Can mixed motives establish actual intent under Utah's fraudulent transfer act? Jones v. Mackey Price Thompson & Ostler Explained

In Jones v. Mackey Price Thompson & Ostler, 2020 UT 25, the Utah Supreme Court addressed several critical issues in commercial litigation, including the scope of the Utah Fraudulent Transfer Act, the availability of constructive trusts as remedies for legal claims, and procedural requirements for adding successor entities to judgments.

Background and Facts

Gregory Jones, an attorney who worked on Fen-Phen litigation cases for Mackey Price Thompson & Ostler (MPTO), sued his former firm over distribution of over $1 million in litigation proceeds. After Jones developed dissociative amnesia and stopped working, MPTO distributed the funds in December 2006, paying $165,000 to Jones while giving larger amounts to firm partners Mackey and Price ($175,484 each) and other attorneys. Jones claimed entitlement to a larger share and asserted claims for quantum meruit, breach of fiduciary duty, and fraudulent transfer. A jury awarded Jones $647,090, but the district court dismissed several claims on directed verdict.

Key Legal Issues

The court addressed three main issues: (1) whether mixed motives can establish “actual intent” under Utah’s fraudulent transfer statute; (2) whether constructive trusts can be imposed to aid collection of legal claims; and (3) what procedural requirements govern adding successor entities to judgments under Utah Rules of Civil Procedure 21 and 25.

Court’s Analysis and Holding

The court reversed the directed verdict on the fraudulent transfer claim, holding that “actual intent” to hinder, delay, or defraud does not require proof that such intent was the sole or primary purpose. Mixed motives suffice under the statutory language requiring only that a defendant act “with actual intent.” The court found sufficient circumstantial evidence for a jury to conclude MPTO acted with fraudulent intent, despite the firm’s claimed tax avoidance motives.

Regarding constructive trusts, the court clarified that its previous decision in Jones I did not categorically foreclose equitable remedies supporting legal claims. The court reversed and remanded for the district court to determine whether Jones established the prerequisites for a constructive trust.

The court also addressed complex procedural issues about adding Mackey Price, LLC as a successor entity, holding that rule 25 substitution is available post-verdict for successors in interest, but the successor entity must have an opportunity to contest the substitution on the merits.

Practice Implications

This decision significantly impacts commercial litigation practice. The mixed motive standard for fraudulent transfer claims expands potential liability, as defendants cannot escape simply by showing legitimate business purposes alongside improper intent. The availability of constructive trusts as collection aids for legal claims provides additional enforcement mechanisms. For procedural matters, practitioners must carefully navigate the distinction between asserting new claims (which require separate proceedings under Tremco) versus seeking substitution of successor entities under existing judgments.