specific facts showing a need for a trial, and cannot, merely rely upon conclusory allegations in pleadings, memoranda and briefs to establish genuine issues of material fact).
Therefore, this court finds that the "loans" underlying Sanders' 1982 confessed judgment were made without sufficient consideration. Since these "loans" were the basis of Sanders' status as a judgment creditor at the 1988 sheriff's sale, that sale was based upon a fraudulent conveyance and, as such, is invalid. Voest-Alpine Trading USA v. Vantage Steel Corp., 919 F.2d 206 (3d Cir. 1990) (sales based upon fraud not valid).
This finding -- that the 1988 sheriff's sale was fraudulent as a matter of law -- is supported by other overwhelming and uncontradicted evidence of record. Each of the traditional "badges of fraud" is present in this case. These indications of fraudulent intent include: absence of or negligible consideration; timing of the transfer; and the transferor's relationship to transferee. In re Roberts, 81 Bankr. 354 (W.D. Pa. 1987).
Gross inadequacy of price is a sufficient basis for setting aside a sheriff's sale. Capozzi v. Antonoplos, 414 Pa. 565, 201 A.2d 420, 422 (1964) (citation omitted). As discussed above, the 1988 sheriff's sale to Sanders was based upon a fraudulent conveyance. Since Sanders was not a valid judgment creditor, the one dollar paid for the rides at the sheriff's sale was grossly inadequate consideration.
It is also settled law in Pennsylvania that where the timing of a sheriff's sale is intended to hinder, delay or defeat creditors, and the purchaser at the sale has knowledge of this improper intention, the sale should be null and void. See e.g., In re Roberts, 81 Bankr. at 367 (the court found fraud where the day after a $ 20,000 state court judgment was entered against a debtor, he attempted to shield his assets by correcting a "mistake" in a property transfer finalized seven months earlier). Sanders waited six years to execute her confessed judgment and schedule a sheriff's sale. She scheduled the sale for three weeks prior to a trial in the Western District of Tennessee between the FDIC and Ken-Penn, a company owned and controlled by her husband and his family. At this trial, judgment was entered in favor of the FDIC and against Ken-Penn for $ 300,000. The FDIC was unable to execute on this judgment because of Sanders' preemptive strike. Considering the totality of circumstances in this case, this court believes that no reasonable jury could find the timing of Sanders' actions merely coincidental.
Finally, transfers of property within families are often scrutinized closely by a reviewing court. Transfers of property between spouses in an attempt to defraud creditors, or transfers in which an insolvent debtor transfers property to his spouse and continues to enjoy the property, are classic instances of fraud. In re Roberts, 81 Bankr. at 367, citing In re Kaiser, 722 F.2d 1574 (2d Cir. 1983). This case is analogous to these classically fraudulent transfers Sanders, in cooperation with at least her husband and Ken-Penn, drew up loan notes to create indebtedness where none existed, based a confession of judgment on those sham notes, held this judgment for six years, and, immediately before a valid creditor could recover its interest, executed the fabricated judgment to protect the rides. On the record before this court, no other scenario is supportable.
This court finds that the FDIC has met its burden in providing enough evidence to show that a reasonable jury could not find in favor of Sanders. Therefore, its motion for summary judgment will be granted.
With respect to Sanders' cross-motion, the court finds that Sanders has not met her burden. Sanders has not provided enough evidence to show that the FDIC knew or should have known about the 1982 confessed judgment against Ken-Penn prior to the sheriff's sale. Further, Sanders did not provide documentation that would allow a reasonable jury to find that the 1982 confessed judgment was based upon valid consideration. Therefore, her cross-motion for summary judgment will be denied.
An appropriate order will follow.
Date: July 31, 1992
Timothy K. Lewis
United States District Judge
AND NOW, this 31st day of July, 1992, upon consideration of the FDIC's motion for summary judgment, filed at Document No. 43, and memoranda in support thereof and in opposition thereto, and Edythe Sanders' cross-motion for summary judgment, filed at Document No. 48, and memoranda in support thereof and in opposition thereto,
IT IS HEREBY ORDERED that the FDIC's motion is GRANTED and Edythe Sanders' motion is DENIED.
IT IS FURTHER ORDERED that judgment shall be and hereby is entered against Edythe Sanders, Ken-Penn Amusement, Inc. and Nova Exposition, Inc., and in favor of the Federal Deposit Insurance Corporation, in its corporate capacity.
IT IS FURTHER ORDERED that the motion to dismiss of Ken-Penn Amusements, Inc., filed at Document No. 8; the motion to dismiss for failure to state a claim by Edythe Sanders, filed at Document No. 9; the motion by plaintiff to strike affidavit of Edythe Sanders, filed at Document No. 14; the motion to release property for lack of levy by defendant Edythe Sanders, filed at Document No. 18; the motion to protect property by defendant Edythe Sanders, filed at Document No. 21; the motion to dismiss by defendant Nova Expositions filed at Document No. 30; and the motion to strike affidavit of Jesse South by defendant Ken-Penn filed in Civil Action No. 89-646 at Document No. 21 are all now MOOT due to this court's decision on the cross-motions for summary judgment.
IT IS ALSO ORDERED that Citizens Bank of Elizabethton, Tennessee, shall provide specific documentation showing the existence and continuing validity of its claim of interest in the amusement rides and vehicles at issue in this case, vis-a-vis the FDIC, by August 31, 1992. Failure to do so will result in judgment being entered in favor of the FDIC and against Citizens Bank in this case.
Timothy K. Lewis
United States District Judge