Texas' Version of the Uniform Fraudulent Transfer Act Does Not Have a Comparative Responsibility Defense to Limit Damages to Such a Claim

Texas' Version of the Uniform Fraudulent Transfer Act Does Not Have a Comparative Responsibility Defense to Limit Damages to Such a Claim

by Onyinyechi Muilenburg

Recent case of interest regarding a court determining that Texas’ version of the Uniform Fraudulent Transfer Act does not have a comparative responsibility defense to limit damages to such a claim.

A Texas Court of Appeals recently confirmed that the Texas Comparative Responsibility Statute under the Texas Practice and Remedies Code does not apply in a fraudulent transfer cause of action.  See Challenger Gaming Solutions, Inc. v. Earp, 402 S.W.3d 290 (Tex. App.—Dallas 2013).

The Defendant argued that Tex. Civ. Prac. & Rem. Code § 33.003 should be applied to a fraudulent transfer claim to allow a Judge or jury to lessen the amount of damages.  The Court spent a good deal of time reviewing how the Texas Supreme Court has held that the Texas Comparative Responsibility Statute does not apply to UCC article 3 check conversion claims.  The court also analyzed how the Texas Supreme Court decided that the Texas Comparative Responsibility Statute does apply to UCC article 2 claims.  I am not aware of any Texas case that has held whether or not the Comparative Responsibility Statute would apply in a UCC article 9 situation.  However, my personal belief is that it should not apply in such a case.

This case is handy if you are litigating a uniform fraudulent transfer act issue.  Plus, this court’s reasoning may provide additional reasoning as to why the Comparative Responsibility Statute should not apply in a UCC article 9 case.

No information in this article is intended to constitute legal advice. For specific legal advice, please contact an attorney.

If you have any questions or would like more information about the Uniform Fraudulent Transfer Act, please contact Pat Huttenbach at 713.220.9184 or phuttenbach@hirschwest.com.