Jenco v. Ledges Partners

2023 UT App 151

THE UTAH COURT OF APPEALS

JENCO LC, DEAN GARDNER INVESTMENT LC, AND
F.M. SNOW PROPERTIES LLC,
Appellants,
v.
SJI LLC,
Appellee.

Opinion
No. 20220892-CA
Filed December 14, 2023

Fifth District Court, St. George Department
The Honorable Jeffrey C. Wilcox
No. 120500362

Bryan J. Pattison,
Attorney for Appellants
Erik A. Olson and Christopher D. Ballard,
Attorneys for Appellee

JUDGE RYAN M. HARRIS authored this Opinion, in which
JUDGES RYAN D. TENNEY and AMY J. OLIVER concurred.

HARRIS, Judge:

¶1 This case involves a dispute about the rightful ownership
of an option (the Option) to purchase certain property. SJI LLC
(SJI) contends that it owns the Option pursuant to a 2010
assignment from the Option’s previous owner, Ledges Partners
LLC (Ledges Partners). SJI’s litigation opponents—JENCO LC,
Dean Gardner Investment LC, and F.M. Snow Properties LLC
(collectively, JENCO)—contend that the 2010 assignment was an
invalid fraudulent transfer and that they own the Option after
purchasing Ledges Partners’ interest in it in a 2017 execution sale.
After a one-day bench trial, the court concluded that the 2010
assignment was not a fraudulent transfer and that SJI therefore
JENCO v. SJI

owned the Option. JENCO appeals, asserting that the trial court’s
fraudulent transfer analysis contained legal errors. We agree with
JENCO and therefore vacate the trial court’s decision and remand
the case for additional proceedings.

BACKGROUND

¶2 In the early 2000s, JENCO owned land in the area now
known as “The Ledges,” north of St. George, Utah. Beginning in
2004, JENCO entered into a series of agreements with Ledges
Partners by which Ledges Partners purchased successive parcels
of JENCO’s land for purposes of development; the purchases
were often at least partially seller-financed by JENCO. After each
purchase of property from JENCO, Ledges Partners would
typically transfer title to the property into separate single-asset
affiliate entities in which Ledges Partners’ managers were also
named as managers. Ledges Partners did this to guard against
“cross-liability”—to prevent any problems with any one portion
of the development from affecting other portions—and always
notified JENCO of any transfers.

¶3 For a few years, the parties operated successfully under
this arrangement, but the economic recession of 2007–2008
changed matters; at that point, sales of developed lots ceased
“virtually overnight,” throwing the project into “dire straits” and
causing the parties to reassess their arrangement. In 2010, after
lengthy negotiations, JENCO and Ledges Partners entered into a
series of “settlement” agreements that redefined their
arrangement and placed certain additional financial obligations
on Ledges Partners. In particular, one of the new agreements
specified that Ledges Partners owed JENCO more than $210,000
from a prior transaction.

¶4 Another of the new agreements entered into in 2010 was
captioned “New Real Property Option Agreement” (the Option
Agreement). Under this agreement, JENCO granted Ledges
Partners an option—the Option—to purchase 67.5 acres of land

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located next to the Ledges Golf Course. Due to the location of the
property at issue, the Option is apparently quite valuable; at one
point, one of Ledges Partners’ managers estimated that the
Option was worth $29.7 million.

¶5 One of the terms of the Option Agreement discussed the
extent to which Ledges Partners could assign its rights thereunder
to another entity. On this point, the parties agreed that, as a
general matter, Ledges Partners could not assign its rights under
the Option Agreement without JENCO’s consent, but this
provision had a noteworthy exception: Ledges Partners was
allowed to “assign its rights hereunder . . . to one or more of [its]
Affiliates, as long as such Affiliate . . . assumes all of [Ledges
Partners’] obligations with respect to the property so transferred.”
The term “Affiliate” was defined in the Option Agreement to
include any company in which any member of Ledges Partners
has an ownership interest. The Option Agreement contained no
provision requiring Ledges Partners to notify JENCO of any
assignment to an “Affiliate.”

¶6 In December 2010, just a few months after entering into the
Option Agreement, Ledges Partners assigned—in a document we
refer to as “the Assignment”—its rights under the Option
Agreement, including the Option, to SJI, an entity controlled by
one of Ledges Partners’ managers (Manager). At the time, Ledges
Partners was financially indebted to JENCO and, in the words of
Manager, was “out of business.” Manager was the only one of
Ledges Partners’ managers who was affiliated with or had any
interest in SJI. And Manager was the only person to execute the
Assignment, doing so on behalf of both Ledges Partners and SJI.
Ledges Partners received no monetary consideration in return for
the Assignment; the only consideration involved was SJI’s
promise “to perform and be bound by all the terms, conditions,
obligations and liabilities required to be paid or performed by
[Ledges Partners] under the” Option Agreement. At the time,
Ledges Partners did not notify JENCO that it had assigned its
rights under the Option Agreement to SJI.

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¶7 In 2012, JENCO filed a lawsuit against Ledges Partners and
eventually obtained a judgment in the amount of $382,787.08. In
an effort to satisfy this judgment, JENCO sought to locate and
execute upon Ledges Partners’ assets; in particular, it applied for
and obtained a writ of execution allowing it to execute upon
Ledges Partners’ interest in the Option Agreement, including the
Option. A constable’s sale was set for June 13, 2017. The day
before the sale, SJI—through a letter from its counsel—notified
JENCO of the Assignment and asserted that it was the rightful
owner of the Option. SJI also recorded a “Notice of Interest”
against the property subject to the Option Agreement. JENCO
learned of SJI’s claimed interest in the Option for the first time
upon receipt of counsel’s letter. But despite SJI’s notice, the
constable’s sale proceeded as scheduled, and JENCO—through a
$100 credit bid—purchased Ledges Partners’ interest in the
Option Agreement.

¶8 A few weeks after the sale, Manager sent a letter—written
on Ledges Partners letterhead—to JENCO. In that letter, Manager
implored JENCO to cease its efforts to execute on or possess the
Option, stating as follows: “What you are now attempting to do
with the [Option], the only remaining asset Ledges [Partners] has,
goes far beyond the boundaries of appropriate and fair business
practices and is just morally and ethically wrong.” (Emphasis
added.) Manager asked JENCO to undertake “constructive
reflection” about “the inequities that exist between” JENCO and
Ledges Partners, and he expressed his “hope” that such reflection
“would lead to [JENCO’s] withdrawal from any further pursuits”
regarding the Option.

¶9 Soon after acquiring Ledges Partners’ interest in the Option
Agreement and learning of SJI’s asserted interest, JENCO made
two post-judgment litigation maneuvers. First, it sought and
obtained leave to conduct additional “post-judgment discovery”
regarding “Ledges Partners’ assets and claimed transfer of
assets.” Second, it sought and obtained leave to join SJI as a
“defendant in interpleader” in the case so that the district court
could make a decision—with all interested parties present—

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regarding the validity of the Assignment. JENCO did not,
however, file a complaint or other pleading against SJI setting
forth any particular causes of action.

¶10 Once SJI was present in the case, JENCO filed a motion
asking the trial court to confirm the validity of the 2017 constable’s
sale and to extinguish any adverse claims to the Option, including
SJI’s. The court granted JENCO’s motion, determining “that any
interest SJI claimed in the [Option] was extinguished because it
did not reply to the writ of execution” before the constable’s sale
occurred. See JENCO LC v. Ledges Partners LLC, 2020 UT App 42,
¶ 7, 463 P.3d 64. SJI appealed that ruling and—in this case’s first
visit to the appellate courts—we determined that, because the writ
of execution only authorized the sale of Ledges Partners’ interest
in the Option Agreement, “any interest SJI may have had . . . could
not have been conveyed to JENCO” at the constable’s sale. Id.
¶ 14. Accordingly, we remanded the case to the trial court “for a
determination of whether [the Assignment] conveyed” Ledges
Partners’ interest in the Option Agreement to SJI. Id.

¶11 On remand, the parties engaged in additional discovery,
and then the court set the matter for a bench trial. In briefs filed
before the start of the trial, JENCO asserted that the Assignment
was “a fraudulent transfer” under Utah law, citing section 25-6-5
of the pre-2017 Utah Code. 1 JENCO did not invoke section 25-6-6
of the Utah Code.

¶12 At the bench trial, the court heard from only two witnesses:
JENCO’s manager and Manager. Both witnesses testified about
the events outlined above. In addition, Manager was asked about
a 2016 email exchange between Manager and one of Ledges
Partners’ investors. The investor initiated the email chain,
inquiring whether Ledges Partners still owned any property at

1. As we explain later, see infra note 4, the relevant sections of the
Utah Code were materially amended in 2017. The parties here
agree, however, that the pre-2017 version of those statutory
sections is the version that applies in this case.

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the Ledges. Manager responded by stating that “[a]n affiliate of
[Ledges Partners] has the rights to roughly 64 acres of property.”2
After the investor asked about the affiliate and, in particular,
whether Ledges Partners’ investors still had “the rights to this 64
acres,” Manager replied that the affiliate was merely holding the
property “to limit cross-liability,” that Ledges Partners’ rights in
the Option Agreement still existed, and that the Option was the
company’s “only remaining asset.”

¶13 In closing arguments, JENCO argued that the
Assignment was a fraudulent transfer, and it asserted that
several “badges of fraud” were present indicating that the
Assignment had been made to “hinder, delay, or defraud” Ledges
Partners’ creditors, including JENCO. In response, SJI argued that
the Assignment had not been made to defraud creditors but,
instead, was a perfectly legal maneuver that was specifically
authorized by the terms of the Option Agreement. In particular,
SJI asserted that Ledges Partners had—during negotiations
over the terms of the Option Agreement—bargained for the right
to make exactly that kind of assignment, and that JENCO “wrote
. . . off” the right to complain about it “by not building that into
[the] contract.”

¶14 At the close of the trial, the court made an oral ruling in
favor of SJI, noting that the Option Agreement allowed the
Assignment and finding that Manager “did what he needed to do
to . . . protect his investors.” On that basis, the court found “that
the assignment was not a fraudulent transfer.”

¶15 About a month later, with the assistance of counsel, the
court entered a written order memorializing its oral ruling. As an
initial matter, the court found that both JENCO’s manager and

2. In its findings, the trial court noted that Manager mistakenly
referred to the amount of property subject to the Option
Agreement as “64 acres” rather than 67.5 acres. No party disputes
that, despite this acreage-related mistake, Manager was referring
to the Option Agreement in this 2016 correspondence.

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Manager had testified credibly. The court included a discussion of
the economic events that led to the current dispute, and it made a
finding that, during the recession, “[s]mart developers and
property owners took measures to survive and protect
themselves from the negative effects of the recession.” The
court found that both JENCO and Ledges Partners were “sharp,
intelligent developers,” and the court observed that the recession
had put Ledges Partners “in a difficult position” that required the
company to “take measures to try to keep the development
going and serve [its] investors.” And the court concluded
that “nothing” in the evidence “would lead it to believe that”
Ledges Partners “intended to defraud anyone” by assigning the
Option to SJI; indeed, it specifically found that Ledges Partners’
“intent in executing the Assignment was to protect Ledges
[Partners’] investors’ interests and ensure the viability of the
[Option] in the wake of the recession.” Thus, the court concluded
that “JENCO has not met its burden of proving by clear and
convincing evidence that the Assignment was a fraudulent
transfer.”

¶16 Along the way, the court found that “JENCO [had] not
proven that any badge of fraud existed here,” although its ruling
contained analysis of only two such badges. The court discussed
whether Ledges Partners had notified JENCO of the Assignment,
and found that it had not (at least not until 2017), but concluded
that this did not weigh against Ledges Partners because, under
the terms of the Option Agreement, Ledges Partners “had no legal
duty to notify JENCO” of the Assignment “or to seek its consent.”
The court also discussed the extent to which SJI gave
consideration for the Assignment, and it concluded that—because
SJI agreed to assume Ledges Partners’ obligations under the
Option Agreement—there had been “adequate consideration” for
the Assignment. In so doing, however, the court did not discuss
whether this consideration constituted reasonably equivalent
value for the asset assigned.

¶17 Ultimately, based on its determination that the Assignment
was not a fraudulent transfer, the court concluded that SJI was—

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by virtue of that Assignment—the rightful owner of the
Option and that the 2017 constable’s sale of Ledges
Partners’ interest in the Option Agreement had not conveyed
anything to JENCO. The court therefore dismissed with prejudice
“JENCO’s fraudulent transfer claim” and entered judgment in
favor of SJI. 3

ISSUES AND STANDARDS OF REVIEW

¶18 JENCO now appeals, raising a challenge to the court’s
rejection of its fraudulent transfer claim. As we understand it,
JENCO’s appeal includes both a challenge to some of the court’s
factual findings as well as an allegation that the court’s analysis
was infected with certain legal errors. In assessing such a
challenge in a fraudulent transfer case, “we review questions of
fact for clear error and questions of law for correctness.” Eskelsen
v. Theta Inv. Co., 2019 UT App 1, ¶ 18, 437 P.3d 1274. “The
existence of fraudulent intent is ordinarily considered a question
of fact . . . .” Lakeside Lumber Products, Inc. v. Evans, 2005 UT App
87, ¶ 9, 110 P.3d 154 (quotation simplified). “A finding is clearly
erroneous when the court either failed to consider all of the facts
or reached a decision against the clear weight of the evidence.” In
re K.K., 2023 UT App 14, ¶ 5, 525 P.3d 526 (quotation simplified),
cert. denied, 531 P.3d 731 (Utah 2023).

3. The court also rejected a procedural objection, lodged by SJI, to
JENCO’s fraudulent transfer claim. In its trial brief, SJI argued—
citing Brigham Young University v. Tremco Consultants, Inc., 2007
UT 17, 156 P.3d 782—that JENCO’s claim failed because JENCO
had not filed and served any actual complaint against SJI setting
forth a fraudulent transfer claim. After trial, JENCO moved to
amend its pleadings, pursuant to rule 15(b) of the Utah Rules of
Civil Procedure, to conform them to the evidence presented and
effectively add a fraudulent transfer claim, and the court granted
that motion. No party takes issue with that ruling in this appeal.

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JENCO v. SJI

ANALYSIS

¶19 In Utah, as in most states, it is unlawful for debtors to
transfer their assets away with the intent to “hinder, delay, or
defraud” their creditors. See Utah Code § 25-6-5(1)(a) (2016); see
also Butler v. Wilkinson, 740 P.2d 1244, 1260 (Utah 1987) (“The law
has long held that transfers of property designed to place a
debtor’s assets beyond the reach of the debtor’s creditors are void
as to the creditors.”). Utah’s statute forbidding these so-called
“fraudulent transfers” is “a codification of the common law,” see
National Loan Invs., LP v. Givens, 952 P.2d 1067, 1069 (Utah 1998),
and was patterned after the Uniform Fraudulent Transfer Act, a
proposed uniform law derived from parts of the federal
bankruptcy code, compare Uniform Fraudulent Transfer Act §§ 4–
5 (Unif. L. Comm’n 1984), with 11 U.S.C. § 548, and that has been
adopted, in some form, in nearly all American jurisdictions. 4 In

4. The Uniform Fraudulent Transfer Act was
promulgated in 1984 by the Uniform Law Commission
and, as of 2015, had been adopted by “[f]orty-five states,
the District of Columbia, and the U.S. Virgin Islands.”
Uniform Voidable Transactions Act, (2014 Amendments), Unif.
L. Comm’n, https://www.uniformlaws.org/viewdocument/ena
ctment-kit-89?CommunityKey=64ee1ccc-a3ae-4a5e-a18f-
a5ba8206bf49&tab=librarydocuments [https://perma.cc/B63M-
EYDL]. In 2014, this uniform law was amended to “address a few
narrowly defined issues,” and was also renamed the “Uniform
Voidable Transactions Act” because the original title was deemed
somewhat “misleading” in that fraud is not a “necessary element
of a claim” under the law. Id. In 2017, the Utah Legislature
followed suit and amended, repealed, renumbered, and renamed
its version of the law, which is now known as the Utah Voidable
Transactions Act. See Uniform Voidable Transactions Act, ch. 204,
§ 2, 2017 Utah Laws 977, 979; see also Utah Code § 25-6-101. The
parties to this appeal all agree that the pre-2017 version of the
statute should be applied here because all relevant events—
including, most notably, the 2010 Assignment—took place prior
(continued…)

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JENCO v. SJI

2010, when the Assignment was made, the governing Utah statute
was known as the Utah Fraudulent Transfer Act, and we refer to
that statute as the “UFTA.”

¶20 The purpose of the UFTA “is to prevent insolvent debtors
from transferring all of their assets to avoid their creditors’ claims,
and to provide a means whereby creditors can collect against a
fraudulently transferred asset.” Porenta v. Porenta, 2017 UT 78,
¶ 13, 416 P.3d 487; see also Utah Code §§ 25-6-5, -6 (2016). Our
supreme court has instructed that, in light of the UFTA’s
“remedial” purpose, the statute “should be liberally construed.”
National Loan Invs., 952 P.2d at 1069.

¶21 In establishing a claim under the UFTA, the first and most
basic prerequisite is demonstrating that a debtor-creditor
relationship exists. See Bradford v. Bradford, 1999 UT App 373, ¶ 14,
993 P.2d 887 (“A fraudulent transfer in Utah first requires a
creditor-debtor relationship.”), cert. denied, 4 P.3d 1289 (Utah
2000). Once such a relationship has been established, there are two
pathways by which a fraudulent transfer claim may be raised, one
of which is applicable only “if the creditor’s claim arose before the
transfer,” and one of which is available regardless of whether “the
creditor’s claim arose before or after the transfer.” See Tolle v. Fenley,
2006 UT App 78, ¶ 20, 132 P.3d 63; see also Utah Code §§ 25-6-5, -6
(2016). In this case, JENCO made a claim, at the trial court level,
under only one of these two pathways: the one potentially
applicable regardless of whether the creditor’s claim arose before
or after the transfer. See Utah Code § 25-6-5 (2016). And even with
regard to that pathway, JENCO limited its claim to a particular
statutory subsection. See id. § 25-6-5(1)(a). Thus, we limit our
analysis to that specific subspecies of UFTA claim.

¶22 The UFTA considers a transfer fraudulent, and voidable at
the creditor’s request, if “the debtor made the transfer . . . with

to the effective date of the 2017 statutory amendment.
Accordingly, unless otherwise noted, we cite and apply the pre-
2017 version of Utah’s statute.

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JENCO v. SJI

actual intent to hinder, delay, or defraud any creditor of the
debtor.” Id. §§ 25-6-5(1)(a), -8(1)(a). Under the pre-2017 statute, the
creditor—here, JENCO—was required to prove its claim,
including the existence of fraudulent intent, “by clear and
convincing evidence.” See Jones v. Mackey Price Thompson & Ostler,
2020 UT 25, ¶ 50, 469 P.3d 879. “The existence of fraudulent intent
[under the UFTA] is a factual question, which may be inferred
from all of the attendant circumstances.” Selvage v. J.J. Johnson
& Assocs., 910 P.2d 1252, 1262 (Utah Ct. App. 1996).

¶23 To assist in the assessment of a debtor’s intent, and in an
effort to enumerate some of the “attendant circumstances” that
may arise in fraudulent transfer situations, the UFTA provides a
list of non-exclusive factors, known as “badges of fraud,” see id. at
1261–62, to which courts “may” give “consideration” in
evaluating a debtor’s “actual intent,” see Utah Code § 25-6-5(2)
(2016). Pursuant to this list, a court may consider whether:

(a) the transfer or obligation was to an insider;

(b) the debtor retained possession or control of the
property transferred after the transfer;

(c) the transfer or obligation was disclosed or
concealed;

(d) before the transfer was made or obligation was
incurred, the debtor had been sued or threatened
with suit;

(e) the transfer was of substantially all the debtor’s
assets;

(f) the debtor absconded;

(g) the debtor removed or concealed assets;

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(h) the value of the consideration received by the
debtor was reasonably equivalent to the value of the
asset transferred or the amount of the obligation
incurred;

(i) the debtor was insolvent or became insolvent
shortly after the transfer was made or the obligation
was incurred;

(j) the transfer occurred shortly before or shortly
after a substantial debt was incurred; and

(k) the debtor transferred the essential assets of the
business to a lienor who transferred the assets to an
insider of the debtor.

Id.

¶24 In this case, there is no dispute that the parties had a
debtor-creditor relationship at the time of the 2010 Assignment.
Indeed, one of the settlement agreements entered into earlier in
2010 specified that Ledges Partners owed JENCO more than
$210,000 from a prior transaction. And JENCO later obtained a
judgment against Ledges Partners in the amount of $382,787.08,
which has yet to be satisfied. Thus, the threshold element of the
UFTA is satisfied here.

¶25 The primary issue at trial, and here on appeal, is whether
Ledges Partners had an impermissible “intent” in executing the
Assignment. “Intent” is a key element of a UFTA claim under
section 25-6-5(1)(a), and a transfer can be avoided pursuant to this
provision if it was made with the “actual intent to hinder, delay,
or defraud any creditor of the debtor.”

¶26 After considering the testimony of the two witnesses, the
trial court found that Ledges Partners had not “intended to
defraud anyone” when it executed the Assignment, and that its
intent in doing so “was to protect Ledges [Partners’] investors’

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interests and ensure the viability of the [Option] in the wake of
the recession.” As long as this factual finding does not rest on any
legal errors or infirmities, it is entitled to deference on appeal and
will be reversed only if we determine it to be clearly erroneous.
See Eskelsen v. Theta Inv. Co., 2019 UT App 1, ¶ 18, 437 P.3d 1274.

¶27 Here, however, we discern several errors on the part of the
trial court that led to this finding regarding intent. As we explain,
most of these errors were legal in nature and were significant
enough to have likely had an influence on the court’s ultimate
intent finding. We also identify one subsidiary factual finding that
is clearly erroneous. Due to these errors, we vacate the court’s
ruling, and we remand this matter to the trial court for a
reassessment, consistent with the principles discussed in this
opinion, of Ledges Partners’ intent in executing the Assignment.

¶28 The first group of errors we identify concerns the general
parameters of the court’s analysis of Ledges Partners’ “actual
intent.” See Utah Code § 25-6-5(1)(a) (2016). Perhaps most
significantly, the court omitted any discussion of whether Ledges
Partners might have intended to “hinder or delay” its creditors.
The governing statute offers three different ways in which a
debtor’s “actual intent” might be unlawful: if the debtor made the
transfer to “hinder” a creditor; if the debtor made the transfer to
“delay” a creditor; or if the debtor made the transfer to “defraud”
a creditor. See id. In this case, the court made a finding that Ledges
Partners did not intend to “defraud anyone” when it executed the
Assignment. But the court did not engage in any analysis about
whether Ledges Partners might have intended to “hinder” or
“delay” its creditors when it executed the Assignment.

¶29 These three verbs do not have identical meaning. A
debtor could conceivably intend to “hinder” a creditor
without intending to “defraud” it. Cf. Shapiro v. Wilgus, 287
U.S. 348, 354 (1932) (“A conveyance is illegal if made with an
intent to defraud the creditors of the grantor, but equally it is
illegal if made with an intent to hinder and delay them.”). At some
level, we understand the trial court’s apparent assumption

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that “fraud” was a necessary condition to liability under a
statute then titled as Utah’s “Fraudulent Transfer Act.” See
Utah Code § 25-6-1 (2016) (emphasis added). But as the
drafters of the uniform law pointed out in connection with
their 2014 amendments, the law’s title was at least
somewhat “misleading” because fraud “has never been a
necessary element of a claim under the Act.”
See Uniform Voidable Transactions Act (2014 Amendments),
Unif. L. Comm’n, https://www.uniformlaws.org/viewdocumen
t/enactment-kit-89?CommunityKey=64ee1ccc-a3ae-4a5e-a18f-
a5ba8206bf49&tab=librarydocuments [https://perma.cc/B63M-
EYDL]. The trial court’s finding that Ledges Partners did not
intend to “defraud anyone” is therefore only part of the required
analysis under section 25-6-5(1)(a) of the UFTA and, absent a
determination about whether Ledges Partners intended to
“hinder” or “delay” creditors, the court’s analysis is incomplete.

¶30 And this lacuna in the court’s analysis is made even more
stark by the court’s own observation that Ledges Partners’ actual
intent was to “protect [its] investors’ interests.” This locution begs
the question: protect the investors’ interests from what? The court
gave no answer to this question specific to Ledges Partners, but it
did offer a general observation that, in the wake of the 2007–2008
recession, “[s]mart developers and property owners took
measures to survive and protect themselves from the negative effects
of the recession.” (Emphasis added.) The court offered no
additional specifics about what these “negative effects” were. But
it doesn’t take much of a logical leap to infer that the negative
effects of a recession include creditors seeking to collect on unpaid
debts. Indeed, JENCO suggests that no logical leap is required; in
its view, the court’s finding that Ledges Partners’ intent was to
“protect [its] investors’ interests” “compels the conclusion that the
[A]ssignment was motivated, at least partially, to hinder and
delay a creditor,” because “the only way” for Ledges Partners to
protect its investors’ interests in the Option was to place it
“beyond the reach of creditors such as JENCO.” We recognize the
inherent logic in JENCO’s argument, and agree that, in this
situation, the court’s analysis was incomplete without identifying

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the thing from which Ledges Partners was attempting to protect
its investors’ interests.

¶31 In this vein, JENCO correctly asserts that a fraudulent
transfer can occur even where the debtor has a “mixed motive.”
See Jones v. Mackey Price Thompson & Ostler, 2020 UT 25, ¶¶ 44–45,
469 P.3d 879. Under the UFTA, “there is no requirement that the
intent to hinder, delay, or defraud be the sole or even primary
motive” of the debtor. Id. ¶ 44. To the contrary, “actual intent to
hinder, delay, or defraud may be established on the ground that
at least one of the defendant’s motives was an impermissible one.”
Id. ¶ 45. A creditor “may carry [its] burden of showing that a
defendant had actual intent to hinder, delay, or defraud without
showing that it was the [debtor’s] sole or primary motivation.” Id.
In its ruling, the trial court did not cite the Jones case or discuss the
legal principle that mixed motive can be sufficient under the
UFTA. And it was important that the court do so here, especially
given its finding that Ledges Partners’ intent was to “protect” its
investors. It is certainly conceivable—perhaps even likely in a
recession where debtors may have significant obligations to
creditors—that a debtor who harbors an intent to protect its
investors’ interests will also have an accompanying motive to
hinder or delay creditors. The court’s failure to examine whether
Ledges Partners had a mixed motive was erroneous.

¶32 The second group of errors we identify concerns the court’s
analysis of the “badges of fraud” listed in the statute. See Utah
Code § 25-6-5(2) (2016). These statutorily listed indicators of fraud
are a necessary part of the analysis of a fraudulent transfer claim
because nefarious intent is rarely provable through direct
evidence; courts therefore need to consider whether they can
“infer fraudulent conduct from the circumstantial evidence and
the surrounding circumstances of the transactions.” In re XYZ
Options, Inc., 154 F.3d 1262, 1271 (11th Cir. 1998); see also Max
Sugarman Funeral Home, Inc. v. A.D.B. Invs., 926 F.2d 1248, 1254
(1st Cir. 1991) (“It is often impracticable, on direct evidence, to
demonstrate an actual intent to hinder, delay or defraud
creditors.”); In re Kaiser, 722 F.2d 1574, 1582 (2d Cir. 1983)

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(“Fraudulent intent is rarely susceptible to direct proof. Therefore,
courts have developed ‘badges of fraud’ to establish the requisite
actual intent to defraud.” (quotation simplified)).

¶33 Trial courts are certainly not required to analyze every
single one of the statutorily listed badges in every case. See Utah
Code § 25-6-5(2) (2016) (stating that “consideration may be given”
to the listed factors (emphasis added)). But courts should, at a
minimum, give consideration to those listed badges that the
parties ask them to consider and that appear potentially relevant
under the circumstances of the case. The analysis will typically
require a court to review and assess several of the listed badges.
See Max Sugarman Funeral Home, 926 F.2d at 1254–55 (stating that
the “presence of a single badge of fraud may spur mere
suspicion,” but “the confluence of several can constitute
conclusive evidence of an actual intent to defraud” (quotation
simplified)); United States v. Leggett, 292 F.2d 423, 427 (6th Cir.
1961) (noting that even though the “badges of fraud are not
conclusive and are more or less strong or weak according to their
nature and the number occurring in the same case, a concurrence
of several badges will always make out a strong case” (quotation
simplified)); Mane FL Corp. v. Beckman, 355 So. 3d 418, 426 (Fla.
Dist. Ct. App. 2023) (“Two or three badges of fraud can be enough
to support a finding of actual intent to defraud.”). After
examining the relevant potential badges of fraud, the court should
weigh them as appropriate, keeping in mind the ultimate question
at hand: whether the debtor had actual intent to hinder, delay, or
defraud creditors. See In re Ritz, 567 B.R. 715, 742 (Bankr. S.D. Tex.
2017) (stating that a court should “assign a particular weight to
each badge of fraud as it sees fit” (quotation simplified)); City Nat’l
Bank, NA v. Breslin, 175 F. Supp. 3d 1314, 1325–26 (D. Utah 2016)
(stating that, although “all badges of fraud need not be present to
support an inference of actual fraudulent intent, those that are
present must support an inference of actual fraud”); see also
Uniform Fraudulent Transfer Act § 4 cmt. 6 (Unif. L. Comm’n
1984) (stating that, in considering the badges of fraud, courts
should “evaluate all the relevant circumstances” and weigh the
factors “negativing as well as those suggesting fraud”). No one

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factor is necessarily more important than others, but some courts
and commentators have concluded that, in certain situations, the
existence of one or two particular badges can be significant. See In
re Ritz, 567 B.R. at 743 (stating that an insolvent debtor’s transfer
to an insider is “so significant” that it has convinced courts “to
make a finding of actual fraud in the absence of any other badges
of fraud” (quotation simplified)); Douglas G. Baird, One-and-a-
Half Badges of Fraud, 60 Prac. L. 41, 43 (2014) (“As fraudulent
conveyance law evolved, two badges of fraud gained particular
prominence: transfers made while insolvent and transfers for less
than reasonably equivalent value.”).

¶34 In the “badges of fraud” part of its analysis, the court
discussed only two of the statutorily listed factors—concealment
and consideration—and determined that “JENCO has not proven
that any badge of fraud existed here.” The court’s analysis was
infirm, first, because that determination is clearly erroneous: it
was and is undisputed that at least some of the badges of fraud
are present here. In addition, the court’s analysis was incomplete
because it discussed only two of the listed badges, and because it
failed to address JENCO’s arguments that certain other badges
were present. And finally, its analysis of the badges it did consider
contained certain legal errors.

¶35 The second statutorily listed badge of fraud is that “the
debtor retained possession or control of the property transferred
after the transfer.” See Utah Code § 25-6-5(2)(b) (2016). The court
did not discuss this particular badge of fraud in its ruling, but this
badge is unquestionably present here. In 2016, Manager explained
to Ledges Partners’ investors that Ledges Partners, through “[a]n
affiliate,” still retained “the rights” to the property subject to the
Option Agreement and that the Option was Ledges Partners’
“only remaining asset.” And in 2017, Manager explained to
JENCO—in a letter written on Ledges Partners’ letterhead—that
the Option, which was nominally assigned to SJI, was “the only
remaining asset Ledges [Partners] has.” Indeed, based on this
evidence, SJI acknowledged, at oral argument before this court,
that this badge of fraud is present. On this basis alone, we

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conclude that the court’s determination that no badges of fraud
“existed here” is clearly erroneous.

¶36 The first statutorily listed badge of fraud is that the transfer
was made “to an insider.” See id. § 25-6-5(2)(a). The court
discussed this badge only in passing, along the way to its
conclusion that the Assignment was contractually authorized
under the Option Agreement, the terms of which allowed Ledges
Partners to assign its rights to an “Affiliate” as contractually
defined. The court determined that SJI was an “Affiliate” of
Ledges Partners, as that term was defined in the Option
Agreement, and that the Assignment was therefore contractually
authorized; the significance of this determination is discussed
more fully below. But the court did not analyze whether SJI was
an “insider” as that term is defined in the UFTA, see id. § 25-6-2(7),
and therefore did not make any determination as to whether the
first statutorily listed badge of fraud is present here.

¶37 The third listed badge is whether the transfer was
“concealed” by the debtor. See id. § 25-6-5(2)(c). This badge is also
unquestionably present: Ledges Partners did not tell JENCO
about the Assignment for nearly seven years. The significance of
this badge is, however, quite uncertain, given that JENCO agreed,
as a matter of contract, that Ledges Partners did not need to notify
it of any assignment to an “Affiliate.” The court’s analysis with
regard to this badge began and ended with the conclusion that
concealment was contractually authorized.

¶38 But transfers are not insulated from UFTA liability simply
because they are contractually authorized. A contractual analysis
is not the same as the statutory analysis required by the UFTA,
and the court erred by conflating the two analyses in this case. See
In re EBC I, Inc., 356 B.R. 631, 640 (Bankr. D. Del. 2006) (“A transfer
may be fraudulent even if it is made in accordance with the terms
of a contract between the parties.”). Indeed, courts applying the
fraudulent transfer provisions of the federal bankruptcy code
have found that an “otherwise legal transfer” may still be avoided
if the requirements under the relevant statute are “otherwise

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met.” In re Pinto, 89 B.R. 486, 497–98 (Bankr. E.D. Pa. 1988)
(quotation simplified); see also In re Grandparents.com, Inc., 614 B.R.
625, 631 (Bankr. S.D. Fla. 2020) (“The existence of a binding
contract does not foreclose a fraudulent conveyance claim if the
elements of the cause of action for constructive fraud are met.”);
In re Calais Reg’l Hosp., 616 B.R. 449, 456 (Bankr. D. Me. 2020)
(stating that “a transfer made pursuant to a contract can be
avoided as a fraudulent transfer”). 5

¶39 JENCO certainly agreed that Ledges Partners could,
consistent with the terms of the Option Agreement, assign its
rights thereunder to an “Affiliate” and could do so without notice;
indeed, JENCO has not brought any claim asserting that Ledges
Partners, by making the Assignment, breached the terms of the
Option Agreement. But the legality of a transaction under contract
law is not always equivalent to the legality of a transaction under
statutes governing fraudulent conveyances; the same transaction
can conceivably be in keeping with the terms of a contract yet
violative of the elements of the UFTA.

¶40 SJI asserts that, if UFTA liability can lie for transactions
authorized by the Option Agreement, then the courts would be
“erroneously rewrit[ing] the Option Agreement” for JENCO’s

5. In support of the contrary position, SJI relies on two cases:
Kamlapat v. Purvis-Wade Carpet Mills, 146 S.E.2d 138 (Ga. Ct. App.
1965), and Stewart v. Edgecomb, 6 N.Y.S.2d 563 (N.Y. Sup. Ct. 1938).
We find these cases unpersuasive. Not only were they decided
before the Uniform Fraudulent Transfer Act was promulgated, see
supra note 4, but they are factually distinguishable. In Kamlapat,
the case was not decided on the terms of a contract but rather on
the fact that the asset was transferred to a party that was not an
insider and the debtor “obtain[ed] fair value for the goods.” 146
S.E.2d at 144. And in Stewart, the court relied on estoppel
principles and found that the creditor could not avoid a
transaction where he had “full knowledge” of the relevant facts
and had “suggested, advised and consummated” the transfer. 6
N.Y.S.2d at 564–65.

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benefit and thereby “deny[ing] Ledges Partners the benefit of its
bargain.” But this argument conflates contract law with statutory
law. Ledges Partners got the benefit of its bargain; it is not liable
in contract to JENCO, and not even JENCO asserts otherwise. But
Ledges Partners did not negotiate for a waiver, on JENCO’s part,
of its right to sue for breach of the UFTA; certainly, no express
waiver of any such claim appears on the face of the Option
Agreement or anywhere else in the record. And no such waiver
can be implied on the facts of this case. See Pioneer Builders Co. of
Nevada v. K D A Corp., 2018 UT App 206, ¶ 12, 437 P.3d 539 (“A
waiver of any statutorily guaranteed right must be explicitly
stated, so that the parties’ intent is clear and unmistakable.”
(quotation simplified)). Indeed, courts “will not infer from a
general contractual provision that the parties intended to waive a
statutorily protected right.” Id. ¶ 15 (quotation simplified); see also
Soter’s, Inc. v. Deseret Fed. Sav. & Loan Ass’n, 857 P.2d 935, 942
(Utah 1993) (stating that waiver is “the intentional relinquishment
of a known right” and that in order for waiver to occur, “there
must be an existing right . . . , a knowledge of its existence, and an
intention to relinquish it” (quotation simplified)). 6

¶41 We do not mean to suggest that the existence of contractual
authorization is completely irrelevant to consideration of whether
a debtor had actual intent to hinder, delay, or defraud creditors.
In some circumstances, the fact that a debtor’s actions are
contractually authorized might weigh in favor—perhaps even
significantly so—of a conclusion that the debtor’s intentions were
not nefarious. Relatedly, it might also serve to negate the adverse

6. For similar reasons, SJI’s claim that JENCO is equitably
estopped from raising a claim under the UFTA is also infirm. An
equitable estoppel claim requires, among other things, that there
“be a statement, admission, act, or failure to act by one party
inconsistent with a claim later asserted.” See Hall v. Peterson, 2017
UT App 226, ¶ 29, 409 P.3d 133 (quotation simplified). We are
unaware of any statement or conduct by JENCO, at any point, that
would have led Ledges Partners to believe that JENCO was
waiving any future claims it may have had under the UFTA.

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effects of—or cause a court to weigh less negatively—one or more
established badges of fraud. And it might matter, for purposes of
weighing the significance of contractual authorization, whether
the authorization was given by the plaintiff directly rather than
by some other third party. The trial court’s error here was not that
it took JENCO’s contractual authorization into account; rather, it
was that the court stopped its analysis as soon as it concluded that
the actions were contractually authorized, and it did not go on to
consider the extent to which nefarious intent might be present
notwithstanding contractual authorization.

¶42 Finally, we perceive error in the trial court’s discussion of
whether Ledges Partners received adequate consideration from
SJI for the Assignment. In that regard, the court concluded that
the Assignment was “supported by adequate consideration”
because SJI agreed to assume Ledges Partners’ responsibilities
under the Option Agreement. For purposes of this discussion, we
accept the court’s conclusion that sufficient consideration was
given to make the transaction valid under principles of contract
law. But here again, the court was conflating principles of contract
law with principles of statutory fraudulent conveyance law.

¶43 In the statutory list of potentially applicable badges of
fraud, courts may consider whether “the value of the
consideration received by the debtor was reasonably equivalent
to the value of the asset transferred or the amount of the
obligation incurred.” See Utah Code § 25-6-5(2)(h) (2016). As is
implied from the phrasing of the statute, “consideration” is not
necessarily the same thing as “reasonably equivalent value.”
Under contract law, courts will not ordinarily “inquire into the
adequacy of consideration unless it is so insufficient or illusory as
to render enforcement of the contract unconscionable.” See Reese
v. Reese, 1999 UT 75, ¶ 27, 984 P.2d 987; see also Howard O. Hunter,
Modern Law of Contracts § 5:7 (2023) (noting that many courts
apply the “peppercorn theory,” under which “the value of
consideration is irrelevant” because valid consideration “may be
worth as little as a peppercorn as long as it is legally sufficient and
is itself the thing bargained for”). But it should go without saying

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that a “peppercorn,” although it might constitute legally sufficient
consideration under contract law, is not always reasonably
equivalent to the value of the asset for which it is being
exchanged. In light of this reality, the UFTA invites courts to
consider whether the consideration given—even if legally
adequate—“was reasonably equivalent to the value of the asset
transferred.” See Utah Code § 25-6-5(2)(h) (2016).

¶44 In undertaking this analysis, it is not sufficient to simply
conclude—as the trial court here did—that the consideration
offered was legally adequate under contract law. The next step—
evaluating whether the consideration given was reasonably
equivalent to the value of the asset transferred—is the much more
important part of the process in terms of evaluating a debtor’s
intent and whether a creditor was harmed by a transfer. See Rupp
v. Moffo, 2015 UT 71, ¶ 17, 358 P.3d 1060 (noting that, where a
“transfer puts one asset beyond the reach of the creditors, but
replaces the asset with one of equivalent value,” all harm to
creditors is avoided); see also Klein v. Cornelius, 786 F.3d 1310, 1321
(10th Cir. 2015) (“The primary consideration in analyzing the
exchange of value for any transfer is the degree to which the
transferor’s net worth is preserved.” (quotation simplified)).
When assessing whether reasonably equivalent value was given,
a court’s analysis should go beyond mere contractual
consideration, and should include an examination of “the totality
of the circumstances,” including “the fair market value of the
benefit received as a result of the transfer.” In re PA Co-Man, Inc.,
644 B.R. 553, 613 (Bankr. W.D. Pa. 2022) (quotation simplified).
While there is no precise formula for how to determine whether a
debtor received reasonably equivalent value, a “helpful starting
point” is “the price which the [transferred] property would
actually bring if presently offered for sale by the owner, with a
reasonable time for negotiation.” In re Richardson, 23 B.R. 434, 442
n.12 (Bankr. D. Utah 1982).

¶45 In this instance, the trial court made no effort to place a
value on either (a) the consideration SJI gave for the Assignment
or (b) the Option itself. The only consideration given was SJI’s

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promise to assume all of Ledges Partners’ obligations under the
Option Agreement; SJI provided no money in the exchange. While
this promise was likely not valueless, we think JENCO raises valid
questions regarding whether that promise constituted reasonably
equivalent value, especially considering the evidence that, at one
point, Manager valued the Option at $29.7 million. The court’s
failure to properly engage with this question was erroneous.

CONCLUSION

¶46 We have identified several legal errors, and one clearly
erroneous subsidiary factual finding, in the trial court’s analysis
regarding whether Ledges Partners, in effectuating the
Assignment, had the actual intent to hinder, delay, or defraud its
creditors, including JENCO. We therefore vacate the trial court’s
ruling and remand the matter for reassessment of Ledges
Partners’ intent, and for further proceedings consistent with this
opinion. We offer no opinion on whether the court can conduct its
reassessment on the existing record or whether additional
proceedings, evidentiary or otherwise, will be necessary.

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