Janice M. Hinrichsen, Inc. v. Messersmith Ventures
296 Neb. 712
| Neb. | 2017Background
- Janice M. Hinrichsen, Inc. (JMH) sold 90% of its insurance-agency assets to Risk Assessment and Management, Inc. (RAM) in 2011 for $108,870; RAM later failed to complete payments and JMH obtained a $98,606.94 judgment against RAM in 2012.
- In October 2013 RAM (as managing partner of PVIA Partnership) transferred customer lists and agency contracts to Messersmith Ventures, LLC for $250; those contracts were later used by Messersmith Ventures to collect commissions.
- JMH sued under the Nebraska Uniform Fraudulent Transfer Act (UFTA), alleging the transfer was fraudulent (lack of reasonably equivalent value; transfer after creditor’s claim arose; insolvency) and sought avoidance and ability to levy execution on transferred assets or proceeds.
- The district court implicitly found a fraudulent transfer but awarded JMH a monetary judgment of $250 (the amount paid by Messersmith) and limited execution to that sum, finding JMH had not proven higher value.
- On appeal the Nebraska Supreme Court reviewed equity issues de novo, held the record supported a finding of fraudulent transfer (transfer lacked reasonably equivalent value and assets were not entirely lien-encumbered), but found the district court’s $250 money judgment was not the appropriate remedy under the UFTA.
- The Supreme Court affirmed the finding of a fraudulent transfer, reversed the $250 monetary judgment, and remanded with directions that, pursuant to Neb. Rev. Stat. § 36-708(b), JMH may levy execution on the assets transferred or their proceeds to satisfy its judgment against RAM.
Issues
| Issue | Plaintiff's Argument (JMH) | Defendant's Argument (Messersmith) | Held |
|---|---|---|---|
| Whether RAM’s transfer to Messersmith was a fraudulent transfer under UFTA (§ 36-706) | Transfer occurred after JMH’s claim arose, RAM received no reasonably equivalent value, and RAM was insolvent → fraudulent | Denies fraudulent transfer: either transferred items were not "assets" (encumbered by bank lien) or $250 was reasonably equivalent value | Court (de novo) held transfer was fraudulent: assets not fully encumbered and $250 was not reasonably equivalent value |
| Whether customer lists and agency contracts were "assets" excluded by lien under UFTA (§ 36-702(2)) | Items were assets transferred and not wholly encumbered by bank lien; their value exceeded $250 | Argues bank security interest fully encumbered those assets so they were not "assets" for UFTA relief | Court held evidence supports that assets were not entirely encumbered and thus were assets for UFTA purposes |
| Whether monetary judgment for the transfer value ($250) was appropriate UFTA relief | JMH sought relief allowing levy of execution on transferred assets or proceeds, not a $250 cap | Messersmith argued $250 reflected fair value and district court correctly limited recovery | Court held $250 judgment was inappropriate given record; UFTA remedies permit execution on transferred assets or proceeds to satisfy creditor’s existing judgment |
| Proper remedy under UFTA when creditor already has a judgment against transferor (§ 36-708(b)) | Court should authorize levy execution on transferred assets/proceeds to satisfy existing judgment | District court limited remedy to $250; defendant relied on that limitation | Court directed remand: order under § 36-708(b) allowing JMH to levy execution on assets or proceeds to the extent needed to satisfy its judgment against RAM |
Key Cases Cited
- Reed v. Reed, 277 Neb. 391 (Neb. 2009) (UFTA actions are equitable)
- Eli's, Inc. v. Lemen, 256 Neb. 515 (Neb. 1999) (appeal of UFTA determination is equitable; de novo review with trial-court fact-weighting)
- Bowers v. Dougherty, 260 Neb. 74 (Neb. 2000) (fraudulent conveyance is an equitable action)
- Trieweiler v. Sears, 268 Neb. 952 (Neb. 2004) (equity courts may devise remedies to redress situations contrary to equitable principles)
- Wells Fargo Bank, N.A. v. Barber, 85 F. Supp. 3d 1308 (M.D. Fla. 2015) (charging order functions described; cited for distinction between UFTA remedies and charging orders)