Kathleen Sullivan v. Timothy Miller

Summary

The Sixth Circuit affirmed the district court's affirmance of a bankruptcy court order avoiding, as a constructively fraudulent transfer under 11 U.S.C. § 548(a)(1)(B)(i), Jason Wylie's 2019 quitclaim of property to his mother Kathleen Sullivan shortly before his Chapter 7 filing. Applying Michigan contract law de novo, the court held that Wylie did not personally guarantee his company's 2014 promissory note to Sullivan, so no released guaranty supplied value for the transfer, and that the parties' 2019 “Mutual Release in Full” did not extinguish Sullivan's claim for Wylie's 2017 conversion of $33,000. It further held that the bankruptcy court did not abuse its discretion under 11 U.S.C. § 550 in awarding the trustee the paid-off property itself rather than the value differential, and that the district court's adoption of the trustee's proposed order was not automatically reversible error.