NJ & CT News

Thomas Baldwin of Budd Larner said that the message the court was sending to lawyers was that “we're really not protected” by the New Jersey Attorney's Lien Act, N.J.S.A. 2A:13-5. Although the parties were warned by the court more than once that their litigious behavior was causing them to waste away their children's educational funds, Baldwin said they ignored the warnings, leaving their attorneys holding the bag. “The lawyers basically financed all of this,” he said ' referring to the children's college account, the support arrears and the wife's education fund.

CONNECTICUT

Divorce Cannot Shield Assets Fraudulently Transferred

Connecticut's Supreme Court has determined that, where evidence indicates a man who knew he was suspected of murder fraudulently transferred most of his assets to his wife, from whom he was eventually divorced, the estate of the victim may seek tort damages from the assets transferred. The defendant in Canty v. Otto, 304 Conn. 546 (5/1/12) is the ex-wife of Kenneth Otto Sr., who in November 2008 was found guilty of murdering a woman with whom he had been involved. The defendant ex-wife learned of the authorities' suspicion that her husband was involved in the murder a few weeks prior to April 13, 2007, when she transferred $8,000 from a bank account held jointly by the couple to an account in her name alone. On April 17, 2007, the couple transfered title in a jointly owned vehicle and a residential property so that only the defendant wife was listed as owner. Within the following week, the wife commenced a dissolution proceeding, which was initiated when her husband was served in her attorney's office reception area, where he had been waiting to receive the papers. On May 9, 2007, the estate of the murder victim commenced a civil wrongful death action against the husband, then sought to intervene in the divorce proceeding. That request was denied. On June 3, 2008, after a trial, the Ottos were divorced. In the dissolution decree, the wife received all of the real property, and the husband took only enough to pay his attorney's fees.

Thereafter, the plaintiff administratrix of the murder victim's estate applied to the court seeking access to the assets moved by the husband to his wife through the divorce action and other methods. The defendant ex-wife moved to dismiss, contending that the plaintiff was a creditor of her debtor ex-spouse, not of her, and so could not collect the debt from her by bringing a claim under the Uniform Fraudulent Transfer Act, Connecticut General Statutes ' 52-552a, et seq. The trial court denied the motion and found for the plaintiff.

Relying on the elements of ' 52-552e (b), the State's high court affirmed, after finding the trial court had before it sufficient evidence for a probable cause finding that, although the wife officially commenced the dissolution action, it was in fact commenced by Kenneth Otto with actual intent to fraudulently transfer his assets to the defendant wife. “First,” noted the Supreme Court, “the transfer of his property to the defendant ' his former wife with whom he continued to reside ' constituted transfers to an insider.” In addition, the transfers ostensibly left him penniless, save for the money he needed to pay his attorney, yet he continued to live in and control the assets transferred to his wife until he was jailed following his murder conviction.

The defendant's claim that the trial court lacked jurisdiction was also to no avail. She claimed that the court could offer no relief to the murder victim's estate, as it could not collaterally attack the dissolution court's holdings. The court agreed with the plaintiff administratrix, however, that her claim under Fraudulent Transfers Act was a challenge not to the divorce, but to the transfer of assets. “Therefore,” stated the court, “in view of the fact that the plaintiff did not have the opportunity to litigate this issue in the context of the dissolution action, and is not attempting to set aside the dissolution judgment, we conclude that the trial court properly determined that this action does not constitute an impermissible collateral attack on the judgment of the trial court.”

NEW JERSEY

Children First: Lawyers Go to the End of the Line

A New Jersey appeals court has upheld the decision of a family court judge to earmark funds for a divorced couple's children's college fund, even though that left the marital estate without enough money to pay one party's divorce attorneys. The precedential decision delivered in Sauro v. Sauro, A-2735-09, was prompted by an appeal by one of the wife's attorney firms, Budd Larner of Short Hills, whose representatives styled the family court decision as a “misguided” attempt to protect the children from their parents' folly in so vigorously litigating their divorce that they drained the family's coffers. In fact, by 2009, when a $122,664 charging lien was imposed against the wife in favor of Budd Larner, the remaining marital property was valued at just under $325,000. But although the appeals court agreed that the parents overzealously fought one another during their 2003-2010 court battle, it also concluded that “Budd Larner's contractual rights, as reflected in the retainer agreement with plaintiff, do not abrogate or limit the Family Part's overriding obligation to act in the best interest of the children in this case.” Thus, the court affirmed Warren County Superior Court Judge John Coyle Jr.'s allocation of $200,000 to the children's college fund. After other arrears were paid and $12,000 set aside for the wife's education, only $48,450 remained for equitable distribution, of which Larner was allotted just under $40,000.

Thomas Baldwin of Budd Larner said that the message the court was sending to lawyers was that “we're really not protected” by the New Jersey Attorney's Lien Act, N.J.S.A. 2A:13-5. Although the parties were warned by the court more than once that their litigious behavior was causing them to waste away their children's educational funds, Baldwin said they ignored the warnings, leaving their attorneys holding the bag. “The lawyers basically financed all of this,” he said ' referring to the children's college account, the support arrears and the wife's education fund.

CONNECTICUT

Divorce Cannot Shield Assets Fraudulently Transferred

Connecticut's Supreme Court has determined that, where evidence indicates a man who knew he was suspected of murder fraudulently transferred most of his assets to his wife, from whom he was eventually divorced, the estate of the victim may seek tort damages from the assets transferred. The defendant in Canty v. Otto , 304 Conn. 546 (5/1/12) is the ex-wife of Kenneth Otto Sr., who in November 2008 was found guilty of murdering a woman with whom he had been involved. The defendant ex-wife learned of the authorities' suspicion that her husband was involved in the murder a few weeks prior to April 13, 2007, when she transferred $8,000 from a bank account held jointly by the couple to an account in her name alone. On April 17, 2007, the couple transfered title in a jointly owned vehicle and a residential property so that only the defendant wife was listed as owner. Within the following week, the wife commenced a dissolution proceeding, which was initiated when her husband was served in her attorney's office reception area, where he had been waiting to receive the papers. On May 9, 2007, the estate of the murder victim commenced a civil wrongful death action against the husband, then sought to intervene in the divorce proceeding. That request was denied. On June 3, 2008, after a trial, the Ottos were divorced. In the dissolution decree, the wife received all of the real property, and the husband took only enough to pay his attorney's fees.

Thereafter, the plaintiff administratrix of the murder victim's estate applied to the court seeking access to the assets moved by the husband to his wife through the divorce action and other methods. The defendant ex-wife moved to dismiss, contending that the plaintiff was a creditor of her debtor ex-spouse, not of her, and so could not collect the debt from her by bringing a claim under the Uniform Fraudulent Transfer Act, Connecticut General Statutes ' 52-552a, et seq. The trial court denied the motion and found for the plaintiff.

Relying on the elements of ' 52-552e (b), the State's high court affirmed, after finding the trial court had before it sufficient evidence for a probable cause finding that, although the wife officially commenced the dissolution action, it was in fact commenced by Kenneth Otto with actual intent to fraudulently transfer his assets to the defendant wife. “First,” noted the Supreme Court, “the transfer of his property to the defendant ' his former wife with whom he continued to reside ' constituted transfers to an insider.” In addition, the transfers ostensibly left him penniless, save for the money he needed to pay his attorney, yet he continued to live in and control the assets transferred to his wife until he was jailed following his murder conviction.

The defendant's claim that the trial court lacked jurisdiction was also to no avail. She claimed that the court could offer no relief to the murder victim's estate, as it could not collaterally attack the dissolution court's holdings. The court agreed with the plaintiff administratrix, however, that her claim under Fraudulent Transfers Act was a challenge not to the divorce, but to the transfer of assets. “Therefore,” stated the court, “in view of the fact that the plaintiff did not have the opportunity to litigate this issue in the context of the dissolution action, and is not attempting to set aside the dissolution judgment, we conclude that the trial court properly determined that this action does not constitute an impermissible collateral attack on the judgment of the trial court.”