Foreign Judgments and Community Property - A Moving Target

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Clients, husband and wife and longtime residents of Arizona, present themselves in your office with a default judgment entered against the husband in a foreign state. They ask whether the judgment is enforceable against their community property in Arizona. They relate to you that the wife was not joined in the foreign lawsuit and that, if she had been served and given the opportunity to defend, would have taken the position that the underlying debt was invalid.

Relying on the holding of Spudnuts v. Lane[1]and its progeny, you inform the clients that they have nothing to worry about, as the judgment does not bind their community.

Sometime later, you receive a communication from the creditor's counsel, who informs you that, under recent Ninth Circuit law, the judgment is enforceable against your clients' community assets-including the wife's earnings-and that her only basis for defense is to show that the husband was not acting for the community.

Is opposing counsel correct? And, if so, how can that result be squared with the Arizona cases, including Spudnuts, that appear to dictate a contrary result and have never been overruled? And how can that result be squared with the recent decision of the Court of Appeals, Division One, in Rackmaster v. Maderia,[2] which refused to permit a creditor to enforce a foreign judgment, entered against one spouse, against a married couple's community assets in Arizona?

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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