Constructively fraudulent transfer; 11 USC § 548(a)(1)(B)(i); Reasonably equivalent value; Contract interpretation; Michigan law; Personal guaranty; Signature blocks; Livonia Bldg Materials Co v Harrison Constr Co (MI Ct App); Extrinsic evidence; Stranger-to-the-contract exception; Shay v Aldrich (MI); Mutual release; Conversion damages; Contract-title interpretation; Smith v Smith (MI Ct App); Property recovery; § 550; In re AMC Mtg Co; Proposed order

[This appeal was from the ED-MI.] The court held that the bankruptcy court properly found a constructively fraudulent transfer and did not abuse its discretion by ordering appellant to return the paid-off property to the bankruptcy estate. Before debtor filed Chapter 7, he transferred three properties to appellant (his mother) in exchange for release of mortgage and note debt. The bankruptcy court found he transferred property worth $893,000 for $737,516 in debt relief, so he received less than reasonably equivalent value. The district court affirmed. On appeal, the court first held that the courts below correctly refused to treat a business loan from appellant to debtor’s company as personally guaranteed by debtor. Applying Michigan contract law, it reasoned that the body of the agreement made “just one entity liable: Wylie’s Rentals,” the word guaranty did not appear, and the single signature block did not show personal liability. The court next held that the mutual release did not satisfy appellant’s conversion claim based on debtor’s earlier taking of $33,000 from her bank account because the release covered claims “related to the Mortgages and Promissory Notes,” and the conversion “does not fit the bill.” The court also deferred to the bankruptcy court’s credibility findings rejecting testimony and later documents suggesting a broader release. The court further held that the bankruptcy court acted within its “broad discretion” under § 550 by awarding the trustee the paid-off property rather than only the value difference because the statute permits recovery of “the property transferred” or its value, and appellant had not preserved a contrary objection. Finally, the court rejected her challenge to use of the trustee’s proposed order because that practice does not “automatically sink to reversible error.” Affirmed.