Hearne v. Riversource Life Ins. Co.

670 S.W.3d 360

Kelly Shane HEARNE, Appellant

v.RIVERSOURCE LIFE INSURANCE COMPANY and Ameriprise Financial Services, LLC, Appellees

No. 06-22-00046-CV

Court of Appeals of Texas, Texarkana.

Date Submitted: April 19, 2023

Date Decided: May 16, 2023

Bruce K. Thomas, Law Office of Bruce K. Thomas, Dallas, Kristen Homyk, Wichita Falls, Michael T. O'Connor, Brandie Moser, T. Dean Malone, Law Offices of Dean Malone, PC, Dallas, for Appellant.

Danya W. Blair, Akerman LLP, San Antonio, Kelly Almeter, Dallas, Ryan C. Krone, Akerman LLP, Houston, for Appellee.

Before Stevens, C.J., van Cleef and Rambin, JJ.

OPINION

Opinion by Chief Justice Stevens

In a prior suit, Kelly Shane Hearne obtained a judgment in excess of $360,000.00 against Charles Duncan McMillan for injuries he suffered while working for McMillan's company, Anthony Sign Company. In this suit, Hearne sued McMillan, RiverSource Life Insurance Company, and Ameriprise Financial Services, LLC, under the Texas Uniform Fraudulent Transfer Act (TUFTA). Hearne alleged that, after McMillan was served with citation in the underlying tort suit, McMillan fraudulently transferred $238,000.00 from the sale of his business, Anthony Sign Company, to Ameriprise and/or RiverSource to purchase an annuity (the RiverSource Annuity) and fund an individual retirement account. Riversource and Ameriprise moved for summary judgment, claiming that they were not transferees under TUFTA or, alternatively, that they were not liable because the transfer was in good faith. After a hearing, the trial court granted Riversource and Ameriprise's motion and dismissed the case.

On appeal, Hearne challenges the summary judgment in favor of Ameriprise and RiverSource and asserts that the trial court erred in (1) finding that Appellees were not transferees under TUFTA, (2) finding that Appellees acted in good faith, and (3) overruling his objections to Appellees’ summary judgment evidence. Because we find that the trial court did not err in finding that Appellees were not transferees under TUFTA, we affirm the trial court's judgment.

I. Procedural Background

In his live pleading, Hearne alleged that McMillan transferred the proceeds of the sale with intent to hinder, delay, or defraud Hearne. See TEX. BUS. & COM. CODE ANN. § 24.005(a)(1). As to Appellees, Hearne alleged that they had notice of McMillan's intent to hinder, delay, or defraud Hearne because McMillan informed them that his purchase of the RiverSource Annuity was intended for the protection of his assets. As relevant here, Hearne sought the following in his prayer:

a. avoidance of the transfer or obligation to the extent necessary to satisfy [Hearne's] claims ...;^[1] [and]

b. money damages from any and all Defendants, jointly and severally, up to the value of the relevant property/funds transferred, such damages being no less than the value of the relevant property – funds transferred at the time of transfer and no greater than the value of such relevant property/funds transferred at the time the jury returns a verdict and/or the court signs a judgment in this case (any money damages sought by Plaintiff in this case over that amount will be sought solely from Defendant Charles Duncan McMillan).^[2]

Appellees filed a motion for summary judgment in which they sought dismissal of all claims against them (1) because they were not transferees under TUFTA, and in the alternative, (2) because they had no liability under TUFTA since the transfer was in good faith and for reasonably equivalent value. In addition, if the trial court found that they were necessary parties, Appellees requested an order that they were in rem defendants only, not subject to liability or relief beyond complying with an order to rescind the transactions and/or to turn over any assets that they held for McMillan.

As relevant to this opinion, Appellees’ summary judgment evidence showed that Ameriprise is a securities broker dealer and registered investment advisor and that RiverSource is an affiliate of Ameriprise that offers insurance, annuities, and investment products focused on growing and protecting client income through retirement. James M. Callaway, McMillan's financial advisor, is an Ameriprise franchisee and an agent for RiverSource. In 2016, McMillan opened an IRA account with Ameriprise, with Callaway as his financial advisor, and transferred an existing IRA account to Ameriprise from another firm. According to Callaway, before he knew about the underlying lawsuit, he had talked with McMillan about McMillan's "options for generating future retirement income after he sold his business, including the use of an annuity" and maximizing his IRA contributions. In January 2017, McMillan deposited $238,000.00 with Ameriprise, and that same month, he purchased the RiverSource Annuity with an initial premium of $225,000.00 and made two $6,500.00 contributions to his IRA account for 2016 and 2017.

Callaway testified,

As an accountholder with Ameriprise, Mr. McMillan can deposit funds into his Ameriprise accounts, can withdraw funds from his Ameriprise accounts, and can transfer the funds in his Ameriprise accounts within Ameriprise or to another financial institution at his discretion. For certain of the accounts, there may be tax or other penalties for early withdrawal based on applicable laws, but such penalties do not prevent McMillan from making such withdrawals. At all times since McMillan became an Ameriprise customer, the funds he holds at Ameriprise have been owned and controlled by McMillan, and can be spent, withdrawn or transferred away from Ameriprise by him at any time.

The evidence also showed that the RiverSource Annuity is a deferred variable annuity, and that McMillan is both the owner and annuitant of the annuity. Under the terms of the annuity, McMillan can designate or change beneficiaries and assign the annuity or an interest in it. He also has the right to direct the amount, frequency, and allocation of the funds to specific investment subaccounts. In addition, because the annuity has not been annuitized, McMillan can withdraw some or all of the funds from the annuity up to its cash value, although he may incur surrender charges if the withdrawal exceeds a certain amount. When McMillan withdraws all or part of the cash value of the annuity, Appellees must generally pay the funds to McMillan within seven days.

Hearne filed a response to the motion for summary judgment and objections to the Callaway affidavit. Hearne argued that Appellees were transferees under TUFTA because McMillan gave up an interest in the funds in exchange for a guaranteed monetary return on his investment, which some courts have found to be a transfer under some state's Uniform Fraudulent Transfer Acts. He also argued that the good-faith defense was not available to Appellees because the evidence showed that Callaway was aware McMillan had been sued and that there were at least fact questions regarding (1) whether Callaway understood that McMillan sought to put his assets out of the reach of any potential judgment and (2) whether the Appellees had inquiry notice but failed to investigate. He also challenged the Appellees’ claim that they were in rem defendants only. Hearne also asserted objections to ten statements in the Callaway affidavit.

As relevant to this opinion, Hearne's evidence in support of his response showed that, on February 2, 2018, McMillan told Callaway he wanted to withdraw $13,000.00 out of the RiverSource Annuity and that Callaway confirmed that McMillan could withdraw $35,583.02 from the annuity without a surrender charge. In addition, between January 1, 2020, and December 31, 2020, McMillan withdrew $22,500.00 from the RiverSource Annuity but incurred no surrender charges.

At the hearing on the motion for summary judgment, the parties argued consistently with their motion and response. Appellees also asserted that, at that time, McMillan could withdraw all the funds in the RiverSource Annuity but that, if it was subsequently annuitized to turn into monthly payments, he would not be able to withdraw the principal. Hearne did not dispute that, although he pointed out that there would be surrender fees. After hearing the arguments on the motion and on Hearne's objections to the Callaway affidavit, the trial court granted the motion for summary judgment without stating its grounds, overruled Hearne's objections to the Callaway affidavit, and retained Appellees as in rem parties only, "with no liability for any deficiency in the net value of assets held for ... McMillan which may be available to satisfy a Judgment against McMillan in this cause, if any."

II. Standard of Review for Traditional Summary Judgment

We review the trial court's grant of a summary judgment de novo. Brown v. CitiMortgage, Inc. , No. 06-14-00105-CV, 2015 WL 2437519, at *2 (Tex. App.—Texarkana May 22, 2015, no pet.) (mem. op.) (citing Provident Life & Accident Ins. Co. v. Knott , 128 S.W.3d 211, 215 (Tex. 2003) ). "In making the required review, we deem as true all evidence which is favorable to the nonmovant, we indulge every reasonable inference to be drawn from the evidence, and we resolve any doubts in the nonmovant's favor." Id. (citing Valence Operating Co. v. Dorsett , 164 S.W.3d 656, 661 (Tex. 2005) ). "When the trial court does not specify the basis for its ruling, we must affirm a summary judgment if any of the grounds on which judgment is sought are meritorious." Id. (citing Merriman v. XTO Energy, Inc. , 407 S.W.3d 244, 248 (Tex. 2013) ).

"To be entitled to traditional summary judgment, a movant must establish that there is no genuine issue of material fact so that the movant is entitled to judgment as a matter of law." Id. (citing TEX. R. CIV. P. 166a(c) ; Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding , 289 S.W.3d 844, 848 (Tex. 2009) ). "Once the movant produces evidence entitling it to summary judgment, the burden shifts to the nonmovant to present evidence raising a genuine issue of...