State ex rel. Wagner v. Gilbane Bldg. Co.

• Decision Date: 31 October 2008
• Docket Number: No. S-07-805.,S-07-805.
• Citation: 276 Neb. 686,757 N.W.2d 194
• Parties: STATE of Nebraska ex rel. L. Tim Wagner, Director of Insurance of the State of Nebraska, as Liquidator of Amwest Surety Insurance Company, appellee, v. GILBANE BUILDING COMPANY, a Rhode Island corporation, appellant.
• Court: Nebraska Supreme Court

757 N.W.2d 194

276 Neb. 686

STATE of Nebraska ex rel. L. Tim Wagner, Director of Insurance of the State of Nebraska, as Liquidator of Amwest Surety Insurance Company, appellee, v. GILBANE BUILDING COMPANY, a Rhode Island corporation, appellant.

No. S-07-805.

Supreme Court of Nebraska.

October 31, 2008.

Robert F. Craig and Jenna B. Taub, of Robert F. Craig, P.C., Omaha, for appellant.

Michael S. Degan and Theresa D. Koller, of Blackwell Sanders, L.L.P., Omaha, and Robert L. Nefsky of Rembolt Ludtke, L.L.P., Lincoln, for appellee.

HEAVICAN, C.J., WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

STEPHAN, J.

Amwest Surety Insurance Company (Amwest) was declared insolvent on June 7, 2001, and is the subject of a liquidation order entered pursuant to the Nebraska Insurers Supervision Rehabilitation, and Liquidation Act (NISRLA).¹ The question presented in this appeal is whether the district court for Lancaster County erred in determining as a matter of law that four payments made by Amwest to Gilbane Building Company (Gilbane), the obligee on a performance bond, were preferences avoidable by the liquidator pursuant to § 44-4828. We affirm the judgment of the district court as to three of the payments. We reverse, and remand for further proceedings with respect to the remaining payment, which was made more than 4 months prior to the filing of the petition for liquidation, because there is a genuine issue of material fact as to whether Amwest was insolvent at the time of the payment.

BACKGROUND

In 1997, Gilbane entered into a subcontract with Crane Plumbing & Heating Co., Inc. (Crane), under which Crane was to perform plumbing work on a construction project in Cambridge, Massachusetts. Pursuant to the subcontract, Crane obtained a "Labor and Material Payment Bond" and a "Performance Bond." Both bonds were issued by Amwest, as surety, on or about December 17, 1997. Gilbane was named as the obligee on each bond.

In January 2000, Crane abandoned the project and defaulted on its subcontract. Gilbane notified Amwest of the default and demanded that it complete Crane's portion of the project pursuant to the performance bond. Amwest subsequently made payments to Gilbane for costs associated with completion of Crane's contractual obligations. The first payment was made on January 5, 2001, when Amwest issued a check in the amount of $357,779.69 to Gilbane. Gilbane deposited the check on January 12. The second payment, a check in the amount of $26,150.23, was issued by Amwest to Gilbane on April 9 and deposited in Gilbane's account on or about April 10. The third payment, a check in the amount of $215,292.12, was issued by Amwest to Gilbane on April 13 and deposited in Gilbane's account on April 17. The final payment, a check in the amount of $4,222.04, was issued by Amwest on May 21 and deposited in Gilbane's account on May 24.

Amwest obtained a replacement subcontract for completion of the project. On March 28, 2001, Amwest and Gilbane entered into a release of the performance bond relating to the original subcontract with Crane, but not related to the replacement subcontract.

A petition to place Amwest in liquidation was filed on June 6, 2001, and Amwest was declared insolvent in an order entered on the following day. Subsequently, the Nebraska Director of Insurance, in his capacity as liquidator, filed a complaint alleging that the four payments made by Amwest to Gilbane in 2001 were preferential transfers voidable under § 44-4828 and seeking recovery in a total amount of $603,444.08 from Gilbane. Gilbane filed an answer denying the claims and setting forth several affirmative defenses. The parties filed cross-motions for summary judgment.

The district court entered summary judgment in favor of the liquidator and overruled Gilbane's motion. The court determined that the second, third, and fourth payments from Amwest to Gilbane were made within 4 months before the filing of the petition for liquidation and were therefore voidable as preferences.² The court further determined that there was no issue of material fact as to the insolvency of Amwest at the time of the first payment in January 2001. The court determined that all four payments were made by Amwest to Gilbane on account of an antecedent debt and that such payments allowed Gilbane to obtain a greater percentage of such debt than another creditor in the same class would receive. The court rejected Gilbane's contention that it was a mere conduit for another party and not an actual creditor responsible for a voidable preference. The district court also rejected Gilbane's contention that the transfers were made for a current expense in the ordinary course of business and, thus, not in satisfaction of an antecedent debt. Based upon these findings, the district court entered judgment in favor of the liquidator and against Gilbane in the amount of $603,444.08.

Gilbane filed this timely appeal, and we moved it to our docket on our own motion pursuant to our statutory authority to regulate the caseloads of the appellate courts of this state.³

ASSIGNMENTS OF ERROR

Quoted verbatim, Gilbane's brief assigns the following errors:

(1) The District Court erred in granting [the liquidator's] Motion for Summary Judgment because the [liquidator] failed to prove the statutory elements of a preference.

(2) The District Court erred in denying [Gilbane's] Motion for Partial Summary Judgment regarding affirmative defenses for preference actions.

(3) The District Court erred in overruling [Gilbane's] Motion for Summary Judgment.

The liquidator argues that these assignments are generalized and vague and should be disregarded by this court.

STANDARD OF REVIEW

Statutory interpretation presents a question of law, for which an appellate court has an obligation to reach an independent conclusion irrespective of the determination made by the court below.⁴

Summary judgment is proper when the pleadings and evidence admitted at the hearing disclose no genuine issue regarding any material fact or the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law.⁵ In reviewing a summary judgment, an appellate court views the evidence in the light most favorable to the party against whom the judgment is granted and gives such party the benefit of all reasonable inferences deducible from the evidence.⁶

ANALYSIS

As a threshold matter, we agree that Gilbane's assignments of error are broadly stated. A generalized and vague assignment of error that does not advise an appellate court of the issue submitted for decision will not be considered.⁷ Accordingly, we consider the assignments of error only insofar as they are narrowed by the specific arguments asserted in Gilbane's brief.⁸

CONTROLLING PRINCIPLES

The issues presented in this appeal are governed by the provisions of NISRLA. NISRLA authorizes a liquidator to avoid certain transfers by the insolvent insurer, including those which constitute a preference.⁹ A "preference" is defined by NISRLA as

a transfer of any of the property of an insurer to or for the benefit of a creditor, for or on account of an antecedent debt, made or suffered by the insurer within one year before the filing of a successful petition for liquidation under the Nebraska Insurers Supervision, Rehabilitation, and Liquidation Act the effect of which transfer may be to enable the creditor to obtain a greater percentage of such debt than another creditor of the same class would receive.¹⁰

A preference may be avoided by the liquidator if the insurer was (1) insolvent at the time of the transfer; (2) the transfer was made within 4 months before the filing of the successful petition for liquidation; (3) the recipient or its agent had reasonable cause to believe the insurer was insolvent or was about to become insolvent at the time the transfer was made; or (4) the creditor receiving the transfer was a person with whom the insurer did not deal at arm's length, for example an employee or attorney.¹¹ The term "[c]reditor" is defined by NISRLA as "a person having any claim, whether matured or unmatured, liquidated or unliqidated, secured or unsecured, or absolute, fixed, or contingent."¹² When a preference is voidable, the liquidator may recover the transferred property from the person who received it, subject to certain rights of bona fide purchasers.¹³

WAS GILBANE CREDITOR OF AMWEST?

Gilbane argues that the liquidator sued the wrong entity. It contends that it was not a creditor of Amwest potentially liable for a voidable preference, but was rather a "mere conduit" through which the payments made by Amwest passed en route to the owner of the construction project.¹⁴ In rejecting this argument, the district court determined that Gilbane was the "general contractor on the project and, as such, was responsible to the owner for [its] completion." Gilbane describes its role in the project as a "construction manager" responsible for managing the project and administering payments on behalf of the owner and subcontractors.¹⁵

Whether Gilbane was the "general contractor" or "construction manager" does not matter. The relationship of the parties at the time of the transfers in question was defined by the performance bond, which stated that Crane as principal and Amwest as surety were "held and firmly bound unto GILBANE ... as Obligee" (emphasis supplied) in the amount of $2,120,000 "for the payment whereof Principal and Surety bind themselves, their heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents." The bond further recites that Crane and Gilbane had entered into a contract for certain construction work on the Cambridge project and that the bond was given to secure performance of Crane's contractual obligations to Gilbane.

Suretyship is a contractual relation resulting from an agreement whereby one person, the surety, engages to be...