## Facts

- Rhina Mejia had a child with Danilo Reed; paternity was established and Danilo was ordered to pay child support.
- Shortly after the initial support order, Danilo’s spouse, Violeta Reed, filed for dissolution.
- The next day, Danilo and Violeta executed a marital settlement agreement (MSA) dividing marital property.
- Under the MSA, Danilo transferred his interest in jointly held real property to Violeta and allocated other assets and debts between them.
- Mejia alleged the MSA transfer was made to prevent collection of child support and sought to reach the transferred real property.

## Issues

1. Whether the Uniform Fraudulent Transfer Act (UFTA) applies to property transfers made under a marital settlement agreement.
2. Whether a debtor may be deemed “insolvent” for UFTA constructive-fraud purposes by treating the discounted value of future child-support obligations as a present “debt” under the insolvency test.

## Decision

- The court held that UFTA applies to transfers made pursuant to marital settlement agreements; such transfers are not categorically exempt from fraudulent-transfer scrutiny.
- The court held that the discounted value of future child-support obligations should not be counted as “debts” when determining insolvency under the UFTA constructive-fraud insolvency standard.
- The court reversed the Court of Appeal in part on the constructive-fraud/insolvency theory and remanded for further proceedings, leaving potential actual-intent fraudulent-transfer claims to be litigated.

## Legal Principles

- UFTA covers “any transfer made or obligation incurred by a debtor,” and this scope includes property transfers effected through marital settlement agreements.
- A marital property division may constitute a fraudulent transfer as to creditors, including support creditors, when the statutory elements are met.
- UFTA recognizes actual-intent fraudulent transfer claims (intent to hinder, delay, or defraud) and constructive-fraud claims (transfer for less than reasonably equivalent value while insolvent).
- For constructive-fraud insolvency under the applicable UFTA standard, future child-support obligations generally are not treated as present debts because they are ordinarily satisfied from future earnings rather than liquidation of existing assets.

## Conclusion

Transfers under marital settlement agreements are subject to UFTA, but a support creditor cannot establish UFTA insolvency for constructive fraud by capitalizing and discounting future child-support obligations; the case was remanded for further proceedings under the corrected insolvency approach and any remaining actual-intent theory.


Mejia v. Reed, 74 P.3d 166 (Cal. 2003)