CACI 4205 Insolvency Explained

California Civil Jury Instructions CACI

4205 “Insolvency” Explained

[[Name of debtor] was insolvent [at the time/as a result] of the transaction if, at fair valuation, the total amount of [his/her/nonbinary pronoun/its] debts was greater than the total amount of [his/her/nonbinary pronoun/its] assets.]

In determining [name of debtor]’s assets, do not include property that has been [transferred, concealed, or removed with intent to hinder, delay, or defraud creditors/ [or] transferred [specify grounds for voidable transfer based on constructive fraud]]. [In determining [name of debtor]’s debts, do not include a debt to the extent it is secured by a valid lien on [his/her/nonbinary pronoun/its] property that is not included as an asset.]

Directions for Use

Give this instruction with CACI No. 4203, Constructive Fraudulent Transfer—Insolvency—Essential Factual Elements. Give also CACI No. 4206, Presumption of Insolvency.

Property the transfer of which is potentially voidable under the Uniform Voidable Transactions Act (formerly the Uniform Fraudulent Transfer Act) is to be excluded from the computation of the debtor’s assets for purposes of determining insolvency. (Civ. Code, § 3439.02(c).) In the first sentence of the second paragraph select the first option if there is property transferred and alleged to be voidable for actual fraud (see Civ. Code, § 3439.04(a)(1).), and specify the grounds in the second option if there is property transferred and alleged to be voidable for constructive fraud. (See Civ. Code, §§ 3439.04(a)(2), 3904.05.) Read the bracketed last sentence if appropriate to the facts. (See Civ. Code, § 3439.02(d).)

Sources and Authority

When Debtor Is Insolvent. Civil Code section 3439.02.

“Asset” Defined. Civil Code section 3439.01(a).

“To determine solvency, the value of a debtor’s assets and debts are compared. By statutory definition, a debtor’s assets exclude property that is exempt from judgment enforcement. Retirement accounts are generally exempt.” (Mejia v. Reed (2003) 31 Cal.4th 657, 670 [3 Cal.Rptr.3d 390, 74 P.3d 166], internal citations omitted.)

“We conclude … that future child support payments should not be viewed as a debt under the UFTA.” (Mejia, supra, 31 Cal.4th at p. 671.)

Secondary Sources

Ahart, California Practice Guide: Enforcing Judgments & Debts, Ch. 3-C, Prelawsuit Considerations, ¶ 3:327 et seq. (The Rutter Group)
23 California Forms of Pleading and Practice, Ch. 270, Fraudulent Conveyances, §§ 270.42[3], 270.192 (Matthew Bender)
26 California Forms of Pleading and Practice, Ch. 307, Insolvency, § 307.32 (Matthew Bender)