Submitted: January 15, 2019
from United States District Court for the Eastern District of
Missouri - St. Louis.
SMITH, Chief Judge, COLLOTON and ERICKSON, Circuit Judges.
Colloton, Circuit Judge.
Financial Group, Inc. sued Richard Podhorn, GR3 Construction,
LLC, and several affiliated entities, advancing a claim under
the Missouri Uniform Fraudulent Transfer Act. The district
court dismissed the complaint without prejudice on the ground
that there was no case or controversy because Enterprise
lacked Article III standing. We conclude, however, that
Enterprise has alleged facts sufficient to demonstrate the
elements of standing. We therefore reverse and remand for
to the amended complaint, Enterprise sells consumer
protection products such as vehicle service contracts.
Podhorn and GR3 Construction were part-owners of North
American Vehicle Insurance Services LLC, also known as
NAVISS, an entity that sold Enterprise's vehicle service
contracts. NAVISS agreed to pay a share of refunds for early
cancellation of the vehicle service contracts, but failed to
meet this obligation. The complaint alleges that NAVISS's
owners transferred NAVISS's funds to themselves and
various affiliated entities, rendering NAVISS insolvent. As a
result, Enterprise was forced to pay NAVISS's share of
refunds totaling more than $6 million. NAVISS also agreed to
use two advances from Enterprise, in the amounts of $250, 000
and $400, 000, exclusively for marketing and advertising
expenses. But NAVISS allegedly transferred at least $350, 000
from these advances to its owners and affiliated entities,
and the funds were thus not used for their intended purpose.
sued NAVISS and its owners in Texas court, seeking damages,
injunctive relief, and a declaration that Enterprise has a
security interest in NAVISS's assets. While that suit was
pending, Enterprise brought this action against Podhorn, GR3
Construction, and other entities that received transfers from
NAVISS, asserting a claim under the Missouri Uniform
Fraudulent Transfer Act. The Act provides relief for
"creditors" who are victims of fraudulent
transfers. See Mo. Rev. Stat. §§ 428.024,
.029, .039, .044. A "creditor" is an individual or
entity that has a "right to payment" from a debtor,
"whether or not the right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured,
or unsecured." Id. § 428.009(3)-(6), (9).
A debtor that retains no interest in the transferred assets
is not a necessary party to the fraudulent-transfer action,
see Springfield Gen. Osteopathic Hosp. v. West, 789
S.W.2d 197, 201 (Mo.Ct.App. 1990), and the Act provides
remedies directly against transferees. See Mo. Rev.
Stat. §§ 428.039, .044.
defendants moved to dismiss this action for lack of an
Article III case or controversy. The district court granted
the motion, concluding that Enterprise lacks Article III
standing. The court reasoned that Enterprise's alleged
injuries are "hypothetical and conjectural,"
because the Texas court has not rendered a judgment on
whether NAVISS breached any agreements or owes Enterprise any
money. As the defendants mounted a facial attack on the
plaintiff's standing, we review the district court's
dismissal of the action de novo, accepting the
material allegations in the amended complaint as true, and
drawing all permissible inferences in Enterprise's favor.
In re SuperValu, Inc., 870 F.3d 763, 768 (8th Cir.
III limits the judicial power to resolving "Cases"
or "Controversies," and the standing doctrine is
"rooted in the traditional understanding of a case or
controversy." Spokeo, Inc. v. Robins, 136 S.Ct.
1540, 1547 (2016). The "irreducible constitutional
minimum" of standing consists of three elements.
Id. "The plaintiff must have (1) suffered an
injury in fact, (2) that is fairly traceable to the
challenged conduct of the defendant, and (3) that is likely
to be redressed by a favorable judicial decision."
Id. The district court concluded that Enterprise
faltered at the first element.
conclude that the absence of a judgment in the Texas
litigation does not mean that Enterprise lacks Article III
standing. To demonstrate injury in fact at the pleading
stage, Enterprise must demonstrate that its alleged injury is
actual or imminent, as well as concrete and particularized.
See id. at 1547-48. According to the amended
complaint, NAVISS agreed to pay its share of refunds for
early cancellation of vehicle service contracts and to use
money advances for specified purposes, but failed to meet
these obligations. As a result, Enterprise suffered losses in
excess of $6 million. An alleged economic harm "is a
concrete, non-speculative injury," Wallace v.
ConAgra Foods, Inc., 747 F.3d 1025, 1029 (8th Cir.
2014), and the harm here is personal to Enterprise. The
amended complaint thus alleges an injury that is actual,
concrete, and particularized.
under Article III to bring a claim in federal court is
distinct from the merits of a claim under the Missouri
Uniform Fraudulent Transfer Act. Whether Enterprise must
first secure a judgment against NAVISS in Texas before
recovering against the defendants under the Act is a question
that bears on the merits of the claim. As we understand
Missouri law, a plaintiff proceeding under the Act might be
required to show at least a pending or threatened lawsuit
against an alleged debtor in order to have a
"claim" under the Act. See Curtis v.
James, 459 S.W.3d 471, 475-76 (Mo.Ct.App. 2015). But
whether or not Enterprise can satisfy the elements of a claim
under the Act, it has alleged a present injury in fact that
is sufficient to establish Article III standing.
defendants argue that Enterprise cannot demonstrate the
second element of standing-i.e., that its alleged
injury is fairly traceable to the conduct of the defendants.
They assert that Enterprise's alleged injury resulted
from the "independent action" of a third party,
NAVISS, that is not before the court. See Lujan v. Defs.
of Wildlife, 504 U.S. 555, 560 (1992) (internal
quotation omitted). NAVISS's conduct as the transferor,
however, was not the sole cause of Enterprise's alleged
injury. A fraudulent transfer requires both a transferor and
a transferee. The defendants' alleged receipt and
retention of the transferred assets kept these assets from
Enterprise and rendered NAVISS insolvent, thereby
contributing to Enterprise's economic harm.
Enterprise's alleged injury is thus "fairly
traceable" to the defendants' alleged participation
in the transfers as transferees.
defendants do not challenge the final element of standing,
and Enterprise has adequately demonstrated that its injury
"is likely to be redressed by a favorable judicial
decision." See Spokeo, 136 S.Ct. at 1547. The
Act provides remedies against transferees, and these remedies
would compensate Enterprise to the extent of its claim
against NAVISS if the claim has merit. See Mo. Rev.
Stat. §§ 428.039.2, .044.2.
these reasons, the order of dismissal is reversed, and the
case is remanded for further proceedings. We leave the
alternative argument of appellee Simpson Living Trust-that
Enterprise lacks "statutory ...