The dispute
in Klein v. Weidner stemmed from Defendant's purchasing and transferring
of real estate and a limited liability company to himself and current wife as "tenants
by the entireties" to evade a $548,797 "unpaid child and spousal
support judgment" while telling Plaintiff ex-wife she'd never see "a
red cent" from him.
The Third
Circuit unanimously affirmed the trial court's holding that Defendant pay both $548,797
in back child and spousal payments and $548,797 in punitive damages due to his
outrageous fraudulent transfers conduct.
The Third
Circuit held that "although the Act did not explicitly authorize punitive
damages, its 'remedies of creditors' section contains a critical 'catch-all'
provision - -§5107(a)(3)(iii) - - expressly providing that a creditor may
obtain 'any other relief the circumstances may require.'" 2013 WL 4712752 p 9.
The Third
Circuit held that because Defendant presented "an example of outrageous
and intolerable behavior that punitive damages are designed to punish and deter",
"where [the] plaintiff can show outrageous conduct, coupled with a
fraudulent transfer, a court may award punitive damages" under the Act. Id.
By
authorizing recovery of punitive damages under the Act, the Klein v. Weidner
opinion will be spectacularly helpful for judgment creditors.
Previously,
other than paying what they already owed, little leverage existed to prevent shifty judgment debtors from fraudulently
transferring assets.
By
imposing harsh consequences for fraudulently transferring assets and increasing
the focus on the wrongdoer's shenanigans, Klein v. Weidner gives the Act
teeth, fortifies judgment creditors' leverage, and provides incentive for judgment
debtors not to hide assets.
