Canty v. Otto: The Court dated the claim for fraudulent transfer back to the day Ms. Smith was murdered, which preceded any transfer.
By Sarah Stark Oldham, divorce lawyer
The Connecticut Supreme Court also ruled on a case full of sex, lies, and murder in Canty v. Otto, 304 Conn. 546 (2012). The plaintiff in Canty was the administratrix of the estate of Shamaia Smith. Ms. Smith was an exotic dancer and prostitute. Mr. Otto had been sexually involved with her, she disappeared, and her remains were found on property co-owned by Mr. Otto with his son. Shortly after that revelation, Mr. and Mrs. Otto undertook together to transfer various motor vehicles and residential property into Mrs. Otto’s name. The wife then contacted a divorce lawyer, who promptly commenced a dissolution of marriage action, including lis pendens against property in Mr. Otto’s name.
Meanwhile, the executrix of Ms. Smith’s estate obtained a prejudgment remedy in a wrongful death action and moved to intervene in the divorce case, but was denied. Her appeal from that denial was dismissed. The divorce judgment then entered, and the court ruled, giving Mrs. Otto all of the real property while what Mr. Otto received was negligible. The executrix again appealed from the decision denying her the right to intervene in the divorce case, and again the Appellate Court dismissed the appeal. Meanwhile, Mr. Otto was convicted of the murder of Ms. Smith. In the wrongful death action, a hearing was held wherein the judge established that the entire divorce between the Ottos was a sham concocted to avoid having to pay anything to Ms. Smith’s estate in the wrongful death action. This action by the executrix against the defendant under the Uniform Fraudulent Transfer Act followed, along with another successful application for prejudgment remedy from which this appeal was taken.
The Supreme Court found that the plaintiff had standing under the Uniform Fraudulent Transfer Act. The Court was persuaded that many states had determined that a dissolution judgment may constitute a transfer of assets under the Act. The Court dated the claim for fraudulent transfer back to the day Ms. Smith was murdered, which preceded any transfer. The Connecticut Supreme Court found particularly compelling the California Supreme Court’s public policy reasoning in Mejia v. Reed, 31 Cal 4th 657, 669 (2003), which states in consideration of the Act: “[i]n view of this overall policy of protecting creditors, it is unlikely that the [l]egislature intended to grant married couples a one-time-only opportunity to defraud creditors by including the fraudulent transfer in [a marital separation agreement].” Id. at 668.
The Court held that this was not a collateral attack by the plaintiff, who had never had a chance to be heard in the original litigation. It was significant that the plaintiff was not trying to set aside the divorce decree. She was instead merely seeking to attach certain assets related to that divorce decree.
Sarah Stark Oldham is a divorce lawyer with Rutkin, Oldham & Griffin, L.L.C. and a Fellow of both the International and American Academy of Matrimonial Lawyers.
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