Dowell v. Dennis

• Decision Date: 03 December 1999
• Docket Number: No. 93,274.,93,274.
• Parties: Jerry DOWELL, Plaintiff/Appellant, v. Tex Ann DENNIS and Kenneth Ray Boyer, Defendants/Appellees.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

998 P.2d 206

2000 OK CIV APP 29

Jerry DOWELL, Plaintiff/Appellant, v. Tex Ann DENNIS and Kenneth Ray Boyer, Defendants/Appellees.

No. 93,274.

Court of Civil Appeals of Oklahoma, Division No. 3.

December 3, 1999.

Order Denying Rehearing and Motion to Dismiss January 13, 2000.

Publication of Rehearing Order Directed April 28, 2000.

Scott G. Robelen, Fulkerson & Fulkerson, Oklahoma City, Oklahoma, For Plaintiff/Appellant.

Brent W. Pitt, Oklahoma City, Oklahoma, For Defendant/Appellee Tex Ann Dennis.

Gary L. Levine, Derryberry, Quigley, Solomon & Naifeh, Oklahoma City, Oklahoma, For Defendant/Appellee Kenneth Ray Boyer.

Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 3. BUETTNER, Presiding Judge:

¶ 1 Plaintiff/Appellant Jerry Dowell appeals from summary judgment entered in favor of Defendants/Appellees Tex Ann Dennis and Kenneth Ray Boyer. The trial court granted Dennis' and Boyer's motion for summary judgment based on the determination that Dowell's action, to avoid as a fraudulent transfer the property division made pursuant to Boyer's and Dennis' divorce decree, constituted an impermissible collateral attack on a divorce decree. Because we find the trial court erred as matter of law, we reverse and remand.

¶ 2 Dowell's attack on the divorce decree was generated by a $300,000.00 verdict Dowell obtained against Boyer December 8, 1998.¹ For facts supporting alleged fraudulent transfer, Dowell points to a petition for divorce which Dennis filed against Boyer December 10, 1998,² and a decree of divorce, including an agreed property division, entered December 30, 1998. Dowell alleged that the property transfer reflected in the agreed property division was made without receiving a reasonably equivalent value and that Boyer was insolvent at the time of the transfer, or became insolvent as a result of the transfer. Dowell also alleged that the transfer was made to an insider³ for an antecedent debt.⁴ ¶ 3 On January 29, 1999, Dowell filed his petition, application for injunction, application for attachment and application for writ of execution in which he alleged that the property division agreement between Boyer and Dennis amounted to a fraudulent transfer, pursuant to the Uniform Fraudulent Transfer Act,⁵ which must be avoided to the extent necessary to satisfy his judgment.⁶ Dennis and Boyer each raised affirmative defenses including a lack of standing to challenge the divorce decree, and res judicata/collateral estoppel.

¶ 4 Dennis filed a motion to dismiss April 22, 1999,⁷ arguing that Dowell's petition amounted to an impermissible collateral attack on the divorce judgment. Dennis cited the general rule in Oklahoma that a collateral attack may only be made where a judgment is void on the face of the judgment roll, citing Nilsen v. Ports of Call Oil Co., 1985 OK 104, 711 P.2d 98.

¶ 5 Dowell filed his response to the motion to dismiss along with a motion for summary judgment May 11, 1999.⁸ Dowell argued that Dennis and Boyer had entered a waiver divorce in which the court does not consider the equity of the agreed property division. Dowell further urged that the settlement agreement transferred "substantially all" of Boyer's property to Dennis. Dowell argued further that the transfer was fraudulent under 24 O.S.1991 § 117,⁹ and that accordingly, the divorce decree was void on its face. Dowell concluded that a divorce decree cannot validate an otherwise fraudulent transfer.

¶ 6 Dennis and Boyer responded to Dowell's motion for summary judgment May 24, 1999 and May 26, 1999, respectively. Dennis and Boyer each proposed disputed issues of fact. They argued that the trial court in the divorce proceeding ruled that the property settlement was equitable and that there was no evidence that the decree transferred substantially all of Boyer's assets to Dennis. Dennis attached the divorce decree to her response. Boyer also argued that a property settlement agreement that has become part of the divorce decree is no longer contractual, but is part of the court's judgment, citing Acker v. Acker, 1979 OK 67, 594 P.2d 1216, 1219. Boyer also argued that Dowell failed to submit sufficient evidence to support his bid for summary judgment.

¶ 7 The trial court order of May 28, 1999 denied Dennis' motion to dismiss and granted Dennis' and Boyer's motions for summary judgment. In the order, the trial court gave the following reason for its decision: "Plaintiff's claim is an impermissible collateral attack on a Divorce Decree."¹⁰ The trial court did not address whether there were disputed issues of material fact. Accordingly, although cast as a grant of summary judgment, the trial court in essence dismissed Dowell's claim on a question of law.

¶ 8 On appeal, Dowell argues that the trial court erred (1) in determining that the transfer of property from Boyer to Dennis as part of the divorce decree was exempt from the provisions of the UFTA, (2) in finding that the transfers did not violate the provisions of the UFTA, and (3) in determining that the UFTA does not apply to a transfer of property made under a divorce decree. We address only the issue of whether a plaintiff creditor may attack a final divorce decree as a fraudulent transfer under the UFTA.

¶ 9 We note two cases from other jurisdictions with facts similar to those in the instant case. Greeninger v. Cromwell, 140 Or.App. 241, 915 P.2d 479 (1996) involved summary judgment granted to the divorced defendants in the plaintiff's claim seeking to set aside alleged fraudulent transfers made as part of an agreed property settlement in the defendants' divorce proceeding. In Greeninger, the defendant husband was convicted of raping the plaintiff. The plaintiff then filed a civil action for sexual battery against the defendant husband. After the plaintiff filed her claim, the defendant wife filed her petition for divorce against the defendant husband in another county. A jury returned a verdict in favor of the plaintiff in her sexual battery case, but a new trial was ordered because of a procedural error. In the agreed divorce decree, "essentially all" of the husband defendant's real and personal property was transferred to the defendant wife.

¶ 10 The plaintiff then filed her claim that the agreed property division was void as to her because it was made with the intent to hinder, delay or defraud the plaintiff in her efforts to collect a judgment. Another jury later awarded the plaintiff a $200,000.00 judgment against the defendant husband in the plaintiff's sexual battery case. The trial court granted summary judgment to the defendants based on the fact that the plaintiff's fraudulent transfer case constituted a collateral attack on another county's divorce decree. The Oregon Court of Appeals reversed, recognizing that the plaintiff's claim was a collateral attack because it was intended to impeach the effect of the decree as to her, rather than a proceeding initiated "for the express purpose of annulling, correcting, or modifying" the divorce decree. The appellate court concluded that jurisdiction over a fraudulent conveyance action is not limited to the same court which entered the challenged judgment. The court remanded the case to the trial court which again granted summary judgment to the defendants, holding that the plaintiff's fraudulent conveyance action, filed in a county other than that which entered the divorce decree is a collateral attack. The opinion in Greeninger follows the appeal of the second entry of summary judgment in favor of the defendants.

¶ 11 The court determined that collateral attacks on a divorce decree are permissible for extrinsic fraud, which it noted had been defined as "collateral acts not involved in the fact finder's consideration of the merits of the case." Id. at 481. The court noted that the plaintiff had alleged that the defendant husband transferred all of his interest in the defendants' assets to the defendant wife to avoid paying the judgment entered in favor of the plaintiff. The court concluded that the plaintiff's allegations would not necessarily be involved in the determination of a just and proper property settlement, so that the allegations, if proved, could constitute extrinsic fraud, making a collateral attack permissible. The court footnoted the following passage from Kardynalski v. Fisher, 135 Ill.App.3d 643, 482 N.E.2d 117, 90 Ill.Dec. 410, (1985).

Special scrutiny is applied to transfers between spouses where the debtor spouse is thereby rendered insolvent and unable to satisfy the claims of his creditors. * * * The incorporation of the parties' agreement into a judicial decree does not alter this result. While judicial approval in such circumstances may represent a determination that the agreement is fair and equitable as between the parties to the divorce, it does not represent a determination that the agreement perpetrates no fraud upon the creditors of one spouse, particularly where the claims of the creditors are not made known to the court or provided for in the decree.

The Oregon Court of Appeals reversed and remanded the second grant of summary judgment based on its holding that the plaintiff's allegations may constitute extrinsic fraud, so that a collateral attack on the divorce decree may be permissible.

¶ 12 The case of Glasscock v. Citizens National Bank, 553 S.W.2d 411 (Tex.Civ. App.1977) also involved facts similar to the instant case. In 1973, Mr. Glasscock deeded 3,270 acres of community property to his wife to reimburse her for advances made to Mr. Glasscock out of the wife's separate property. Mrs. Glasscock filed for divorce in May 1974 and the divorce decree was filed in October 1974. The Glasscocks testified that, other than the deeded real property mentioned above, there was no property settlement reached. Meanwhile, in August 1974, the creditors of Mr. Glasscock obtained a judgment for $32,951.12. The creditors sued to have the conveyance of...