W/F Investment Corp. v. Neal CA4/3

FACTS

In 1987 Russell Diehl and his wife, Diane G. Diehl, transferred their interest in a residence to Diehl‟s mother the day after suffering a judgment for $37,500 in

2 1 favor of William F. Quirk, Jr. Diehl‟s mother subsequently reconveyed the property to Diehl and his wife. In 1988 Diehl was served with an order to appear for a judgment- debtor exam, and within days Diehl and his wife again conveyed the residence to Diehl‟s mother. Quirk subsequently filed a complaint “To Set Aside a Fraudulent Conveyance” against Diehl‟s mother. The complaint prayed for a judgment “[t]hat said fraudulent conveyance be set aside to the extent necessary to satisfy plaintiff‟s claim.” The trial court found that Diehl had transferred the residence with the intent to defraud Quirk, his creditor (Diehl‟s mother, on the other hand, did not have fraudulent intent). Accordingly, the court entered judgment, stating the transfer “having been found to have been made with the actual intent to defraud plaintiff, is hereby declared to be set aside” (we refer to this as the “set-aside judgment”). The judgment was recorded in 1991. In 1993 Diehl suffered an unrelated judgment in favor of Westerly…