In its recent decision in Nautilus, Inc. v. Yang, the California Court of Appeal for the Fourth District addressed a split of authority regarding the good faith defense to fraudulent transfer claims in California.
In 1986, California adopted, with minor alterations, the Uniform Law Commission’s Uniform Fraudulent Transfer Act as Civil Code sections 3439, et seq. Effective January 1, 2016, that chapter was amended and renamed the Uniform Voidable Transactions Act (the “UVTA"). The UVTA creates a civil cause of action by a creditor against a debtor, the debtor’s transferees, and/or the subsequent transferees of the debtor’s transferees to void transfers made by the debtor to defraud the creditor or prevent the creditor from collecting on his claim. Civ. Code § 3439.07(a). A creditor’s claim is defined broadly to include almost any right to payment, including an accrued cause of action or a judgment. Civ. Code § 3439.01(b).