Are defendants entitled to a jury trial in a voidable transfer case? | Ervin Cohen & Jessup LLP


Question: I am a defendant in a fraudulent transfer action brought by a receiver in a state court. Can I demand a jury trial? I don’t want the judge who appointed the receiver to judge my case, because he is clearly biased!

A: Whether you are entitled to a jury for a fraudulent transfer request (now called a “voidable transfer” under California law – Civil Code § 3439 et seq.) Depends on the specific remedy sought. If the action is simply for the recovery of money, it is a purely legal action and you would be entitled to a jury. If, however, the action is for the recovery of land, intangibles or other equitable measures, you would not be entitled to a jury.

This issue was decided by a federal court some time ago in the Granfinanciera, SA v. Nordberg, 492 US 33 (1989). There, the Supreme Court reviewed the history of fraudulent transfer actions and concluded that the right to a jury trial depended on the property to be recovered. If the action is against personal property, still in the defendant’s possession, or money, historically such actions were and still are legal actions (e.g. replevin or money had and received) and a jury would be appropriate. . If, however, the object asks for land, intangibles, accounting or other equitable relief, these would be equitable actions and there is no right to a jury trial. Identifier. to 44. Recently in Moofly Productions, LLC v Favila 46 Cal. App. 5th 1 (2020), the same rule has been applied to fraudulent transfer actions brought in state court.

The court in Moofly noted that while the California Constitution guarantees the right to a jury trial which is only the right: “as it existed in common law in 1850, when the Constitution was first adopted … general proposition, “[t]he jury trial is a question of law in a civil lawsuit, but not in equity. ” Username. at 7.quoting the decision of the Supreme Court of California in C&K Engineering Contractors v. Amber Steel Co. 23 App Cal. 3rd 1, 8 (1978). He went on to quote: “In determining whether the action was capable of being tried by a jury at common law, the court is not bound by the form of the action but rather by the nature of the rights at issue and the facts of the particular case – the gist of the action. A jury trial should be granted when the substance of the action is legal, when the action is in fact recognizable in law. On the other hand, if the action is essentially an action in equity and the remedy “sought depends on the application of the doctrines of equity”, the parties are not entitled to a jury trial. ” Moofly, supra. at 8, citing C&K Engineering, above. at 9 o’clock [citations omitted].

In Moofly, the court determined that in the absence of a full remedy in law, based on the allegations, the defendant was not entitled to a jury. The claimant sought to avoid the transfer of three different categories of property: (1) movable property, such as computer equipment; (2) money, in the form of proceeds and profits from fraudulently transferred property, and (3) intangibles, such as software codes, trademarks, copyrights. The court ruled that no legal procedure could have provided “a simple, complete, rapid and adequate remedy”. Moofly, supra. to 9. This is because the court found that even the money demanded in the claim required accounting to determine the amount of profit involved and, therefore, demanded fair compensation. She further ruled that there was no way for the superior court to have divided the fraudulent transfer action and held the fair parts of the claims separately from the legal parts. Indeed, the court held that one of the key questions in any fraudulent transfer case was whether the transferor “received a reasonably equivalent value in exchange for the transfer or obligation”. The court ruled: “this question required considering all the assets Moofly received and would not have authorized separate lawsuits for movable property, cash and intangible property. Username.

While the court of Moofly sets out the appropriate rules to be considered in determining whether a person is entitled to a jury trial in a fraudulent transfer action, it appeared to do everything possible to conclude that no jury trial would be appropriate. Courts often separate fair and legal claims in a lawsuit, with the court determining the fair part of the claims and leaving the jury to determine the legal parts. While it can be cumbersome, it is possible, depending on the allegations and the facts. In Moofly, however, the court held that “[b]because the estate’s cause of action for fraudulent transfer was essentially a cause of equity, and the relief sought “depended on[ed] on the application of fair doctrine, Moofly was “not entitled to a jury trial.” Identifier. [citations omitted].


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