CACI 4202 Constructive Fraudulent Transfer—No Reasonably Equivalent Value Received—Essential Factual Elements (Civ. Code, § 3439.04(a)(2))

California Civil Jury Instructions CACI

4202 Constructive Fraudulent Transfer—No Reasonably Equivalent Value Received—Essential Factual Elements (Civ. Code, § 3439.04(a)(2))


[Name of plaintiff] claims [he/she/nonbinary pronoun/it] was harmed because [name of debtor] [transferred property/incurred an obligation] to [name of defendant] and, as a result, was unable to pay [name of plaintiff] money that was owed. [This is called “constructive fraud.”] To establish this claim against [name of defendant], [name of plaintiff] must prove all of the following:

1.That [name of plaintiff] has a right to payment from [name of debtor] for [insert amount of claim];

2.That [name of debtor] [transferred property/incurred an obligation] to [name of defendant];

3.That [name of debtor] did not receive a reasonably equivalent value in exchange for the [transfer/obligation];

4.[That [name of debtor] was in business or about to start a business or enter a transaction when [his/her/nonbinary pronoun/its] remaining assets were unreasonably small for the business or transaction;] [or]

[That [name of debtor] intended to incur debts beyond [his/her/nonbinary pronoun/its] ability to pay as they became due;] [or]

[That [name of debtor] believed or reasonably should have believed that [he/she/nonbinary pronoun/it] would incur debts beyond [his/her/nonbinary pronoun/its] ability to pay as they became due;]

5.That [name of plaintiff] was harmed; and

6.That [name of debtor]’s conduct was a substantial factor in causing [name of plaintiff]’s harm.

If you decide that [name of plaintiff] has proved all of the above, [he/she/nonbinary pronoun/it] does not have to prove that [name of debtor] intended to defraud any creditors.

[It does not matter whether [name of plaintiff]’s right to payment arose before or after [name of debtor] [transferred property/incurred an obligation].]


Directions for Use

Under the Uniform Voidable Transactions Act (formerly the Uniform Fraudulent Transfer Act), a transfer made or obligation incurred by a debtor is voidable as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor either: (1) was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or (2) intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor’s ability to pay as they became due. (Civ. Code, § 3439.04(a)(2).)

This instruction assumes the defendant is a transferee of the original debtor. Read the bracketed second sentence if the plaintiff is asserting claims for both actual and constructive fraud. Read the last bracketed sentence if the plaintiff’s alleged claim arose after the defendant’s property was transferred or the obligation was incurred.

Courts have held that there is a right to a jury trial whenever the remedy sought is monetary relief, including even the return of a “determinate sum of money.” (Wisden v. Superior Court (2004) 124 Cal.App.4th 750, 757 [21 Cal.Rptr.3d 523].) If the only remedy sought is the return of a particular nonmonetary asset, the action is an equitable action. However, even if a specific nonmonetary asset is involved, a conspiracy claim or an action against any party other than the transferee who possesses the asset (e.g., “the person for whose benefit the transfer was made”) (Civ. Code, § 3439.08(b)(1)(A)) necessarily would seek monetary relief and give rise to a right to a jury trial.


Sources and Authority

Transfer Without Reasonably Equivalent Value in Exchange. Civil Code section 3439.04(a)(2).

When Value Is Given. Civil Code section 3439.03.

“There are two forms of constructive fraud under the UFTA. Civil Code section 3439.04 … provides that a transfer is fraudulent if the debtor did not receive reasonably equivalent consideration and either ‘(1) Was engaged or about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or (2) Intended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they became due.’ Civil Code section 3439.05 provides that a transfer is fraudulent as to an existing creditor if the debtor does not receive reasonably equivalent value and ‘was insolvent at that time or … became insolvent as a result of the transfer … .’ ” (Mejia v. Reed (2003) 31 Cal.4th 657, 669–670 [3 Cal.Rptr.3d 390, 74 P.3d 166].)

“A well-established principle of the law of fraudulent transfers is, ‘A transfer in fraud of creditors may be attacked only by one who is injured thereby. Mere intent to delay or defraud is not sufficient; injury to the creditor must be shown affirmatively. In other words, prejudice to the plaintiff is essential. It cannot be said that a creditor has been injured unless the transfer puts beyond [her] reach property [she] otherwise would be able to subject to the payment of [her] debt.’ ” (Mehrtash v. Mehrtash (2001) 93 Cal.App.4th 75, 80 [112 Cal.Rptr.2d 802], internal citations 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)
17 California Forms of Pleading and Practice, Ch. 215, Duress, Menace, Fraud, Undue Influence, and Mistake, §§ 215.70[5], 215.111[2][c] (Matthew Bender)
23 California Forms of Pleading and Practice, Ch. 270, Fraudulent Conveyances, §§ 270.42, 270.193, 270.194 (Matthew Bender)