Janice M. Hinrichsen, Inc. v. Messersmith Ventures
296 Neb. 712
Neb.2017Background
- JMH (Janice M. Hinrichsen, Inc.) sold 90% of an insurance agency’s assets to RAM in Jan 2011 for $108,870; RAM later owed JMH a judgment of $98,606.94 (July 2012).
- RAM operated through PVIA Partnership (90% RAM, 10% JMH); in Oct 2013 RAM (as managing partner) transferred PVIA Partnership’s customer list and agency contracts to Messersmith Ventures for $250.
- Messersmith Ventures renewed agency contracts and began operating as Mid‑States Insurance Agency; RAM dissolved its partnership interest effective Oct 31, 2013.
- JMH sued under the Nebraska Uniform Fraudulent Transfer Act (UFTA), seeking avoidance or other relief to satisfy its judgment against RAM (including levy on transferred assets or a charging order).
- The district court implicitly found a transfer occurred but awarded JMH a monetary judgment of $250 (the price paid), limiting execution to that amount; JMH appealed and Messersmith cross‑appealed.
- The Nebraska Supreme Court reviewed the case de novo (equitable action) and affirmed that a fraudulent transfer occurred but reversed the $250 money judgment and remanded for UFTA relief allowing JMH to levy execution on the transferred assets or their proceeds under § 36‑708(b).
Issues
| Issue | Plaintiff's Argument (JMH) | Defendant's Argument (Messersmith Ventures) | Held |
|---|---|---|---|
| Whether RAM’s transfer to Messersmith was a fraudulent transfer under the UFTA | Transfer was after JMH’s claim arose, received not reasonably equivalent value, and RAM was insolvent — so fraudulent under §36‑706(a) | Denies fraudulent transfer; disputes valuation and asset status | Court held record supports finding of fraudulent transfer (de novo review) |
| Whether transferred items qualified as "assets" under the UFTA given bank lien | Assets (customer lists, agency contracts) were property of RAM and not fully encumbered by the bank’s lien | Argues assets were encumbered by valid lien and thus excluded from "asset" definition (§36‑702(2)) | Court found evidence supported that assets were not wholly encumbered and thus were assets for UFTA purposes |
| Whether RAM received reasonably equivalent value for the transfer | $250 was not reasonably equivalent given prior sale price (~$108,870), commissions earned, and existing judgment amount | $250 reflected fair value; JMH failed to prove higher value | Court concluded $250 was not reasonably equivalent; transfer could be avoided |
| Proper form of relief under UFTA | Sought avoidance/charging order or order permitting levy execution on assets/proceeds to satisfy JMH’s existing judgment against RAM | Agreed $250 (if any) was proper monetary recovery; disputes broader remedies | Court held monetary judgment of $250 was inappropriate; remanded to order relief under §36‑708(b) permitting JMH to levy execution on the transferred assets or their proceeds to satisfy its judgment against RAM |
Key Cases Cited
- Reed v. Reed, 277 Neb. 391 (statement that actions under UFTA are equitable and appellate review in equity is de novo)
- Eli’s, Inc. v. Lemen, 256 Neb. 515 (equitable nature of UFTA remedies and review)
- Bowers v. Dougherty, 260 Neb. 74 (fraudulent conveyance is an action in equity)
- Trieweiler v. Sears, 268 Neb. 952 (equitable relief may be fashioned where precedent does not exactly match facts)
- O’Connor v. Kearny Junction, 295 Neb. 981 (equitable principles guide crafting of remedies)