Bankr. E.D.N.C.: Oliver v. Bateman, et al.- Iqbal/Twombley and Fraudulent Transfer Pleadings


On September 26, 2008, Luther Bateman transferred, subject to retention of a life estate, property located at 106 Sanderline Road, Shawboro, North Carolina to his children, Carol Bateman Cooper, Timothy Ross Bateman, Louis Eugene Bateman, and Robert Charles Bateman (“the Defendants”). On August 4, 2010, Mr. Bateman filed Chapter 7 and valued his life estate in the Property to be approximately $186,000.00, subject to a mortgage in the amount of $15,395.99. The Trustee then sought to avoid and recover the transfer of the Property to as fraudulent transfers, pursuant to 11 U.S.C. §§ 548; N.C. Gen. Stat. § 39-23.4; and 11 U.S.C. §§ 501 and 551, alleging that the paid little or no consideration for the transfer of his interest in the Property. The Defendants sought dismissal of the complaint, citing to the heightened pleading standard as adopted in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009), particularly as to the the insolvency requirement for a fraudulent transfer, asserting that the Trustee merely made the conclusory statement that “[u]pon information and belief, the Debtor became insolvent as a result of the transfer of the Property of the Defendants.” The bankruptcy court agreed, finding that there were no facts in the complaint supporting the Debtor’s insolvency on or about the date of the transfer. The Debtor’s assets and liabilities as indicated in the bankruptcy petition nearly two years after the transfer did not show that the Debtor was insolvent on the date of the transfer or became insolvent as a result of the transfer. Similarly, the Trustee’s allegation that this transfer was fraudulent undger N.C.G.S. § 39-23.4, fails since it must be shown that the transfer left the Debtor “under capitalized.” Accordingly, the bankruptcy court gave the Trustee 21 days to file an amended Complaint or the complaint would be dismissed for failure to allege sufficient factual allegations as to the elements of a preference claim under 11 U.S.C. § 548; N.C.G.S. § 39-23.4; and 11 U.S.C. §§ 550 and 551.

For a copy of the opinion, please see:

Oliver v. Bateman, et al.- Iqbal Twombley and Fraudulent Transfer Pleadings.pdf


1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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