Sturm v. Moyer: Premarital Agreements; Fraudulent Transfers

Sturm v. Moyer (Premarital Agreements; Fraudulent Transfers)

California Court of Appeal, Second District

Published Opinion, (2019) 32 Cal.App.5th 299

File Date:
Filed 2/15/2019

In July 2005, the plaintiff obtained a $600,000 judgment in bankruptcy court against the debtor, which was not dischargeable in bankruptcy. The debtor claimed to have no assets and refused to work so he could avoid paying the judgment. The debtor got married in 2014 with a premarital agreement (prenup) providing that each spouse’s respective earnings and income, and any property acquired during the marriage by either of them, would be that spouse’s separate property. Under the agreement, the parties could have a joint bank account which would be jointly owned separate property in proportion to their contributions to the account. The agreement had a sunset provision to make all income and assets acquired during marriage community property if the judgment lapsed or became unenforceable.

The judgment creditor brought an action under the Uniform Voidable Transactions Act (Civil Code section 3439 et seq., formerly known as the Uniform Fraudulent Transfer Act, or UFTA) against the judgment debtor and his wife. The creditor wanted to set aside the alleged transfer of the debtor’s community property interest in his wife’s earnings and income under the premarital agreement. The trial court sustained a demurrer to the complaint and the creditor appealed. The appellate court held that the UFTA may apply to premarital agreements in which prospective spouses agree that each spouse’s earnings, income, and property acquired during marriage, will be that spouse’s separate property. Whether the UFTA applies depends whether there was actual or constructive fraud. The sunset provision was a factor in the court’s decision because it re-characterizes the income and assets acquired during marriage to community property once the judgment lapses.

Sturm v. Moyer 2-15-19

The case listed here was not handled by Walzer Melcher unless the description states that Walzer Melcher appeared as counsel.