895 N.W.2d 683
Neb.2017Background
- JMH 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 renewed primary agency contracts in its name.
- JMH sued under the Nebraska Uniform Fraudulent Transfer Act (UFTA), alleging the Oct 2013 transfer was fraudulent and seeking avoidance or execution on transferred assets to satisfy JMH’s prior judgment against RAM.
- After a bench trial the district court entered judgment for JMH in the amount of $250 and permitted execution limited to that amount, finding JMH failed to prove a higher value for the transferred assets.
- On appeal the Nebraska Supreme Court reviewed the equity action de novo, concluded the transfer was fraudulent under the UFTA, but held the $250 money judgment was inappropriate relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Oct 2013 transfer was a fraudulent transfer under the UFTA | Transfer was made after JMH’s preexisting judgment, for no reasonably equivalent value, while RAM was insolvent | No fraudulent transfer because either (a) transferred items were not "assets" (encumbered by bank lien), or (b) $250 constituted reasonably equivalent value | Court: Implicit finding of fraudulent transfer affirmed (de novo review supports it) |
| Whether the transferred items qualified as "assets" under UFTA given bank lien | JMH: transferred customer lists/agency contracts were property of RAM and not wholly encumbered | Messersmith: bank security interest encumbered assets at least $22,750 so transferred items lacked asset status | Court: Transferred items were not wholly encumbered; they were assets for UFTA purposes |
| Whether $250 paid was a "reasonably equivalent value" | JMH: evidence (prior $108,870 sale, commissions received, and $98,606.94 judgment) shows $250 was not reasonably equivalent | Messersmith: district court findings that value = $250; thus reasonably equivalent | Court: $250 was not reasonably equivalent; record supports inference assets were worth substantially more |
| Appropriate remedy under UFTA | JMH sought avoidance and ability to levy execution on transferred assets/proceeds (or charging order) | Messersmith argued no relief because no fraudulent transfer; if relief, $250 judgment appropriate | Court: reversed $250 money judgment; ordered district court to permit JMH to levy execution on the transferred assets or their proceeds under §36-708(b) (charging order not applicable here) |
Key Cases Cited
- Reed v. Reed, 277 Neb. 391 (Neb. 2009) (UFTA actions are equitable; appellate de novo review applies)
- Eli’s, Inc. v. Lemen, 256 Neb. 515 (Neb. 1999) (appeal of district court determination under UFTA is equitable)
- Wells Fargo Bank, N.A. v. Barber, 85 F. Supp. 3d 1308 (M.D. Fla. 2015) (charging order described as lien on member's LLC interest; charging order is typical remedy to reach membership interests)
- Trieweiler v. Sears, 268 Neb. 952 (Neb. 2004) (equitable courts may craft novel remedies to redress fraudulent conveyances)