Mejia v. Reed

Danilo Reed (defendant) and Violeta Reed were married. In 1994, Danilo had an affair with Rhina Mejia (plaintiff). In February 1995, Danilo and Rhina had a child together. In May 1995, Violeta filed for divorce from Danilo. Danilo and Violeta entered into a marital settlement agreement (MSA). Danilo conveyed his interest in the couple’s real estate to Violeta. Violeta conveyed her interest in Danilo’s medical practice to Danilo. Danilo was solely responsible for any child-support obligations owed. In 1997, Danilo deserted his medical practice, moved in with his mother, and generated little income. During this time, Rhina had a pending paternity suit against Danilo. Rhina filed suit claiming that the MSA was a fraudulent transfer of property between Danilo and Violeta. Danilo filed a motion for summary judgment, relying on Rhina’s failure to prove that there was intent to defraud Rhina when the transfer was made. There was conflicting evidence regarding the value of Danilo’s medical practice. The trial court presumed that the Uniform Fraudulent Transfer Act (UFTA) applied to the MSA but granted Danilo’s motion for summary judgment because there was no evidence of intent to defraud. Rhina appealed. The court of appeals held that the UFTA applied to marital settlement agreements. The court of appeals reversed the trial court’s decision because there were genuine issues of material fact. Danilo petitioned the Supreme Court of California for review. Due to a split of authority among the courts of appeals, the Supreme Court of California granted review.