Erika Jayne Settles $25 Million Lawsuit Tied to Tom Girardi Bankruptcy
Erika Jayne, star of Real Housewives of Beverly Hills, reached a settlement in her $25 million lawsuit connected to ex-husband Tom Girardi's bankruptcy just days before jury selection was scheduled to begin on May 27, 2026. The lawsuit accused Jayne of spending Girardi Keese law firm funds on personal expenses totaling $25 million while the firm's clients—including burn victims and families of plane crash victims—went unpaid. This settlement resolves one of the most high-profile cases illustrating how bankruptcy claims can intersect with California divorce proceedings.
Key Facts
| Detail | Information |
|---|---|
| What happened | Erika Jayne settled a $25 million lawsuit tied to Tom Girardi's bankruptcy |
| When | Settlement reached May 2026, days before May 27 trial date |
| Where | California federal bankruptcy court |
| Who's affected | Girardi Keese creditors including burn victims and plane crash families |
| Key statute | Cal. Fam. Code § 760 (community property) |
| Settlement path | Lawsuit rights sold to third party for $2 million, enabling private resolution |
Why This Settlement Matters Legally
This settlement demonstrates how bankruptcy trustees can pursue claims against a debtor's spouse for assets allegedly transferred during marriage. Under California community property law, both spouses share equal ownership of assets acquired during marriage. When one spouse uses marital funds inappropriately, the other spouse may face liability for those expenditures regardless of whether they directly participated in any wrongdoing.
The original lawsuit alleged that Girardi's law firm transferred approximately $25 million to Jayne's company, EJ Global LLC, over a 12-year period from 2008 to 2020. These funds allegedly paid for personal expenses including a glam squad, clothing, and other lifestyle costs while the firm simultaneously failed to pay settlement funds owed to clients who had suffered catastrophic injuries.
The lawsuit rights were sold to a third party for $2 million in a bankruptcy auction, which allowed the settlement to proceed privately without public disclosure of terms. This sale-of-claims mechanism is increasingly common in complex bankruptcy cases, enabling creditors to receive guaranteed funds while private investors take on the risk of litigation.
How California Law Handles Marital Debt and Asset Transfers
California operates under community property rules codified in Cal. Fam. Code § 760, which provides that all property acquired during marriage is presumed to be community property owned equally by both spouses. This presumption has significant implications when one spouse's business dealings create liability.
Under Cal. Fam. Code § 910, community property is liable for debts incurred by either spouse during marriage. This means creditors can pursue community assets even if only one spouse incurred the debt. In the Girardi case, the allegation was that law firm funds (which should have belonged to clients) were transferred to a company controlled by Jayne during the marriage.
California also recognizes fraudulent transfer claims under the Uniform Voidable Transactions Act, codified in Cal. Civ. Code § 3439. When assets are transferred without fair value while a debtor is insolvent or becomes insolvent as a result, those transfers can be voided and the assets recovered. Bankruptcy trustees frequently use these provisions to claw back assets from spouses, family members, or affiliated entities.
The Girardi bankruptcy, filed in December 2020, resulted in the State Bar of California disbarring Tom Girardi in June 2022. The bankruptcy estate has been working to recover funds for creditors, including the families of victims from Lion Air Flight 610, which crashed in Indonesia in 2018 killing 189 people.
What This Case Reveals About Divorce and Bankruptcy Intersection
Erika Jayne filed for divorce from Tom Girardi in November 2020, just weeks before his firm's financial troubles became public. California courts examine the timing of divorce filings closely when they occur near financial crises or bankruptcy proceedings.
Under Cal. Fam. Code § 2100, both spouses have fiduciary duties to each other regarding disclosure of assets and debts. These duties require complete transparency about all community property, separate property, income, and obligations. When a divorce coincides with bankruptcy, courts scrutinize whether the divorce filing was an attempt to shield assets from creditors.
The bankruptcy trustee's ability to sue Jayne separately from the divorce proceedings illustrates an important principle: divorce does not automatically shield either spouse from pre-existing creditor claims. California law allows creditors to pursue community property even after divorce, particularly when the debt arose during the marriage.
This case also highlights how high-net-worth divorces involving business interests require forensic accounting. The $25 million allegedly transferred over 12 years required extensive documentation and financial analysis. Parties in similar situations should expect detailed examination of all accounts, transfers, and expenditures throughout the marriage.
Practical Takeaways for California Residents
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Understand that community property liability extends to both spouses for debts incurred during marriage, even if you had no direct involvement in the transactions creating the debt
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Document all separate property carefully, maintaining clear records that trace assets to pre-marital sources or gifts/inheritances specifically designated for one spouse
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If your spouse has business debts or potential creditor claims, consult a family law attorney before filing for divorce to understand your exposure and options
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Be aware that divorce timing near bankruptcy or business failure will face scrutiny from courts, creditors, and bankruptcy trustees
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Maintain complete financial records during marriage, including bank statements, tax returns, and documentation of all significant transfers between accounts or entities
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Consider whether assets titled in your name or entities you control could be subject to fraudulent transfer claims if your spouse faces financial difficulties
Frequently Asked Questions
Can creditors pursue me for my spouse's debts in California?
Yes, under Cal. Fam. Code § 910, community property is liable for debts incurred by either spouse during marriage. This means creditors can pursue joint assets and potentially your share of community property even if you did not personally incur the debt. Separate property remains protected.
Does filing for divorce protect me from my spouse's business creditors?
No, divorce does not automatically shield you from creditor claims arising during the marriage. Creditors can pursue community property even after divorce is finalized. In the Girardi case, the lawsuit continued against Erika Jayne despite her November 2020 divorce filing because the alleged transfers occurred during the marriage.
What is a fraudulent transfer under California law?
Under Cal. Civ. Code § 3439, a fraudulent transfer occurs when assets are transferred without receiving fair value while the transferor is insolvent or becomes insolvent. Bankruptcy trustees can void these transfers and recover assets from recipients, including spouses, within specific lookback periods extending up to 7 years.
How long do creditors have to pursue transferred assets in California?
Creditors generally have 4 years from the transfer date or 1 year from when the transfer was discovered to bring fraudulent transfer claims. In bankruptcy, the trustee can reach back up to 2 years for actual fraud or 10 years in some circumstances, making old transfers potentially recoverable.
What should I do if my spouse faces significant business debts?
Consult a family law attorney immediately to assess your potential liability and protection options. Document all separate property with clear paper trails. Consider whether a postnuptial agreement might provide some protection going forward. Understand that proactive planning before a crisis is far more effective than reactive measures after creditors have filed claims.
If you are facing a divorce involving complex financial issues, business debts, or potential creditor claims, find an experienced California family law attorney who can help protect your interests.
This article discusses recent news and provides general legal commentary. It does not constitute legal advice. Every case is unique. Consult a qualified family law attorney for advice specific to your situation.