Transfers to Defraud Creditors

Under some circumstances a creditor may sue to set aside a transfer of property by a debtor, where the transfer defrauds that creditor. (Civ.Code, § 3439 et seq., the Uniform Fraudulent Transfer Act.) 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.” (16 Cal.Jur.3d (rev.) Creditors’ Rights and Remedies, § 430, p. 540, fns. omitted; Bennett v. Paulson (1935) 7 Cal. App.2d 120, 123, 45 P.2d 369Haskins v. Certified Escrow & Mtge. Co. (1950) 96 Cal.App.2d 688, 691, 216 P.2d 90; 37 Am. Jur.2d (2001) Fraudulent Conveyances and Transfers, § 157, p. 644; 37 C.J.S. (1997) Fraudulent Conveyances, § 46, p. 579.)

A fraudulent conveyance under the UFTA involves “`a transfer by the debtor of property to a third person undertaken with the intent to prevent a creditor from reaching that interest to satisfy its claim.'” (Kirkeby v. Superior Court (2004) 33 Cal.4th 642, 648, 15 Cal.Rptr.3d 805, 93 P.3d 395.) “A transfer made … by a 887*887 debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer was made …, if the debtor made the transfer … as follows: [¶] (1) With actual intent to hinder, delay, or defraud any creditor of the debtor….” (§ 3439.04, subd. (a).)

Section 3439.07, subdivision (a) sets forth creditors’ remedies, which include avoidance of a transfer, attachment, and the equitable remedies of injunction and receivership as well as “[a]ny other relief the circumstances may require.” (§ 3439.07, subd. (a)(3)(C).) A transfer is not voidable against a person “who took in good faith and for a reasonably equivalent value or against any subsequent transferee….” (§ 3439.08, subd. (a).)

The UFTA permits defrauded creditors to reach property in the hands of a transferee. The Family Code, in section 916, protects property transferred to a spouse incident to divorce from the debts of the other spouse. Neither statute expressly refers to the other. Our task is to harmonize the two statutes. (DeVita v. County of Napa (1995) 9 Cal.4th 763, 778-779, 38 Cal.Rptr.2d 699, 889 P.2d 1019.)

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