Janice M. Hinrichsen, Inc. v. Messersmith Ventures
296 Neb. 712
| Neb. | 2017Background
- JMH sold 90% of an insurance agency’s assets to RAM in Jan 2011 for $108,870; RAM later failed to complete payments and JMH obtained a $98,606.94 judgment against RAM (Case No. C112-88).
- In Oct 2013, RAM (as managing partner of PVIA Partnership) transferred customer lists and agency contracts to Messersmith Ventures for $250; Messersmith thereafter operated the business.
- JMH sued under the Nebraska Uniform Fraudulent Transfer Act (UFTA), alleging RAM’s transfer to Messersmith was fraudulent and seeking avoidance/relief to satisfy JMH’s prior judgment against RAM, including levy of execution on transferred assets.
- The district court implicitly found a fraudulent transfer but awarded JMH a monetary judgment of $250 (the amount paid by Messersmith), and permitted levy only up to that amount; JMH appealed and Messersmith cross-appealed.
- The Nebraska Supreme Court reviewed the equity action de novo, found the record supported a finding of fraudulent transfer, but held that a $250 money judgment was not appropriate relief under the UFTA.
- The Court remanded with directions to allow JMH, pursuant to § 36-708(b) of the UFTA, to levy execution on the assets transferred or their proceeds to satisfy JMH’s judgment against RAM.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RAM’s transfer to Messersmith was a fraudulent transfer under the UFTA | Transfer was post-dated to JMH’s claim, received no reasonably equivalent value, and RAM was insolvent — so transfer was fraudulent under § 36-706(a) | Denied fraudulent transfer: either the transferred items were not "assets" (encumbered by bank lien) or Messersmith paid reasonably equivalent value ($250) | Court (de novo) held evidence supported an implicit finding of fraudulent transfer; assets were not fully encumbered and $250 was not reasonably equivalent value |
| Whether the district court’s monetary judgment of $250 was proper relief under the UFTA | JMH sought avoidance and authority to levy execution on transferred assets or proceeds to satisfy prior judgment; a charging order was requested but UFTA remedies were appropriate | Messersmith argued no relief warranted or, alternatively, $250 was the correct valuation/remedy | Court held $250 money judgment was inappropriate; § 36-708(b) relief (levy on transferred assets or their proceeds to satisfy JMH’s preexisting judgment) was the proper remedy |
| Whether a charging order against Messersmith Ventures was an appropriate remedy | JMH requested a charging order as alternative means to reach value | Messersmith argued remedies under UFTA govern and charging order in LLC statute does not reach assets transferred here | Court held charging-order statute in LLC law did not apply to the transferred assets (no membership interest transferred); UFTA remedies govern |
| Whether the bank security interest made transferred items non-assets under the UFTA | JMH argued transferred items had value beyond any bank lien and thus were assets available to creditors | Messersmith argued bank lien encumbered assets fully, excluding them from UFTA "asset" definition | Court found record sufficient to conclude assets were not entirely encumbered and thus were "assets" under the UFTA |
Key Cases Cited
- Reed v. Reed, 277 Neb. 391 (equitable nature of UFTA actions)
- Eli’s, Inc. v. Lemen, 256 Neb. 515 (appeal of UFTA determinations is equitable; de novo review with deference to trial judge on conflicting credible evidence)
- Bowers v. Dougherty, 260 Neb. 74 (fraudulent conveyance is an action in equity)
- Trieweiler v. Sears, 268 Neb. 952 (where no precedent exists, equity court may devise appropriate remedy)