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.