Interaction between a long fraudulent transfer SOL and a short tort SOL
Posted: Tue May 15, 2012 7:08 pm
Limitation period for California fraudulent transfer under California Civil
Code Section 3439.09 can be as long as 7 years. A personal injury statute
of limitations is 2 years. If a personal injury perpetrator committed a
fraudulent transfer, a strange situation arises.
1. In state court, would the personal injury claimant be able to pursue
a fraudulent transfer claim after his personal injury claim is time-barred?
2. In bankruptcy court, would the trustee, having stepped into the shoes
of the personal injury claimant, whose claim became time-barred
prepetition, would the trustee be able to pursue a fraudulent transfer
claim that is not time-barred.
For example,
Negligent driver causes an accident and injures Victim on 1/5/2008.
Shortly thereafter, on 1/7/2008 Negligent Driver transfers his house
(owned free and clear) to his brother. Assuming no exceptions apply, the
Victim's last day to file a suit for personal injuries is 1/5/2010.
Victim's lawyer blows the statute and does not file a suit in two years.
Three years and two days after the accident, 3 years after the transfer,
on 1/7/2011, negligent driver files bankruptcy. Only 3 years passed after
the fraudulent transfer, so recovery of the fraudulent transfer is not
time-barred. The victim's claim is time barred, and he is entitled to no
distribution in the bankruptcy.
May the trustee stand in the shoes of the time-barred personal injury
claimant to unwind the fraudulent transfer and bring the paid off house
into the estate?
Alik Segal
Alik.Segal@gmail.com
310-362-6157
California Central District
Limitation period for California fraudulent transfer underCalifornia
Civil Code Section 3439.09 can be as long as 7 years. A personal injury statute of limitations is 2 years. If a personal injury perpetrator committed a fraudulent transfer, a strange situation arises.
In state court,would the personal injury claimant be able to pursue a fraudulent transfer claim after his personal injury claim is time-barred? In bankruptcy court, would the trustee, having stepped into the shoes of the personal injury claimant, whose claimbecametime-barred prepetition, would the trustee be able to pursue a fraudulent transfer claim that is not time-barred.
For example,Negligent driver causes an accident and injures Victim on 1/5/2008. Shortly thereafter, on 1/7/2008 Negligent Driver transfers his house (owned free and clear) to his brother. Assuming no exceptions apply, the Victim's last day to file a suit for personal injuries is 1/5/2010. Victim's lawyer blows the statute and does not file a suit in two years. Three years and two days after the accident, 3 years after the transfer, on 1/7/2011, negligent driver files bankruptcy. Only 3 years passed after the fraudulent transfer, so recovery of the fraudulent transfer is not time-barred. The victim's claim is time barred, and he is entitled to no distribution in the bankruptcy.
May the trustee stand in the shoes of the time-barred personal injury claimant to unwind the fraudulent transfer and bring the paid off house into the estate?
nk">Alik.Segal@gmail.com310-362-6157California Central District
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