- 8 -
was insolvent at that time or the debtor became
insolvent as a result of the transfer or obligation.
Section 3439.04(a) relates to actual fraud, whereas sections
3439.04(b) and 3439.05 relate to constructive fraud.
Mr. Solaas' Salary
1. Actual Fraud
Respondent contends that the amount of the increase in Mr.
Solaas' salary from 1987 to 1988 was actual fraud on KBI's
creditors. Respondent points out that (1) KBI increased Mr.
Solaas' salary by 30 percent while during that same time it
increased other officers' salaries by only 6 percent, and (2) Mr.
Solaas determined the salary KBI paid him. Mr. Solaas argues
that the salary KBI paid him in 1988 was reasonable.
For the Court to find actual fraud, Mr. Solaas must have
actually intended to hinder, delay, or defraud any of KBI's
creditors. Cal. Civ. Code sec. 3439.04(a). Respondent concedes
that the increased salary by itself does not indicate that Mr.
Solaas had the intent to hinder, delay, or defraud KBI's
creditors. Respondent, however, argues that the "unwarranted
increase in salary", when considered along with the other
transfers KBI made to Mr. Solaas, somehow amounts to actual
fraud.
In 1988, KBI paid Mr. Solaas a salary that was comparable to
similarly positioned officers and executives at similar
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011