They’re on appeal… for legal reasons…: The Tale of Two Diamonds.

In light of Real Housewives of Beverly Hills star Erika Jayne’s controversial diamond stud earrings being sold at auction for way less than she expected, it’s time to talk about what exactly Ms. Jayne’s “legal reasons” are to support the infamous earring appeal.

Every legal offense has what’s called a Statute of Limitations. That is just the period of time a person is allowed to sue someone after the incident. In bankruptcy a similar concept exists: the trustee (the person who is collecting things to sell and get the money back) can sell things for money that were purchased or somehow obtained in the 10 years before the bankruptcy is declared. 

A trustee generally files what is called “a turnover motion,” asking a bankrupt party — here, Erika Girardi, to turn over their valuables so they can be sold. For example, if the bankrupt person was gifted something valuable 15 years ago, and the trustee is only allowed to sell items obtained in the last 10 years, then that particular gift should be “off limits” to the trustee. 

The Girardi trustee filed a turnover motion wherein the trustee asked the court to order the Girardi’s to turn over all of their stuff to be sold and repay their debts. Erika said that the earrings didn’t count as part of the things that should be sold under that motion because it is not the property of the bankruptcy estate. Court said the earrings totally count and that she had to turn them over to be sold at auction.

Erika said that the Statute of Limitations (the statute of repose in bankruptcy) for fraudulent transfers in California is 7 years. Erika says the earrings were gifted over 15 years ago. 

If that is true, Erika argues that earrings are outside the scope of the time that the trustee can go back and grab. 

Erika also argued that the earrings and the funds used to purchase them were never part of the Girardi Keese Bankruptcy estate. And, because Erika had an “innocent mind” when she received the earrings, they can’t be part of the estate. Erika Jayne’s attorney argued that the debt of the value of the earrings can be against the estate, but shouldn't be recovered from Mrs. Erika Jayne Girardi herself.

The trustee disagreed. The Court agreed with the trustee. Bye, earrings!!