Background
In August 2021, Yessica Bocanegra was seriously injured when her vehicle was struck by a Chevrolet Suburban driven by Alfonso Gonzalez. She filed a negligence action in Hamilton County, and in April 2024 obtained a judgment of $1,100,000 against Gonzalez. Meanwhile, Viking Insurance Company of Wisconsin — which had issued a “Named Driver” automobile liability policy to Gonzalez’s parents — filed a declaratory judgment action in Hall County seeking a declaration of noncoverage. Bocanegra successfully moved to be dismissed from that proceeding under Medical Protective Co. v. Schrein, which bars insurers from obtaining declarations of noncoverage binding on injured claimants. In January 2023, the Hall County court entered a declaratory judgment that the Viking policy afforded no coverage to Gonzalez or his parents for the accident.
Following her $1.1 million judgment, Bocanegra commenced garnishment proceedings against Viking in May 2024. Viking answered that it had no property belonging to Gonzalez and was not indebted to him, attaching the 2023 declaratory judgment. Bocanegra filed an application to determine garnishee liability, arguing she was not bound by the declaratory judgment and was entitled to an independent coverage determination. She contended the policy covered Gonzalez as a permissive driver, and alternatively sought reformation of the policy to provide such coverage — either because Neb. Rev. Stat. § 60-534 required it, or because § 60-561’s exemption from that requirement was unconstitutional.
The garnishment court held a trial, made factual findings that Gonzalez had taken the vehicle without his father’s permission, and concluded the Named Driver policy unambiguously excluded non-named drivers. Without addressing its own authority to grant such relief or Bocanegra’s standing to seek it, the court reached the merits of the reformation claim and rejected both theories, finding § 60-534 inapplicable because the policy had never been certified as proof of financial responsibility and upholding § 60-561 against constitutional challenge. The court discharged Viking from garnishee liability. Bocanegra appealed solely the denial of her reformation claim.
The Court’s Holding
The Nebraska Supreme Court affirmed the discharge of Viking but vacated and set aside the portion of the judgment addressing Bocanegra’s request to reform the Viking policy. The court held, as a threshold jurisdictional matter, that the garnishment court lacked subject matter jurisdiction to entertain a request for equitable reformation of the insurance policy. Garnishment in aid of execution is a purely statutory legal remedy — not an equitable one — and the court found no statutory authority permitting a garnishment court to grant equitable relief when determining garnishee liability. Additionally, because garnishee liability is fixed as of the date the garnishment summons is served, the court expressed serious doubt that a garnishment court could ever premise liability on a policy equitably reformed after that date.
The court also held that Bocanegra independently lacked standing to seek reformation of the Viking policy. As a general rule, only parties or those in privity with the parties to a written instrument may seek its reformation. Nebraska follows the rule that there is no privity between an injured person and the tortfeasor’s liability insurer, and the state does not permit injured persons to bring direct actions against a tortfeasor’s insurer. Because Bocanegra was neither a party to nor in privity with the Viking insurance contract, she had no standing to seek its reformation, and the garnishment court accordingly lacked jurisdiction to hear that claim. The court noted that Viking’s cross-appeal — challenging the garnishment court’s conclusion that Medical Protective Co. entitled Bocanegra to litigate coverage in the garnishment proceeding — was not properly briefed under the appellate rules and was not considered.
Key Takeaways
- A garnishment court, which is limited to the purely statutory legal remedy of garnishment in aid of execution, lacks subject matter jurisdiction to entertain claims for equitable reformation of an insurance policy during a garnishment liability proceeding.
- An injured judgment creditor who is not a party or privy to the tortfeasor’s liability insurance policy lacks standing to seek reformation of that policy — a jurisdictional defect the court must raise sua sponte regardless of whether the parties contested it below.
- A garnishor is subrogated only to the rights the judgment debtor actually holds against the garnishee; the creditor’s claim can rise no higher than the debtor’s claim and cannot be expanded through equitable theories unavailable to the debtor in a garnishment forum.
- Under Medical Protective Co. v. Schrein, an insurer’s noncoverage declaratory judgment obtained without the injured claimant as a bound party does not preclude the claimant from litigating coverage in a subsequent garnishment proceeding, but that right to litigate is limited to legal coverage questions — not equitable reformation.
Why It Matters
This decision clarifies an important boundary for injured plaintiffs who hold unsatisfied judgments against underinsured or potentially uninsured tortfeasors: garnishment proceedings are a viable vehicle for contesting an insurer’s denial of coverage, but they are not a forum for equitable claims such as policy reformation. Judgment creditors who seek to expand coverage through statutory-compliance or public-policy reformation arguments must pursue those theories in a separate action — and must grapple with the further obstacle that Nebraska does not recognize privity between an injured person and the tortfeasor’s insurer, making standing to seek such reformation a significant independent hurdle.
The ruling also reinforces the structural separation between law and equity in Nebraska garnishment practice and signals that courts cannot permit garnishment proceedings to “follow any course other than that charted by the Legislature,” even when a more flexible approach might seem equitably appealing. Attorneys representing injured plaintiffs should carefully evaluate whether coverage disputes can be framed as pure legal questions resolvable within the garnishment framework, or whether separate equitable litigation is necessary — and, if so, whether their client has the requisite privity or standing to pursue it.