Outside Publication

The Applicability of the Crime-Fraud Exception in Fraudulent Transfer Cases: Does a “Fraud” by any Other Name Smell as Sweet?, South Texas Law Review

Spring 2020

Morgan Lewis litigation of counsel co-authored an article titled “The Applicability of the Crime-Fraud Exception in Fraudulent Transfer Cases: Does a 'Fraud' by any Other Name Smell as Sweet?” for the Spring 2020 edition of South Texas Law Review.

Texas recognizes an exception to the attorney-client and work product privileges when a “lawyer's services were sought or obtained to enable or aid anyone to commit or plan to commit what the client knew or reasonably should have known to be a crime or fraud.” While Texas courts agree that this exception may apply in a case involving a common law fraud claim, there is considerably less certainty regarding whether the exception applies in a case involving a fraudulent transfer claim under the Texas Uniform Fraudulent Transfer Act (TUFTA). TUFTA provides a comprehensive statutory scheme that allows a creditor to obtain a remedy when a debtor transfers an asset with the intention of placing the asset beyond the creditor's reach.

TUFTA also provides a remedy for a creditor who can prove that the debtor transferred an asset without receiving “reasonably equivalent value” in return. Both of these statutory causes of action are generally referred to as fraudulent transfer claims. A fraudulent transfer claim is a separate cause of action from common law fraud, and the elements of a fraudulent transfer claim are different than those of a traditional fraud claim.