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I. Introduction

When an insurance company becomes insolvent, the Insurance Code authorizes the liquidator (who is usually the state Insurance Commissioner) to bring an action to recover any money that was paid to a creditor of the company within four months of the filing of the petition for liquidation, if the payment had the effect of putting the creditor in a better position than another creditor “of the same class” in the liquidation. (Ins. Code, § 1034.) This case requires us to ascertain four separate questions concerning time periods which govern such “preference actions”:

(1) How long is the statute of limitations? The very nature of preference actions under section 1034—which involves bona fide payments to creditors, not fraudulent transfers—means that the three-year statute for liabilities created by statute other than penalties or forfeitures should apply. (See former Code Civ. Proc., § 338, subd. 1, now Code Civ. Proc., § 338, subd. (a).) Preference actions under section 1034 are not penal in nature, but remedial.

(2) When does the statute of limitations begin to run on a preference action under section 1034? Both the plain text of the statute and analogous…