858 N.W.2d 196
Neb.2015Background
- United General paid $588,671.80 to cover a shortage discovered in escrow funds held by its title agent, Guardian (owned/managed by Daniel Malone and IPR). Guardian had failed to remit about $22,000 in premiums and other escrow deposits were transferred improperly among related entities.
- United General sued multiple defendants (including Malone, Heitkamp, IPR-managed entities, and recipients of transfers) asserting claims for conversion, civil conspiracy, indemnification, contribution, and a constructive trust, seeking recovery of the paid amounts.
- At summary judgment the district court granted defendants’ motions as to conversion, contribution, and constructive trust, but denied summary judgment on conspiracy and indemnification and ordered those claims to trial.
- At trial the jury found for United General on indemnification against some defendants and for defendants on conspiracy except as to M & M Property Partners and Heitkamp; the court later granted JNOV on indemnification for several defendants and directed a verdict for Fidelis after denying United General’s late motion to amend to allege successor liability.
- On appeal the Nebraska Supreme Court affirmed in part, reversed in part, and remanded: it held summary judgment was improper as to conversion (limited to unpaid premiums) and as to a constructive trust (as to unpaid premiums traceable to defendants), but affirmed summary judgment on contribution and affirmed trial rulings regarding the instruction, amendment/directed verdict, and post-trial JNOV on indemnification for certain defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Conversion — right to immediate possession | United Gen: had immediate right to unpaid premiums held in Guardian escrow; transfers therefore tortious conversion | Defendants: United Gen had no possessory or ownership interest in customer escrow funds | Court: reversal of summary judgment — United Gen had immediate right to unpaid premiums; conversion claim survives as to those premiums, but not as to customer escrow funds generally |
| Contribution v. Indemnification | United Gen: could seek contribution from defendants who were potentially jointly liable to customers | Defendants: no common, jointly committed wrong; United Gen’s liability was statutory and distinct | Court: affirmed that claim is not contribution but equitable indemnification; summary judgment for defendants on contribution was proper (claim characterized as indemnification) |
| Constructive trust — traceability | United Gen: constructive trust proper because unpaid premiums (its property) were transferred and could be traced to defendants | Defendants: United Gen had no equitable interest in customer escrow and premiums could not be traced to specific defendants/accounts | Court: reversed summary judgment as to unpaid premiums — genuine issues exist on tracing and on whether transfers resulted from fraud/abuse so constructive trust claim as to premiums may proceed; no trust as to customer escrow funds |
| Trial issues — jury instruction, amendment/successor liability, JNOV on indemnification | United Gen: requested instruction that conspirators are liable for entire loss; sought to amend to add successor liability re: Fidelis; argued JNOV on indemnification was erroneous | Defendants: instruction substance covered by given instructions; Fidelis would be prejudiced by late amendment and was not in existence during transfers; JNOV proper where defendants found without fault so indemnity not available | Court: instruction rejection not reversible (substance included in given instructions); denial of amendment and directed verdict for Fidelis affirmed (no implied consent and Fidelis did not exist at transfers); JNOV affirmed for certain defendants lacking fault |
Key Cases Cited
- InterCall, Inc. v. Egenera, Inc., 284 Neb. 801 (definition and elements of conversion)
- Credit Bureau Servs. v. Experian Info. Solutions, 285 Neb. 526 (conversion principles)
- Martensen v. Rejda Bros., 283 Neb. 279 (conversion standard)
- Baye v. Airlite Plastics Co., 260 Neb. 385 (conversion and possessory rights)
- Shada v. Farmers Ins. Exch., 286 Neb. 444 (summary judgment evidence viewed in plaintiff's favor)
- Warner v. Reagan Buick, 240 Neb. 668 (distinguishing indemnification from contribution)
- Eggleston v. Kovacich, 274 Neb. 579 (constructive trust elements)
- Chalupa v. Chalupa, 254 Neb. 59 (tracing requirement for money-based constructive trusts)
- Eicher v. Mid America Fin. Invest. Corp., 270 Neb. 370 (civil conspiracy definition and dependency on underlying tort)
- Treptow Co. v. Duncan Aviation, Inc., 210 Neb. 72 (damages/essence of conspiracy claim)