The plaintiff, Dr. Raley, joined the defendant, Dr. Haider, in a medical practice from late 2008 through 2009. Plaintiff contended that the defendant promised to make him a co-owner of the practice entity, Minimally Invasive Spine Institute, PLLC (MISI), and that he was then to share in the practice’s expenses while getting paid for all revenues he generated. Defendant never made good on the promise to make plaintiff a co-owner, and the two ultimately split at the end of 2009. Defendant made an interim payment to the plaintiff at that time, but then continued to reap revenues from plaintiff’s work without paying him further. Plaintiff sued in 2010, naming MISI and Haider as defendants. The court in the first case limited the plaintiff to pursuing MISI on contract theories, and dismissed Haider on a demurrer. Importantly, the court held that plaintiff, as a non-member, could not bring an action directly against Haider under Va. Code §13.1-1035; only a member or the LLC itself would be deemed eligible to do so. Plaintiff proceeded to win judgment (against MISI only) for $395,428.70 on Nov. 18, 2011. No appeal was filed.
After extensive debtor interrogatories and other post-judgment discovery, plaintiff brought two new actions in 2012. Plaintiff first served a garnishment summons on Haider as garnishee, alleging that he was the recipient of illicit LLC distributions and fraudulent conveyances from MISI, and seeking to have those repaid to MISI and therefore, to plaintiff as judgment lien creditor (that is, the garnishment sought to assert MISI’s rights under § 13.1-1035 as well as other claims). Plaintiff also filed a complaint, naming Haider and two new LLCs he had formed as defendants, repeating the judgment creditor claims but also pursuing direct actions for fraudulent and voluntary conveyances and other related causes of action. After the two 2012 suits were consolidated by agreement, Haider and his new LLC’s demurred, claiming res judicata due to his dismissal from the first case. The circuit court initially granted the demurrer as to all parties, but the Supreme Court substantially reversed upon plaintiff’s appeal. See Raley v. Haider (VLW 013-6-062).
Upon remand, the case was tried before Judge Joanne Alper, sitting as a substitute judge in Fairfax County. Plaintiff’s case, challenging numerous transfers or groups of transfers, was presented almost exclusively using the defendant’s discovery responses (especially extensive requests for admissions), as well as transcripts from past testimony of Haider and his brother (who handled all his finances for him) from the first trial, the debtor interrogatories and various depositions. Plaintiff’s case was presented in a little over two hours. The defense case, which largely sought to present new legal theories in contradiction to previously served answers to requests for admissions, was largely stymied when plaintiff’s objections were repeatedly sustained.
The court found Haider’s new LLCs liable for extensive fraudulent conveyances received. Though Alper noted that Haider himself had controlled those transactions, he was not subject to the fraudulent conveyance claim at trial due to certain aspects of the Supreme Court’s 2013 ruling. But Haider was found personally liable on the garnishment claim, through which plaintiff had asserted MISI’s rights under Va. Code § 13.1-1035. No punitive damages were awarded, but the court did award 100 percent of attorney’s fees and other legal expenses claimed against the two defendant LLCs, including an allowance to cover either the defense of a potential appeal or the pursuit of further post-judgment collection actions. The court also granted plaintiff’s request for imposition of a constructive trust against land purchased by one of the LLCs using MISI funds.
Following entry of judgment, defendant paid the amount awarded in full in exchange for a consent order vacating the judgment and dismissing the case agreed.[15-T-008]
Type of action: Contract – fraudulent conveyances
Injuries alleged: Non-payment of income distributions due to contract employee physician, with later fraudulent conveyances and illicit LLC distributions in an attempt to evade an initial judgment
Name of case: Raley v. Haider
Court: Fairfax County Circuit Court
Case nos.: 2012-4243 and 2012-7905 (consolidated)
Tried before: Judge
Judge: Joanne Alper
Date resolved: Oct. 31, 2014
Special damages: Originally $395,428.70 in principal; interest, costs and attorney’s fees ultimately accumulated
Verdict or settlement: Verdict
Attorneys for plaintiff: Brad Marrs and Patrick Henry, Richmond
Attorneys for defendant: Sae Lee and Mike Meier, Fairfax