Scalia,

writing for this Court, specifically distinguishes the

Grupo Mexicano case from cases arising under state fraud-

ulent conveyance laws:

Insofar as Rule 18(b) [rule inapplicable to action on

fraudulent conveyances] applies to such an action,

the state statute eliminating the need for a judgment

may have altered the common law rule that a general

contract creditor has no interest in his debtor's prop-

erty. Because this case does not involve a claim of

fraudulent conveyance, we express no opinion on the

point. Grupo Mexicano, supra, at 15, Footnote 7.

12

In the case at bar, Respondent already held a money

judgment in the amount of $5.2 Million Dollars, plus

interest, against Petitioner Moreton Rolleston, Jr., when

the Superior Court of Fulton County issued a preliminary

injunction on July 7, 1995 in the case at bar. [Appendix

“B” Judgment, D97003 and Rolleston v. Cherry, 226 Ga.

App. 750, 487 S.E.2d 354 (1997)] Petitioners’ first question

is entirely without merit and presents no grounds entit-

ling Petitioners to a Writ of Certiorari from this Court to

the Court of Appeals of Georgia.

B. No Federal Question Was Timely Raised and The

Opinion of The Georgia Court of Appeals Does Not

Burden Interstate Commerce.

Petitioners’ Second Question presents no issue for

consideration by this Court because Petitioner admits

that a federal question was not raised in either the trial

court or the Georgia Court of Appeals until Petitioners

moved for reconsideration of the Court of Appeals’ opin-

ion. (Petitioners’ Brief, pp. 4, 5.)

Petitioners presently contend that the ruling of the

Georgia Court of Appeals constitutes an impermissible

restraint of trade and places a destructive burden on

interstate commerce. Petitioners raised no such claim in

the trial court, nor did they enumerate such error in their

appeal of the trial court’s order granting summary judg-

ment. It is well-settled that the federal question must be

raised in the first instance prior to the appearance of the

case in a court of review, Aiken v. Richardson, supra, and

Dye v. Georgia, supra. However, even had the questions

been properly and timely raised, Petitioners’ contention

Set

13

presents no legal basis because it misstates the holding of

the opinion of the Georgia Court of Appeals. In the case

at bar, a judgment in excess of Five Million Dollars had

already been rendered against Petitioner Moreton Roll-

eston, Jr. prior to his recorded transfers of real property.

There was nothing uncertain about Respondent’s claim,

nor was there any secret that Petitioner intended to uti-

lize the legal fiction of the Moreton Rolleston, Jr., Living

Trust as a conduit to transfer real property to bona fide

purchasers without notice and therefore to avoid Respon-

dent’s judgment entirely.!

Petitioner Moreton Rolleston, Jr. first appeared in this

Court in Heart of Atlanta Motel v. United States, 370 U.S.

241, 85 S.Ct 348, 13 L.Ed. 2d 258 (1964). He did not

hesitate in that instance to preter his personal interests, as

an owner of the Heart of Atlanta Motel, to imposing the

burden of racial discrimination on interstate commerce.

Petitioners contend that the Georgia Court of

Appeals has construed O.C.G.A. §18-2-22 to prevent the

conveyance of good marketable title to real property by a

debtor during the pendency of a lawsuit. However, this

reading of the opinion completely ignores the purpose of

the statute which prohibits only those conveyances

wherein:

' A portion of the opinion of the Georgia Court of Appeals

deals with the order of the trial court which found Moreton

Rolleston, Jr., in contempt for a further attempt to avoid the

judgment by transferring all of his property by 100 year lease to

another wholly owned and controlled entity, the Moreton

Rolleston, Jr. Limited Partnership. Petitioners did not reference

this portion of the opinion in their petition.

14

1) The debtor, rendered insolvent by the

assignment or transfer, retains any trust or

benefit for himself;

2) the debtor intends the transaction to delay

or defraud creditors, and the transferee has

knowledge of the intent to defraud; or

3) the debtor receives no consideration for his

voluntary deed or conveyance.

The Georgia Court of Appeals quite rightly pointed

out that it is only necessary for the Plaintiff to satisfy one

prong of the statute in order to prevail. In the case below,

not only does O.C.G.A. §18-2-22 apply to the Estate as the

“others” holding an unascertained amount of damage

and protected by a long line of case authority? but also

Petitioners violated all three prongs of the statute. As

Trustee and as the sole income beneficiary of the Moreton

Rolleston, Jr., Living Trust, Petitioner Rolleston retained

all the benefit of the Trust [O.C.G.A, §18-2-22(1)]; his

knowledge is imputed to the Trust as taking party

because the Trust is Rolleston’s alter ego [O.C.G.A.

§18-2-22(2)]; and finally, Petitioners admitted in judicio

that the transfers were voluntary and no consideration

was paid or received [O.C.G.A. §18-2-22(3)].

It is clear that the Georgia Court of Appeals’ con-

struction of the statutory language targets only those

tortfeasors whose conveyances are intended to defraud

2 Westmoreland v. Powell, 59 Ga. 256, 258 (1877) and

Chambers v. Citizen & Southern National Bank, 242 Ga. 498, 249

S.E.2d 214 (1978) citing New England Mutual Life Ins. Co. v.

Childs, 185 Ga. 198, 202, 203, 194 S.E. 561 (1937).

15

creditors and others and that it in no Way restrains trans-

fers to bona fide purchasers in arms-length transactions

made in the ordinary course of business. What is perhaps

not so clear, but which is implicit in Petitioners’ argu-

ment, is their effort to set up constitutional issues to

allow them to delay the ultimate day of justice for the

duration of yet another appeal to the Supreme Court of

the United States, in the same manner as was done in the

underlying judgment.

It is well-settled that a constitutional issue cannot be

raised for the first time on appeal, Dye v. Georgia, supra;

Aiken v. Richardson, supra. However, it is not necessary for

this Court to reach this issue because Petitioners’ argu-

ment is absurd on its face. The statutory language carves

out an exception for bona fide purchasers without notice.

None of the examples cited by Petitioners for their con-

tentions that the opinion of the Court of Appeals would

wreak havoc in the marketplace or create chaos in the real

estate field is even remotely related to the situation in the

case at bar where Petitioner Rolleston’s conveyances were

conveyances in name only. It is as if Rolleston transferred

his billfold from his vest pocket to his pants pocket. The

man who is wearing the suit is the same and he has equal

possession, use and benefit of all the property therein.

+

CONCLUSION

Petitioners’ reliance on the case of Grupo Mexicano,

supra, is misplaced because Respondent already pos-

sessed a multi-million dollar judgment against Petitioner

16

Moreton Rolleston, Jr., when the trial court enjoined Peti-

tioners from subsequent transfers. Moreover, Grupo Mex-

icano, supra, has no application to cases predicated on

statutes in derogation of common law, and specifically

those state statutes prohibiting fraudulent conveyances,

such as O.C.G.A. §18-2-22, which Petitioners violated in

its entirety.

Petitioners’ second argument that the opinion of the

Court of Appeals of Georgia violates the Commerce

Clause of the United States Constitution is fatally flawed

because no federal question was raised by Petitioners in

either the trial court or the first appearance on review to

the Georgia Court of Appeals. However, pretermitting the

failure to timely and properly raise a federal question,

Petitioners’ argument is patently absurd because Respon-

dent’s claim was not uncertain, but was reduced to judg-

ment prior to the filing of the case at bar.

The decision of the Court of Appeals of Georgia is in

accordance with the law of Georgia and the Constitutions

of the State of Georgia and the United States. Petitioner

has failed to show that the opinion of the Court of

Appeals of the State of Georgia in any way violates the

Commerce Clause of the United States Constitution or

deprives Petitioners of any constitutional rights. The

opinion of this Court in Grupo Mexicano, supra, upon

which Petitioners rely, is inapplicable because Respon-

dent’s case is founded on express statutory authority

prohibiting fraudulent conveyances. Respondent Estate

of Rebecca Wight Cherry Sims submits that for the

17

reasons stated above the Petition for Writ of Certiorari

should be denied.

Respectfully submitted,

SHELBY A. OuTLaw

THE OuTLAW Firm

315 Sycamore Street

Decatur, GA 30030

(404) 371-9598

Counsel for Respondent

Dated: November 3, 1999

a

Appendix A

Appendix B

Appendix C

Appendix D

APPENDIX

TABLE OF CONTENTS

Page

Judgment on Jury Verdict, Ful-

ton Superior Court, D81176....... A-1

Judgment on Jury Verdict, Ful-

ton Superior Court, D97003....... B-1

Interlocutory Injunction, July 7,

sea SESE CET EL eS eee een C-1

Findings of Fact, Conclusions of

Law and Judgment, Superior

Court of Fulton County, E37496 ...D-1

A-1

APPENDIX A

IN THE SUPE ROR COURT OF FULTON COUNTY

SiATE OF GEORGIA

COAST HOUSE, LTD. and )

SANDEASE, LTD., )

Plaintiffs ) CIVIL ACTION

si ) FILE NO. ®-27479

i ‘ Transferred to

JOHN RANDOLPH Civil Action File No.

CHERRY, Executor of the D-81176

Estate of Mrs. Rebecca W.

Cherry Sims,

Defendant. )

JUDGMENT ON JURY VERDICT

(Filed March 1, 1991)

This action came on for trial before the Court and a

jury, Honorable Frank Eldridge, presiding, and the issues

having been duly tried, and the jury having duly ren-

dered its verdict; and

Plaintiffs having claimed that the sum of their ver-

dicts designated A ($900,000.00) and B ($1,625,000.00),

totalling $2,525,000.00, are concurrent with their judg-

ment designated E ($3,000,000.00), which sum is the

greater of the two concurrent amounts; and Plaintiffs

having taken the position that they are entitled to full

Satisfaction of either to the greater amount of

$3,000,000.00; and this Court having required Plaintiffs to

make an election between the sum of A and B on the one

hand, and E on the other, and having permitted a stand-

by election; and

Plaintiffs having elected E ($3,000,000.00) over A

($900,000.00) and B ($1,625,000.00) (with an alternative or

A-2

stand-by election of A and B, only in the event that upon

appeal or post-verdict ruling or order that E is set aside

or reduced below the sum of A and B), which election

both “primary” and “stand-by”) having been authorized

by this Court; and damage item D ($800,000.00) being

independent and requiring no election, and Plaintiff hav-

ing waived item F ($5,000.00);

IT IS ORDERED AND ADJUDGED

That the Plaintiffs Coast House, Ltd, and Sandease,

Ltd. recover of the Defendant, John Randolph Cherry,

Executor under the Last Will and Testament of Rebecca

Wight Cherry Sims, the sum of $3,800,000.00 with interest

thereon at the rate of 12% as provided by law, and its

costs of this action.

In the event that item E is set aside or reduced below

the sum of items A and B as above described, then, and

only in that event, Plaintiff will recover of Defendant the

sum of $3,335,000.00, with interest thereon at the rate of

12% as provided by law, and its costs of action.

Dated at Atlanta, Fulton County, Georgia, this the 1

day of March, 1991.

/s/ Frank M. Eldridge

Judge, Superior Court of

Fulton County, Georgia

Presented by:

/s/ Austin E. Catts

AUSTIN E. CATTS

Georgia Bar No. 0116900

ATTORNEY FOR PLAINTIFFS

A-3

IN THE SUPERIOR COURT OF FULTON COUNTY

STATE OF GEORGIA

COAST HOUSE, LTD. and

SANDEASE, LTD.,

Individually and as Joint

Ventura Partners,

Plaintiffs,

CIVIL ACTION

FILE NO.

D-81176

JOHN RANDOLPH

CHERRY, Executor of the

Estate of Mrs. Rebecca

Wight Cherry, Sims,

Deceased,

)

)

)

)

)

)

VS. )

)

)

)

)

)

)

)

Defendant.

SPECIAL VERDICT FORM

(Filed Feb. 27, 1991)

I

We, THE JURY, find that the Plaintiffs were damaged

by the Defendant’s breach of contracts.

YES Y¥ NO

If “YES”. amswer [sic] each of the subparts and II below

“NO”.

If “NO”, answer II below “YES”.

A. We find that the Plaintiffs suffered damages

as a direct and immediate consequence of

Defendant's breach of contract for lost use

of capital in the form of lost interest,

expenses spent for development which did

not take place, and administrative costs

=

$

A-4

caused by the delay in the amount of

$900,000.

We find that the Plaintiffs suffered damages

as a direct and immediate consequence of

the Defendant’s breach of contract in the

form of increased development costs in the

amount of $1,625,000.

/s/ FME

D.

We find that the Plaintiffs incurred attor-

neys fees and litigation expenses as a result

of the bad faith conduct of the Defendant in

the amount of $800,000.

We find that the Plaintiffs incurred dam-

ages, not including attorneys fees or

expenses of litigation, by the abusive litiga-

tion tactics of the Defendant in the amount

of $3,000,000.

We find nominal damages in the amount of

$5,000.

I]

We, THE JURY, find that Plaintiffs suffered no recov-

erable damages.

YES

—

NO V7

This 27th day of February, 1991.

/s/ Charles E. Crowder

Foreperson

A-5

CERTIFICATE OF SERVICE

I hereby certify that I have this date served a copy of

the within and foregoing JUDGMENT ON JURY VER-

DICT upon defendant's attorneys, Myles E. Eastwood,

Esq. and Taylor W. Jones, Esq. via telecopier to (404)

872-2095 and via first-class mail with the proper postage

affixed thereto addressed as follows:

Taylor W. Jones, Esq.

JONES, BROWN & BRENNAN

1900 One Georgia Center

600 W. Peachtree Street

Atlanta, Georgia 30308

Myles E. Eastwood, Esq.

JONES, BROWN & BRENNAN

1900 One Georgia Center

600 W. Peachtree Street

Atlanta, Georgia 30308

This lst day of March, 1991.

/s/ Austin E. Catts

Austin E. Catts

6

15th April 98

Patricia Brown

B-1

APPENDIX B

IN THE SUPERIOR COURT OF FULTON COUNTY

STATE OF GEORGIA

ESTATE OF REBECCA WIGHT

CHERRY SIMS, JOHN

RANDOLPH CHERRY, Executor,

Plaintiff, CIVIL ACTION

FILE NO. D97003

MORETON ROLLESTON, JR.,

Defendant.

v.

JUDGMENT ON JURY VERDICT

(Filed Apr. 7, 1995)

This action having come on for trial before the Court

and a jury, the Honorable Isaac Jenrette, presiding, and

the issues having been duly tried, and the jury having

duly rendered its verdict (attached hereto as Exhibit “A”),

IT IS HEREBY ORDERED AND ADJUDGED

That the Plaintiff, The Estate of Rebecca Wight

Cherry Sims, John Randolph Cherry, Executor, shall

recover of the Defendant, Moreton Rolleston, Jr., the prin-

cipal sum of FIVE MILLION ONE HUNDRED THOU-

SAND ($5,100,000.00) DOLLARS, plus expenses of

litigation in the amount of ONE HUNDRED THOUSAND

($100,000.00) DOLLARS, together with the costs of this

action and Judgment is hereby entered for said amount;

B-2

That the Plaintiff, The Estate of Rebecca Wight

Cherry Sims, John Randolph Cherry, Executor, shall

recover of the Defendant, Moreton Rolleston, Jr., post-

judgment interest thereon at the rate of twelve percent

(12%) per annum as provided by law, on the principal

sum of FIVE MILLION ONE HUNDRED THOUSAND

($5,100,000.00) DOLLARS to the date of satisfaction of

said principal sum and Judgment is hereby entered for

said amount; and

Plaintiff filed its affidavit showing demand was made

via certified mail on January 13, 1993 for unliquidated

damages in the amount of One Million ($1,000,000.00)

Dollars and Defendant having failed to satisfy said

demand within the time required by O.C.G.A. §51-12-14,

the Plaintiff, The Estate of Rebecca Wight Cherry Sims,

John Randolph Cherry, Executor, shall further recover of

the Defendant, Moreton Rolleston, Jr., pre-judgment

interest in the amount of Two-Hundred Fifty-Two Thou-

sand Four Hundred Ninety-Three and 15/100

($252,493.15) Dollars, pursuant to O.C.G.A. §51-12-14,

said amount being interest at the rate of twelve percent

(12%) per annum running from thirty days after Plain-

tiff’s unliquidated damages demand on January 13, 1993,

to the date of Judgment on March 22, 1995. Judgment is

hereby entered for said amount.

This 6th day of APR, 1995,

/s/ Isaac Jenrette

The Honorable Isaac Jenrette,

Chief Judge

Fulton County Superior Court

B-3

Presented by:

/s/ Shelby A. Outlaw

SHELBY A. OUTLAW

Georgia State Bar No. 555740

/s/ Scott M. Kaye

SCOTT M. KAYE

Georgia State Bar No. 409310

ATTORNEYS FOR PLAINTIFF

THE OUTLAW FIRM

315 Sycamore Street

Decatur, Georgia 30030

(404) 371-9588

B-4

IN THE SUPERIOR COURT OF FULTON COUNTY

STATE OF GEORGIA

ESTATE OF REBECCA WIGHT CIVIL ACTION

CHERRY SIMS, JOHN

RANDOLPH CHERRY, Executor CASE No. D-97003

Plaintiff

vs

MORETON ROLLESTON, JR.

Defendant

VERDICT

(Filed March 22, 1995)

We the jury find for the plaintiff and award damages

as follows:

1. Actual Damages $5,100,000

plus any interest $ 0

2. Expense of Litigation

including attorneys fees $ 200,000

Total $5,200,000

We find that punitive damages should be awarded ( )

Yes (X) No.

OR

We the jury find for the defendant. ( )

This the 22nd day of March, 1995.

/s/ James A. Robbins Jr.

FOREPERSON

C-1

APPENDIX C

IN THE SUPERIOR COURT OF FULTON COUNTY

STATE OF GEORGIA

ESTATE OF REBECCA WIGHT}

CHERRY SIMS, JOHN

RANDOLPH CHERRY, Executor, ]

met

Plaintiff, } Civil Action

Vv. ]

MORETON ROLLESTON, JR., | File No: E 37496

individually, MORETON

ROLLESTON, JR., LIVING

TRUST, and MORETON

ROLLESTON, JR. in his capacities !

as Trustee and/or Beneficiary, 7

]

]

Defendants

INTERLOCUTORY INJUNCTION

(Filed Jul. 7, 1995)

Plaintiff’s Motion for Interlocutory Injunction having

come on for hearing on July 6, 1995, and after reviewing

the pleadings and hearing argument of counsel,

IT IS HEREBY ORDERED AND ADJUDGED that:

Defendant MORETON ROLLESTON, JR. and Defen-

dant MORETON ROLLESTON, JR. LIVING TRUST are

enjoined from transferring or conveying any real or per-

sonal property without notice to and approval by this

Court. This injunction shall remain in full force and effect

until further order of this Court.

C-2

SO ORDERED THIS 7th DAY OF July, 1995.

/s/ Isaac Jenrette

THE HONORABLE ISAAC JENRETTE

Judge Fulton County Superior Court

Prepared by:

Shelby A. Outlaw

Ga. Bar No. 555740

/s/ Shelby A. Outlaw

Attorneys for Plaintiff

THE OUTLAW FIRM

315 Sycamore Street

Decatur, Georgia 30030

(404) 371-9588

D-1

APPENDIX D

IN THE SUPERIOR COURT OF FULTON COUNTY

STATE OF GEORGIA

ESTATE OF REBECCA

WIGHT CHERRY SIMS,

JOHN RANDOLPH

CHERRY, Executor,

Plaintiff,

Civil Action

File No: E-37496

V.

J

]

]

]

]

MORETON ROLLESTON, |

JR., individually, |

MORETON ROLLESTON, !

JR., LIVING TRUST, and!

MORETON ROLLESTON, !

JR. in his capacities as

Trustee and/or |

Beneficiary, 7

]

]

Defendants

FINDINGS OF FACT, CONCLUSIONS OF

LAW AND JUDGMENT

(Filed July 7, 1998)

The above-referenced action having come before this

Court on Plaintiff’s Motion for Partial Summary Judg-

ment on the issue of liability pursuant to O.C.G.A.

§9-11-56(c) and on Defendants’ Third Renewed Motion

for Summary Judgment, and the Court, having received

D-2

evidence and heard argument of counsel, and upon con-

sideration of the pleadings, answers to interrogatories

and admissions on file and depositions, affidavits and

evidence in the record, hereby issues its findings of fact

and legal conclusions and enters judgment as follows:

FINDINGS

1.

Defendant Moreton Rolleston, Jr. (hereinafter “Defen-

dant Rolleston”) was personally served on February 20,

1992, with Plaintiff’s Complaint in Civil Action D97003,

Superior Court of Fulton County, Georgia.

2.

Plaintiff's Complaint sought actual damages in

excess of Five Million ($5,000,000.00) Dollars for Defen-

dant Rolleston’s alleged fraud, breach of fiduciary duty,

and legal malpractice and for contribution and indemnity

arising out of the judgment entered against Plaintiff in

Civil Action D81176, Superior Court of Fulton County,

Georgia, on March 1, 1991.

3.

Said Civil Action D97003 referenced in Paragraph 1

above was tried to the jury beginning the seventh and

ending on the twenty-second day of March and a verdict

in the amount of $5,100,000.00 in general damages and

$100,000.00 in attorney’s fees was rendered on March 22,

1995.

D-3

4.

On April 7, 1995, this Court entered Judgment on

Jury Verdict against Defendant Rolleston in the total

amount of $5,452,493.15 including pre-judgment interest

of $252,493.15 and post-judgment interest at the legal

rate.

a

On April 12, 1995, Plaintiff learned that Defendant

had filed a Warranty Deed purporting to transfer to the

Moreton Rolleston, Jr., Living Trust all of his right, title

and interest in and to the property located at Rebel Road

Estates as described more particularly in the Deed

recorded March 29, 1995 in Deed Book 19415, Pp. 169-171

of the Superior Court of Fulton County, Georgia.

6.

On April 12, 1995, Plaintiff learned that Defendant

had filed a Warranty Deed on March 31, 1995 purporting

to transfer to the Moreton Rolleston, Jr., Living Trust all

of his right, title and interest in the Lots Numbered One

Thousand Seventy-two (1072) and One Thousand Sev-

enty-three (1073) of Block Number Seventy-one (71) of

Sea Island Subdivision No. 1, Glynn County, Sea Island,

Georgia, being recorded in Deed Book 57-K, Folio 155, of

the Superior Court of Glynn County, Georgia.

f

On April 12, 1995, Plaintiff filed this action against

Defendants Moreton Rolleston, Jr., individually, Moreton

D-4

Rolleston, Jr., Living Trust and Moreton Rolleston, Jr., in

his capacities as Trustee and/or Beneficiary of said Trust,

pursuant to O.C.G.A. §18-2-22 (acts fraudulent in law

against creditors and others) to set aside fraudulent con-

veyances and for damages, imposition of a constructive

trust and injunctive relief. A temporary restraining order

issued immediately and Plaintiff filed Notices of Lis Pen-

dens in all counties where Defendant Rolleston owned

real property known to Plaintiff.

8.

On July 7, 1995, this Court entered an interlocutory

injunction against Defendants which was affirmed on

appeal by the Supreme Court.

9.

On December 15, 1997, this Court denied Defendants’

Motion for Summary Judgment and denied their request

for Certificate of Immediate Review to appeal on inter-

locutory order.

10.

On December 19, 1997, Plaintiff filed an Amended

Complaint setting forth the same causes of action to set

aside fraudulent conveyances under O.C.G.A.

§18-2-22(1)(2) and (3) and for Permanent Injunction

(Count IV), Constructive Trust (Count V), Damages

(Count VI) and Attorney’s Fees (Count (VII).

D-5

11.

On January 7, 1998, Defendants filed a Notice of

Appeal of the Court’s Order of December 15, 1997 deny-

ing Defendants’ Motion for Summary Judgment.

12.

On January 27, 1998, at the call of the trial calendar,

Defendants moved in open court to dismiss Plaintiff’s

Amended Complaint on the ground that it dismissed the

original Complaint and set forth a new cause of action for

fraud which was barred by a two year statute of limita-

tions.

13.

On February 3, 1998, this Court denied Defendants’

Motion to Dismiss Plaintiff's Amended Complaint and

the same order denied Defendants’ Motion to Vacate and

Set Aside its Order of December 15, 1997 and Defendants’

second (renewed) Motion for Summary Judgment and

granted Plaintiff’s Motion to Strike Defendants’ Notice of

Appeal as a nullity.

14.

On February 5, 1998, Defendants filed a notice of

appeal of this Court’s interlocutory order of February 3,

1998.

D-6

15.

On March 6, 1998, Plaintiff filed and served Defen-

dants via hand delivery with its Motion for Partial Sum-

mary Judgment on the issue of the Defendants’ liability

for fraudulent conveyances in avoidance of debt.

16.

Defendants filed no response to Plaintiff’s Motion for

Partial Summary Judgment within the 30 days allowed by

statute and Plaintiff filed its Motion for Grant of Unop-

posed Motion on April 9, 1998.

17.

On April 10, 1998, Defendants filed their third

(renewed) Motion for Summary Judgment (Motion only),

relying on and incorporating by reference the Brief, Affi-

davits, Theories of Recovery and Statement of Material

Facts in Dispute originally filed in June, 1996, in support

of their first motion for summary judgment on December

15, 1997. Defendants also requested oral argument on

both Plaintiff's and Defendants’ motions for summary

judgment.

18.

This Court heard oral argument on Plaintiff’s and

Defendants’ Motions for Summary Judgment on June 22,

1998, and Defendants renewed their argument that Plain-

tiff’s amended Complaint dismissed the original Com-

plaint filed April 12, 1995 and is barred by a two-year

Statute of limitations for the tort of fraud.

D-7

CONCLUSIONS

Defendants contend that Plaintiff dismissed its origi-

nal Complaint by the filing of its Amended Complaint on

December 19, 1997, which contained the language, “This

Amended Complaint replaces and supersedes the origi-

nal Complaint filed and served on April 12, 1995.” It is a

matter of statutory law that “whenever the claim or

defense asserted in the amended pleadings arises out of

the conduct, transaction or occurrence set forth or

attempted to be set forth in the original pleading, the

amendment relates back to the date of the original plead-

ing.” O.C.G.A. §9-11-15(c). Plaintiff’s Amended Com-

plaint sets forth the same causes of action to set aside

property transfers pursuant to O.C.G.A. §18-2-22(1), (2)

and (3) as the original Complaint and they arise out of the

same conduct, transaction, or occurrence as described in

Plaintiff’s original complaint. The court concludes that

Plaintiff’s Amended Complaint relates back to the origi-

nal date of filing and Defendants’ contention has no

merit.

2

Defendants further contend that Plaintiff’s claims for

relief set forth in Plaintiff's Amended Complaint are

barred by a two-year statute of limitation regarding the

tort of fraud. Defendants’ contention is without merit in

the case at bar because the amended Complaint relates

back to April 12, 1995, and it is undisputed that Plaintiff

filed suit the same day it discovered the transfers from

Defendant Moreton Rolleston, Jr., to the Moreton Roll-

eston, Jr. Living Trust. Moreover, the period of limitation

D-8

applying to an equitable suit to set aside a conveyance of

real property is seven years from the date of execution of

the deed, unless extended by concealment of the fraud,

Stephens v. Walker, 193 Ga. 330, 18 S.E.2d 537 (1942), Jones

v. Spindel, 239 Ga. 68, 235 S.E.2d 486 (1977), McCravy v.

McCravy, 244 Ga. 336, 260 S.E.2d 52 (1979). The period of

limitation for actions for damages from injury to Plain-

tiff’s property rights by virtue of Defendants’ fraud is

four years. O.C.G.A. §9-3-32, Frost v. Arnaud, 144 Ga. 26,

85 SE 1028 (1915), Blocker v. Boswell, 109 Ga. 230, 236, 34

SE 289 (1899). The Court concludes that the period of

limitations has not expired for either an equitable action

to set aside fraudulent transfers of real or personal prop-

erty or for damages arising from the tort itself and that

Plaintiff's Amended Complaint states valid causes of

action and claims for relief.

Defendants further contend that the Estate of

Rebecca Wight Cherry Sims was not a creditor at the time

that Defendant Rolleston created the Moreton Rolleston,

Jr., Living Trust and executed the deeds of conveyance on

February 27, 1995, because there had not yet been a trial

(March 7-22, 1995) or judgment (April 7, 1995) rendered

against Defendant Rolleston in the underlying action, so

that Plaintiff was therefore not entitled to protection

against fraudulent transfers under O.C.G.A. §18-2-22.

Defendants’ argument is an incorrect statement of the

law. It is well-settled in Georgia that an action in equity to

set aside a fraudulent conveyance is available under

O.C.G.A. §18-2-22 to one who has only an uncertain

claim. Kesler, et. al. v. Veal, et. at., 182 Ga. App 444, 449,

D-9

356 S.E.2d 254 (1987) citing Westmoreland v. Powell, 59 Ga.

256, 258 (1877). This court previously held as a matter of

law in its order denying Defendants’ Motion for Sum-

mary Judgment, entered December 15, 1997, that Defen-

dant Rolleston had knowledge of the Estate’s claim at the

time of the making of the deeds (February 27, 1995) and

the filing of same (March 29, 1995 through April 19,

1995). Since the underlying action was filed approxi-

mately three (3) years before the deeds transferring valu-

able real property were executed or recorded, the Court

adheres to its earlier holding that the Estate belonged to

the class of “creditors and others” protected against

fraudulent conveyances under O.C.G.A. §18-2-22.

4.

Defendants similarly contend that Defendant Roll-

eston was not insolvent at the time of transfers because

his real and personal property was valued at between

twelve and fourteen million dollars at the time he made

the transfers on February 27, 1995 (Affidavit of Moreton

Rolleston, Jr., Exhibit “J”, Plaintiff's Compendium of

Exhibits). The value of Rolleston’s assets prior to the

transfers is not in dispute. It is also undisputed that

Rolleston conveyed al! of his real and personal property

to the Moreton Rolleston, Jr. Living Trust on February 27,

1995 (Moreton Rolleston, Jr. Living Trust, Exhibit “I”.

Plaintiff’s Compendium of Exhibits), except for an invest-

ment in German Marks in the approximate amount of

$507,000.00 which was deposited to the Wachovia Bank

account titled in the name of Moreton Rolleston, Jr., Liv-

ing Trust on March 10, 1995 (Affidavit of Moreton Roll-

eston, Jr. Exhibit “J”; Defendants’ Undisputed Material

ene

D-10

Facts, Exhibit “K”; Defendants’ Status Reports, Exhibit

“L”; Plaintiff’s Compendium of Exhibits). It is well estab-

lished in Georgia law that the test for insolvency under

O.C.G.A. §18-2-22 is whether the property retained after

the transfers is ample to satisfy the debtor’s obligations.

Chambers v. Citizen & Southern National Bank, 242 Ga. 498,

249 S.E.2d 214 (1978) citing New England Mutual Life Ins.

Co. v. Childs, 185 Ga. 198, 202, 203, 194 S.E. 561 (1937);

Federal Land Bank v. Bush, 179 Ga. 627, 628, 176 S.E. 639

(1934); Drake v. Ward-Truitt Co., 149 Ga. 54, 56, 99 S.E. 125

(1919). Defendant Rolleston, according to his sworn affi-

davit and his admissions in judicio, divested himself of

all real and personal property immediately prior to the

verdict (March 22, 1995) and Judgment (April 7, 1995) by

transferring it to the Living Trust and was therefore insol-

vent at the time of transfers as contemplated by O.C.G.A.

§18-2-22(1) and (3) — having retained no property with

which to satisfy the known claims of the Estate against

him.

>

Defendant Moreton Rolleston, Jr., is the Grantor, the

Trustee and the Beneficiary of the Moreton Rolleston, Jr.,

Living Trust, which is revocable at the Grantor’s will.

Defendant Rolleston has admitted that he receives all

income paid to the Moreton Rolleston, Jr., Living Trust

and has reserved all benefit of trust property to himself

during his lifetime. (Deposition excerpts, Exhibits “N”

and “O”, Plaintiff’s Compendium of Exhibits) - thus sat-

isfying Plaintiff's burden of proof under O.C.G.A.

§18-2-22(1).

~ =i

D-11

6.

Defendant Rolleston has admitted in judicio that the

transfers were voluntary and without consideration

(Defendants’ Status Report, Exhibit “L” Plaintiff’s Com-

pendium of Exhibits) — thus satisfying Plaintiff’s burden

of proof under O.C.G.A. §18-2-22(3).

7.

When the Plaintiff has proven insolvency and volun-

tary conveyances for no consideration, the law presumes

a fraudulent intent. Defendant Moreton Rolleston, Jr.,

Living Trust is the alter ego of Defendant Grantor

Moreton Rolleston, Jr. and the knowledge of Grantor is

imputed to the Trust - thus, satisfying Plaintiff’s burden

of proof under O.C.G.A. §18-2-22(2).

8.

Plaintiff is not required to prove all three statutory

components of O.C.G.A. 18-2-22. It is sufficient to prevail

if Plaintiff satisfies its burden of proof according to the

terms of either (1), (2), or (3) of O.C.G.A. 18-2-22.

9.

Plaintiff having satisfied its burden of proof with

respect to subsections (1), (2) and (3) of O.C.G.A. 18-2-22,

the Court concludes that there is no genuine issue of

material fact remaining for trial and Plaintiff is entitled to

summary judgment as a matter of law.

ee

D-12

JUDGMENT

Having found that there is no genuine issue of fact

remaining for trial on the issue of Defendants’ liability to

Plaintiff for fraudulent conveyances of real and personal

property in avoidance of debt and that Plaintiff is entitled

to summary judgment as a matter of law on all of its

claims (except for permanent injunction, damages and

attorneys fees under Counts IV, VI and VII), and having

further found that there is no just reason for delay of

entry of judgment in favor of the Estate of Rebecca Wight

Cherry Sims, the Court pursuant to O.C.G.A. §9-11-54(b)

hereby directs entry of Final Judgment in favor of Plain-

tiff, The Estate of Rebecca Wight Cherry Sims, John Ran-

dolph Cherry Executor, and against Defendants, Moreton

Rolleston, Jr., Living Trust, and Moreton Rolleston, Jr.,

individually, and as Trustee and Beneficiary of said Trust,

on all of Plaintiffs claims (except its claims for permanent

injunction, damages and attorney’s fees under Counts IV,

VI and VII) and on Defendants’ Counterclaim, as follows:

*

That all property transfers, known and unknown, to

the Moreton Rolleston, Jr., Living Trust are hereby set

aside and are null and void and of no effect and that the

Moreton Rolleston, Jr., Living Trust holds title to such

property (except as set forth in paragraph 2 below) and

any proceeds received upon the prior disposition of such

property in trust as constructive trustee for the satisfac-

tion of debt to Plaintiff in the principal amount of

$5,452,493.15, plus post-judgment interest arising out of

Civil Action D97003, Superior Court of Fulton County

D-13

and of any and all outstanding claims by Plaintiff against

the Defendants.

2.

That the real property deeds conveyed by Moreton

Rolleston, Jr. to the Moreton Rolleston, Jr. Living Trust are

null and void as to Plaintiff’s judgment and other claims

and are hereby set aside, as follows:

A) That certain Warranty Deed dated February

27, 1995 (filed and recorded in the clerk’s

office on March 29, 1995) and recorded in

Deed Book 19415, Pages 169-171, of the

Superior Court of Fulton County, Georgia,

purporting to convey from Defendant

Moreton Rolleston, Jr. to Defendant

Moreton Rolleston, Jr. Living Trust, the

property located as Rebel Road Estates, Ful-

ton County, Georgia, (as described more

particularly in the Warranty Deed) is

hereby set aside and is null and void and of

no effect, and title to said property remains

in the name of Defendant Moreton Roll-

eston, Jr. individually.

B) That certain Warranty Deed dated February

27, 1995 (filed in the clerk’s office on March

31, 1995) and recorded in Deed Book 57-K,

Folio 155, of the Superior Court of Glynn

County, Georgia, purporting to convey

from Defendant Moreton Rolleston, Jr. to

Defendant Moreton Rolleston, Jr. Living

Trust, the property located at Lots Num-

bered One Thousand Seventy-two (1072)

and One Thousand Seventy-three (1073) of

Block Number Seventy-one (71) of Sea

D-14

Island Subdivision No. 1, Glynn County,

Sea Island, Georgia, (as described more par-

ticularly in the Warranty Deed) is hereby

set aside and is null and void and of no

effect, and title to said property remains in

the name of Defendant Moreton Rolleston,

Jr., individually.

C) That the Warranty Deed dated February 27,

1995 (filed in the clerk’s office on April 19,

1995) and recorded in Deed Book V-20,

Pages 1139-1140, of the Superior Court of

Macon County, North Carolina, purporting

to convey from Defendant Moreton Roll-

eston, Jr. to Defendant Moreton Rolleston,

Jr. Living Trust, the property located at

Condominium Unit #702, VZ Top Mountain

Villas Condominium I, Macon County,

North Carolina, (as described more partic-

ularly in the Warranty Deed) is hereby set

aside and is null and void and of no effect,

and title to said property remains in the

name of Defendant Moreton Rolleston, Jr.,

individually.

D) That the Warranty Deed dated February 27,

1995 (filed in the clerk’s office on April 19,

1995) and recorded in Deed Book 2319,

Pages 222-223, of the Superior Court of

Clayton County, Georgia, purporting to

convey from Defendant Moreton Rolleston,

Jr. to Defendant Moreton Rolleston, Jr. Liv-

ing Trust, the property located at Land Lot

116 of the 13th District of Clayton County,

Georgia, (as described more particularly in

the Warranty Deed) is hereby set aside and

is null and void and of no effect, and title to

said property remains in the name of

Defendant Moreton Rolleston, Jr., individu-

ally.

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a

That Defendants’ Counterclaim seeking damages for

the filing of Lis Pendens Notices by Plaintiff and for

abusive litigation, having been mooted by the Court's

grant of summary judgment in favor of Plaintiff, is

hereby DISMISSED with prejudice.

4.

That Defendants’ Third Renewed Motion for Sum-

mary Judgment is hereby DENIED.

J

That the Plaintiff's claims for permanent injunction,

damages and attorney’s fees under Counts IV, VI and VII

are hereby reserved for trial.

6.

That the interlocutory entered July 7, 1995 remains in

full force and effect until further order of this Court.

SO ORDERED this 6th day of June, 1998.

/s/ Isaac Jenrette

ISAAC JENRETTE, Judge

Superior Court of

Fulton County

Order Presented by:

/s/ Shelby A. Outlaw

Shelby A. Outlaw

Ga. Bar No. 555740

Attorney for Plaintiff

THE OUTLAW FIRM

315 Sycamore Street

Decatur, Georgia 30030

(404) 371-9588

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