Schade v. Rittman
To prevail on fraudulent conveyance, a creditor must prove that a debtor transferred substantially all its assets or absconded with or removed assets with actual intent to hinder, delay or defraud a creditor. Allegedly, Donald Rittman and Edgar Schade were shareholders of DCSR Inc., and the shareholders' agreement provided that if one of the shareholders resigned, he could obtain payment. In 2005, Schade resigned, and DCSR issued a promissory note in the amount of $965,000 for his ownership interest. In 2009, Schade sued DCSR and alleged it failed to pay the promissory note. In December 2010, DCSR entered into an asset purchase agreement and sold its assets to Brown & Brown of Connecticut Inc. for $16 million. Allegedly, DCSR also sold assets to Stone Transportation, an entity that Donald Rittman owned. In January 2011, Schade obtained judgment against DCSR in the amount of $992,673 and discovered that DCSR lacked enough assets to satisfy his judgment. Schade sued DCSR and Donald Rittman, alleging fraudulent conveyance, and the defendants moved to strike. The plaintiff's complaint adequately alleged fraudulent conveyance with actual intent to hinder, delay or defraud a creditor. Rittman can be held individually responsible, if the plaintiff proves he participated as a company officer and shareholder. The court denied the motion to strike the fraudulent conveyance count. Rittman allegedly received a substantial amount of the $16 million and also could be legally responsible under an unjust enrichment theory. The plaintiff's complaint alleged a fraudulent and deceitful transfer intended to deprive the plaintiff of his compensation for his ownership interest. Rittman could be legally responsible, if the plaintiff proves his allegations, for a violation of CUTPA, the Connecticut Unfair Trade Practices Act. The court denied DCSR and Rittman's motion to strike.