California Court Denies Defendants’ Motions for Summary Judgment, Finding Evidentiary Support for Odyssey Re’s Fraudulent Transfer Claims
A California district court issued its latest decision arising from Odyssey Reinsurance Company’s ongoing effort to collect a $3.2 million default judgment against insurance agency Cal-Regent, its successor PBIS, and their owners, Richard and Diane Nagby. We have been tracking the case on our blog.
In this latest iteration, Claims Technology Services (CTS) and its CEO, David Dostalik, sought summary judgment on four causes of action against them. CTS and Dostalik allegedly conspired with Mr. Nagby to conceal funds that Cal-Regent and PBIS owed Odyssey by transferring them into accounts held by CTS. Dostalik also allegedly released portions of the funds directly to the Nagbys. Odyssey’s fifth and sixth causes of action were against CTS for unlawful transfers under California’s Uniform Fraudulent Transfer Act (UFTA). The seventh was against Dostalik for intentional fraudulent transfers. The 13th was against CTS as a “subsequent transferee” of unlawfully transferred funds. The court denied summary judgment on the fifth, sixth and seventh causes of action, but granted CTS summary judgment on the 13th.
Regarding the avoidable transfer claims, the court found sufficient evidence that Cal-Regent’s assets were fraudulently transferred, and that CTS and Dostalik acted in furtherance of the transfers. As to CTS, the evidence was deemed sufficient to support an avoidable transfer claim under either an intentional or constructive fraud theory. While Dostalik argued he had no involvement in an intentional fraud, the court found the evidence suggested otherwise and thus precluded summary judgment on the seventh cause of action. The court granted CTS summary judgment on the 13th cause of action, however, since Odyssey conceded that discovery produced no evidence that CTS was a “subsequent transferee” of funds derived from a sale of Cal-Regent and PBIS assets.
Odyssey Reinsurance Co. v. Richard Keith Nagby, et al., No. 16-3038, 2019 U.S. Distr. LEXIS 68950 (S.D. Cal. Apr. 22, 2019).