Filed 7/23/19

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

CHRISTOPHER POTTER,

Plaintiff and Appellant, 

v.

ALLIANCE UNITED INSURANCE 

COMPANY,

Defendant and Respondent.

 B287614

 (Los Angeles County

 Super. Ct. No. MC026408)

APPEAL from a judgment of the Superior Court of Los 

Angeles County, Brian C. Yep, Judge. Reversed and remanded 

with directions. 

Black Compean & Hall, Michael D. Compean and Frederick 

G. Hall, for Plaintiff and Appellant.

Lewis Brisbois Bisgaard & Smith, Lane J. Ashley, Raul L. 

Martinez, and Celia Moutes-Lee, for Defendant and Respondent. 
2

Plaintiff and appellant Christopher Potter (Potter) was

injured by Jesus Remedios Avalos-Tovar (Tovar) in an auto 

accident. Tovar was insured by defendant and respondent 

Alliance United Insurance Company (AUIC), with a maximum 

liability limit of $15,000. Potter offered to settle personal injury 

claims against Tovar for his policy limit, but AUIC did not 

respond to the offer. The claim was later tried to a jury and 

Potter obtained a judgment against Tovar for nearly one million 

dollars—which the trial court subsequently vacated when 

granting AUIC’s motion for new trial. Then, before retrial, AUIC 

paid Tovar $75,000 to release any bad faith claim he had against 

AUIC (for AUIC’s failure to accept the early settlement offer). 

Potter again prevailed after the second trial, this time obtaining 

a judgment in excess of one million dollars. Unable to collect that 

sum from the insolvent Tovar, Potter sued AUIC and alleged the 

release it procured from Tovar was a fraudulent conveyance 

under statutory and common law. We consider whether the trial 

court was right to sustain AUIC’s demurrer and dismiss the 

fraudulent conveyance suit on either of two alternative grounds—

namely, that the suit was barred by the statute of limitations and 

failed to state a proper fraudulent conveyance claim. 
3

I. BACKGROUND1

A. AUIC Procures the Release After a Jury Finding for 

Potter

In October 2007, Potter was severely injured when the

motorcycle he was riding collided with the automobile Tovar was 

driving. Tovar was insured under an automobile insurance policy 

issued by AUIC, which included liability coverage limited to

$15,000 per person. 

Two months after the accident, Potter wrote to AUIC and

offered to settle his claims against Tovar in exchange for 

payment of the $15,000 policy limit. The offer stated it would

expire in 30 days. AUIC did not respond to the offer before it 

expired. 

Potter later filed a personal injury lawsuit against Tovar in 

Los Angeles Superior Court. That action proceeded to trial in 

July 2009. Tovar conceded he was at least partially at fault for 

Potter’s injuries but challenged the amount of damages. The jury 

returned a verdict in Potter’s favor, awarding him $908,643. 

Tovar filed a motion for a new trial and the trial court 

granted it—vacating the existing jury verdict and judgment. 

Potter appealed. 

In April 2010, while Potter’s appeal was pending, AUIC 

and Tovar entered into a confidential “Release and Settlement 

Agreement” (Release) pursuant to which Tovar released and 

discharged AUIC from “any claims for negligence, delay, bad 

 

1 Our factual recitation is taken from the operative 

complaint’s allegations and attached exhibits. (See generally 

Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 

924, fn. 1 (Yvanova).)
4

faith, punitive damages, unfair practices, malpractice, emotional 

distress, consequential loss and damage, excess judgment, and 

personal injury.” Tovar also agreed he would “not make any 

assignments, file any suit, take any action or pursue any action

[or] proceeding against releasees arising out of or in any way 

pertaining to the [Potter] automobile accident or the insurance 

and legal claims relating to said accident.” In exchange for 

Tovar’s release of claims and agreement to forego any assignment 

related to the Potter liability action, AUIC paid Tovar $75,000. 

B. Judgment Again for Potter, Who Cannot Collect 

Against Tovar

The Court of Appeal affirmed the order granting a new trial 

in the Potter liability action and the case was remanded for 

retrial. In early April 2012—before a trial setting conference in 

the personal injury action and some two years after the Release 

had been executed—counsel for Tovar disclosed the existence of 

the Release to Potter’s counsel. The second trial in the personal 

injury action commenced approximately a year later. The jury 

again returned a verdict in Potter’s favor, this time awarding him 

$975,000 in damages. The trial court also awarded Potter 

$108,455.59 in recoverable costs and $441,697.92 in prejudgment 

interest. In December 2013, the trial court entered judgment for 

Potter in the amount of $1,523,887.16. 

From the time of the accident through the time of the 

second jury verdict, Tovar was insolvent—the only means he had 

of paying any significant portion of the judgment was his 

prerogative to sue AUIC. Potter offered to take an assignment of 

Tovar’s rights against AUIC in exchange for a covenant not to 

execute the judgment against Tovar’s personal assets. Because 
5

he had already signed the Release, however, Tovar was unable to 

agree. 

AUIC paid Potter the $15,000 policy limit but refused to 

satisfy the remainder of the judgment. 

C. Potter Sues AUIC on a Fraudulent Conveyance 

Theory and the Trial Court Sustains AUIC’s 

Demurrer

Potter filed an original complaint in this action alleging 

eight causes of action, including breach of contract, breach of the 

implied covenant of good faith and fair dealing, and engaging in a 

fraudulent conveyance. Potter subsequently filed first and 

second amended complaints, each alleging a single cause of action 

for fraudulent conveyance. Potter later filed a third amended 

complaint (the operative complaint) alleging only two causes of 

action: statutory and common law fraudulent conveyance. 

The former cause of action, predicated on a violation of

California’s Uniform Voidable Transactions Act (the UVTA,2 Civ. 

Code,3§ 3439 et seq.), alleges Tovar was insolvent prior to and at 

the time Tovar and AUIC entered into the Release. The cause of 

 

2 The UVTA was formerly known as the Uniform Fraudulent 

Transfers Act (UFTA) until it was amended and renamed

effective January 1, 2016. (Stats. 2015, ch. 44, § 3.) Although the 

transfer at issue here took place in 2010, the UVTA does not 

substantively differ from the UFTA in any manner pertinent to 

our analysis. Thus, like the parties, we refer to and cite the 

current version of the UVTA throughout this opinion unless 

otherwise noted. 

3 Undesignated statutory references that follow are to the 

Civil Code.
6

action further alleges that Tovar had a viable claim for breach of 

the implied covenant of good faith and fair dealing against AUIC, 

which was an “asset” he could have used to pay down his civil 

liability, and that AUIC participated in a fraudulent transfer of 

that asset by entering into the Release—which prevented Potter 

from collecting all or a greater share of the judgment in his 

favor.

4

 

The operative complaint’s common-law-based fraudulent 

conveyance cause of action proceeded on essentially the same 

theory, but without reliance on the terms of the UVTA. The 

Release was illegal, the cause of action alleged, because the 

insolvent Tovar transferred his right to sue for breach of the 

covenant of good faith and fair dealing to AUIC, AUIC intended 

to prevent Potter from collecting the full amount of the judgment, 

and Tovar did not receive reasonably equivalent value for the 

claim released. 

AUIC demurred to the operative complaint, arguing the 

allegations predicated on the UVTA and common law failed to 

state facts sufficient to constitute a proper fraudulent conveyance 

cause of action. As relevant for our purposes, AUIC’s demurrer

argued the UVTA-based cause of action was (1) barred by the 

statute of limitations and constituted a sham pleading because 

 

4 The operative complaint further alleged facts evidencing 

AUIC’s intent to “hinder, delay or defraud” Potter, namely, the

failure to disclose the Release for two years, the decision to enter 

into the Release after Potter had obtained a judgment against 

Tovar that was substantially higher than his policy limit, AUIC’s 

awareness that Tovar lacked assets other than the rights to the

bad faith claim he released, and the purportedly inadequate 

consideration Tovar received for the Release. 
7

its amendments contradicted prior allegations regarding when 

Potter became a creditor of Tovar; (2) Potter lacked standing to 

assert a UVTA claim because AUIC was not a debtor, a 

transferee, or a person for whose benefit a transfer was made; (3) 

the bad faith claim was not an “asset” when Tovar and AUIC 

entered into the Release because there was no judgment in effect 

against Tovar at the time; and (4) Potter could not allege he was 

injured by the transfer. As to the common law cause of action, 

AUIC argued it failed because Potter lacked standing to sue and 

could not prove any injury. 

At the demurrer hearing, the trial court initially opined the 

sham pleading and statute of limitations arguments “have some 

merit.” But the court asked the parties to focus their arguments 

on “whether this [i.e., the released bad faith claim] is an asset, 

whether there’s been a transfer of this asset, whether there are 

damages and, if so, whether they’re speculative or not, and the 

issue of standing.” The parties thereafter argued consistent with 

their positions in the demurrer briefing. 

After hearing argument from counsel, the trial court 

acknowledged AUIC’s conduct “doesn’t pass the smell test for 

sure,” but the court further mused that “doesn’t mean that 

something unlawful was done.” The court ultimately concluded it 

would sustain AUIC’s demurrer without leave to amend “for all of 

the reasons we discussed other than [an argument made by AUIC 

seeking to invoke] the mediation privilege.” The trial court 

prepared no further articulation of these reasons, and AUIC gave 

notice of the bottom-line ruling. A judgment of dismissal was 

then entered for AUIC. 
8

II. DISCUSSION

Potter’s briefing on appeal includes no meaningful 

discussion of his common law fraudulent conveyance cause of 

action, nor of why the trial court erred in sustaining the 

demurrer to it. We therefore do not address it and instead affirm 

the trial court’s ruling on that score. But the trial court’s UVTA 

ruling is adequately challenged, and that challenge has merit.

Insofar as the trial court sustained AUIC’s demurrer

because the UVTA claim is barred by the applicable statute of 

limitations, the conclusion is unsound. That cause of action was 

timely filed because the fraudulent transfer complained of was 

made during the pendency of a lawsuit that would (and did)

establish whether a debtor-creditor relationship existed between 

Potter and Tovar. Under California precedent, the statute of 

limitations thus did not begin running until the judgment in the 

personal injury action became final. The trial court’s remaining 

reasons (from what we can gather) for sustaining AUIC’s 

demurrer were also faulty. Tovar’s right to sue for bad faith was 

an asset under the UVTA because it was an assignable form of 

personal property at the time the Release was executed. Potter

had a “claim” against Tovar when the release was executed. 

Potter sufficiently alleged injury because the cause of action was 

an asset of Tovar’s that was put out of Potter’s reach by the 

Release. And AUIC is a proper defendant because the “transfer” 

of the bad faith claim (within the meaning of the UVTA, which 

defines “transfer” to include a “release”) was made for its benefit. 

A. Standard of Review 

We review de novo an order sustaining a demurrer without 

leave to amend. (Centinela Freeman Emergency Medical 
9

Associates v. Health Net of California, Inc. (2016) 1 Cal.5th 994, 

1010; Morales v. 22nd Dist. Agricultural Assn. (2016) 1 

Cal.App.5th 504, 537.) “[W]e accept the truth of material facts 

properly pleaded in the operative complaint, but not contentions, 

deductions, or conclusions of fact or law. We may also consider 

matters subject to judicial notice. (Evans v. City of Berkeley

(2006) 38 Cal.4th 1, 6[ ].)” (Yvanova, supra, 62 Cal.4th at p. 924, 

fn. omitted.)

“‘[T]he plaintiff has the burden of showing that the facts 

pleaded are sufficient to establish every element of the cause of 

action and overcoming all of the legal grounds on which the trial 

court sustained the demurrer, and if the defendant negates any 

essential element, we will affirm the order sustaining the 

demurrer as to the cause of action.’ [Citation.]” (Rossberg v. 

Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1490-1491; 

accord, Carman v. Alvord (1982) 31 Cal.3d 318, 324 [“A judgment 

of dismissal after a demurrer has been sustained without leave to 

amend will be affirmed if proper on any grounds stated in the 

demurrer, whether or not the [trial] court acted on that ground”]; 

E.L. White, Inc. v. City of Huntington Beach (1978) 21 Cal.3d 497, 

504, fn. 2 [validity of the trial court’s action, not the reason for its 

action, is what is reviewable].)

B. Overview of the UVTA 

The UVTA is the most recent iteration of creditor 

protection statutes that trace their origin to the reign of Queen 

Elizabeth I. (Legis. Com. com., 12A pt. 2 West’s Ann. Civ. Code 

(2016 ed.) foll. § 3439.01, p. 253; see also Mejia v. Reed (2003) 31 

Cal.4th 657, 664 (Mejia).) A fraudulent transfer under the UVTA 

“‘is a transfer by the debtor of property to a third person 
10

undertaken with the intent to prevent a creditor from reaching 

that interest to satisfy its claim.’ [Citation.]” (Kirkeby v. 

Superior Court (2004) 33 Cal.4th 642, 648.) “Under the U[V]TA, 

a transfer can be invalid either because of actual fraud (Civ.

Code, § 3439.04, subd. (a)) or constructive fraud (id., §§ 3439.04, 

subd. (b), 3439.05) . . . .” (Mejia, supra, at p. 661.) 

“A creditor who is damaged by a transfer described in 

either section 3439.04 or section 3439.05 can set the transfer 

aside or seek other appropriate relief under Civil Code section 

3439.07.” (Monastra v. Konica Business Machs., U.S.A., Inc.

(1996) 43 Cal.App.4th 1628, 1635-1636.) As pertinent here, a 

creditor may recover against either “[t]he first transferee of the 

asset or the person for whose benefit the transfer was made.” 

(§ 3439.08, subd. (b)(1).)

Actual fraud under the UVTA is shown when a transfer is 

made, or an obligation is incurred, “[w]ith actual intent to hinder, 

delay, or defraud any creditor of the debtor.” (§ 3439.04, subd. 

(a)(1).) Such a transfer is voidable as to a creditor of the debtor, 

“whether the creditor’s claim arose before or after the transfer 

was made or the obligation was incurred.” (§ 3439.04, subd. (a).) 

It is not voidable, however, “against a person that took in good 

faith and for a reasonably equivalent value given the debtor or 

against any subsequent transferee or obligee.” (§ 3439.08, subd. 

(a).)

Constructive fraud under the UVTA can be shown in either 

of two ways. First, a transfer is constructively fraudulent where 

a debtor makes a transfer or incurs an obligation “[w]ithout 

receiving a reasonably equivalent value in exchange for the 

transfer or obligation, and the debtor either: (A) [w]as engaged or 

was about to engage in a business or a transaction for which the 
11

remaining assets of the debtor were unreasonably small in 

relation to the business or transaction[; or] (B) [i]ntended 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.”

5

 (§ 3439.04, subd. (a)(2).) As with actual

fraud, this form of transfer is voidable as to a creditor no matter 

whether the creditor’s claim arose before or after the transfer. 

(§ 3439.04, subd. (a).) Second, a transfer is constructively 

fraudulent when a debtor makes a transfer or incurs an 

obligation “without receiving a reasonably equivalent value in 

exchange for the transfer or obligation and the debtor was 

insolvent at that time or the debtor became insolvent as a result 

of the transfer or obligation.” (§ 3439.05, subd. (a).) This form of 

transfer is voidable as to a creditor whose claim arose before the 

transfer was made. (§ 3439.05, subd. (a).)

C. The UVTA’s Filing Deadlines Pose No Bar to Potter’s 

UVTA Cause of Action

The UVTA states a cause of action under section 3439.04, 

subdivision (a)(1) (actual fraud) is “extinguished” unless filed “not 

later than four years after the transfer was made or the 

obligation was incurred or, if later, not later than one year after 

the transfer or obligation was or could reasonably have been 

discovered by the claimant.” (§ 3439.09, subd. (a).) The statute 

provides a cause of action under section 3439.04, subdivision 

(a)(2) (constructive fraud—assets too small or debts too large) or 

 

5 Former section 3439.04, subd. (a)(2)(B) used the phrase “he 

or she” rather than “the debtor.” (Former § 3439.04, subd. 

(a)(2)(B).) 
12

section 3439.05 (constructive fraud—insolvency) must be filed 

“not later than four years after the transfer was made or the 

obligation was incurred.”

6

 (§ 3439.09, subd. (b).) 

The “after the transfer was made or the obligation was 

incurred” language used by section 3439.09 was interpreted by 

the Court of Appeal over 20 years ago in Cortez v. Vogt (1997) 52 

Cal.App.4th 917 (Cortez). The panel in that case analyzed when 

UVTA filing deadlines are triggered in a case where the “transfer 

alleged to be a fraudulent conveyance occurs during an 

underlying action which later establishes by final judgment the 

actual legal existence of a debtor-creditor relationship.” (Id. at p. 

929.) We are, of course, presented with that same basic scenario 

here: the Release was executed during the pendency of Potter’s 

action against Tovar, which ultimately confirmed Potter was a 

creditor of Tovar. 

Relying on “legislative material published in connection 

with the adoption of the [UVTA],” the Cortez opinion holds the 

filing deadlines run from the time the underlying judgment 

becomes final. (Cortez, supra, 52 Cal.App.4th at p. 929.) Cortez

reached that conclusion in light of: (1) the UVTA’s purpose as a 

cumulative remedy in addition to preexisting remedies—

remedies for which California Supreme Court precedent holds the 

limitations period begins to run at the time of judgment in the 

underlying action (Adams v. Bell (1936) 5 Cal.2d 697, 703); (2) a 

desire to construe the UVTA in a manner consistent with other 

 

6 The wording of the UVTA differs slightly from the wording 

of the former UFTA. The differences are inconsequential for our 

analysis.
13

states’ laws;7and (3) “[t]he potential of unnecessary litigation if 

strict time limits are drawn for fraudulent transfer cases in 

circumstances such as are involved in [Cortez].” (Cortez, supra, 

52 Cal.App.4th at pp. 930-937.)

Potter’s lawsuit against Tovar, the result of which would 

establish whether and to what extent Potter is a creditor of

 

7 The analysis and result in Cortez has since been criticized 

by some courts in other jurisdictions. (See, e.g., Schmidt v. HSC, 

Inc. (2014) 131 Hawaii 497, 511; Moore v. Browning (Ct.App. 

2002) 203 Ariz. 102, 109; but see GEA Group AG v. Flex-N-Gate 

Corp. (7th Cir. 2014) 740 F.3d 411, 417 [noting the Illinois 

Supreme Court has not addressed the issue and could potentially 

agree with the “forcefully argued” Cortez].) In the 20-plus years 

since Cortez was decided, however, no published case in 

California has disagreed with its holding or adopted the 

reasoning of the critical out-of-state cases. We will not be the 

first, partly in deference to the reliance interests that may have 

grown up around Cortez and to the salutary aim of ensuring

predictability and stability in the law.

AUIC, for its part, does not argue Cortez was wrongly 

decided. Rather, AUIC cites PGA West Residential Assn., Inc. v. 

Hulven Internat., Inc. (2017) 14 Cal.App.5th 156 (PGA West) and 

contends PGA West concluded section 3439.09 is a statute of 

repose (not a statute of limitations), thereby rendering Cortez

distinguishable. AUIC misreads PGA West, or more precisely, 

reads it too broadly. The court in PGA West considered a 

question Cortez did not: whether section 3439.09, subdivision (c), 

which places a backstop seven-year filing cap on a UVTA action 

“[n]otwithstanding any other provision of law,” is subject to 

tolling. PGA West does not, as AUIC suggests, declare either 

subdivisions (a) or (b) statutes of repose, and we decline to so 

extend the case’s holding, which is solely focused on subdivision 

(c).
14

Tovar, was pending when the Release was signed. Following

Cortez, the UVTA filing deadlines did not begin to run until 

judgment was entered in the underlying action. (Cortez, supra, 

52 Cal.App.4th at p. 937.) That occurred on December 20, 2013,

and Potter filed his original complaint within four years of that 

date, on June 24, 2016. The suit is therefore timely. 

D. The Operative Complaint States a Valid UVTA Claim

AUIC’s demurrer did not challenge the sufficiency of 

Potter’s allegations of either actual or constructive fraud. 

Instead, the demurrer attacked the sufficiency of the

foundational allegations that establish certain predicates for a 

UVTA violation, namely whether Potter sufficiently alleged (1) an 

asset was transferred, (2) Potter was injured by the transfer, and 

(3) any suffered injury entitled Potter to sue AUIC. AUIC 

continues to press these points on appeal. AUIC additionally 

argues the complaint failed to sufficiently allege that Potter had 

a “claim” against Tovar or that Tovar was insolvent at the 

pertinent time. We take up these arguments and find each

lacking. 

1. The cause of action for bad faith is an “asset”

In pertinent part, the UVTA defines an asset as the 

“property of a debtor,” excluding property “to the extent it is 

encumbered by a valid lien[,]” and “to the extent it is generally 

exempt under nonbankruptcy law.” (§ 3439.01, subd. (a).) As 

noted by the Legislative Committee Comments, the definition of 

asset “requires a determination that the property is subject to 

enforcement of a money judgment. Under Section 704.210 of the 

Code of Civil Procedure, property that is not subject to 
15

enforcement of a money judgment is exempt.” (Legis. Com. com., 

12A pt. 2 West’s Ann. Civ. Code (2016 ed.) foll. § 3439.01, p. 253.) 

“Except as otherwise provided by law, all property of the 

judgment debtor is subject to enforcement of a money judgment.” 

(Code Civ. Proc., § 695.010, subd. (a).) “‘Property’ includes real 

and personal property and any interest therein.” (Code Civ. 

Proc., § 680.310.) “‘Personal property’ includes both tangible and 

intangible personal property.”8 (Code Civ. Proc., § 680.290.)

A cause of action to recover money damages is known as a 

“chose in action,” which is considered a form of personal property.

(Vick v. DaCorsi (2003) 110 Cal.App.4th 206, 212, fn. 35; see also 

Code Civ. Proc. § 17, subd. (b)(8)(A) [defining “personal property” 

to include “things in action”].) From just these basic definitional 

principles, Tovar’s right to bring a bad faith cause of action would 

constitute personal property subject to the enforcement of a 

money judgment.

The Code of Civil Procedure, however, includes an 

exception to the rule that we must consider to see if it changes 

the result. The Code states: “Except as otherwise provided by 

statute, property of the judgment debtor that is not assignable or 

transferable is not subject to enforcement of a money judgment.” 

(Code Civ. Proc. § 695.030, subd. (a).) The question, of course, 

becomes whether Tovar’s bad faith cause of action was 

assignable, and for that, we look to the nature of the cause of 

action. 

 

8 Potter’s opening brief contends at some length that the 

intangible nature of the property at issue here does not bear on 

the adequacy of his pleading. Because we agree and AUIC does 

not argue to the contrary, we do not address this point further. 
16

“The implied covenant [of good faith and fair dealing] 

imposes on an insurer the duty to accept a reasonable settlement 

offer within policy limits when there is a substantial likelihood of 

a judgment against the insured exceeding policy limits.

[Citation.] An insurer who breaches this duty is liable for all of 

the insured’s damages proximately caused by the breach, 

regardless of policy limits.” (Wolkowitz v. Redland Ins. Co. (2003) 

112 Cal.App.4th 154, 162 (Wolkowitz).) An insured, however, has 

no immediate remedy for a refusal to settle; rather, “[u]ntil 

judgment is actually entered, the mere possibility or probability 

of an excess judgment does not render the refusal to settle 

actionable.” (Safeco Ins. Co. of Am. v. Superior Court (1999) 71 

Cal.App.4th 782, 788 (Safeco).)

An insured may, however, assign a cause of action for bad 

faith failure to settle in exchange for the plaintiff’s covenant not 

to execute an excess judgment against the insured’s personal 

assets. (Hamilton v. Maryland Cas. Co. (2002) 27 Cal.4th 718, 

732 (Hamilton); see also 21st Century Ins. Co. v. Superior Court

(2015) 240 Cal.App.4th 322, 327 (21st Century); Safeco, supra, 71 

Cal.App.4th at pp. 788-789.) This both “ensure[s] a reliable 

judicial determination of the insured’s liability for purposes of a 

later bad faith action and eliminate[s] the insured’s exposure to 

an excess judgment.” (Wolkowitz, supra, 112 Cal.App.4th at p. 

164.) The assignment “is not immediately assertable,” but 

“becomes operative after the excess judgment has been rendered.” 

(Hamilton, supra, at p. 732; see also Wolkowitz, supra, at p. 164 

[an insured can assign the bad faith cause of action against the 

insurer to the claimant “before trial in the underlying action”]; 

21st Century, supra, at p. 327 [“insured may assign any bad faith 

claims to the plaintiff in exchange for a covenant not to execute; 
17

the assignment will become operative after trial and in the event 

that an excess judgment has been rendered”].)

Under this established authority, Tovar’s bad faith cause of 

action against AUIC was assignable when Tovar entered into the 

Release even though Tovar could not yet have sued AUIC. 

Because it was assignable, and because it does not appear to be 

otherwise exempted, the potential cause of action is property 

subject to a money judgment and therefore an asset under the 

UVTA. AUIC’s arguments to the contrary are all unpersuasive. 

AUIC relies on Safeco, supra, 71 Cal.App.4th 782, for the 

proposition that a cause of action for bad faith failure to settle 

accrues only after a judgment has been rendered in excess of the 

policy limits. True, that is what Safeco says, but that is not all it

says. Safeco and the other cases we have cited recognize a bad 

faith cause of action may be assigned to the claimant before trial 

in the underlying action (id. at p. 788), and AUIC does not reckon 

with that aspect of precedent that is dispositive on the meaning 

of “asset” under the UVTA. AUIC also contends the cause of 

action was not an asset because Tovar could not have sold it to 

satisfy the excess judgment. The cause of action was 

transferable, though, and that undercuts AUIC’s unsupported

assertion that the cause of action was not an asset. 

Additionally, AUIC contends section 1045, which provides 

“[a] mere possibility, not coupled with an interest, cannot be 

transferred,” demonstrates the unaccrued cause of action could 

not have been assigned. This contention is similarly 

unpersuasive. “Although common law and statutory rules 

against assignment of expectations . . . prevent the transferee 

from immediately asserting his claim, the attempted transfer of a 

future right arising out of the breach of the insurer’s duty to 
18

settle in good faith operates as an ‘equitable assignment or 

contract to assign, which becomes operative as soon as the right 

comes into existence.’ [Citation.]” (Schlauch v. Hartford Accident 

& Indem. Co. (1983) 146 Cal.App.3d 926, 931, fn. 3.) Indeed, 

California courts have long enforced assignments of contingent 

expectancies “[d]espite . . . section 1045.” (Bank of California v. 

Connolly (1973) 36 Cal.App.3d 350, 366-367; see also Dougherty 

v. California Kettleman Oil Royalties, Inc. (1937) 9 Cal.2d 58, 89.)

Because we conclude the cause of action was an asset

within the meaning of the UVTA, AUIC’s argument that the 

Release was not a transfer of an asset also fails. “‘[T]ransfer’ 

under the U[V]TA has a broad meaning.” (Sturm v. Moyer (2019) 

32 Cal.App.5th 299, 308.) It includes “every mode, direct or 

indirect, absolute or conditional, voluntary or involuntary, of 

disposing of or parting with an asset or an interest in an asset, 

and includes payment of money, release, lease, license, and 

creation of a lien or other encumbrance.” (§ 3439.01, subd. (m), 

italics added.) Under the plain language of the UVTA, a release 

qualifies as a “transfer.” 

AUIC nevertheless relies on canons of statutory 

interpretation to argue Tovar’s release of his contingent bad faith 

cause of action could not constitute a transfer under the UVTA 

because “release” only applies to an asset or interest in an asset, 

not to the release of a right. The canons do not alter the statute’s 

plain meaning, however, and in any event, we have decided there 

was an asset involved and the argument therefore fails by 

necessity. 
19

2. Potter alleged sufficient facts to establish he 

had a claim against Tovar 

AUIC also argues Potter did not have a “claim” against 

Tovar, and thus was not a “creditor” when Tovar executed the 

Release, because Potter did not have a judgment against Tovar at 

the time. While AUIC is correct that a creditor under the UVTA 

is “a person that has a claim,” the word “claim” is not as narrowly 

defined as AUIC contends. With an exception not pertinent here, 

a claim is “a right to payment, whether or not the right is reduced 

to judgment, liquidated, unliquidated, fixed, contingent, matured, 

unmatured, disputed, undisputed, legal, equitable, secured, or 

unsecured.” (§ 3439.01, subd. (b).)

The plain language of section 3439.01 demonstrates an 

individual need not have a judgment to have a claim, as does 

section 3439.04, which provides certain transfers are voidable as 

to a creditor “whether the creditor’s claim arose before or after 

the transfer was made” (§ 3439.04, subd. (a)). Though Potter did 

not have a judgment against Tovar when the Release was 

executed, he had a claim against him. He and Tovar were thus, 

respectively, a creditor and debtor under the terms of the UVTA. 

(§ 3439.01, subds. (c), (e).) 

3. Potter sufficiently alleged injury 

The operative complaint alleges Potter obtained a verdict in 

his favor in the amount of $1,523,887.16 and has been damaged 

because he cannot collect the full amount of the excess judgment 

from either Tovar or AUIC. As we have already concluded, the 

bad faith cause of action was a transferrable asset. Without the 

Release, Tovar could have assigned the cause of action to Potter. 

If Tovar had declined to do so in favor of pursing it himself, 
20

Potter could have placed a lien on the cause of action or potential 

proceeds of the lawsuit. (Code Civ. Proc., § 708.410, subd. (a).) 

The Release deprived Potter of those options. While it is unclear 

at this juncture what value Tovar’s cause of action had or has,9

the allegation is sufficient to demonstrate injury for the purposes 

of a demurrer. 

We also reject AUIC’s argument that Potter was not 

injured by the Release because it did not put any property out of 

the reach of a creditor. The basic premise of this contention is 

that Potter did not have a judgment or a “right to payment” when 

the Release was executed. As described above, a right to 

payment under the UVTA need not be “reduced to judgment” in 

order for a claim to exist. (§ 3439.01, subd. (b).) Potter had a 

“claim,” and was a creditor, when the Release was executed. 

4. Potter alleged sufficient facts to establish AUIC 

is a proper defendant for this cause of action 

AUIC appears to have abandoned the contention, raised 

below, that Potter lacks standing to sue AUIC for fraudulent 

conveyance. We nevertheless address the contention briefly

because it is unclear from the trial court’s “for all of the reasons 

we discussed” ruling whether it based any part of its decision on 

this contention.

The UVTA permits a creditor to recover against a 

transferee or a “person for whose benefit the transfer was made.” 

 

9

It seems fair to assume, however, from the $75,000 AUIC 

paid Tovar in consideration for the Release, that the cause of 

action had significant monetary value when the Release was 

executed. 
21

(§ 3439.08, subd. (b)(1)(A).) AUIC argued Potter could not state a 

cause of action for fraudulent conveyance against AUIC because 

AUIC was not a debtor, a transferee, or a person for whose 

benefit a transfer was made. The facts as alleged in the operative 

complaint forestall this conclusion. As alleged, the transfer in 

question was made for AUIC’s benefit. 

5. AUIC’s insolvency argument fails

AUIC argues the trial court properly sustained the 

demurrer because the Release did not render Tovar “insolvent” as 

defined by the UVTA. Only one of the three methods of proving a 

violation of the UVTA requires a plaintiff to prove insolvency 

(§ 3439.05), and the operative complaint pleads all three methods 

in the alternative. As a result, even if AUIC were correct, it has 

not shown the complaint fails to state a cause of action for 

violation of the UVTA.

E. Potter Waived Any Challenge to the Demurrer Ruling 

on the Common Law Cause of Action 

Though Potter’s briefs on appeal include passing mentions 

of his cause of action for common law fraudulent conveyance, he 

includes no meaningful discussion of it and cites no pertinent 

authority regarding it. “‘When an appellant fails to raise a point, 

or asserts it but fails to support it with reasoned argument and 

citations to authority, we treat the point as waived.’ (Nelson v. 

Avondale Homeowners Assn. (2009) 172 Cal.App.4th 857, 862[ ].) 

‘We are not bound to develop appellants’ arguments for them. 

[Citation.] The absence of cogent legal argument or citation to 

authority allows this court to treat the contention as waived.’

[Citations.]” (Cahill v. San Diego Gas & Electric Co. (2011) 194 
22

Cal.App.4th 939, 956.) Cahill’s observations apply fully to 

Potter’s common law cause of action and the trial court’s ruling 

as to that cause of action will therefore stand.

DISPOSITION

The judgment of dismissal is reversed and the case is 

remanded for further proceedings consistent with this opinion. 

Potter is to recover his costs on appeal. 

CERTIFIED FOR PUBLICATION

BAKER, J.

We concur:

RUBIN, P. J.

MOOR, J.