Dowell v. Dennis
2000 OK 29, 998 P.2d 206, 2000 OK CIV APP 29 (2000)
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Rule of Law:
A creditor, who is a stranger to a divorce proceeding, may challenge a property division made pursuant to the divorce decree as a fraudulent transfer under the Uniform Fraudulent Transfer Act (UFTA). Such a challenge is a permissible exception to the general rule prohibiting collateral attacks on final judgments.
Facts:
- On December 8, 1998, Jerry Dowell obtained a $300,000 jury verdict against Kenneth Ray Boyer, making Dowell a creditor of Boyer.
- Two days later, on December 10, 1998, Boyer's wife, Tex Ann Dennis, filed a petition for divorce against Boyer.
- On December 30, 1998, a divorce decree was entered, incorporating an agreed property division between Dennis and Boyer.
- Dowell alleged that this agreed property division transferred substantially all of Boyer's assets to Dennis.
- Dowell further alleged that Boyer did not receive a reasonably equivalent value for the transfer and was either insolvent at the time or became insolvent as a result, preventing Boyer from satisfying the judgment.
Procedural Posture:
- Jerry Dowell filed a petition in the trial court against Tex Ann Dennis and Kenneth Ray Boyer.
- Dowell's petition alleged the property division in the defendants' divorce decree was a fraudulent transfer under the UFTA and sought to avoid the transfer to satisfy his judgment against Boyer.
- Dennis and Boyer raised the affirmative defense that Dowell's suit was an impermissible collateral attack on a final divorce decree.
- The trial court granted summary judgment in favor of Dennis and Boyer, ruling that Dowell's claim was an impermissible collateral attack on a divorce decree.
- Dowell, as the appellant, appealed the trial court's grant of summary judgment to the Oklahoma Court of Civil Appeals.
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Issue:
Does a creditor's lawsuit under the Uniform Fraudulent Transfer Act (UFTA) to avoid a property division made pursuant to a divorce decree constitute an impermissible collateral attack on that decree?
Opinions:
Majority - Buettner, J.
No. A creditor's claim under the UFTA to avoid a property transfer made pursuant to a divorce decree is not an impermissible collateral attack. A stranger to a judgment whose pre-existing rights have been adversely affected by that judgment may attack it in a later proceeding, especially on the grounds of fraud. The court reasoned that Dowell was a 'stranger' to the divorce proceeding, as he was not a party nor in privity with a party, and therefore could not be bound by its terms. Furthermore, a claim under the UFTA is an allegation of fraud, which is a well-established exception to the rule against collateral attacks. The court noted that while a divorce decree may be equitable as between the spouses, it does not represent a determination that the agreement perpetrates no fraud upon a third-party creditor whose rights accrued before the decree was entered.
Analysis:
This decision clarifies that a divorce decree does not serve as an absolute shield against fraudulent transfer claims brought by third-party creditors. It establishes that the legal principle of finality in judgments must yield to the protections afforded to creditors under the UFTA, particularly when a creditor was not a party to the original action. This ruling prevents parties from using an agreed divorce settlement as a tool to fraudulently convey assets beyond the reach of those with pre-existing claims. The case reinforces the due process principle that a person cannot be bound by a judgment in a proceeding to which they were not a party and had no opportunity to be heard.
