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Klein v. Weidner

July 2, 2010

DEBORAH D. KLEIN
v.
DOUGLAS M. WEIDNER, ET AL.



The opinion of the court was delivered by: Juan R. Sánchez, J. United States District Judge

MEMORANDUM

Juan R. Sánchez, J.

Plaintiff Deborah Klein (Klein) is a creditor and the ex-wife of Defendant Douglas Weidner (Weidner). In an amended complaint, Klein asserted Weidner's transfers of his interests in real property (the Property) and a business, Defendant DMW Marine, LLC (DMW), to himself and his wife, Defendant Kathleen Weidner, as tenants by the entireties, were actually and constructively fraudulent under the Pennsylvania Uniform Fraudulent Transfer Act, 12 Pa. C.S. § 5101, et seq. (PUFTA). Klein also sought to pierce the corporate veil to treat DMW's assets as Weidner's assets for the purpose of collecting the debt he owed her.

By Memorandum and Order of January 6, 2010, this Court granted Klein's summary judgment motion as to Count One, concluding Weidner's transfer of the Property to himself and his wife, as tenants by the entireties, was actually and constructively fraudulent under PUFTA §§ 5104(a)(1), 5104(a)(2), and 5105. A bench trial on Klein's remaining claims was held from January 11-13, 2010.*fn1 Following the trial, this Court granted judgment in favor of Klein on her two remaining counts. See Memorandum & Order of February 17, 2010. As to Count Two, the Court concluded Weidner's transfer of his ownership interest in DMW to himself and his wife, as joint owners, was both an actual and constructive fraudulent transfer under PUFTA §§ 5104(a)(1), 5104(a)(2), and 5105. As to Count Three, the Court concluded Weidner improperly used the LLC form to perpetrate an injustice and Klein was therefore entitled to reverse-pierce the corporate veil and treat DMW's assets as Weidner's assets for the purpose of collecting her judgment against Weidner. This Court appointed a receiver, Michael J. Antonoplos, to manage the operation of DMW and preserve its assets. See Orders of January 19, 2010, and February 17, 2010.

In her amended complaint and in her petition for attorneys' fees, Klein sought an award of punitive damages against the Weidners, jointly and severally, on her PUFTA claims.*fn2 By Order of February 18, 2010, the Court instructed the parties to brief the issue of punitive damages. Having reviewed each party's briefs and the trial record, this Court concludes Klein is entitled to punitive damages against Douglas Weidner only, in an amount equal to compensatory damages, $548,797.07.*fn3

FACTS

1. Klein and Weidner divorced in California in 1999.

2. As part of the divorce decree, the Superior Court of Orange County, California, ordered Weidner to make spousal and child support payments to Klein. Weidner made some child support payments but has paid no spousal support to date.

3. On January 1, 2006, Weidner married Kathleen Weidner.

4. After litigation between Klein and Weidner with respect to how much Weidner owed, on June 2, 2008, the Superior Court determined Weidner owed Klein $548,797.07 for unpaid child and spousal support.

5. On August 25, 2008, the $548,797.07 judgment against Weidner, in favor of Klein, was entered in the Chester County Court of Common Pleas.

6. At all times relevant to the instant matter, Weidner and Kathleen Weidner were aware of Klein's claim that Weidner owed her arrearages for spousal and child support.

7. On March 17, 2005, Weidner purchased a parcel of real estate, located at 1123 Saint Matthews Road, Chester Springs, Pennsylvania, 19425 (the Property), from his mother, Jean Weidner, for $300,000.

8. On January 17, 2006, Weidner transferred the Property to himself and his wife, Kathleen Weidner, as tenants by the entireties.

9. The Transfer of Deed states Kathleen Weidner paid Weidner one dollar as consideration for her interest in the Property.

10. On March 31, 2006, the Property was appraised at approximately $750,000.

11. Kathleen Weidner paid over $300,000 to contractors for renovations to the Property. Such payments began approximately ten months after the Property's transfer, and they were made directly to contractors, not to Weidner.

12. On January 4, 2010, the Weidners granted a $200,000 mortgage against the Property to Robert Bendix (the Mortgage). They filed the Mortgage on January 12, 2010, the day the parties expected trial in this case to be completed.

13. The Mortgage bears the signatures of both Weidner and Kathleen Weidner. Weidner asserted his Fifth Amendment privilege against self-incrimination at trial when asked about the preparation of the Mortgage.

14. Kathleen Weidner testified she did not sign the Mortgage.

15. The Court draws an adverse inference against Weidner based upon his assertion of his Fifth Amendment privilege and concludes Weidner participated in the forgery of his wife's signature on the Mortgage.

16. DMW is a limited liability company that sells and leases marine cranes. DMW has continuously operated in Pennsylvania since 2003.

17. DMW produced no evidence, either through discovery or at trial, that corporate formalities are observed or that by-laws or other rules to govern its operation have been adopted.

18. At deposition, Weidner testified that, shortly after January 1, 2006, he transferred his ownership interest in DMW to ...


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