A bank sued a husband and wife to undo the transfer of their property in St. Petersburg, Fla., via quit claim deed. It alleges the couple quit claimed the property into both of their names to evade the bank’s attempt to collect on a judgment it obtained in federal court in Vermont against the husband.
The case is Bank of America N.A. v. Kevin Elnicki and Stephanie Elnicki (U.S. District Court for the Middle District of Florida, No. 8:19-cv-1331-T-SPF).
In April 2016, Bank of America filed a breach of contract suit in the U.S. District Court for the District of Vermont against Kevin Elnicki and 11 companies he controls for defaulting on a series of loans and agreements. The bank obtained judgment on Aug. 3, 2018, against Elnicki and his companies for approximately $7 million. Bank of America filed the current suit in May 2019, alleging the Elnickis fraudulently transferred their home on Snell Isle, Fla., on jan. 4, 2017, nine months after the bank filied the Vermont suit against Elnicki, to prevent the bank from levying it to collect its judgment. In November 2019, Bank of America filed another case in Vermont federal court against the Elnickis and their closely held companies, alleging the couple fraudulently transferred other real properties in Vermont and New York into the names of straw companies to evade creditors.
Kevin and Stephanie Elnicki married in 1990. They purchased a home in Florence, Vt., in 1994 to raise their four children and still own that house. Around 2012, the Elnickis purchased the subject property in Snell Isle.
In his application for a mortgage, Kevin Elnicki listed himself as the only borrower and stated that he and Stephanie Elnicki intended to hold title to the property together as a secondary residence. However, Kevin Elnicki checked “yes” in answer to the question, “Do you intend to occupy the property as your primary residence?” When completing the transaction, the Elnickis signed a second home ryder, stating they would occupy the property as their second home.
While Elnicki testified that his Vermont home was his primary residence the day before closing, he considered the Snell Isle house the Elnickis’ primary residence after closing. Kevin Elnicki operated his businesses remotely from Florida while Stephanie Elnicki stayed in Vermont with their kids.
Kevin Elnicki surrendered his Vermont driver’s license in April 2013, though he listed his Vermont address when filling out an individual personal financial statement in May 2014. In October 2014 Kevin Elnicki executed a guaranty of a loan to one of his Vermont businesses, listing his Vermont address. The Elnickis filed joint federal and Vermont tax returns in 2015 and 2016, listing their Vermont address.
Stephanie Elnicki and the Elnickis’ youngest son moved to Florida for the 2016-2017 school year, though they moved back the following year. In January 2017, Stephanie Elnicki applied for a Florida driver’s license using a copy of the warranty deed for the Snell Isle house as proof of residency. The Elnickis discovered Stephanie Elnicki was not on the warranty deed and corrected this mistake by executing the quit claim deed on Jan. 4, 2017, transferring the title from Kevin Elnicki in fee simple to Kevin and Stephanie Elnicki as tenants by the entirety. They did not contact the bank or title company that prepared the warranty deed before executing the quit claim deed.
In March 2017, Kevin Elnicki filed an excessive force lawsuit in the District of Vermont against a police officer and the City of Rutland, Vt. The complaint states that Elnicki is a resident of Pittsford, Vt.
In April 2017, Kevin Elnicki executed a loan agreement with TD Bank listing his Vermont address. For tax year 2017, the Elnickis’ federal return listed their Vermont address, while their Vermont return listed their Florida address.
The Elnickis testified that they have spent most of their time in Florida since 2018.
Bank of America’s complaint asserts five causes of action: declaratory judgment, fraudulent transfer, and constructive trust. The Elnickis filed a motion for summary judgment.
U.S. Magistrate Judge Sean Flynn denied the Elnickis’ motion for summary judgment, noting that there is a genuine dispute regarding whether the Snell Isle house was Elnicki’s homestead, either at the time of the January 2017 quit claim transfer or the Nov. 20, 2018 recording of the judgment.
“First, addressing the objective test of whether he actually used and occupied the Snell Isle house, Mr. Elnicki testified to living in Florida most of the time,” Flynn stated. “While the Bank may dispute the amount of time Mr. Elnicki spent at the Snell Isle house, the Bank has presented no facts to dispute that the Elnickis did occupy and use the Snell Isle house.
“Second, regarding Mr. Elnicki’s subjective intent, there is a disputed material fact as to whether Mr. Elnicki’s actions were inconsistent with his self-professed intention to establish a homestead,” Flynn continued. “Mr. Elnicki holds a Florida driver’s license, he is registered to vote in Florida, and his son was enrolled in school in Florida for the 2016-2017 academic year. But the Elnickis still own their Vermont house (the family’s home of almost 20 years), and his wife and children lived there most of the time. He and Mrs. Elnicki have been married for 30 years, they have never legally separated, they speak daily, their funds are commingled, and they run their family businesses together. Further, he (and Mrs. Elnicki) executed the mortgage on the Snell Isle house subject to the Second Home Ryder, stating his intent to occupy the Snell Isle house as a secondary residence. The house has no internet (an essential utility for remote working) and no cable or TV. He testified to traveling back and forth between Vermont and Florida dozens of times over the years.”
Flynn then noted a judgment creditor can use FUFTA to set aside a transfer if it can establish the transfer was actively or constructively fraudulent.
“The bank’s fraudulent transfer counts rise and fall on the answer to the question posed by Count One: Was the Snell Isle house Mr. Elnicki’s homestead at any point before the bank recorded the Vermont judgment on Nov. 20, 2018? If the answer is yes, the property is protected from forced sale except in narrow circumstances,” Flynn stated. “If the answer is no, the transfer may be set aside under FUFTA, if the bank can satisfy the elements of those causes of action. As there is a disputed material fact regarding whether the Snell Isle house was Mr. Elnicki’s homestead, the Elnickis’ summary judgment motion as to Counts II through IV fails.”