In an opinion officially released on August 30, 2023, the United States Court of Appeals for the Second Circuit upheld a default judgment obtained by Z&Z attorneys Matthew Beatman, James Moriarty, and John Cesaroni to recover certain fraudulent transfers for their client.  In Mirlis v. Greer, No. 21-202, 2023 U.S. App. LEXIS 22938 (2d Cir. Aug. 30, 2023), the Second Circuit agreed with the arguments of Attorneys Beatman, Moriarty, and Cesaroni that, under the facts of the case, where a non-debtor spouse (wife) withdrew funds from a bank account jointly owned by a debtor spouse (husband) and wife, and then, wife deposited the funds into an account only in her name, such a transfer was fraudulent and could be recovered by husband’s creditor, Z&Z’s client.

   In a decision that appears to be the first decided by any appellate court on the issue, the Second Circuit held that the Connecticut Supreme Court would conclude, under the broad terms of Connecticut’s fraudulent transfer statute (CUFTA), that the withdrawals from a joint account by a non-debtor were transfers by a debtor subject to recovery by a creditor even if deposits made by the debtor-husband into the account were assumed to be gifts to the non-debtor-wife.  Moreover, the Second Circuit upheld the District Court’s sanction of default judgment against the defendant wife where she repeatedly and consistently failed to comply with her discovery obligations and court orders.

A copy of the Second Circuit’s opinion is found here:

https://www.ca2.uscourts.gov/decisions/isysquery/c54cd790-f127-438b-8b4c-f36dfb21b5c9/1/doc/21-202_opn.pdf#xml=https://www.ca2.uscourts.gov/decisions/isysquery/c54cd790-f127-438b-8b4c-f36dfb21b5c9/1/hilite/