Wing v. Buchanan (UFTA Statute of Limitations, Equitable Powers of the Receivership Court)

Vacating a District Court order granting summary disposition in favor of the Receiver, the Court ruled that the previous appointment of a bankruptcy trustee months before the receiver was appointed could trigger the start of the one year discovery period statute of limitations in Utah’s Uniform Fraudulent Transfer Act. Although the Court did apply adverse domination theory to determine that the start of the discovery period was tolled until the bad actors were removed, it determined that the bad actors had been previously removed as to at least one entity through bankruptcy, and the bankruptcy trustee may have been reasonably able to discover the alleged fraudulent transfers. In remanding for further factual review, the Court explicitly rejected the Receiver’s argument that the Receiver is the “claimant” referred to in the statute that must have been reasonably able to discover the fraud, as a receiver has no power to bring claims on his own behalf. Additionally, the Court rejected the Receiver’s argument that the District Court had disallowed the statute of limitations defense on equitable grounds for two reasons. First, the District Court had not addressed the statute of limitations in its written order, let alone cited equitable reasons for rejecting it. Second, the Tenth Circuit noted uncertainty as to whether the District Court would have the equitable power to reject a statute of limitations defense in a fraudulent transfer action, as it is a separate action from the receivership proceedings, and the case law supporting the equitable rejection of statute of limitations may only apply in the context of receivership distribution and not ancillary actions.