FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In the Matter of JENNIFER JAN 

BLEDSOE,

Debtor.

No. 07-35567

D.C. No. MICHAEL B. BATLAN, Trustee,  CV-07-06062-HO Plaintiff-Appellant,

OPINION

v.

RYAN CURTIS BLEDSOE,

Defendant-Appellee. 

Appeal from the United States District Court

for the District of Oregon

Michael R. Hogan, District Judge, Presiding

Argued and Submitted

December 9, 2008—Portland, Oregon

Filed June 25, 2009

Before: Diarmuid F. O’Scannlain, Susan P. Graber, and

Jay S. Bybee, Circuit Judges.

Opinion by Judge Graber;

Partial Concurrence and Partial Dissent by

Judge O’Scannlain

7935
COUNSEL

Peter C. McKittrick and Christopher L. Parnell, Farleigh Witt,

Portland, Oregon, for the plaintiff-appellant.

David B. Mills, Hammons & Mills, Eugene, Oregon, for the

defendant-appellee.

OPINION

GRABER, Circuit Judge:

We must decide under what circumstances a federal bankruptcy court may avoid a transfer made pursuant to a statecourt judgment dissolving the marriage of the debtor. We hold

that, under Oregon law, a party who challenges a dissolution

judgment must allege and prove “extrinsic fraud.” Following

the lead of the Fifth Circuit in Ingalls v. Erlewine (In re Erlewine), 349 F.3d 205 (5th Cir. 2003), we also hold that a dissolution judgment that follows from a regularly conducted,

contested divorce proceeding conclusively establishes “rea7938 IN THE MATTER OF BLEDSOE
sonably equivalent value” under 11 U.S.C. § 548(a)(1)(B) in

the absence of fraud, collusion, or violation of state law.

FACTUAL AND PROCEDURAL HISTORY

Debtor Jennifer Jan Bledsoe and Defendant Ryan Curtis

Bledsoe married in 1994. Defendant filed for divorce in Oregon state court in 2002. Debtor filed an appearance, and the

parties did not enter into a settlement.

In 2003, the Oregon court struck Debtor’s appearance and

entered a default judgment. The court found that Debtor had

“failed to comply with the discovery and production requirements” of Oregon law; that she had “ignored the discovery

process and that her disobedience [was] willful and in bad

faith”; that she had “failed to comply with [one of] the

Court’s order[s]”; and that she had “indicated no willingness,

despite repeated opportunity and while represented by a variety of counsel[,] to produce the documentation necessary for

a meaningful trial.” According to Trustee Michael B. Batlan,

who is seeking to avoid the transfers made pursuant to the dissolution judgment, the state-court judgment granted Defendant items valued at $93,737, while Debtor received items

valued at only $788.1

Debtor filed for bankruptcy in 2004. Thereafter, Trustee

brought an adversary action against Defendant, asserting

claims under 11 U.S.C. §§ 544(b)(1) and 548(a)(1)(B). The

bankruptcy court granted summary judgment to Defendant on

all claims, concluding:

1The dollar figures are those alleged by the Trustee. Defendant disputes

the allegedly inequitable distribution; he asserts that Debtor depleted the

marital assets during the dissolution proceedings and hid assets from him

and from the state court. Those factual disputes are not material to the

legal issues in this case. For purposes of this appeal, we assume without

deciding that Trustee’s factual assertions are correct. 

IN THE MATTER OF BLEDSOE 7939
Because [Trustee] does not allege any facts which

may constitute “extrinsic fraud” under Oregon law,

his claims under the Uniform Fraudulent Transfer

Act constitute an impermissible collateral attack

against the dissolution judgment entered by the state

court and the state law claims [which underlie the

§ 544 claims] must therefore be dismissed. Because

there are no allegations of collusion, actual intent to

defraud, or that the dissolution judgment was not

obtained pursuant to a regularly conducted proceeding under state law, the transfers made pursuant to

the dissolution judgment conclusively establish reasonably equivalent value for purposes of Bankruptcy

Code § 548(a)(1)(B).

The district court summarily affirmed, and Trustee timely

appealed.

STANDARDS OF REVIEW

We review de novo the district court’s decision on appeal

from a decision of the bankruptcy court. Johnson v. Neilson

(In re Slatkin), 525 F.3d 805, 810 (9th Cir. 2008). We review

de novo the bankruptcy court’s conclusions of law and review

for clear error its findings of fact. McDonald v. Checks-NAdvance, Inc. (In re Ferrell), 539 F.3d 1186, 1189 (9th Cir.

2008) (per curiam).

DISCUSSION

Federal bankruptcy law, like state fraudulent transfer laws,

generally allows a creditor to ask the court to void certain

transfers if the creditor can establish either actual fraud or

constructive fraud. An actual fraud theory alleges that the

debtor transferred assets within a specified period before filing for bankruptcy and that the debtor did so with a fraudulent

intent. Constructive fraud proceeds on the theory that,

although the debtor may not have had a fraudulent intent, the

7940 IN THE MATTER OF BLEDSOE
court nevertheless should void the transfer, usually because

the debtor received inadequate consideration.

In this case, Trustee makes only a constructive fraud claim.

That is, he does not argue that the dissolution judgment was

obtained in order to thwart Debtor’s creditors. He argues

instead that the transfers pursuant to the dissolution judgment

must be voided because Defendant received much more than

Debtor.

[1] Under 11 U.S.C. § 544(b)(1), a trustee “may avoid any

transfer of an interest of the debtor in property . . . that is

voidable under applicable law.” Here, Trustee argues that the

transfers made under the dissolution judgment are voidable as

fraudulent transfers under Oregon law, specifically its version

of the Uniform Fraudulent Transfer Act (“UFTA”), Or. Rev.

Stat. §§ 95.200-.310. See Kupetz v. Wolf, 845 F.2d 842, 845

(9th Cir. 1988) (“Section 544(b) of the Bankruptcy Code permits the Trustee to stand in the shoes of a creditor to assert

any state law claims that a creditor may have.”). Trustee also

argues that the transfers made under the dissolution judgment

are voidable directly under federal law, 11 U.S.C.

§ 548(a)(1)(B). Specifically, he asserts that, under

§ 548(a)(1)(B), Debtor “receive[d] less than a reasonably

equivalent value” from the dissolution judgment. We will

examine each claim in turn.

A. Section 544 Claim

[2] In Johnson v. Johnson, 730 P.2d 1221, 1222 (Or. 1986),

the Oregon Supreme Court held that a party may attack a

judgment collaterally only by alleging and proving “extrinsic

fraud.” See also id. (“Since Friese v. Hummel, 37 P. 458

([Or.] 1894) [(per curiam)], this court has recognized a distinction between extrinsic and intrinsic fraud in granting relief

from a judgment.”). “Extrinsic fraud consists of collateral acts

not involved in the fact finder’s consideration of the merits of

the case.” Id. Trustee concedes that he does not allege extrinIN THE MATTER OF BLEDSOE 7941
sic fraud, and we are bound, of course, by Johnson. See Ariz.

Elec. Power Coop., Inc. v. Berkeley, 59 F.3d 988, 991 (9th

Cir. 1995) (“When interpreting state law, federal courts are

bound by decisions of the state’s highest court.”). So, if the

extrinsic fraud requirement in Johnson applies to collateral

attacks in the form of fraudulent transfer claims under the

UFTA, the bankruptcy court did not err in dismissing Trustee’s claim under § 544.

We begin by observing that nothing in Johnson suggests

that its rule is not one of general applicability; that is, nothing

suggests that the rule would not apply to all collateral attacks

on judgments. Additionally, Trustee has failed to explain persuasively why UFTA fraudulent transfer claims would be subject to a different rule. But we need not rest there, because we

have guidance from the Oregon Court of Appeals.

[3] In Greeninger v. Cromwell, 915 P.2d 479, 481-82 (Or.

Ct. App. 1996), the court considered a UFTA fraudulent

transfer claim—identical to the one brought by Trustee here—

and held that the extrinsic fraud requirement from Johnson

applies. “In the absence of a pronouncement by the highest

court of a state, we must follow the decision of the intermediate appellate courts of the state unless there is convincing evidence that the highest court of the state would decide

differently.” Munson v. Del Taco, Inc., 522 F.3d 997, 1002

(9th Cir. 2008) (order) (alterations and internal quotation

marks omitted). Trustee argues that Greeninger was wrongly

decided, but there is little evidence—and certainly not “convincing evidence”—that the Oregon Supreme Court would

repudiate Greeninger.

According to Trustee, the Greeninger court failed to appreciate the difference between UFTA fraudulent transfer claims

and other collateral attacks. Trustee’s argument begins with

the unobjectionable observation that, generally speaking, a

party may seek avoidance of transfers under either an actual

fraud theory or a constructive fraud theory. According to

7942 IN THE MATTER OF BLEDSOE
Trustee, the Greeninger rule eviscerates the second half of

that proposition, because it disallows all claims under a constructive fraud theory.

[4] Trustee reads the Greeninger rule too broadly. A party

may not proceed under a constructive fraud theory when challenging a state-court judgment collaterally, but constructive

fraud is still a viable theory for challenging all other types of

transfers. See, e.g., Or. Rev. Stat. § 95.230(1)(b). Most constructive fraud cases do not involve transfers that have

received a judicial imprimatur, and even fewer involve transfers effected through marriage dissolution judgments. With

respect to the class of cases like this one, involving transfers

under a regularly obtained dissolution judgment following a

contested proceeding, we think that the Oregon Supreme

Court would hold, as did Greeninger, that allegations of

extrinsic fraud are required.2

2Trustee also relies on several cases that he urges support his position.

None of the cases applies Oregon law, and each is otherwise inapposite or

of no help to Trustee. 

For example, Britt v. Damson, 334 F.2d 896 (9th Cir. 1964), contradicts

Trustee’s position. There, we rejected claims premised on Washington law

and brought under the predecessor statute to § 544, because “[w]e [we]re

not aware of any Washington decision in which it was held that creditors

of a marital community which has been terminated by divorce may set

aside a property award on the basis that it was a fraudulent transfer.” Id.

at 901. 

Other cases involved a marital settlement agreement, rather than a dissolution judgment entered at the conclusion of a regularly conducted statecourt proceeding. See Beverly v. Wolkowitz (In re Beverly), 374 B.R. 221

(B.A.P. 9th Cir. 2007) (applying California law to a marital settlement

agreement), adopted, 551 F.3d 1092 (9th Cir. 2008) (order); Mejia v.

Reed, 74 P.3d 166, 174 (Cal. 2003) (same); Corzin v. Fordu (In re Fordu),

201 F.3d 693, 707-09 (6th Cir. 1999) (applying Ohio law to a marital separation agreement); Roosevelt v. Ray (In re Roosevelt), 176 B.R. 200

(B.A.P. 9th Cir. 1994) (applying California law to a marital settlement

agreement). Because transfers under a settlement agreement may raise different issues in this context, we need not and do not decide whether

Greeninger would apply to a marital settlement agreement. See In re

Lynch-Kirby, 185 P.3d 494, 496 (Or. Ct. App. 2008) (applying the rule

that a marital settlement agreement is treated as a contract, whose terms

are governed by the parties’ intent, not the court’s). 

IN THE MATTER OF BLEDSOE 7943
[5] In conclusion, in Johnson the Oregon Supreme Court

announced a rule of general applicability that a party must

allege extrinsic fraud to bring a successful collateral challenge

to a regularly obtained court judgment. In Greeninger, the

Oregon Court of Appeals applied that general rule to the specific type of claim here: a fraudulent transfer claim under the

UFTA. There is no convincing evidence that the Oregon

Supreme Court would repudiate Greeninger. We therefore

hold that the district court properly granted summary judgment to Defendant on the § 544 claim.

B. Section 548 Claim

As we have explained, a trustee may avoid certain transfers

if the debtor “received less than a reasonably equivalent value

in exchange for such transfer.” 11 U.S.C. § 548(a)(1)(B)(I).

Defendant argues, and the bankruptcy court agreed, that a dissolution judgment following a regularly conducted state-court

proceeding conclusively establishes “reasonably equivalent

value.” For the following reasons, we also agree.

[6] In BFP v. Resolution Trust Corp., 511 U.S. 531, 533

(1994), the Supreme Court addressed “whether the consideration received from a noncollusive, real estate mortgage foreclosure sale conducted in conformance with applicable state

law conclusively satisfies the Bankruptcy Code’s requirement

. . . [of] exchange for ‘a reasonably equivalent value.’ ” The

Court answered that question in the affirmative, but expressly

limited its holding to “mortgage foreclosures of real estate.”

Id. at 537 n.3.

The Court first rejected, primarily for textual reasons, the

conclusion of some appellate courts that the term “reasonably

equivalent value” meant “fair market value.” Id. at 536-40.

The Court next sought to create its own definition of a reasonable price, but rejected that approach, too: “To specify a federal ‘reasonable’ foreclosure-sale price is to extend federal

bankruptcy law well beyond the traditional field of fraudulent

7944 IN THE MATTER OF BLEDSOE
transfers, into realms of policy where it has not ventured

before.” Id. at 540. The Court then reasoned that “[i]t is

beyond question that an essential state interest is at issue

here”; that “[t]o displace traditional state regulation in such a

manner, the federal statutory purpose must be ‘clear and manifest’ ”; and that, because no such clear purpose appears evident in the Bankruptcy Code, the term “reasonably equivalent

value” means “the price in fact received at the foreclosure

sale, so long as all the requirements of the State’s foreclosure

law have been complied with.” Id. at 544-45. The Court concluded:

This conclusion does not render § 548(a)(2)[3]

superfluous, since the “reasonably equivalent value”

criterion will continue to have independent meaning

(ordinarily a meaning similar to fair market value)

outside the foreclosure context. Indeed, § 548(a)(2)

will even continue to be an exclusive means of invalidating some foreclosure sales. Although collusive

foreclosure sales are likely subject to attack under

§ 548(a)(1), which authorizes the trustee to avoid

transfers “made . . . with actual intent to hinder,

delay, or defraud” creditors, that provision may not

reach foreclosure sales that, while not intentionally

fraudulent, nevertheless fail to comply with all governing state laws. Any irregularity in the conduct of

the sale that would permit judicial invalidation of the

sale under applicable state law deprives the sale

price of its conclusive force under § 548(a)(2)(A)

. . . .

Id. at 545-46 (citation omitted).

[7] Applying the principles of BFP, the Fifth Circuit held

in Erlewine that, as a matter of law, the debtor received “rea3The statute’s numbering has changed, but its substance remains materially the same. 

IN THE MATTER OF BLEDSOE 7945
sonably equivalent value” from a state-court dissolution judgment. “We cannot agree with the Trustee that the Debtor

necessarily received less than reasonably equivalent value for

her claims solely by virtue of the fact that the Debtor received

less than half of the community property.” Erlewine, 349 F.3d

at 211-12. The Fifth Circuit summarized BFP and concluded

that the Court there responded to some of the same concerns

as “are present in this case, and they suggest that we should

hesitate before we impute to Congress an intent to upset the

finality of judgments in an area as central to state law as

divorce decrees.” Id. at 212. The court limited its holding to

cases in which the state divorce proceeding “was fully litigated, without any suggestion of collusion, sandbagging, or

indeed any irregularity.” Id. at 212-13.

We agree with the Fifth Circuit. At the outset, we share the

policy concern that it voiced: “The Trustee’s argument, if

adopted, would apparently subject every divorce decree to

scrutiny in the bankruptcy court, so long as the divorce court

divided the community property unequally.” Id. at 212.

[8] Turning to BFP, we observe what animated the Court’s

decision: that foreclosure sales touch on traditional state interests. Although the Court clearly limited its holding to mortgage foreclosure sales, the same basic principle applies here.

The state’s traditional interest in the regulation of marriage

and divorce is at least as powerful as its traditional interest in

regulating sales of real property. See, e.g., Attorney Gen. of

N.Y. v. Soto-Lopez, 476 U.S. 898, 905 n.5 (1986) (recognizing

“the State’s strong, traditional interest in setting the terms of

and procedures for marriage and divorce”). Avoiding transfers

made pursuant to a state-court dissolution judgment would

seriously impinge on that traditional state interest. “To displace traditional state regulation in such a manner, the federal

statutory purpose must be ‘clear and manifest.’ ” BFP, 511

U.S. at 544 (citation omitted). We do not discern any congressional intention to allow collateral attacks on, or to inject

uncertainty into, properly obtained state dissolution judg7946 IN THE MATTER OF BLEDSOE
ments. And, just as “reasonably equivalent value” was an

approximate term for purposes of foreclosure sales, so it is for

purposes of transfers made under a dissolution judgment. As

the bankruptcy court cogently explained:

Oregon law requires an equitable distribution of

the parties’ assets in a marital dissolution. [Or. Rev.

Stat. § 107.15(1)(f).] Like property that is subject to

foreclosure, the economic value of the assets is questionable and difficult to ascertain, so long as it is

subject to the competing claims of the parties in the

divorce. The divorce resolves these matters, and furthers the state’s interests by dividing property in a

manner that gives due consideration to the economic

interests of the parties and their dependants, given

the circumstances of the case. This process should be

deemed to provide reasonably equivalent value to

the same extent that a foreclosure does.

In conclusion, we hold that a state court’s dissolution judgment, following a regularly conducted contested proceeding,

conclusively establishes “reasonably equivalent value” for the

purpose of § 548, in the absence of actual fraud.

[9] Trustee argues in the alternative that, even under that

rule, his § 548 claim must proceed because the dissolution

judgment at issue here was a default judgment. We disagree.

A default judgment has “the same solemn character as [a]

judgment[ ] entered after trial.” Watson v. State, 694 P.2d

560, 562 (Or. Ct. App. 1985) (en banc). There being no “suggestion of collusion, sandbagging, or indeed any irregularity”

in the dissolution proceedings, Erlewine, 349 F.3d at 212-13,

we hold that the rule applies here. Accordingly, we affirm the

grant of summary judgment to Defendant on the § 548 claim.

The special concurrence would hold that a marriage dissolution judgment does not effect a “transfer,” as that term is

defined by the Bankruptcy Code. Concurrence at 7955-60.

IN THE MATTER OF BLEDSOE 7947
But the special concurrence fails to explain how we may

reach that argument. Defendant did not raise that argument

before us, before the district court, or before the bankruptcy

court. The argument is therefore waived. See Smith v. Marsh,

194 F.3d 1045, 1052 (9th Cir. 1999) (“[O]n appeal, arguments

not raised by a party in its opening brief are deemed

waived.”); Thacker v. FCC (In re Magnacom Wireless, LLC),

503 F.3d 984, 996 (9th Cir. 2007) (“The trustee failed to raise

this argument before either the bankruptcy court or the district

court. We, therefore, deem it waived.”), cert. denied, 128 S.

Ct. 2076 (2008). In fact, Defendant expressly declined to raise

the argument before the district court, stating: “As for

[P]laintiff’s claim under 11 U.S.C. § 548, [D]efendant agrees

that a transfer occurred with the entry of the dissolution judgment.”

[10] The parties’ position is not surprising. Although we

are hesitant to address an issue without the benefit of any

briefing from the parties, we do note our deep skepticism of

the special concurrence’s position. “ ‘What constitutes a

transfer and when it is complete’ is a matter of federal law.”

Barnhill v. Johnson, 503 U.S. 393, 397 (1992) (quoting McKenzie v. Irving Trust Co., 323 U.S. 365, 369-70 (1945)). The

text of the Bankruptcy Code states: “The term ‘transfer’

means [among other things] (D) each mode, direct or indirect,

absolute or conditional, voluntary or involuntary, of disposing

of or parting with (i) property; or (ii) an interest in property.”

11 U.S.C. § 101(54)(D). We are concerned that the special

concurrence “fails to take proper account of the Bankruptcy

Code’s definition of ‘transfer,’ which is extremely broad.”

Bernard v. Sheaffer (In re Bernard), 96 F.3d 1279, 1282 (9th

Cir. 1996); see also id. (“’The definition of transfer is as

broad as possible.’ ” (quoting S. Rep. No. 989, 95th Cong., 2d

Sess. 27 (1978), reprinted in 1978 U.S.C.C.A.N. 5787,

5813)).

[11] Notwithstanding the “extremely broad” federal definition of transfer, id., we note that the terms “ ‘property’ and

7948 IN THE MATTER OF BLEDSOE
‘interest in property’ are creatures of state law,” Barnhill, 503

U.S. at 398. We therefore must examine whether Oregon law

defines the property rights of spouses in a manner consistent

with the special concurrence’s position. It does not. “[A]

transfer of marital assets under a judgment of annulment or

dissolution of marriage . . . shall be considered a partitioning

of jointly owned property.” Or. Rev. Stat. § 107.105(1)(f)

(emphasis added). It is indisputable that the partitioning of

jointly owned property effects a transfer of property interests

between the two parties.

AFFIRMED.

O’SCANNLAIN, Circuit Judge, specially concurring in part

and concurring in the result:

I concur in the judgment of the Court and agree entirely

with the majority’s cogent analysis and rejection of the bankruptcy trustee’s claim under 11 U.S.C. § 544, which would

avoid the effect of the marriage dissolution judgment.

Although I share the view that the trustee’s parallel claim

under § 548 must also fail, the majority’s analysis of that

issue troubles me, particularly with respect to BFP v. Resolution Trust Corp., 511 U.S. 531 (1994). I interpret BFP to hold

that real estate mortgage foreclosure sales pursuant to state

law establish reasonably equivalent value as a statutory matter; I believe, however, state dissolution judgments cannot fulfill such function. Rather, the latter merely establish the

ownership, not value, of property as between two divorcing

spouses. This perspective compels me to take a somewhat different approach on the § 548 issue and therefore I cannot concur in Part B of the majority’s opinion.

I

Michael Batlan is the trustee of the bankruptcy estate of

Jennifer Jan Bledsoe, who filed for Chapter 7 protection.

IN THE MATTER OF BLEDSOE 7949
Before she filed, the now former Mrs. Bledsoe had divorced

her husband, Ryan Bledsoe, in a contested proceeding. The

appropriate Oregon court adjudicated the divorce; over time

Jennifer stopped participating, and the court divided the marital assets between the two former spouses in a default judgment. According to Batlan, Ryan received far more under the

marriage dissolution judgment than Jennifer did. As the

trustee of Jennifer’s Chapter 7 estate, Batlan has the right to

avoid, or set aside, certain transfers that she made during and

shortly before bankruptcy. See 11 U.S.C. §§ 544-49 (establishing and limiting the trustee’s “avoidance powers”); see

also 11 U.S.C. § 550 (establishing the liability of a transferee

of an avoided transfer). Batlan seeks to avoid the effect of the

marriage dissolution judgment as a fraudulent conveyance

under two provisions of the Bankruptcy Code—§§ 544 and

548. Because I agree with the majority’s discussion of the

§ 544 claim, I address only the § 548 claim.

II

A

Section 548 allows the trustee to avoid transfers, made on

the eve of bankruptcy, because they are said to defraud creditors. The law governing so-called fraudulent conveyances has

a long pedigree in the common law, and it has generally recognized two types of fraud. First, a transfer is fraudulent if

made “with actual intent to hinder, delay, or defraud any

entity to which the debtor was or became, on or after the date

that such transfer was made or such obligation was incurred,

indebted.” § 548(a)(1)(A) (emphasis added). This is the classic fraudulent conveyance, as English law has recognized it

since the Statute of 13 Elizabeth I. See An Act Against Fraudulent Deeds, Gifts, and Alienations, 1571, 13 Eliz. c. 5, s. 2

(nullifying as against third parties conveyances with the “Purpose and Intent to delaye hynder or defraude Creditors”),

cited in Donell v. Kowell, 533 F.3d 762, 774 (9th Cir. 2008).

To take an example, suppose a man owes $1000 to his credi7950 IN THE MATTER OF BLEDSOE
tor, but before he files for bankruptcy, he secretly “sells” his

mint-condition sports car to his brother for $500 in order to

defraud his creditor—the classic, actually fraudulent transfer.

Second, transfers can be constructively fraudulent where

courts infer fraudulent intent without direct evidence of it.

These transfers bear one of the so-called “badges of fraud”

traditionally associated with the classic fraudulent conveyance. See Twyne’s Case, 76 Eng. Rep. 809, 810-11 n.B (1601)

(listing examples of “badges” or “marks” of fraud); see also

BFP, 511 U.S. at 540-41 (referring to the “badges of fraud”);

Heath v. Helmick, 173 F.2d 157, 160 (9th Cir. 1949) (“The

badges of fraud with relation to creditors were early marked

in the English mercantile community . . . . Twyne’s Case is

a classic which delineates many devious devices.”). The

“badge” at issue in this case is, as the Bankruptcy Code

phrases it, a transfer in which the debtor “received less than

a reasonably equivalent value in exchange for such transfer.”

§ 548(a)(1)(B)(i). The law infers the fraudulent intent, in

other words, simply because the debtor transfered his mint

condition sports car for $500 rather than $1000, even if there

is no direct evidence of fraudulent intent. We must start from

the proposition, therefore, that an exchange for less than reasonably equivalent value is constructively fraudulent.

B

Here we have a proceeding by the bankruptcy trustee in a

Chapter 7 case to recover assets pursuant to § 548 that a debtor’s former spouse received in the dissolution of their marriage. The trustee, Batlan, claims that there is a constructively

fraudulent conveyance because the debtor spouse received

significantly less in the dissolution than the non-debtor spouse

received. In other words, he alleges that the dissolution judgment effected a transfer for less than reasonably equivalent

value. Under fraudulent conveyance law, if Batlan is correct

that the values are not reasonably equivalent, then he can

avoid the transfer.

IN THE MATTER OF BLEDSOE 7951
The bankruptcy court analogized from BFP to conclude

that where a transfer occurs pursuant to a non-collusive, contested divorce proceeding, it is presumed to be for “reasonably equivalent value” and therefore precludes an action by

the trustee to recover the assets transferred as a constructively

fraudulent conveyance. See Batlan v. Bledsoe (In re Bledsoe),

350 B.R. 513, 519 (Bankr. D. Or. 2006). This is essentially

the position the majority adopts in its carefully crafted opinion. The majority emphasizes the policy implications of the

trustee’s theory of recovery, which would expose final state

court marriage dissolution judgments to collateral attack in

bankruptcy. See Maj. Op. at 7946-47.

Although this approach is reasonable and its policy concerns sensible, I prefer to reach the same conclusion by a different route. In particular, I worry that the majority has

inadvertently interpreted BFP too broadly in applying it

directly to marriage dissolution judgments. It is odd to presume that two values are reasonably equivalent when they are

numerically far apart, but that is what the majority’s opinion

does. I agree with the majority that there is an analogy to be

drawn between this case and BFP, but not the one the majority draws.

III

In BFP, the Supreme Court held that “a fair and proper

price, or a ‘reasonably equivalent value,’ for foreclosed property, is the price in fact received at the foreclosure sale, so

long as all the requirements of the State’s foreclosure law

have been complied with.” 511 U.S. at 545. The majority

properly seeks to follow, and build upon, this holding. In

doing so, however, it focuses more on the important state

interest (regulating real property transfers in BFP, regulating

divorces here) involved than on the logical underpinnings of

the Supreme Court’s opinion. To be sure, as the majority

points out, BFP highlighted the traditional state interest in

regulating real estate mortgage foreclosure sales without risk

7952 IN THE MATTER OF BLEDSOE
of federal interference. See Maj. Op. at 7944-45, 7946. But

the Supreme Court took account of the state interest only as

a guide in construing the meaning, in the context at issue, of

the statutory term “reasonably equivalent value.” See BFP,

511 U.S. at 544 (“Federal statutes impinging upon important

state interests cannot be construed without regard to the

implications of our dual system of government” (internal quotation marks and alteration omitted) (emphasis added)).

I prefer to place the holding of BFP in its theoretical context. The Supreme Court emphasized that § 548(a)(1)(B)(i)

always “directs an inquiry into the relationship of the value

received by the debtor to the worth of the property transferred.” Id. at 546. In the context of BFP, “[t]he language of

[the statute] (‘received less than a reasonably equivalent value

in exchange’) requires judicial inquiry into whether the foreclosed property was sold for a price that approximated its

worth at the time of sale.” Id. at 538-39. The Supreme Court

concluded that the price obtained at a lawful real estate mortgage foreclosure sale, as opposed to the fair market value or

some other measure, must be “the criterion of equivalence,”

id. at 538, between the property the debtor transfers (the foreclosed property) and the property he receives (the price

obtained). 

To put it another way, “[t]he [central] question” in BFP

was: “What is a foreclosed property worth?“ Id. at 547. Is it

fair market value or something else? The Court acknowledged

that “[a]n appraiser’s reconstruction of ‘fair market value’

could show what similar property would be worth if it did not

have to be sold within the time and manner strictures of stateprescribed foreclosure. But,” crucially, “property that must be

sold within those strictures is simply worth less.” Id. at 539.

If one wants to know how much a property that must be sold

at foreclosure is worth, the logical place to look is the price

it actually fetched at a properly conducted mortgage foreclosure sale. Thus the answer to the question, “What is foreclosed real estate worth?” is: its foreclosure sale price. In that

IN THE MATTER OF BLEDSOE 7953
sense, the foreclosure procedure operates as a value discovery

device; it tells us what the foreclosed property is really worth.

IV

I have dwelled on this point because I believe it is the

aspect of the BFP opinion that the majority has overlooked.

In doing so, I fear it has weakened the “reasonably equivalent

value” standard for purposes of § 548’s version of a constructively fraudulent conveyance. 

Nothing in BFP suggested that a court need not compare

the property transferred with the property received and determine whether they are “reasonably equivalent.” Indeed, BFP

insisted on that inquiry. 511 U.S. at 546. But the majority’s

opinion, by holding that a state marriage dissolution judgment

per se establishes reasonably equivalent value, suggests that

the value of property transferred and the value of property

received can be reasonably equivalent for purposes of § 548

even when they obviously are not. In my view, if A received

significantly less in an exchange than B, we would say that A

received less than reasonably equivalent value for the property he transferred to B. No state court proceeding can change

this lack of equivalence. And BFP did not hold that it could.

BFP merely held that, quite sensibly, property that is burdened, because foreclosed, is worth what it can be sold for in

a regular, legal sale for foreclosed real estate. But if Jennifer

Bledsoe received far less than Ryan Bledsoe in the divorce,

neither BFP nor common sense compels us to conclude that

what is not equal in fact is somehow equal in law.

Understood this way, we cannot directly apply the BFP

Court’s reasoning, that a mortgage foreclosure price reveals

the value of foreclosed property, to state court marriage dissolution judgments without undermining the statutory language

to which that case applied. This is because BFP understood

the foreclosure as fulfilling a function that I do not believe a

dissolution judgment fulfills—that is, value discovery. In this

7954 IN THE MATTER OF BLEDSOE
case, for example, there is no unknown value to discover.

There are dollar figures associated with what Ryan and Jennifer Bledsoe allegedly received and with the value of all of the

marital assets combined.

But such realization does not mean that we must rule for

the trustee. This becomes clear if one attempts the inquiry that

§ 548 compels: “an inquiry into the relationship of the value

received by the debtor to the worth of the property transferred.” Id. at 546. In this case, the debtor, Jennifer Bledsoe,

received an award from the Oregon court judgment that dissolved her marriage to Ryan Bledsoe. That was the “property

received.” But what was the property transferred, and who

owned it before? In a sense, the married couple once owned

the entirety of the marital res, over which Jennifer no longer

had any claim; but, of course, the married couple no longer

existed after the divorce. Thus, to speak of a transfer fits

uncomfortably with the reality of what happens in a divorce

proceeding. 

I believe it makes more sense to say that both spouses

owned the property before dissolution, but that, because they

were getting divorced, the dissolution judgment assigned the

assets of the marital res to each spouse individually as the

state court found to be equitable. That is to say, a dissolution

judgment determines, for the first time, what each spouse

owns on an individual basis. Therefore, the debtor ex-spouse

does not transfer or receive anything, because there is no

transfer for fraudulent conveyance purposes. A divorce court

simply determines that, in equity, each ex-spouse owns a certain share of the marital res.

1

1This is consistent with the definition, under Oregon law, of a dissolution judgment as “a partitioning of jointly owned property.” Or. Rev. Stat.

§ 107.105(1)(f). In other words, the married spouses jointly owned the

whole, but after divorce individually own only a part. See id. (“Subsequent

to the filing of a petition for annulment or dissolution of marriage or separation, the rights of the parties in the marital assets shall be considered a

IN THE MATTER OF BLEDSOE 7955
Thus the real analogy to BFP is that a marriage dissolution

judgment, like a mortgage foreclosure sale, discovers a piece

of information crucial to the inquiry, though not the same

piece. Foreclosure sales discover the value of property; dissolution judgments discover, or assign, the individual ownership

of property. This is the meaning of the otherwise cryptic

remark by our Bankruptcy Appellate Panel in Roosevelt v.

Ray (In re Roosevelt), cited by the parties in this case, that

“[w]hen viewed from the perspective of the debtor-creditor

relationship, it is appropriate to perceive the dissolving

spouses as mutual creditor-debtors, because the law requires

a fair and equitable settlement of their claims against the marital res and one another.” 176 B.R. 200, 207 (9th Cir. BAP

1994). 

In other words, as one half of a married couple, each individual spouse held a bundle of assets and liabilities, including

claims against the marital res (e.g., wages contributed to the

marital household) and against the other spouse (e.g., loans

from one spouse to the other for some individual purpose).

Even before divorce, one might have sorted out the bundles

so that they “netted out” to yield a hypothetical balance, but

no one ever needed to do so. That is precisely the task, however, of the divorce court, which “assigns assets to the appropriate spouse and makes a correlative assignment of property

of equal value to the other,” after “settlement of [each

species of coownership, and a transfer of marital assets under a judgment

of annulment or dissolution of marriage or of separation . . . shall be considered a partitioning of jointly owned property.”). Because the partition

is equitable and therefore not always 50/50, see id., it is unclear ex ante

how much each spouse owns individually. The dissolution judgment

answers that question. 

Of course, the fact that Oregon describes the process as a transfer does

not control the definition of the term “transfer” under federal bankruptcy

law. See Barnhill v. Johnson, 503 U.S. 393, 397 (1992) (internal quotation

marks omitted). 

7956 IN THE MATTER OF BLEDSOE
spouse’s] claims against the marital res and one another.” Id.2

Thus, its dissolution judgment simply determines the entitlements to property that already existed but were unclear

because there was never a need to settle conclusively who

owned what.3 That is what I mean when I characterize the dissolution judgment as a device for discovering the ownership

of property, not its value. Nothing is transferred; rather, individual ownership is clarified.4

I recognize that excluding dissolution judgments from the

reach of § 548 on the ground that they do not effect transfers

2

I presume that the Bankruptcy Appellate Panel in In re Roosevelt used

the phrase “equal value,” because under California law, which governed

the dispute in that case, community property typically must be divided

equally in the event of dissolution. See Cal. Fam. Code § 2550. I discuss

the implications of the California rule infra, at note 4. 

3

I also note that my interpretation is consistent with the effect, if not the

exact language, of the Internal Revenue Code, which treats “transfers

[between former spouses] incident to [a] divorce” as non-taxable events.

26 U.S.C. § 1041(a). Contrast how the Internal Revenue Code would have

treated the transaction at issue in BFP, in which the debtor gave up the

foreclosed property in exchange for cancellation of some of his debts. “Income from discharge of indebtedness” is explicitly listed in the definition

of “gross income” and its receipt is, generally, a taxable event. 26 U.S.C.

§ 61(a)(12). 

4The distinction I draw between establishing ownership and value may

have, admittedly, little practical effect in those community property states,

such as California, which mandate an equal division of community assets

at divorce. See supra, at note 2. This is because where all dissolutions

divide community property equally anyway, it does not matter whether

there has been a transfer or not for purposes of fraudulent conveyance law.

Even if there were a transfer, it would always be for reasonably equivalent

—indeed, equal—value. 

However, the distinction I draw does matter in the vast majority of

states, in which the divorce court equitably divides the property, because

in those states the division can often be unequal. This description covers

all non-community property states, such as Oregon, and those community

property states in which the law does not mandate a 50/50 division, such

as Washington. See, e.g., Or. Rev. Stat.§ 107.105(1)(f); Wash. Rev. Code

§ 26.09.080. 

IN THE MATTER OF BLEDSOE 7957
seems at odds with the broad definition of transfer under the

Bankruptcy Code. See 11 U.S.C. § 101(54)(D) (“The term

‘transfer’ means . . . each mode, direct or indirect, absolute or

conditional, voluntary or involuntary, of disposing of or parting with (i) property; or (ii) an interest in property.”).5

 In my

view, however, each spouse has not parted with any interest

in property because neither owned the marital res as an individual. To the extent each spouse had an individual interest in

the marital property, it was uncertain; the dissolution judgment clarifies the extent of the property interest, but does not

effect a “parting with” such interest.6

Furthermore, it is a cardinal principle—the so-called “Butner principle”—that bankruptcy law takes applicable nonbankruptcy law as it finds it, particularly when it comes to the

definition of property interests. See BFP, 511 U.S. at 544-45

(noting that, except where a contrary purpose is “clear and

manifest,” “the Bankruptcy Code will be construed to adopt,

rather than to displace, pre-existing state law” (internal quotations and citation omitted)); Butner v. United States, 440 U.S.

48, 55 (1979) (“Property interests are created and defined by

state law . . . . Uniform treatment of property interests by both

5The majority argues that we should not reach whether the dissolution

judgment is a transfer because we do not reach issues that the parties have

not briefed. That is the usual rule, of course, but there is an exception

when “the issue presented is purely one of law and the opposing party will

suffer no prejudice as a result of the failure to raise the issue.” United

States v. Carlson, 900 F.2d 1346, 1349 (9th Cir. 1990). Whether a dissolution judgment is a transfer is a legal question that requires no factual

development here. Furthermore, the fact that the parties assumed the dissolution judgment was a transfer shows that they considered it. Thus neither is prejudiced by reevaluating the issue. 

6

I recognize my interpretation is in tension with our interpretation of the

Bankruptcy Act (the predecessor to the modern Bankruptcy Code) in Britt

v. Damson, 334 F.2d 896 (9th Cir. 1964). Britt held, with little analysis,

that a dissolution judgment awarding more than fifty percent of marital

property to one spouse effects a transfer to the extent of the overage. Id.

at 902. I believe Britt was wrongly decided, and therefore concur specially. 

7958 IN THE MATTER OF BLEDSOE
state and federal courts within a State serves to reduce uncertainty, to discourage forum shopping, and to prevent a party

from receiving a windfall merely by reason of the happenstance of bankruptcy.” (internal quotation marks and citation

omitted)). 

As I pointed out above, in BFP the Supreme Court interpreted the term “reasonably equivalent value” in such a way

as to avoid upsetting an official state legal procedure. BFP is

not the only time the Court has favored such an approach.

See, e.g., Kelly v. Robinson, 479 U.S. 36, 50 (1986) (expressing “serious doubts whether Congress intended to make criminal penalties ‘debts’ within the meaning of [the Bankruptcy

Code]” and then holding on related grounds that restitution

obligations imposed as conditions of probation in state criminal proceedings are nondischargeable in any event); Midlantic

Nat’l Bank v. N.J. Dep’t of Envtl. Prot., 474 U.S. 494, 502-05

(1986) (concluding that a trustee’s § 554(a) abandonment

power is limited by state health and safety requirements).

Furthermore, the characterization I recommend would not

insulate from collateral attack a divorce settlement agreement,

adopted by a state court, that the spouses negotiated between

themselves in order to divide their assets. My reasoning, that

a dissolution judgment, reached after a contested divorce proceeding, operates as a determination of the individual ownership of the former spouses without any transfer having taken

place, plainly does not apply to a dissolution settlement agreement. For in that case the state court has not determined ownership, but simply ratified the parties’ allocation of assets.

When the parties allocate the assets, the transaction is akin to

a contractual exchange, in which each gives up something to

get something. See In re Marriage of Lynch-Kirby, 185 P.3d

494, 496-97 (Or. Ct. App. 2008).7 Indeed, our court has

7The same, it seems to me, would be true of a secret, collusive agreement whereby the parties trick a court into issuing a particular dissolution

judgment. 

IN THE MATTER OF BLEDSOE 7959
recently come to a similar conclusion with respect to a collusive marriage dissolution settlement agreement. See Wolkowitz v. Beverly (In re Beverly), 374 B.R. 221, 233-35 (9th

Cir. BAP 2007) (characterizing as a transfer, in the context of

§ 544, a transaction in which one spouse received, pursuant to

a dissolution settlement agreement, more than she otherwise

would have in a judicial division), adopted by 551 F.3d 1092

(9th Cir. 2008).

V

Perhaps it seems overly technical to insist on the proper

doctrinal approach in this case. After all, I agree with the

judgment of the Court, and the majority has crafted a sensible

and judicious opinion. I might not worry about a seemingly

minor over-reading of BFP if it did not have the potential for

trouble further down the line. But such potential does exist. In

my view, we must guard against transforming BFP into a presumption that all transfers are for reasonably equivalent value

simply because they occur pursuant to a regulated state procedure. We should rest our analysis as closely as possible on the

reasoning of BFP and on a clear understanding of the nature

of the specific state court judgment at issue. Practically, I fear

that the majority’s approach might insulate from attack as

constructively fraudulent those conveyances in which,

although they occur pursuant to a state procedure, the debtor

clearly receives less than reasonably equivalent value in

exchange for the property transferred. With respect to the

Court’s disposition of § 548 claim, therefore, I concur in the

result only.

7960 IN THE MATTER OF BLEDSOE