California Civil Jury Instructions (CACI) (2017)

4201. Factors to Consider in Determining Actual Intent to Hinder, Delay, or Defraud (Civ. Code, § 3439.04(b))

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4201.Factors to Consider in Determining Actual Intent to Hinder,
Delay, or Defraud (Civ. Code, § 3439.04(b))
In determining whether [name of debtor] intended to hinder, delay, or
defraud any creditors by [transferring property/incurring an obligation]
to [name of defendant], you may consider, among other factors, the
following:
[(a) Whether the [transfer/obligation] was to [a/an] [insert relevant
description of insider, e.g., “relative,” “business partner,” etc.];]
[(b) Whether [name of debtor] retained possession or control of the
property after it was transferred;]
[(c) Whether the [transfer/obligation] was disclosed or concealed;]
[(d) Whether before the [transfer was made/obligation was incurred]
[name of debtor] had been sued or threatened with suit;]
[(e) Whether the transfer was of substantially all of [name of
debtor]’s assets;]
[(f) Whether [name of debtor] fled;]
[(g) Whether [name of debtor] removed or concealed assets;]
[(h) Whether the value received by [name of debtor] was not
reasonably equivalent to the value of the [asset
transferred/amount of the obligation incurred];]
[(i) Whether [name of debtor] was insolvent or became insolvent
shortly after the [transfer was made/obligation was incurred];]
[(j) Whether the transfer occurred shortly before or shortly after a
substantial debt was incurred;]
[(k) Whether [name of debtor] transferred the essential assets of the
business to a lienholder who transferred the assets to an insider
of [name of defendant];] [and]
[(l) [insert other appropriate factor].]
Evidence of one or more factors does not automatically require a
finding that [name of defendant] acted with the intent to hinder, delay, or
defraud creditors. The presence of one or more of these factors is
evidence that may suggest the intent to delay, hinder, or defraud.
New June 2006; Revised June 2016
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Directions for Use
Some or all of the stated factors may not be necessary in every case. Other factors
may be added as appropriate depending on the facts of the case.
Sources and Authority
• Determination of Actual Intent. Civil Code section 3439.04(b).
“Over the years, courts have considered a number of factors, the ‘badges of
fraud’ described in a Legislative Committee comment to section 3439.04, in
determining actual intent. Effective January 1, 2005, those factors are now
codified as section 3439.04, subdivision (b) and include considerations such as
whether the transfer was made to an insider, whether the transferee retained
possession or control after the property was transferred, whether the transfer
was disclosed, whether the debtor had been sued or threatened with suit before
the transfer was made, whether the value received by the debtor was reasonably
equivalent to the value of the transferred asset, and similar concerns. According
to section 3439.04, subdivision (c), this amendment ‘does not constitute a
change in, but is declaratory of, existing law.’ ” (Filip v. Bucurenciu (2005) 129
Cal.App.4th 825, 834 [28 Cal.Rptr.3d 884], internal citations omitted.)
• “[The factors in Civil Code section 3439.04(b)] do not create a mathematical
formula to establish actual intent. There is no minimum number of factors that
must be present before the scales tip in favor of finding of actual intent to
defraud. This list of factors is meant to provide guidance to the trial court, not
compel a finding one way or the other.” (Filip, supra, 129 Cal.App.4th at p.
834.)
• “Even the existence of several ‘badges of fraud’ may be insufficient to raise a
triable issue of material fact.” (Annod Corp. v. Hamilton & Samuels (2002) 100
Cal.App.4th 1286, 1299 [123 Cal.Rptr.2d 924], internal citation omitted.)
• “Whether a conveyance was made with fraudulent intent is a question of fact,
and proof often consists of inferences from the circumstances surrounding the
transfer.” (Filip, supra, 129 Cal.App.4th at p. 834, internal citation omitted.)
Secondary Sources
Ahart, California Practice Guide: Enforcing Judgments & Debts, Ch. 3-C,
Prejudgment Collection—Prelawsuit Considerations, ¶ 3:291 et seq. (The Rutter
Group)
Wiseman & Reese, California Practice Guide: Civil Procedure Before Trial Claims
& Defenses, Ch. 5(III)-B, Fraud—Fraudulent Transfers—Elements of Claim,
¶ 5:528 (The Rutter Group)
9 California Forms of Pleading and Practice, Ch. 94, Bankruptcy, § 94.55[4][b]
(Matthew Bender)
23 California Forms of Pleading and Practice, Ch. 270, Fraudulent Conveyances,
§ 270.40 (Matthew Bender)
UNIFORM FRAUDULENT TRANSACTIONS ACT CACI No. 4201
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