In Georgia, if a person is confronted with a trust case involving fraudulent conveyance, the first question they need to answer is which statute will govern the issue. In 2002, Georgia's version of the Chepstow Ltd. v. Hunt, 381 F.3d1077, 1087 (11th Cir. 2004) (O.C.G.A. § 18-2-70 et seq.) repealed and replaced some of the existing fraudulent conveyance law, including O.C.G.A. § 18-2-22.
The issue arose over whether a trust document drafted prior to 2002 would be analyzed under the current UFTA or the earlier § 18-2-22. When confronted with the issue in Miller v. Lomax, 266 Ga. App. 93 (2004), the Georgia Court of Appeals indicated that pre-UFTA transfers could be challenged under the UFTA itself. The Court offered very little explanation for its reasoning, addressing the issue in a footnote which said that it isthe general rule of appellate courts to apply the law as it exists at the time of the judgment, irrespective of previous laws. The Court thus decided to use the UFTA to analyze the issue,ignoring § 18-2-22.
Later that same year, the Eleventh Circuit Court of Appeals heard a similar case and held that § 18-2-22 continues to remain applicable to transactions that occurred prior to the July 1, 2002effective date of the UFTA. See Chepstow Ltd. v. Hunt, 381 F.3d1077, 1087 (11th Cir. 2004); see also Miller v. Lomax, 266 Ga. App. 93 (2004) , 636S.E.2d 663, 665 n.8 (Ga. App. 2006). The Eleventh Circuit said that unless there is a decision by the state supreme court on point they would typically follow decisions by state appellate courts (meaning Miller). However, the Court of Appeals decided there was a strong indication that the Georgia Supreme Court would decide the matter differently and chose to ignore Miller. As a result, the Eleventh Circuit held that the UFTA did not retroactively repeal § 18-2-22 when the underlying events occurred before the 2002 effective date of the UFTA.
The Georgia Supreme Court clarified the issue in Byers v. McGuireProps., 285 Ga. 530 (2009), saying that though O.C.G.A. § 18-2-22 was repealed in 2002 by the UFTA, this did not extinguish causes of action that arose under O.C.G.A. § 18-2-22 prior to that date. As a result, the Eleventh Circuit opinion will prevail and O.C.G.A. § 18-2-22 should apply to all documents drafted prior to implementation of the UFTA.
By Connor Alexander, Law Clerk, Meriwether & Tharp, LLC