Janice M. Hinrichsen, Inc. v. Messersmith Ventures
296 Neb. 712
| Neb. | 2017Background
- JMH (Janice M. Hinrichsen, Inc.) sold 90% of its insurance-agency assets to RAM in Jan 2011 for $108,870; RAM later defaulted and JMH obtained a $98,606.94 judgment against RAM in July 2012.
- In Oct 2013, RAM (as managing partner of PVIA Partnership) transferred customer lists and agency contracts to Messersmith Ventures for $250; Messersmith then renewed agency contracts in its name.
- JMH sued under the Nebraska Uniform Fraudulent Transfer Act (UFTA), alleging the transfer was fraudulent and seeking avoidance and the ability to levy execution on the transferred assets or proceeds.
- The district court implicitly found a fraudulent transfer but awarded JMH a money judgment of $250 (the price paid) and permitted execution only to that extent, citing lack of proof of greater value.
- On appeal, the Nebraska Supreme Court reviewed the equity action de novo and affirmed that a fraudulent transfer occurred but reversed the $250 monetary judgment as inappropriate relief.
- The Supreme Court remanded with directions that, under § 36-708(b) UFTA, the proper relief is to allow JMH to levy execution on the assets transferred or their proceeds to satisfy JMH’s existing judgment against RAM.
Issues
| Issue | Plaintiff's Argument (JMH) | Defendant's Argument (Messersmith Ventures) | Held |
|---|---|---|---|
| Whether a fraudulent transfer occurred under UFTA | Transfer occurred after judgment debt arose; no reasonably equivalent value received; RAM insolvent => fraudulent under §36-706(a) | Either no fraud because transferred items not “assets” (encumbered by bank lien) or $250 was reasonably equivalent value | Court (de novo) found record supports fraudulent transfer (implicit district finding affirmed) |
| Whether transferred items were "assets" under UFTA (encumbrance issue) | Items were assets (customer lists, agency contracts) and not fully encumbered by bank lien | Bank security interest encumbered assets; therefore not "assets" for UFTA purposes | Court rejected full-encumbrance argument—evidence supports that assets were not fully encumbered |
| Whether $250 constituted reasonably equivalent value | $250 is not reasonably equivalent given prior sale price and commissions earned by RAM; value closer to judgment amount | District court found insufficient proof of greater value; $250 accepted as value | Court held $250 was not reasonably equivalent; $250 judgment was inappropriate relief |
| Appropriate remedy under UFTA | Seek avoidance and ability to levy execution on transferred assets/proceeds ( §36-708(b)) or charging order | Argues relief improper if no transfer; if transfer proven, $250 judgment correct based on lack of valuation evidence | Court directed remedy under §36-708(b): allow JMH to levy execution on transferred assets or proceeds to satisfy judgment against RAM; monetary $250 judgment reversed and remanded |
Key Cases Cited
- Reed v. Reed, 277 Neb. 391 (discussing equitable nature of UFTA actions)
- Eli’s, Inc. v. Lemen, 256 Neb. 515 (appellate de novo review in equity actions)
- Bowers v. Dougherty, 260 Neb. 74 (fraudulent conveyance as action in equity)
- Trieweiler v. Sears, 268 Neb. 952 (equitable remedies where no precedent exists)
- O’Connor v. Kearny Junction, 295 Neb. 981 (equitable relief principles applied by Nebraska courts)