Sunday, December 20, 2009

Order Denying Relief From Judgment Reversed - Party Not On Notice That ABC Would Discharge Debts Of Individual Who Was Non-Party

In Associated Receivables Funding of Florida, Inc. v. Moecker, et al (5D08-4353), the Fifth District reversed the trial court's denial of a motion for relief from judgment.  Although the appellant was a party to the underlying assignment for the benefit of creditors, it was not put on notice the debts of the individual (non-party) would be discharged as well as those of the debtor corporation.  The court stated:
In 2004, Commerce became unable to pay its debts and executed an assignment for benefit of creditors1 to Michael Moecker...Moecker filed a petition for assignment for benefit of creditors, and notified Commerce’s creditors of the proceedings. Notably, the petition did not name Rivers as a party...Moecker and Rivers reached a compromise wherein Rivers agreed to purchase all of Commerce’s assets.
Moecker sought court approval of the compromise...He further stated that approval would preclude any of Commerce’s creditors from pursuing claims against Commerce’s successor-in-interest, IBSG, based on any claim the creditor had against Commerce. The motion defined IBSG, however, to include Rivers in his individual capacity. Thus, approval of the compromise between Moecker and Rivers sought not only to preclude claims against Commerce, but also claims against Rivers individually. Appellant was served with the motion, but did not file an objection.
Almost two years later, Appellant filed a motion for relief from judgment under Florida Rule of Civil Procedure 1.540(b)(4). It claimed that the order was void because the trial court lacked jurisdiction over Appellant’s claim against Rivers individually. It argued that although it was a “party of interest to said action by way of a claim it filed against Commerce, . . . [Appellant] did not submit the debt against Rivers to the jurisdiction of the court . . . .” We agree.
A court cannot determine matters not the subject of appropriate pleadings....The jurisdictional pleadings in this case were insufficient to put Appellant on notice that the court might enjoin Appellant from collecting its judgment against Rivers, a non-party to the assignment....Here, simply because Appellant was on notice of the motion to approve the compromise and sale of Commerce’s assets, it was not on notice that these proceedings extended beyond claims against Commerce. By purporting to extinguish Appellant’s claims against a non-party, the court denied Appellant’s due process rights. Appellant is entitled to relief from the judgment pursuant to rule 1.540.


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