Vaughn v. Graves

In a matter of first impression, the issue before the Supreme Court was whether proceedings in aid of execution or judgment collection pursued within an action under the Uniform Fraudulent Transfers Act (UFTA) must be preceded by registration of a foreign judgment in the county of the district court from which execution issued. In 2002, the United States Bankruptcy Court for the Western District of Oklahoma entered summary judgment against Debtors and denied a discharge of the debt to Bank based on Debtors' fraudulent concealment of assets. The Bank initiated various collection procedures against Debtors including garnishment and a hearing on assets in an attempt to satisfy the two judgments. The bankruptcy judgments were registered in Payne County, the location of Debtors' homestead, in July, 2002. Meanwhile, the UFTA action continued to proceed in Oklahoma County against Debtors' relatives. In September, 2007, the trial court entered an order in the UFTA action which determined that a portion of Debtors' income had been fraudulently diverted to a sham corporation for the purpose of avoiding garnishment of that income. However, it was not until November, 2007, that Bank's second amended petition in the UFTA action added Debtors and the corporation as defendants. In December, 2009, a contempt trial against Debtors generated an order filed 2010. That order expressly withdrew and superseded the September, 2007, order. It found one of the Debtors guilty of contempt for failure to obey the 2007 order. In April, 2011, Bank sought contempt to enforce the 2010 order. On August 18, 2011, Bank registered one of the bankruptcy judgments, and one for costs and attorney fees, in Oklahoma County. On March 15, 2012, a trial judge entered an order on Bank's motion to enforce the 2010 contempt order. The trial court found open and wilful violations of the withdrawn 2007 order as well as the 2010 order. The trial court acknowledged that Bank had failed to comply with the statutory requirements of registration of foreign judgments in the county of the court which issued execution, but it determined that those requirements did not apply in a UFTA action. Debtors brought then brought this original proceeding asserting the trial court's lack of jurisdiction to impose the relief granted to Bank. Upon review, the Supreme Court concluded that the belated registration of the foreign judgment in 2011 did not authorize the trial court to retroactively enforce orders which were void for lack of jurisdiction. "When a judgment was registered in Oklahoma County in 2011, the trial court did not retroactively acquire jurisdiction to enforce the provisions of the 2007 and 2010 orders that granted remedies in the nature of execution, including contempt, and threatened incarceration for failure to pay the judgments. The 2011 judgment registration did not make the void portions of the prior orders any less so." Furthermore, the Court held that a trial court may not take judicial notice of findings of fact and conclusions of law encompassed within a void judgment. New findings of fact and conclusions of law regarding any attempt to enforce the bankruptcy judgments are required. View "Vaughn v. Graves" on Justia Law