Fleet National Bank v. Valente (In Re Valente)

United States Court of Appeals
For the First Circuit
No. 03-1103

In re PAUL VALENTE, Debtor

FLEET NATIONAL BANK,

Appellant,

v.

PAUL VALENTE,

Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND

[Hon. Mary M. Lisi, U.S. District Judge]

Before

Torruella and Lipez, Circuit Judges,
and Schwarzer,* Senior U.S. District Judge.

Thomas S. Hemmendinger, with whom Brennan, Recupero, Cascione,
Scungio & McAllister, LLP was on the brief, for Appellant.
Louis A. Geremia, with whom Lisa A. Geremia, and Geremia &
DeMarco, Ltd. were on the brief, for Appellee.

March 2, 2004

*
Of the Northern District of California, sitting by
designation.
 LIPEZ, Circuit Judge. On motion by Fleet National Bank

for the turnover of $18,000 held in escrow as security for an

outstanding claim, the bankruptcy court ruled that the escrow funds

should instead be turned over to the debtor because the debtor's

transaction at issue was not a fraudulent conveyance within the

meaning of the Uniform Fraudulent Transfer Act (UFTA). On appeal,

the district court agreed. We now reverse the district court and

direct the bankruptcy court to award judgment to Fleet.

I.

The material facts of this case are undisputed. In 1989,

the Appellant, Fleet National Bank, lent the Debtor-Appellee, Paul

Valente, $180,000 secured by property in Newport, Rhode Island.

Valente defaulted on this loan. After the resulting foreclosure

sale left a deficiency, Fleet obtained a judgment on July 26, 1993

for $10,648.50 from the Rhode Island Superior Court. The resulting

execution order levied "the goods and chattels and real estate of

[Valente] including any and all real estate located within the Town

of Middletown, County of Newport, State of Rhode Island." Fleet

filed a copy of that order in the land evidence records for the

Town of Middletown on September 9, 1993.

On June 30, 1992, approximately one year prior to the

deficiency judgment, Valente transferred title to the Middletown

property to his son for no consideration. Valente claimed that he

conveyed the property "for estate planning purposes;" however, he

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later testified that he and his son "had an understanding that I

was going to be able to stay at the house and live at the house

because I couldn't afford to keep the house any longer." The

Middletown real estate was Valente's primary asset at the time and

he was having trouble paying his bills. The property was

encumbered by a mortgage loan from Citizens Bank, the IRS, and

Rhode Island state tax liens. The mortgage alone was for $168,000

and the property was only worth about $150,000. When asked at

deposition why his father transferred the property to him,

Valente's son testified: "Because he was trying to scam somebody or

scam something, I don't know, beat something. It wasn't out of the

generosity of his heart."

Valente filed for Chapter 7 bankruptcy protection on

January 28, 1994, claiming that he had no assets available for

distribution to his creditors. The IRS and the State of Rhode

Island released their tax liens on the Middletown property.

Valente received his bankruptcy discharge on April 21, 1994.1

During and after the bankruptcy proceedings, Valente

continued to manage, maintain, and live in the home in Middletown

as if he were the actual owner. He ran a business on the premises,

1
Fleet did not file a claim during Valente's bankruptcy
proceedings; however, as a holder of a perfected lien, Fleet did
not need to take any steps to preserve its security interest. See
Arruda v. Sears, Roebuck & Co., 310 F.3d 13, 21 (1st Cir. 2002)
("It is hornbook law that a valid lien survives a discharge in
bankruptcy unless it is avoidable and the debtor takes the proper
steps to avoid it.").

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the Valco Construction Corporation, and paid the utilities and

other bills. In April 1996, Valente contracted with a realty firm

to list and sell the property. In September 1997, after his

attempt to sell the real estate failed, he leased the property.

Valente signed all of the lease documents and collected the rent

money during this period.

On April 14, 1999, Valente's son transferred title back

to his father, without consideration, because Valente told him that

"[h]e was going to sell it and get his money so he could move to

Florida." Two months later, Valente entered into another listing

agreement with the realty firm; on August 25, 1999, he sold the

property for $200,500 cash. His son was not involved in this

transaction.

In preparation for the closing on the property, a title

attorney determined that Fleet's 1993 execution encumbered the

property and would have to be removed before the sale could be

completed. Valente contacted Fleet, and the bank agreed to release

the execution if $18,000 of the sale proceeds were put into escrow

as security for its claim plus interest. Valente placed $18,000 in

escrow and the sale closed. Since the IRS and the State of Rhode

Island had released their liens, Valente was able to pay off the

Citizens' Bank mortgage and still receive approximately $24,850, in

addition to the amount in escrow. His son did not receive any of

those proceeds.

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 Valente reopened his bankruptcy case on February 15, 2000

and filed a motion to recover the escrow funds. He claimed that

since he did not own any property in Middletown when Fleet executed

its judgment, the bank's lien never attached to his property and,

therefore, its claim remained unsecured when the bankruptcy court

discharged his debts in 1994. Accordingly, he asked the bankruptcy

court to hold Fleet in contempt for attempting to enforce a

discharged debt and to order the escrow agent to turn over the

remaining funds. Fleet responded with its own turnover motion on

May 25, 2000. The parties prepared a joint statement of facts and

law and waived a hearing.

In denying Fleet's turnover motion on June 26, 2001, the

bankruptcy court began its explanation with a lament: "While it is

unfortunate that a Debtor playing such a blatant shell game with

his real estate might prevail, this one probably gets away with it,

strictly by operation of law." The court then evaluated whether

Rhode Island's version of the Uniform Fraudulent Transfer Act

(UFTA) compelled Valente to turn the funds over to Fleet. Calling

Valente's transfers a "blatant charade" laden with "plenty" of

fraudulent intent, it nevertheless concluded that mere intent was

not sufficient to establish Fleet's claim under the UFTA. Valente

lacked equity in the Middletown property when he conveyed it to his

son; therefore, the court held that the conveyance did not

constitute a "transfer" of an "asset" as those terms are defined by

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the UFTA. It also held that even if the conveyance did constitute

a transfer under the Act, Fleet could not recover because it filed

the turnover motion after the UFTA's four year statute of

limitations had expired. The court ordered the escrow agent to

turn over the $18,000 to Valente; however, it stayed this order

pending appeal.

Fleet appealed this decision to the district court,

arguing that the UFTA did not apply because its action was not a

suit to recover property that was fraudulently transferred.

Instead, its turnover motion was aimed at enforcing a lien on the

equitable interest retained by Valente when he transferred legal

title to the property to his son for no consideration. The

district court rejected that argument and upheld the bankruptcy

court's order. This appeal followed.2

II.

Rhode Island's version of the Uniform Fraudulent Transfer

Act (UFTA) provides creditors with remedies against debtors who

transfer assets with "intent to hinder, delay, or defraud any

creditor of the debtor." R.I. Gen. Laws. § 6-16-4(a)(1). As the

bankruptcy court correctly observed, the Act limits its definition

of "asset" to "property of a debtor . . . [except] . . . to the

2
When a bankruptcy case has been affirmed by the district
court, "our focus [generally] remains on the decision of the
bankruptcy court. We examine that court's findings of fact for
clear error and afford de novo review to its conclusions of law."
In re Watman, 301 F.3d 3, 7 (1st Cir. 2002).

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extent it is encumbered by a valid lien." Id. § 6-16-1(2)(i).

See also Ed Peters Jewelry Co., Inc. v. C & J Jewelry Co., Inc.,

124 F.3d 252, 262 (1st Cir. 1997). Since the Middletown property

was only worth $150,000 but was encumbered by a $168,000 first

mortgage, as well as a number of state and federal tax liens, it

did not qualify as an "asset" under the UFTA at the time of the

transfer. The bankruptcy court held, therefore, that Fleet could

not recover under the UFTA. That conclusion was correct. However,

the court failed to look beyond the UFTA to evaluate Fleet's claim

to relief under Rhode Island common law.

Rhode Island courts have long granted common law remedies

to defrauded creditors when statutory relief was otherwise barred.

For example, in Monks v. Deslandes, 94 A. 854, 855 (R.I. 1915), the

Rhode Island Supreme Court considered whether a creditor could

recover assets that the debtor was holding in his wife's name to

protect them from attachment. The court held that the fraudulent

conveyance statute that was in effect at that time, R.I. Gen. Laws

§ 253-1 (1909), did not provide such relief since the debtor did

not actually transfer the property. However, the creditor did have

"a right in equity to follow and reach the equitable assets of the

debtor." Id. In taking this approach, the court implicitly

concluded that the predecessor to the UFTA did not preempt the

field of equitable recovery for fraudulent transfers.

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 The UFTA, by its own terms, is consistent with this

background. The Act states that "[u]nless displaced by the

provisions of this chapter, the principles of law and equity,

including . . . the law relating to . . . fraud . . . or other

validating or invalidating cause, supplement[s] this chapter's

provisions." R.I. Gen. Laws. § 6-16-10. At the very least, this

clause demonstrates a desire by the drafters to preserve the common

law as a supplement to the UFTA unless precluded by the terms of

the Act. Moreover, to find broad preemption in the UFTA, in the

absence of language of preemption, would be at odds with the

presumption that statutes should not be construed to alter common

law principles absent an explicit statement of legislative intent

to do so. See, e.g., Shaw v. R.R. Co., 101 U.S. 557, 565 (1879)

("No statute is to be construed as altering the common law, farther

than its words import."); Knowles v. Ponton, 190 A.2d 4, 6 (R.I.

1963) ("It is a well settled rule in the construction of statutes

that legislative enactments will be construed to alter the common

law only to the extent that the legislature has made that purpose

clear."); 3 Norman J. Singer, Sutherland Statutory Construction §

61:1 (2001 Revision) ("Where there is any doubt about [statutes']

meaning or intent they are given the effect which makes the least

rather than the most change in the common law.").

Our own case law rejects the proposition that the

adoption of the UFTA by a state preempts all common law remedies

-8-
relating to fraudulent transfers. In Goya Foods, Inc. v. Unanue,

233 F.3d 38, 44-45 (1st Cir. 2000), a case with some striking

similarities to this case, the district court imposed a

constructive trust, under New York law, to allow a creditor to

execute judgment against properties that the debtor was concealing

under his wife's name. The district court concluded that the

debtor was the true owner of the properties because he purchased

them with his money, lived in the residences, and maintained the

properties. Goya Foods, Inc. v. Unanue-Casal, 982 F. Supp. 103,

111-12 (D.P.R. 1997). Accordingly, it awarded judgment to the

creditor. On appeal, the debtor argued that New York's fraudulent

conveyance statute, with its four year statute of limitations,

should have barred recovery. We responded that the "lack of an

effective conveyance" meant that the UFTA did not apply. Goya, 233

F.3d at 46. Instead, we held that New York's general statute of

limitations for fraudulent actions applied, and concluded that the

district court was correct in holding that the assets were held in

constructive trust for the creditor. Id. See also In re Bushey,

210 B.R. 95, 104-05 (B.A.P. 6th Cir. 1997) (rejecting the

bankruptcy court's assertion that a trustee was not entitled to a

resulting trust remedy outside of the UFTA's purview).

Courts in other states evaluating claims in other

contexts have also rejected UFTA preemption of existing remedies.

See, e.g., Macedo v. Bosio, 86 Cal. App. 4th 1044, 1051 (Cal. Ct.

-9-
App. 2001) ("[T]he UFTA is not the exclusive remedy by which

fraudulent conveyances and transfers may be attacked. They may

also be attacked by, as it were, a common law action."); Cortez v.

Vogt, 52 Cal. App. 4th 917, 929 (Cal. Ct. App. 1997) ("[T]he

remedies of the UFTA . . . are cumulative to the remedies

applicable to fraudulent conveyances that existed before the

uniform laws went into effect."); Freitag v. McGhie, 947 P.2d 1186,

1189-90 (Wash. 1997) (observing that the purpose of the UFTA was to

"discourag[e] fraud" and that "within the UFTA itself lies a

mandate to apply the common law to the extent it is not

inconsistent with the provisions of the act"); Bill Nay & Sons

Excavating v. Neeley Constr. Co., 677 P.2d 1120, 1123 (Utah 1984)

(imposing a resulting trust after concluding that the creditor did

not satisfy the requirements for relief under the UFTA). But see

Moore v. Browning, 50 P.3d 852, 858 (Ariz. App. 2002) (concluding

that the UFTA preempted the common law use of the statute of

limitations regarding fraudulent actions). Given this precedent,

both within and without Rhode Island, we conclude that Rhode

Island's adoption of the UFTA did not preempt common law remedies

applicable to fraudulent transactions.

III.

Having concluded that the UFTA does not preempt

applicable remedies, we must now evaluate whether Rhode Island

common law provides Fleet with a cause of action and whether the

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bank took the necessary steps to avail itself of that relief.

Fleet claims that Valente retained an equitable interest in the

property after he transferred it to his son, and that the bank

obtained a lien on that interest which it could enforce through the

turnover proceeding in the bankruptcy court. To evaluate this

claim, we must consider three issues: 1) did Valente retain an

interest in the transferred property pursuant to Rhode Island law;

2) does Rhode Island common law allow recovery against such

interests; and 3) did Fleet file the necessary action within the

proper limitations period to avail itself of applicable relief.

A. Valente's Interest in the Middletown Property

Throughout these proceedings, Fleet has maintained that

Valente retained equitable ownership of the transferred property

and that this ownership was an attachable interest. This claim has

a sound basis in Rhode Island law, which uses the resulting trust

doctrine to explain the nature of this equitable interest.3 For

example, when the debtor in Tucker v. Denico, 61 A. 642, 645 (R.I.

1905), took property in his wife's name in order to keep that

3
Courts usually find resulting trusts after a transfer of
property has taken place to give legal effect to the parties'
intent at the time of the transfer. These trusts are equitable
tools that might be used when, for example, express trusts fail or
when the parties fail to explicitly identify interests that were
retained in a deed. They are commonly referred to as "intent-
enforcing" trusts because they "cover cases where the court decrees
a property holder to be a trustee, either because it finds there
has been an implied intent that he be such or because of a presumed
or fictional intent." George G. Bogert & George T. Bogert, Law of
Trusts 262 (1973).

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property out of the reach of his creditors, the Rhode Island

Supreme Court recognized this transaction as a fraudulent transfer

and imposed a resulting trust upon the property for the creditors'

benefit.4 Likewise, in Mitchell v. Campbell, 48 R.I. 120, 122

(1927), the court effectively imposed a resulting trust by holding

that an attachable interest is created "[w]hen a conveyance for the

purpose of defrauding creditors is made of the legal title to real

estate without any intention of passing the beneficial interest

therein." The equitable interest found by the courts in these

cases sufficed to provide the creditors relief from the debtors’

fraudulent attempts to avoid attachment.

Valente's fraudulent transaction with his son fits

readily into the resulting trust model. According to the

Restatement (Second) of Trusts:

A resulting trust arises where a person makes
or causes to be made a disposition of property
under circumstances which raise an inference
that he does not intend that the person taking
or holding the property should have the
beneficial interest therein, unless the
inference is rebutted or the beneficial
interest is otherwise effectively disposed of.

4
Technically speaking, the Tucker court should have referred
to the remedy that it imposed as a "constructive trust," not as a
"resulting trust." Restatement (Third) of Trusts § 7, Comment d
(noting that courts frequently confuse the two doctrines). Unlike
resulting trusts, which are used primarily to enforce the parties'
unstated plan at the time of the transfer, constructive trusts are
used as remedial devices regardless of the parties' original intent
"whenever title to property is found in one who in fairness ought
not to be allowed to retain it." Bogert & Bogert, supra at 287.

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Restatement (Second) Trusts, § 404. See also United States v. One

Parcel of Real Prop. with Bldgs., 942 F.2d 74, 82 (1st Cir. 1997)

("In general, under Rhode Island law, a resulting trust arises

where a person makes or causes to be made a disposition of property

under circumstances which raise an inference that he does not

intend that the person taking or holding the property should have

the beneficial interest therein.") (Campbell, J., dissenting);

Reilly v. Wheatley, 68 F.2d 297, 299 (1st Cir. 1933) (stating that

"[r]esulting trusts . . . arise where there is a conveyance without

consideration, and from the surrounding facts and circumstances it

is apparent that the grantor was still to retain his beneficial

ownership").

Valente transferred the property to his son for no

consideration shortly before he declared bankruptcy because he

“couldn’t afford to keep the house any longer.” The two had an

“understanding” that Valente was going to live in the house, and he

continued to treat the property as his own by, inter alia, paying

all of the bills, managing the lease and sale of the property,

running a business on the premises, and not paying rent. His son

admitted that his father's aim was "to scam somebody or scam

something." He also testified that he returned the property, for

no consideration, when his father told him that he was interested

in selling it. This evidence compels a finding of a resulting

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trust,5 with Valente's son holding legal title to the Middletown

property in trust for his father, who retained the equitable

interest in the property at the time of the transfer to his son.6

Hence, we must now evaluate whether Fleet could have attached that

interest or otherwise secured relief in a Rhode Island court.

B. Fleet's Cause of Action

Fleet claims that its state judgment and execution

created a lien on the equitable interest that Valente retained in

the Middletown property. We agree. As we noted in the previous

section, the Rhode Island Supreme Court, in Mitchell v. Campbell,

5
See, e.g., In re McGavin, 189 F.3d 1215, 1218 (10th Cir.
1999) (finding a resulting trust where the debtor resided in the
home, paid bills, and continued to use the property as collateral);
New Amsterdam Cas. Co. v. Waller, 323 F.2d 20, 26 (10th Cir. 1963)
(claiming that a resulting trust would have arisen "if donor and
donee had agreed that the property was actually the husband's
placed in the wife's name only to circumvent his creditors and
would be reconveyed by the wife to the husband upon his demand");
Gammel v. Enochs, 353 P.2d 1106, 1110 (Okla. 1960) (ignoring claims
of consideration in the deed and finding a resulting trust based on
evidence showing that no consideration was actually exchanged and
that the transferor continued to exercise dominion over the
property and upon the transferee's admission "that the conveyances
were made as a matter of convenience and that beneficial title
rested in [the transferor]").
6
Although this resulting trust was established to perpetrate
a fraud and courts generally refuse to enforce implied trusts for
such purposes, enforcing the trust in the circumstances of this
case serves to defeat the illegal purpose for which Valente
transferred the property. See 5 Scott on Trusts § 444 (noting that
while a court will not enforce the resulting trust created when a
person takes property in another's name to avoid creditors, "[t]he
creditors, of course, can reach the property").

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136 A. 249 (R.I. 1927), explicitly allowed a creditor to acquire a

lien on fraudulently-transferred assets:

When a conveyance for the purpose of
defrauding creditors is made of the legal
title to real estate without any intention of
passing the beneficial interest therein, it is
well settled that the equitable estate of the
grantor may be attached in a suit at law as
well as in equity.

Id. at 250. This unconditional holding authorizes Rhode Island

courts to enforce liens on equitable interests to remedy transfers

of title such as the one in this case. See also Brierly v.

Brierly, 431 A.2d 410, 416 (R.I. 1981) (upholding the trial judge's

attachment of a husband's equitable interest in the family home);

R.I. Gen. Laws § 9-26-14 (outlining the procedures for "[w]henever

execution is to be levied upon real estate or any interest

therein") (emphasis added); id. § 10-5-9 (concerning "any writ to

attach real estate, or the right, title, and interest of any

defendant in real estate"); Restatement (Second) of Trusts § 407(3)

("Creditors of the beneficiary of a resulting trust can by

appropriate proceedings reach his interest and thereby subject it

to the satisfaction of their claims against him."). Since Fleet

acquired a lien on "real estate of [Valente] including any and all

real estate located within the Town of Middletown," we conclude

that it had a valid lien on Valente's equitable interest in the

Middletown property.

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 Resisting this conclusion, Valente claims that the relief

offered by Mitchell and similar cases is not applicable to the

Middletown property because the property was fully encumbered by a

mortgage and other liens at the time that he conveyed this property

to his son. He cites Mehrtash v. Mehrtash, 112 Cal. Rptr. 2d 802,

805 (Ct. App. 2001) for the principle that "[i]t cannot be said

that a creditor has been injured unless the transfer puts beyond

[its] reach property [it] otherwise would be able to subject to the

payment of [its] debt." The debtor in Mehrtash deeded his

residence to his step-sons for no consideration when he was

insolvent. When a creditor attempted to reverse that transfer, the

court held that she was not harmed by the transaction since the

residence was only worth between $540,000 and $551,000 and was

encumbered by $610,000 in mortgages and liens. Id. at 805-06.

We disagree with Valente's claim that Mehrtash supports

his position. Like the bankruptcy court here, the Mehrtash court

only considered whether the creditor could seek relief under the

UFTA and did not evaluate whether the debtor retained an interest

in the property after the fraudulent transfer. Therefore, its

conclusion that the UFTA does not provide relief when the

transferred property was fully encumbered does not address the

availability of common law remedies.

It is true that the Mehrtash court supplemented its UFTA

analysis by observing that recovering the property from the

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transferee would not actually help the creditor since the debtor

could not have satisfied his debts with that property. It

buttressed that observation by citing the "fundamental maxim of

jurisprudence" that "'[t]he law neither does nor requires idle

acts.'" Id. at 805 (quoting Bennett v. Paulson, 45 P.2d 369, 370

(Cal. App. 1935)). See also A/S Kreditt-Finans v. Cia Venetico De

Navegacion S.A. of Panama, 560 F. Supp. 705, 711 (E.D. Pa.), aff'd,

729 F.2d 1446 (3d Cir. 1984) ("[N]umerous courts in other

jurisdictions in which the issue has arisen have stated as though

it were axiomatic the requirement that a creditor be injured by the

conveyance it seeks to invalidate."). However, as Valente's sale

of the property revealed, that reasoning does not apply here. The

Middletown property had appreciated in value prior to the turnover

proceeding in the bankruptcy court, and Fleet could have satisfied

its judgment from Valente's equitable asset but for his fraudulent

conduct. Since the bankruptcy court could have awarded the

proceeds that Valente received from the sale to Fleet, it was not

being asked to undertake an "idle act."

C. Fleet's Legal Action to Adjudicate its Right to Relief

Valente also claims that Fleet may not avail itself of

the relief provided by Rhode Island law because it failed to bring

an action to determine whether he actually engaged in fraud until

it filed its motion for the turnover of funds in the bankruptcy

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court. He also claims that its motion was time-barred. We will

consider each of these objections in turn.

1. The Bankruptcy Proceeding

Valente's claim that Fleet has failed to seek "some sort

of judicial inquiry" to support its claim of fraud and his

retention of a beneficial interest in the property reflects the

untenable premise that the turnover proceeding in the bankruptcy

court did not properly serve that purpose. Ideally, Fleet should

have initiated its case by filing a complaint under the rules

governing adversary proceedings, Part VII of the Federal Rules of

Bankruptcy Procedure, rather than by filing a motion under the rule

that governs contested matters, Fed. R. Bankr. P. 9014. However,

the standard of proof in these two types of proceedings is the

same, the procedural rules are similar, and the proceedings

provided Valente with more than adequate notice and an opportunity

to be heard. See, e.g., Trust Corp. v. Patterson (In re Copper

King Inn, Inc.), 918 F.2d 1404, 1406-07 (9th Cir. 1990) (disposing

as harmless error the bankruptcy court's failure to hold

proceedings under Part VII when the parties had adequate notice and

opportunity to be heard); In re Swizzlestick, L.L.C., 253 B.R. 264,

267 (Bankr. W.D. Mo. 2000) ("[T]he Court will not elevate the form

of the proceeding in which a lien issue is to be considered, if the

substance of the hearing on that issue is such that the objecting

party has been afforded due process."). Valente was not prejudiced

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by Fleet's decision to proceed by motion. See Fed. R. Bankr. P.

9005 (stating that the harmless error rule, Fed. R. Civ. P. 61,

applies in bankruptcy cases).

As we have already noted, Fleet provided sufficient

evidence in an adversarial setting to establish that Valente

retained an equitable interest in the property. See supra Section

III.A. For the bankruptcy court, the application of Rhode Island's

resulting trust doctrine would have been an appropriate and

familiar role. See, e.g., Young v. United States, 535 U.S. 43, 50

(2002) (describing bankruptcy courts as "courts of equity that

'appl[y] the principles and rules of equity jurisprudence'")

(quoting Pepper v. Litton, 308 U.S. 295, 304 (1939)); Bessette v.

Avco Fin. Servs., Inc., 230 F.3d 439, 445 (1st Cir. 2000) (stating

that a bankruptcy court has the power to fashion an equitable

remedy "so long as the court acts consistent with the Code and does

not alter the Code's distribution of other substantive rights").

The bankruptcy court erred in not providing this equitable relief.

2. Fleet Filed Its Claim Within the Statute of Limitations

Valente claims that Fleet's action is barred by the

UFTA's four year statute of limitations. However, we have already

concluded that this case is not governed by the UFTA. Since

Valente's equitable interest in the Middletown property arose out

of his fraudulent conduct, we conclude that Rhode Island's statute

of limitations for fraudulent actions should apply. See Goya, 244

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F.3d at 46 (relying upon New York's statute of limitations

regarding fraudulent actions to conclude that the plaintiff's

action was not time-barred); New Amsterdam Cas. Co. v. Waller, 323

F.2d 20, 26 (10th Cir. 1963) (applying the state limitations period

governing fraud in a fraudulent transfer case); 37 Am. Jur. 2d

Fraudulent Conveyances and Transfers § 180 (observing that the

general rule holds that barring an express statute of limitations,

fraudulent transfers are generally governed by the state's

limitations period for fraudulent actions). That limitations

period is ten years. See R.I. Gen. Laws § 9-1-13(a) ("Except as

otherwise specially provided, all civil actions shall be commenced

within ten (10) years next after the cause of action shall accrue,

and not after."); Jones v. Moretti, 711 A.2d 1156, 1157 (R.I. 1998)

("Actions for fraud in Rhode Island are subject to the ten-year

statute of limitations contained in G.L. 1956 § 9-1-13(a).").

Since Valente's fraudulent conduct occurred in June 1992 and Fleet

filed its turnover motion on May 25, 2000, Fleet's motion was not

time-barred.7

7
Valente claims that Fleet could have sought relief under the
UFTA; therefore, the concurrent remedy rule, which directs courts
to withhold equitable relief when the party would have had a remedy
at law but for the expiration of a statute of limitations, bars
Fleet's recovery under the common law. See Cassell v. Taylor, 243
F.2d 259, 261 (D.C. Cir. 1957) ("In those instances where the court
has concurrent jurisdiction to grant either equitable or legal
relief in the enforcement of the asserted obligation, equity
follows the law and the equitable remedy will be withheld if the
local statute of limitations would bar the concurrent legal
remedy."). As we noted above, however, Fleet never had a remedy at

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 IV.

The bankruptcy court vented its frustration about this

case by lamenting that it did not have the power to stop Valente

from "playing such a blatant shell game with his real estate." In

fact, the court did have that power. Although the court was

correct that the UFTA did not provide Fleet with a remedy for

Valente's fraudulent transfer of his Middletown property, it erred

when it assumed that this conclusion foreclosed the bank's common

law remedies. Rhode Island common law has long provided equitable

relief to creditors in Fleet's position. Under Rhode Island law,

Valente's son held the Middletown property in a resulting trust for

his father, who retained the equitable interest. Fleet acquired a

valid lien on that equitable interest in 1993, and that secured

interest survived Valente's 1994 bankruptcy discharge.

Accordingly, Valente does not have a valid claim to the escrow

funds. The funds must be awarded to Fleet.

Therefore, we vacate the district court's judgment and

remand to the district court for the purpose of remanding to the

bankruptcy court for entry of judgment for Fleet.

SO ORDERED.

law under the UFTA since the Middletown property was fully
encumbered; therefore, the common law relief that Fleet is seeking
does not constitute a concurrent remedy.

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