Lavenhar v. First American Title Insurance Co. (In re Lavenhar)

Citation:
Lavenhar v. First American Title Insurance Co. (In re Lavenhar), Case No. 14-1391 (10th Cir. July 29, 2014). Published.
Tag(s):
Ruling:
A chapter 7 trustee has the sole power to bring a fraudulent conveyance action but a creditor is a party in interest entitled to object to another creditor’s claim.
Procedural context:
The Bankruptcy Court lifted the automatic stay allowing appellee to litigate in state court whether divorce decree was obtained by fraud but prohibiting it from litigating its fraudulent conveyance action. The District Court affirmed. On appeal, the 10th Circuit independently reviewed the Bankruptcy Court’s decision and affirmed. Determining whether lifting the automatic stay was appropriate is a question of law reviewed de novo.
Facts:
Appellant is the ex-wife of debtor. Prepetition, appellee sued debtor in state court and obtained a judgment. While the lawsuit was pending, debtor and appellant divorced and the divorce decree provided that debtor was to pay monthly support payments and that the marital house has always been and would remain the property of appellant’s trust. Appellee sued debtor and appellant to collect the judgment and asserted that the transfer of debtor’s interest in the house to appellant was a fraudulent conveyance. Appellee also intervened in the divorce case asserting that the divorce proceeding was a fraud on the court. Debtor filed bankruptcy and appellee sought stay relief to litigate its fraudulent conveyance action which was denied. Appellant filed a priority claim for domestic support and appellee again sought stay relief to pursue its intervention action in the divorce case to determine whether the domestic support obligation was obtained by fraud.
Judge(s):
Briscoe, Murphy, Gorsuch (Murphy)

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