Judgment Creditors Can go After Some Assets Transferred to Non-Debtor Spouse in Divorce Judgment

In Estes v Titus (MSC Docket No. 133098), a woman brought a wrongful death suit against the man who killed her husband. She obtains a judgment but when it came time to collect the wrongful death judgment, the man was in prison for the murder with no assets (because he had transferred all of his assets to his wife when they divorced after the wrongful death suit began).

The wrongful death judgment creditor tried to intervene in the divorce action. The Supreme Court agreed with the trial court that third parties cannot intervene in divorce judgments. She then initiated a supplemental proceeding in the wrongful death case, alleging that the husband fraudulently transferred property to his ex-wife to avoid judgment creditors. She also tried to bring in the murderer’s ex-wife into the UFTA action so that she could collect her judgment from the property that had been transferred to the murderer’s ex-wife in the judgment of divorce. The trial court would not allow the wrongful death judgment creditor to pursue her UFTA claim against the ex-wife. The Supreme Court ruled - with a caveat - that a property division in a divorce could be the subject of an UFTA action. The caveat is that if the parties held the property as tenants by the entirety when they were married, then the judgment creditor could not go after those assets transferred in the divorce judgment.

UPDATE:

On February 24, 2023, after nearly 21 year, Jeff Titus was released from prison after a judge threw out his murder convictions under an agreement between the attorney general’s office and the Innocence Clinic at University of Michigan law school.