Florida Court Rules in Favor of Title Insurance Company Because Plaintiff Failed to Meet His Burden of Proof on Issue of Reasonably Equivalent Value
March 29, 2021, Middle District of Florida – Debtor was a title insurance company conducting its business under the trade name “The Fund” through a network of attorney agents, who were themselves licensed as title insurance agents. Defendant Old Republic National Title Insurance Company (“OR Title”) is a nationwide title insurer that is owned directly or indirectly by Old Republic National Title Holding Company (“OR Holding”).
The Debtor was facing difficulties and contracted with Defendant OR Holdings to form a company to service title insurance agencies. Under the agreement, Attorneys’ Title Fund Services, LLC (“ATF Services”) was formed to provide services to OR Title in connection with OR Title’s issuance of the underwriting of title insurance policies. The Debtor agreed that it would not engage in the business of title insurance underwriting or title insurance production. Debtor even surrendered its license to sell title insurance. Debtor and OR Holding held equal interests in ATF Services. After the agreement, eventually, all of Debtor’s business operations related to the sale, issuance, and underwriting of title insurance policies got moved to OR Title, and all of Debtor’s “ancillary” business operations were moved to ATF Services.
Under the agreement, the plaintiff alleges that OR Title assumed Debtor’s title policy claims liability in exchange for Debtor’s cash and investments, intellectual property, and real estate, but “paid nothing” for the intellectual property and the real estate. The complaint contained twelve counts: Counts I through IV were actions against OR Title to recover actual and constructive fraudulent transfers under 11 U.S.C. § 548; Counts V through VIII were actions against OR Title to recover actual and constructive fraudulent transfers under Fla. Stat. §§ 726.105 and 726.106; Count IX was an action for a declaratory judgment that ATF Services is the alter ego of OR Holding and OR Companies; and Counts X through XII were actions for successor liability against OR Holding and OR Companies.
The Court concluded that the Debtor’s transfer of assets to Defendant was not avoidable as a “fraudulent transfer” under 11 U.S.C.S. § 548 and Fla. Stat. §§ 726.105, 726.106, because the Debtor transferred tangible assets having a value of $47,571,074 in exchange for Defendant’s assumption of Debtor’s title insurance policy liabilities between $45 million and $57.2 million, with an actuarial central estimate of $50,889,000, without consideration of any additional risk premium or profit. Citing the Eleventh Circuit, the Court stated that “the concept of reasonably equivalent value does not require a dollar-for-dollar transaction.” The Court concluded that Plaintiff did not meet his burden of proof to establish that Debtor’s transfers to OR Title under the agreement were for less than reasonably equivalent value.