Janice M. Hinrichsen, Inc. v. Messersmith Ventures
296 Neb. 712
| Neb. | 2017Background
- JMH (Janice M. Hinrichsen, Inc.) sold 90% of an insurance agency to RAM in Jan 2011 for $108,870; RAM later defaulted and JMH obtained a $98,606.94 judgment against RAM (July 2012).
- In Oct 2013 RAM (as managing partner of PVIA Partnership) transferred customer lists and primary agency contracts to Messersmith Ventures for $250; Messersmith thereafter operated the agency.
- JMH sued under the Nebraska UFTA alleging the Oct 2013 transfer was fraudulent and asked the court to avoid the transfer and permit levy/execution on the transferred assets (or proceeds) to satisfy JMH’s judgment against RAM.
- The district court found (implicitly) a fraudulent transfer but awarded JMH a monetary judgment of $250 (the price paid) and allowed execution only to that amount, finding JMH had not proven a higher value.
- On appeal the Nebraska Supreme Court reviewed de novo, concluded the record supported a finding of fraudulent transfer, but reversed the $250 money judgment as inappropriate relief under the UFTA.
Issues
| Issue | Plaintiff's Argument (JMH) | Defendant's Argument (Messersmith Ventures / RAM) | Held |
|---|---|---|---|
| Whether the Oct 2013 transfer was a "fraudulent transfer" under the UFTA | Transfer followed the debt, RAM received no reasonably equivalent value, and RAM was insolvent — so transfer is fraudulent under §36-706(a) | Denied fraudulent transfer; alternatively, contended transferred items were encumbered (not UFTA "assets") or were worth only $250 | Court: implicit finding of fraudulent transfer is supported by record; affirmed that a fraudulent transfer occurred |
| Whether transferred items were "assets" excluded by a valid lien | JMH: assets (customer list/contracts) were part of the business sold in 2011 and not fully encumbered by bank lien | Messersmith: bank security interest encumbered assets (≈$22,750), so transferred items were not UFTA "assets" to the extent encumbered | Court: evidence supports that assets were not entirely encumbered; thus they qualify as assets for UFTA purposes |
| Whether the $250 represented "reasonably equivalent value" for the transfer | JMH: $250 is not reasonably equivalent given original $108,870 sale, subsequent commissions, and existing judgment (~$98,607) | Messersmith: district court correctly found insufficient proof of higher value; $250 was reasonable | Court: JMH need not prove exact value; record reasonably supports that $250 was not reasonably equivalent and transfer was fraudulent |
| Appropriate remedy under UFTA | JMH sought relief to levy execution on transferee’s assets/proceeds (§36-708(b)) or a charging order | Messersmith accepted $250 money judgment or argued no relief warranted | Court: monetary judgment of $250 was inappropriate; remanded to permit JMH to levy execution on the transferred assets or their proceeds per §36-708(b) (charging order inapplicable here) |
Key Cases Cited
- Reed v. Reed, 277 Neb. 391 (equitable nature of UFTA actions)
- Eli's, Inc. v. Lemen, 256 Neb. 515 (appellate review in equitable UFTA matters)
- Bowers v. Dougherty, 260 Neb. 74 (fraudulent conveyance treated as equity action)
- Trieweiler v. Sears, 268 Neb. 952 (equity courts may devise remedies to meet situations lacking direct precedent)
- Wells Fargo Bank, N.A. v. Barber, 85 F. Supp. 3d 1308 (charging-order remedy under LLC law is generally the creditor’s exclusive remedy against member interests)