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

California Civil Jury Instructions CACI

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.

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, Prelawsuit Considerations, ¶ 3:291 et seq. (The Rutter Group)
Gaab & Reese, California Practice Guide: Civil Procedure Before Trial—Claims & Defenses, Ch. 5(III)-B, 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)