In an opinion entered February 27, 2006, the Eleventh Circuit Court of Appeals held that an insurance broker was not an “initial transferee” of a preferential transfer made by the debtor to cover a dishonored check previously issued to the creditor. Therefore, the debtor could not recover a preferential transfer from the creditor.
Andreini & Co. v. Pony Express Delivery Company, 2006 U.S. App. LEXIS 4938 (11th Cir. 2006). Andreini was a insurance broker who arranged for insurance coverage for its clients, and billed them for the premiums due on the policies. Pursuant to state law, the client payments were deposited in a trust account, then remitted to the insurance carrier. Pony Express was a client of Andreini. In early 2000, Andreini sent Pony Express several notices for premiums due on workers compensation insurance policies, due May 18 and June 1, 2000. On May 22, 2000, Andreini received a check from Pony Express in the amount of $310,422, the full amount of the premiums, which Andreini deposited in its client trust account. The following day, prior to the check clearing the bank, Andreini issued several checks from its trust account to Pony Express’ insurance carriers as the premiums were either overdue or due in less than a week. Unbeknownst to Andreini, Pony Express was experiencing serious financial problems and its check to Andreini was returned for insufficient funds. On June 12, 2000, Pony Express wire transferred $310,422 to Andreini’s client trust account to cover the premiums. On June 14, 2000, Pony Express filed a Chapter 11 petition.