Opinion ID: 2625291
Heading Depth: 3
Heading Rank: 1

Heading: The Uniform Fraudulent Transfer Act

Text: The UFTA was enacted in 1986; it is the most recent in a line of statutes dating to the reign of Queen Elizabeth I. This Act, like its predecessor and the Statute of 13 Elizabeth, declares rights and provides remedies for unsecured creditors against transfers that impede them in the collection of their claims. (Legis. Com. com., 12A West's Ann. Civ.Code (1997 ed.) foll. § 3439.01, p. 272.) Under the UFTA, a transfer is fraudulent, both as to present and future creditors, if it is made [w]ith actual intent to hinder, delay, or defraud any creditor of the debtor. (Civ.Code, § 3439.04, subd. (a).) Even without actual fraudulent intent, a transfer may be fraudulent as to present creditors if the debtor did not receive a reasonably equivalent value in exchange for the transfer and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation. (Civ. Code, § 3439.05.) On its face, the UFTA applies to all transfers. Civil Code, section § 3439.01, subdivision (i) defines [t]ransfer as 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.... The UFTA excepts only certain transfers resulting from lease terminations or lien enforcement. (Civ.Code, § 3439.08, subd. (e).) Thus, the UFTA on its face encompasses transfers made under an MSA. Consequently, most decisions of other states construing parallel provisions of the UFTA hold that it does apply to marital property transfers, including those in connection with divorce. (See, e.g., Scholes v. Lehmann (7th Cir. 1995) 56 F.3d 750, 758-759 [applying 111. law]; Kardynalski v. Fisher (1985) 135 Ill.App.3d 643, 90 Ill.Dec. 410, 482 N.E.2d 117, 121-122; Dowell v. Dennis (Okla.Ct. App.2000) 998 P.2d 206, 209, 212-213; Greeninger v. Cromwell (1996) 140 Or. App. 241, 915 P.2d 479, 482; see also Federal Deposit Ins. Co. v. Malin (2d Cir. 1986) 802 F.2d 12, 18 [under New York law, UFTA applies but ex-wife was good faith purchaser for value]; but see Britt v. Damson (9th Cir.1964) 334 F.2d 896, 901 [Wash, law]; Witbart v. Witbart (1983) 204 Mont. 446, 666 P.2d 1217, 1219.) Civil Code section 3439.11 provides expressly that the UFTA shall be applied and construed to effectuate its general purpose to make uniform the law .. . among states enacting it. Husband here points to section 10 of the UFTA (Civ.Code, § 3439.10), which provides: Unless displaced by the provisions of this chapter, the principles of law and equity, including the law merchant and the law relating to principal and agent, estoppel, laches, fraud, misrepresentation, duress, coercion, mistake, insolvency, or other validating or invalidating cause, supplement its provisions. He argues that Family Code section 916 is a law that supplements] the provisions of the UFTA by, in effect, establishing an exception to its provisions. But to supplement the UFTA means to provide something additional to the law, not to narrow or nullify the law. This point is illustrated in Monastra v. Konica Business Machines, U.S.A., Inc. (1996) 43 Cal.App.4th 1628, 51 Cal.Rptr.2d 528. The defendants there argued that compliance with the Bulk Sales Act (Cal. U. Com.Code, § 6101 et seq.) immunized a transfer from attack under the UFTA. The Court of Appeal disagreed, concluding that the protections given creditors under the Bulk Sales Law supplemented, that is, added to the protections of the UFTA. ( Monastra v. Konica Business Machines, U.S.A., Inc., supra, at pp. 1639-1640, 51 Cal.Rptr.2d 528.)