Kelley v. Boosalis, No. 19-1079 (8th Cir. 2020)Annotate this Case
This case arose from a Ponzi scheme perpetrated by Thomas Petters from 1994 to 2008 through his company, PCI. These appeals involve the Trustee’s separate claw back claims against defendants. The Trustee asserted claims under 11 U.S.C. 544(b)(1), which permits a trustee to "avoid any transfer of an interest of the debtor . . . that is voidable under applicable law by a creditor holding an unsecured claim." In this case, the applicable law is the Minnesota Uniform Fraudulent Transfers Act (MUFTA).
The Eighth Circuit held that the district court erred in applying the Supreme Court of Minnesota's controlling MUFTA decision in Finn v. Alliance Bank, 860 N.W.2d 638 (Minn. 2015), and the Minnesota law of void contracts. Therefore, the court reversed summary judgment against Papadimos and Kanios. The court also reversed and remanded in the Boosalis case because the district erred in instructing the jury on the MUFTA elements of "good faith" and "reasonably equivalent value." In both cases, the court held that the district court erred in concluding that Minnesota rather than federal law governed the award of prejudgment interest. The court rejected defendants' other arguments.