Foreclosure Sale Cannot Go Forward When Timely Filed Motion for Rehearing Is Pending

In 944 CWELT-2007 LLC v. Bank of America (3D15-2091), the Third District granted a petition for certiorari that sought to quash an order denying a motion to cancel a foreclosure sale. On the date of the scheduled foreclosure sale, a motion for rehearing directed to the final judgment remained pending. The court stated that "it is well settled that a foreclosure sale cannot be held while a timely motion for rehearing is pending because enforcement of a final judgment is suspended by the filing of the rehearing motion."

One other procedural issue was included in the opinion. The court stated that it "consider[ed] the Bank’s decision not to file a response to the petition as the equivalent of a confession of error."

Court Where Lis Pendens Filed Obtains Exclusive Jurisdiction Over All Liens Until Judgment

In Jallali v. Knightsbridge Village Homeowners Association, Inc. (4D15-2036), the Fourth District again held that the court where a mortgagee files a lis pendens obtains exclusive jurisdiction over all liens on the property until final judgment. Therefore, the judgment entered in a case filed after the original lis pendens must be vacated.

The court stated:

In the present case, when the mortgagee filed its foreclosure action and recorded its notice of lis pendens in May 2007, the association had not yet recorded a notice of lis pendens with regard to its 2011 lien and 2012 foreclosure action....... 

Accordingly, based on section 48.23, Florida Statutes (2015), Quadomain, and the cases cited therein, we conclude that the final foreclosure judgment which the association obtained in the 2012 case was void because the trial court lacked jurisdiction at that time. Exclusive jurisdiction to foreclose on Jallali’s property was in the circuit court conducting the mortgagee’s foreclosure action in the 2007 case. Accordingly, we reverse the order denying Jallali’s motion to vacate final judgment of foreclosure.

Judgment Cannot Be Corrected To Clarify Status Of Parties Years After Entry

In Lorant v. Whitney National Bank (1D14-2757), the First District "consider[ed] whether Florida’s Rule of Civil Procedure allowing for corrections of 'clerical mistakes,' encompasses authorization to supplement a final deficiency judgment by clarifying the party defendants’ status in the litigation almost three years after the entry of the initial judgment."

After a foreclosure judgment was entered:

the court entered a final deficiency judgment as to Mr. Lorant and two other named defendants in favor of the bank. The bank then sought to domesticate the final deficiency judgment in Alabama against Mr. Lorant, but the Alabama courts did not allow it. Under Alabama law, the deficiency judgment had to reflect that Mr. Lorant was the sole remaining defendant and that all claims, rights, or liabilities of the other parties had been adjudicated. See Whitney Bank v. Lorant, 148 So. 3d 1077, 1078 n. 1 (Ala. 2014) (Moore, C.J., dissenting).

After the Alabama court's refused to domesticate the judgment, the lender "filed a motion to correct a final deficiency judgment pursuant to Rule 1.540(a)’s allowance for the correction of 'clerical mistakes.' The bank asked the court to modify its 2011 deficiency judgment to reflect that Mr. Lorant was the sole remaining defendant and that all claims, rights, or liabilities of the other parties had been adjudicated."

The court stated that:

Rule 1.540(a) specifically allows for the correction of “clerical mistakes” and “errors” in judgments “arising from oversight or omission” for an indefinite period of time. Rule 1.540(b), on the other hand, allows for the correction of other mistakes or inadvertence in a final judgment for “a reasonable time . . . not more than 1 year after the judgment[.]” The bank in this case filed its motion under Rule 1.540(a), requiring a “clerical mistake” as opposed to some other kind of mistake. Our court has recognized clerical mistakes include “only ‘errors or mistakes arising from an accidental slip or omission, and not errors or mistakes in the substance of what is decided by the judgment or order,’ the latter of which must be corrected pursuant to Rule 1.540(b).” .... A trial court “has no authority under Rule 1.540(a) to make substantive changes.” .... And relief under Rule 1.540(a) may not be appropriate where “[t]he proposed amendment of the judgment substantially change[s] its impact and effect.” 

Therefore, the court held that "[t]he mistake involved in this case resulted in the trial court 'supplementing' its initial final deficiency judgment in order to more definitively address the litigation status of the three party defendants. This correction and supplement to the previous final judgment represented a substantive change, not the sort of accidental slip or omission permitted to be corrected under Rule 1.540(a). In fact, nothing in the record indicates that a 'mistake' existed at all in the initial judgment; rather the bank’s issue was that Alabama required these matters to be addressed in a substantively different manner."

Be Specific: Order Vacating Judgment Pursuant to Rule 1.540 Reversed Because Motion Only Relied Upon Rehearing Rule (1.530)

In Foche Mortgage, LLC v. CitiMortgage, Inc. (3D14-521), the Third District reversed a trial court's order vacating a judgment pursuant to Rule 1.540. The Third District stated that the movant only referenced Rule 1.530 in the motion filed in the trial court and did not reference or make argument relating to Rule 1.540. Therefore, the motion could only be construed pursuant to Rule 1.530, which  requires a motion to be filed within fifteen days.* 

Because the movant only sought relief pursuant to Rule 1.530, and didn't reference or rely upon Rule 1.540, the motion was required to be filed within fifteen days of the entry of the order. Since it was not filed within that time period, the trial court lacked jurisdiction to enter the order appealed. 

* Rule 1.530 was recently amended to allow fifteen days. The prior version of the rule, and the version applicable to the motion at issue in the opinion, was ten days.

Error In Legal Description Renders Judgment Voidable, and Cannot Be Corrected More Than A Year After Issuance

Epstein v. Bank of America (4D13-4066), released today, involves a borrower’s challenge to a trial court’s order vacating a judgment that had been entered in favor of the plaintiff/lender. Three years after the judgment was entered in its favor, the plaintiff/lender sought to vacate the judgment due to an error in the legal description of the property on the mortgage, complaint, and ultimately the judgment. Ultimately, the court reversed the trial court's order vacating the judgment. As is shown below, the error relating to the property description was a voidable error, meaning the trial court lost jurisdiction to correct the error one year after the judgment was entered. 

The court outlined the facts at issue as follows:

The problem began when the mortgage was signed using an incorrect legal description for the real property. Subsequently, the bank filed a foreclosure complaint. In December 2009, a final summary judgment of foreclosure was entered using the incorrect legal description. The foreclosure sale was conducted the following August with the bank as the highest bidder. Shortly thereafter, a certificate of title containing the incorrect legal description was issued to the bank.

Two years later, in September 2012, the bank filed its first motion to vacate the final summary judgment, sale, and certificate of title. The motion was filed pursuant to Florida Rule of Civil Procedure 1.540(b)(1), alleging that, “due to an inadvertent mistake,” the legal description of the property in the mortgage was incorrect, and therefore, the bank needed to amend the complaint to add a reformation count. It also alleged that the incorrect legal description in the foreclosure judgment prevented the bank from obtaining clear title to the property. In October 2012, the trial court entered an order denying the bank’s motion, “without prejudice.”

In January 2013, the bank filed its second motion to vacate. This second motion was also filed pursuant to Florida Rule of Civil Procedure 1.540(b)(1), but, additionally, pursuant to rule 1.540(b)(4), on the added grounds that the final judgment was void. In this motion, the bank admitted that it was made aware of the error in the legal description in the mortgage and final judgment in October 2010, ten months after the judgment was entered. The motion alleged that the error in the legal description in the final judgment was clouding the title to property owned by a third party.

A hearing was held on the bank’s second motion. At the hearing, the homeowner objected to the bank’s second motion, arguing that the trial court did not have jurisdiction to hear the motion because rule 1.540(b)(1) has a one-year time limit for vacating a judgment, and the bank’s motion was filed more than a year after the judgment was entered. The bank renewed its argument that the incorrect legal description rendered the judgment void, making the one-year time limitation inapplicable. The trial court granted the bank’s second motion.

On appeal, the issue was whether the three-year old judgment was void or merely voidable. The court noted that “‘[i]f a judgment is ‘void’ then under rule 1.540(b) it can be attacked at any time, but if it is only ‘voidable’ then it must be attacked within a year of entry of the judgment.’ Condo. Ass’n of La Mer Estates, Inc. v. Bank of New York Mellon Corp., 137 So. 3d 396, 398 (Fla. 4th DCA 2014). Thus, the determining factor in this case is whether the final judgment was void due to an error in the legal description in the mortgage and judgment.”

In this case, the “bank argues that the judgment was void ‘because the owner of the property identified in the judgment was not made a party to the underlying case.’” The court explained that:

The bank argues that the instant case is similar to Wright, and that the final summary judgment in this case is void because the due process rights of the owner of the described property in the mortgage and judgment were violated in that the actual owner was never made a party to the action. However, there are two problems with the argument. First, there is no evidence in the record that there is an owner of the described property other than the homeowner named in the complaint, or that the property, as described in the mortgage and judgment, even exists. Second, if the property described in the mortgage and final judgment does exist, and if there is an owner of the property other than the homeowner named in the complaint, that owner was not the party challenging the final summary judgment. “[C]onstitutional rights are personal and may not be asserted vicariously.” Broadrick v. Oklahoma, 413 U.S. 601, 610 (1973). This also holds true specifically for due process challenges. See State v. Muller, 693 So. 2d 976, 978 (Fla. 1997) (holding that a defendant lacked standing to challenge a violation of the due process rights of the non-defendant owners of a vehicle). Therefore, the due process argument that the judgment is void is not applicable in this case.

***

Although not cited by either party, we agree with the analysis of the Second District regarding the authority of the court to correct errors in the legal descriptions in mortgages and foreclosure judgments: 

When a mortgage contains an incorrect legal description, a court may correct the mistake before foreclosure. If, however, the mistaken legal description is not corrected before final judgment of foreclosure, and the mistake is carried into the advertisement for sale and the foreclosure deed, a court cannot reform the mistake in the deed and judgment; rather, the foreclosure process must begin anew. Lucas v. Barnett Bank of Lee Cnty., 705 So. 2d 115, 116 (Fla. 2d DCA 1998) (citing Fisher v. Villamil, 62 Fla. 472, 56 So. 559 (1911)).  

As the Second District noted, “[w]hile the mortgagee who bid its mortgage at the sale might have understood exactly what property was being offered, other potential bidders at the sale might not have had the same understanding.” Id.

In conclusion, the court stated: "As to the named parties in this proceeding, there is no issue of subject matter jurisdiction or personal jurisdiction. We therefore determine that the final summary judgment was voidable, not void, and the bank’s motion to vacate was time-barred under rule 1.540(b)."

Trust Account Wire Receipts Are Not Privileged

In Sweetapple, Broeker & Varkas, P.L. v. Simmon (3D14-1543), the Third District addressed whether trust account wire receipts showing transfers to Sweetapple, Broeker & Varkas, P.L. (“the Firm”) are protected by the attorney-client privilege. The court described the general facts as follows:

After obtaining two judgments against one of the Firm’s clients, the Judgment Creditor discovered that the client transferred money to the Firm. The Judgment Creditor subpoenaed the Firm requesting documents reflecting any payment of sums into and out of the Firm’s trust account for the benefit of its client.  

The trial court held an in camera inspection and ordered the law firm to produce the records. The Third District agreed and concluded that "because this financial information is not privileged in the hands of the client, it is not privileged in the hands of the attorney." Therefore, the judgment creditor prevailed. 

On a procedural note, the court dismissed the petition as opposed to denying it, stating:

Because the records are not privileged, the Firm has failed to demonstrate that production of the documents would constitute irreparable harm. We therefore dismiss the petition for lack of jurisdiction. Bd. of Trs. of Internal ImprovementTrust Fund v. Am. Educ. Enters., LLC, 99 So. 3d 450, 454-55 (Fla. 2012) (“A finding that the petitioning party has suffered an irreparable harm that cannot be remedied on direct appeal is a condition precedent to invoking a district court’s certiorari jurisdiction.”) (citation and internal quotations omitted). 

Judge Logue wrote the opinion and was joined by Chief Judge Shepherd and Judge Emas. 

Issue Relating To Collection Of Judgment Against The State Certified To Florida Supreme Court

In Florida Department of Agriculture And Consumer Services v. David Mendez (4D11-4644), the Fourth District stated: "Pursuant to Florida Rule of Appellate Procedure 9.125, we certify the following question to be of great public importance:

Are property owners who have recovered final judgments against  the  State  of  Florida  in  inverse  condemnation proceedings  constitutionally  entitled to invoke the  remedies provided  in  section  74.091,  Florida  Statutes,  without  first petitioning  the  Legislature  to  appropriate  such funds pursuant to section 11.066, Florida Statutes?

The court's opinion in the case, released on July 25, 2012, can be viewed HERE. In the July 25th opinion, the court held: "We  reverse  that  portion  of  the  Palm  Beach  County  order  allowing execution against the Department and remand to the  circuit  courts for further  proceedings  consistent  with this  opinion.   We  also  reverse that portion of the Broward County order holding that section 11.066(3) was constitutional as applied, because the issue was not yet ripe."

Sanctions For Filing Motion to Vacate Reversed Due To Colorable Claim

​In Swan Landing Development LLC v. First Tennessee Bank National Association (2D11-3410),  the Second District reviewed the trial court's  imposition of sanctions against the Appellant and its attorneys. Ultimately,  the sanctions order was reversed because the organization had a colorable claim and basis to file a motion seeking relief they sought.

​The court stated that "[a] finding that a party is entitled to recover attorney's fees under section 57.105 must be based upon substantial, competent evidence presented at the hearing on attorney's fees or otherwise before the court and in the record." That being said, in this case, the Court stated:

We are compelled to conclude based on the facts of this case that the trial court abused its discretion in awarding fees under section 57.105.  Rule 1.540(b) permits a trial court to relieve a party from a final judgment based, in part, on "newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial or rehearing, . . . fraud . . . , misrepresentation, or other misconduct of an adverse party . . . ."  Here, the Bank's audit inquiry letter, which was sent after entry of the final judgment of foreclosure, facially contradicted the Bank's position at trial that the parties had agreed to a concession.  And because Swan Landing's efforts seeking an explanation of this contradiction proved unsuccessful, we conclude it was reasonable under these circumstances for Swan Landing and its attorneys to pursue the 1.540(b) motion. 

​

Appeal Of Judgment Dismissed For Failure To Comply With Trial Courts Post Judgment Orders

In Daniels v. JPMorgan Chase Bank, et al, (3D11-1237), the Third District dismissed an appeal of a final judgment due to the appellants failure to comply with post judgment orders entered by the trial court. The court stated "A party in contempt of the trial court cannotseek to invoke the authority of this Court." The court did stay the dismissal for twenty days to allow the appellant to correct the failure to comply with the trial courts orders.

General Allegation Of Fraud Is Not Sufficient To Set Aside Judgment

In Vilvar v. Deutsche Bank Trust Company Americas (4D11-457), the Fourth District affirmed the trial court's order refusing to vacate a judgment. In this case, soon after a final judgment was obtained the defendant filed bankruptcy. After the bankruptcy action was dismissed, the plaintiff moved to amend its judgment to include additional amounts owed and relied upon the affidavit of Cross in obtaining the amended judgment. "One day before the foreclosure sale was to have occurred, Vilvar filed a second petition in bankruptcy, which was also later dismissed. The sale was re-scheduled, but one week before the sale, Vilvar filed a motion to vacate the amended final judgment pursuant to Florida Rule of Civil Procedure 1.540(b). In her motion, Vilvar alleged that Cross’s affidavit “was inaccurate and constituted hearsay” and it “failed to include sworn or certified copies of the very business records upon which” Cross relied. The motion was denied and this appeal followed." The court stated:

What occurred in Freemon is precisely what transpired in this case. Cross’s affidavit stated that she was the assistant vice president of Saxon, which, as the loan servicer, was responsible for collection of the loan and pursuit of any delinquency in payments. Cross went on to explain that she was familiar with Saxon’s books, records, and documents relevant to the allegations in the complaint, and that all of the books, records, and documents concerning the loan were kept by Saxon in the regular course of its business. Cross’s affidavit also stated that she had personal knowledge of the facts regarding the sums due and owing to the bank, and provided a complete breakdown of those sums.

In stark contrast, Vilvar’s motion does not demonstrate fraud or show why any of the alleged facts would entitle her to relief sufficient to set aside the amended final judgment. She does not dispute that she defaulted on her mortgage, and does not allege that the amounts set forth in Cross’s affidavit or that were due and owing are incorrect. Indeed, Vilvar has not specifically alleged any fraud in connection with Cross’s statements in her affidavit regarding the amounts due. Equally as compelling is the fact that Vilvar failed to object to or appeal the final judgment and the amended final judgment. Vilvar waited over a year from the entry of the amended final judgment to take issue with Cross’s affidavit.

Citing to Freemon, Hembd v. Dauria, Flemenbaum v. Flemenbaum, Cady v. Chevy Chase Sav. & Loan, Inc., and Rule 1.120(b), the court stated: "This Court has made it abundantly clear that general allegations of fraud will not support a motion to vacate a final judgment under rule 1.540(b)(3)." 

We likewise find no merit to Vilvar’s claim that Cross’s affidavit did not constitute admissible evidence and that failure to attach any sworn or certified copies of the records upon which she relied should have made the affidavit insufficient under rule 1.510(e). Vilvar’s failure to timely object to the sufficiency of Cross’s affidavit when it was presented on motion for summary judgment is fatal to this claim.

Florida's Post-Judgment Interest Rate (Adjusted Quarterly)

Previously, Florida's Chief Financial Officer established the post-judgment interest rate on an annual basis. However, beginning July 1, 2011, the CFO sets the interest rate on December 1, March 1, June 1, and September 1 of each year. 

The interest rates for 2011 and the first quarter of 2012 are listed below by date:

• 01/01/2011-09/30/2011: 6%
• 10/01/2011-12/31/2011: 4.75%
• 01/01/2012-03/31/2012: 4.75%

The image below was created by Florida's Chief Financial Officer:

A post when the 2011 statutory rate of interest was announced can be viewed HERE.

A post when the 2010 statutory rate of interest was announced can be viewed HERE.

Trial Court Has Discretion To Schedule Foreclosure Sale

In LR5A-JV v. Little House (5D09-3857), the Fifth District affirmed the trial courts order scheduling a foreclosure sale.  A prior decision in the same case can be found at the following cite: LR5A-JV, LP v. Little House, LLC, 998 So. 2d 1173 (Fla. 5th DCA 2008).  In 2008, the Fifth District concluded its opinion by stating "Accordingly, we AFFIRM the final judgment of foreclosure and order of clarification and REMAND with instructions to proceed to foreclose the superior mortgage of LR5A-JV."  

After the case was remanded, the condominium association filed a motion in the trial court requesting that the trial court schedule the foreclosure sale.  Over the objection of the judgment holder, the trial court granted the motion and scheduled the sale.  The judgment holder argued that "the Association, as a junior lien holder, cannot demand that a foreclosure sale date be set, and the trial court erred as a matter of law in setting the date for the judicial sale. The Association counters that section 45.031(1), gives the trial court the ultimate authority to order a judicial sale."  The court "agree[d] with the Association."

The court stated that the statutes "clearly required the trial court to set a judicial sale date between 20 to 35 days after entry of the final judgment or order directing a judicial sale, but allows an extension with the plaintiff’s consent."  Further, "Florida decisional law reflects that the matter of fixing the time for a judicial sale is set by statute, but that the trial court has reasonable discretion within the statutory framework to set or reset the date for such sale."

The court also noted the Florida Supreme Court's 2010 amendment to the Florida Rules of Civil Procedure relating to motions to cancel foreclosure sales.  The court stated:

the Florida Supreme Court adopted amendments to the rules of civil procedure relating to mortgage foreclosures. In re Amends. to the Fla. R. of Civ. P., 35 Fla. L. Weekly S97 (Fla. Feb. 1, 2010). Included in these amendments is Form 1.996(b), entitled “Motion to Cancel and Reschedule Foreclosure Sale,” which sets out a list of reasons for cancellation of a scheduled judicial sale, and provides, “If this Court cancels the foreclosure sale, Plaintiff moves that it be rescheduled.” In other words, the supreme court, in adopting the form, apparently did not contemplate that a judicial sale would be left in limbo.

The Florida Supreme Court issued a new opinion on the a different subsection of the rule just yesterday, December 9, 2010, which was discussed HERE.

Ultimately, the court held that the trial court, not the judgment holder, had the ultimate discretion to schedule the sale. I believe the fact that the case was remanded in 2008 with instructions to conduct a sale also played a factor.  The judgment holder was attempting to never schedule the foreclosure sale which seems to present a different circumstance from the cases discussing a judgment holders attempts to reschedule a foreclosure sale.  Those cases hold that a motion to postpone a foreclosure sale should be granted absent “extraordinary circumstance.”  A Mortg. Co. v. Bowman, 642 So. 2d 123, 124 (Fla. 4th DCA 1994); see also Chemical Mortg. Co. v. Dickson, 651 So. 2d 1275, 1276 (Fla. 4th DCA 1995); LaSalle Bank Nat. Ass’n. v. Alicea,  35 So. 3d 986, 989 (Fla. 5th DCA 2010); U.S. Bank Nat'l Ass'n v. Bjeljac, 17 So. 3d 862 (Fla. 5th DCA 2009); and Wells Fargo Bank, N.A. v. Lupica, 17 So. 3d 864 (Fla. 5th DCA 2009).  

Denial Of Motion For Relief Of Judgment Without Evidentiary Hearing Reversed

In Schuman v. International Consumer Corporation, et al (4D09-951), the Fourth District reversed the trial court's order denying a motion for relief from judgment and held that "the trial court erred since the trial court should not have denied the motion without an evidentiary hearing where there was a 'colorable' claim of entitlement to relief."  Generally, the facts were stated as follows:

Appellant filed a motion for new trial and relief from the judgment, alleging that he did not receive notice of the trial. The counsel for appellant had just been retained and had not received any papers regarding the trial date. Further, prior counsel advised the new counsel only that there was an upcoming calendar call on this matter. The trial court denied appellant’s motion and this appeal ensues.

The court held that:

We conclude that the trial court abused its discretion by failing to hold an evidentiary hearing on the motion for relief from judgment. “A motion for relief from judgment should not be summarily dismissed without an evidentiary hearing unless its allegations and accompanying affidavits fail to allege ‘colorable entitlement’ to relief.”  Clearly, in the present case, the motion for relief from judgment stated a claim of  “colorable entitlement to relief” that would require the trial court to conduct an evidentiary hearing before dismissing the motion. We reverse and remand for an evidentiary hearing.

Order Denying Motion To Vacate Judgment Reversed & Remanded For Evidentiary Hearing

In Palacio v. Alaska Seaboard Partners Limited Partnership, et al (1D10-2690), the First District reversed the trial court's order denying a motion to set aside judgment and remanded the case so that the trial court can conduct an evidentiary hearing.

Appellants were served with a foreclosure complaint in February 2009, to which they did not file a response due to what they understood to be assurances by the loan servicer representative.  Appellants alleged they contacted  the loan servicer representative  immediately after being served with the complaint.  Appellants  were assured  by the loan service representative  that the foreclosure proceeding would be abated pending application for, and approval of, a loan modification agreement.  Appellants alleged that they faxed the application for the loan modification agreement on April 7, 2009.  In support of this assertion, Appellants attached affidavits and the facsimile cover sheet  to their motion  to set aside and vacate a default judgment.

The court held that those facts were sufficient to require an evidentiary hearing.  The court stated:

It is the trial court’s failure to conduct an evidentiary hearing that warrants reversal of the denial of Appellants’ motion to set aside the default judgment.  This court has held that a trial court is required to conduct an evidentiary hearing before entering an order denying a motion to set aside a judgment.  See Seal v. Brown, 801 So. 2d 993, 994-95 (Fla. 1st DCA 2001).  Furthermore, if a moving party’s allegations raise a colorable entitlement to relief, a formal evidentiary hearing and appropriate discovery is required.  Id.  at 995.

As in the proceedings below, Appellees do not contest Appellants’ factual assertions; rather,  they  essentially  argue that Appellants’ allegations  are facially insufficient to warrant entitlement to setting aside a default judgment.  We disagree.  Appellants’ allegations and supporting documents make a colorable case for their assertion that their failure to respond to the foreclosure complaint was due to their settlement negotiations and complying with what they understood to be a modified mortgage agreement, all of which may reasonably have led them to believe that the foreclosure action was abated. 

Judge Thomas wrote the opinion and Judge Hawkes concurred.  Judge Davis concurred in the result only.

Florida's 2011 Statutory Interest Rate Is 6% Per Annum Or .0001644 Per Day

The Florida Department of Financial Services announced that the Statutory Interest Rate for 2011 will be 6% per annum or .0001644 per day.  That is the same rate that applied in 2010.  The interest rate for each year from 1981 through 2011 is below.
2011 Statutory Rate of Interest - Florida Department of Financial Services



A post when the 2010 statutory rate of interest was announced can be viewed HERE.

Fourth District Denies Petition Seeking to Prevent Post-Judgment Discovery Sought From Counsel

In Neiman v. Naseer, et al (4D10-2091), the Fourth District denied a petition for certiorari seeking to quash the trial court's order that had refused to grant protection from a subpoena, served on the appellant's attorneys, that "sought  information  about settlement  funds  paid  to  one of  the  judgment  debtors  in  an  unrelated lawsuit."  Review was sought of the trial court's non-final order.  The Fourth District first noted that the order was not reviewable "as a non-final order under Florida Rule of Appellate Procedure 9.130(a)(4)."  The court concluded:

Treating  the appeal as a petition  for writ of certiorari, we agree with the  circuit  court  that  the  information  sought was not  protected  by  the  attorney-client privilege.  The information was known  to  the other party to the settlement agreement in the unrelated lawsuit.  We also agree that “[w]hile  confidentiality  agreements  are  necessary  in  some  instances,  to facilitate  settlement,  they  may  not  be  subsequently  employed  by a litigant to . . . thwart an opponent’s discovery.”  Smith v. TIB Bank of the Keys, 687 So. 2d 895, 896  (Fla. 3d DCA 1997).  We reject the  judgment debtors’ other arguments without further comment.

Final Judgment Of Garnishment Reversed

UPDATE: The court released a new opinion, HERE, on rehearing.  The new opinion reached the same conclusion and is published at the following cite: GrayRobinson, P.A. v. Fireline Restoration, Inc., 46 So. 3d 170 (Fla. 4th DCA 2010).

In GrayRobinson, P.A., et al v. Fireline Restoration, et al. (4D09-2102 & 4D09-2116), the Fourth District reversed a garnishment judgment against GrayRobinson and the Florida Insurance Guaranty Association and ordered that the writs of garnishment be dissolved.

After obtaining a judgment against Fireline, Works R Us had writs of garnishment issued against FIGA and GrayRobinson. Works R Us argued that money in GrayRobinson’s trust account belonged to FIGA and that it was going to be paid to Fireline. FIGA argued that it did not owe money to Fireline, however, the trial court disagreed and entered a judgment against both FIGA and GrayRobinson requiring that the money in the GrayRobinson trust account be turned over to Works R Us.

After a recitation of the underlying facts, the court noted that “Works R Us has no greater right than Fireline has to recover funds from FIGA or GrayRobinson.” the court stated:

The funds held by GrayRobinson have been paid in accordance with a court order in the Del Mar litigation with specific directions. Fireline and various creditors of Fireline, as well as Del Mar and FIGA itself, were allowed thirty days to file claims against those funds. Any claims filed beyond that time were deemed barred and waived. Any unclaimed funds would be returned to Del Mar. The record on summary judgment in this proceeding does not reveal whether Fireline filed a claim to the deposited funds. If it did not, then according to the judgment, its claim to them would be barred. In that case, owing no debt to Fireline, GrayRobinson would owe no monies to Works R Us.

The court referenced several orders from an unrelated litigation which can be viewed at the links below:

• Del Mar Ass'n, Inc. v. Fla. Ins. Guar. Ass'n, No. 2006-0175-CA-03, 2008 WL 5705147 (Fla. Cir. Ct. Dec. 26, 2008);
• Del Mar Ass'n, Inc. v. Fla. Ins. Guar. Ass'n, No. 2006-0175-CA-03, 2009 WL 6328786 (Fla. Cir. Ct. Feb. 24, 2009);
• Del Mar Ass'n, Inc. v. Fla. Ins. Guar. Ass'n, No. 2006-0175-CA-03, 2009 WL 6328788 (Fla. Cir. Ct. March 2, 2009); and
• Del Mar Ass'n, Inc. v. Fla. Ins. Guar. Ass'n, No. 2006-0175-CA-03, 2009 WL 6328787 (Fla. Cir. Ct. April 2, 2009).

You can read a press release relating to the named appellee Fireline issued by the United States Securities & Exchange Commission HERE and a related complaint filed by the SEC HERE.  News articles can be found at the following links:

• BB&T seizes Brian Marshall’s yacht, seeks Ferrari and Bentley;
• Fireline Restoration subcontractor debts sounding alarms; 
• SEC filings detail unraveling of Fireline Restoration’s parent company;
• Profiting From Disaster With Lies;
• Tampa exec Brian Marshall helped create 'fantasyland of fraud,' SEC says;
• Feds investigate disaster Restoration execs;
• Brian Marshall companies seek Chapter 11 bankruptcy protection; 

*Disclaimer: Jeffrey Kuntz and/or GrayRobinson, P.A. were involved in the above-referenced action.

Judgment-Creditor Can Only Recover Amount Debtor Entitled To In Garnishment

In T.G.O.B., LLC v. Murphy (3D09-2771), the Third District affirmed the trial court's order denying a motion to dissolve writ of garnishment.  In its entirety, the court stated:

We affirm the order On Motion for Default and Motion to Dissolve Writ of Garnishment. The trial court properly denied T.G.O.B., LLC’s motion to dissolve writ of garnishment as it was untimely. § 77.055, Fla. Stat. (2009). As the court properly observed in that order, “the plaintiff, Michael J. Murphy, stands in no stronger position than that of the defendant, debtor, Carl E. Lindback, III. Thus, the plaintiff can only recover the amount of funds that the defendant would have been entitled to, but for the garnishment.” Therefore, while T.G.O.B. is a party for purposes of determining the garnishment amount (if any) at a final hearing, only Carl E. Lindback’s interest in the funds can be subject to garnishment.

The law firm’s role in this action is strictly that of a garnishee, or holder of the disputed funds for the benefit of the law firm’s client. There is no merit to the argument that the law firm’s role when served with the writ was that of an escrow agent.

Affirmed.

Florida Supreme Court Addresses Rights Of An LLC's Judgment Creditor

In Olmstead v. Federal Trade Commission, 44 So. 3d 76 (Fla. 2010) (SC08-1009), the Florida Supreme Court answered a certified question from the Eleventh Circuit.  The opinion that certified the question was published at 528 F.3d 1310 and can be viewed HERE.  The Florida Supreme Court rephrased the question from the Eleventh Circuit as follows:

Whether Florida law permits a court to order a judgment debtor to surrender all right, title, and interest in the debtor's single-member limited liability company to satisfy an outstanding judgment.

The court "answer the rephrased question in the affirmative" and concluded:

Section 608.433(4) does not displace the creditor's remedy available under section 56.061 with respect to a debtor‘s ownership interest in a single-member LLC.  Answering the rephrased certified question in the affirmative, we hold that a court may order a judgment debtor to surrender all right, title, and interest in the debtor‘s single-member LLC to satisfy an outstanding judgment.

Notably, there was a forceful dissent refusing to "join my colleagues in the judicial rewriting of Florida's LLC Act. Make no mistake, the majority today steps across the line of statutory interpretation and reaches far into the realm of rewriting this legislative act."

The briefs filed in the case can be viewed at the following links: Initial Brief (Olmstead), Answer Brief (FTC), Reply Brief (Olmstead), Amicus Brief (Zimmerman, Kiser &  Sutcliffe, P.A.), Amicus Brief (Prof. Daniel S. Kleinberger).  The court held oral argument on January 8, 2009 and the oral argument can be watched HERE.

**Update: A motion for rehearing was filed on July 8, 2010, which can be viewed HERE.  On July 23, 2010, the FTC filed its response to the rehearing motion which can be viewed HERE.  The Court denied the motion for rehearing on August 31, 2010, and the order can be viewed HERE.

**Update #2: After the certified question was answered, the case was returned to the Eleventh Circuit and on September 29, 2010, the Eleventh Circuit issued an opinion that can be viewed HERE.  See 621 F.3d 1327 (11th Cir. 2010).

Below is an article about the Florida Supreme Court's decision:
GrayRobinson Banking and Finance Newsletter, October 2010

Other articles about the decision can be viewed at the following links:

• Professor Carter Bishop had a post about the decision HERE.  You can also view Professor Bishop's "Fifty State Series: LLC Charging Order Statutes" HERE.  The University of Pennsylvania Law School is hosting Professor Bishop's Memorandum Charging Order, HERE.  Professor Bishop's article "Desiderata: The Single Member Limited Liability Company Charging Order Statutory Lacuna" can be downloaded HERE.
• Professor Gary Rosin at the "Unincorporated Business Entities Law" Blog had two posts about this decision, HERE and HERE.  
• Professor Larry Ribstein had a discussion HERE at the "Truth on the Market" Blog. 
• Professor Stephen Bainbridge had two posts at ProfessorBainbridge.com, HERE and HERE.
• The "Business Law Prof Blog" has a post HERE.
• The ABA webstore even has a CD CLE titled "Are Single-Member LLCs a Ticking Time Bomb for Asset Protection?" which can be viewed HERE.
• The KYEstates.com blog has a post titled "Your Single-Member LLC: Not A Mighty Fortress," which can be viewed HERE.
• Professor Carter and Professor Kleinberger co-authored an article titled "The Single-Member Limited Liability Company as Disregarded Entity" which can be viewed HERE.
• The Georgia State University Law Review published an article by , which is titled "The Olmstead Decision: The Road to Dignity and Freedom."  See 26 Ga. St. U. L. Rev. 651 (Spring 2010) Hein | LexisNexis | Westlaw
• BNA Tax & Accounting has an article titled "Olmstead and Piercing the Veil" which can be found HERE.

Motion To Amend Judgment Must Be Filed Within One Year

In Mumenthaler v. Williams, et al (3D09-3143), the Third District reversed an order amending a final judgment because the motion to amend the judgment was filed more than one year after the entry of the judgment.  The court stated:

Approximately one year and four months [after the entry of judgment], the plaintiffs filed a motion under Rule 1.540(b), seeking to amend the final judgment. The plaintiffs’ motion alleged that Swiss counsel advised them that the judgment would not be enforceable under Swiss law because the judgment did not state that it was “final, absolute, and unappealable.”

***

It is clear that the plaintiffs relied on Rule 1.540(b)(1) for their motion for relief from judgment. Subdivision (b)(1) allows relief from judgment on account of “mistake, inadvertence, surprise, or excusable neglect[.]” A motion under Rule 1.540(b)(1) must be filed “not more than 1 year after the judgment, decree, order, or proceeding was entered or taken.” As the motion was filed more than one year after the judgment was entered, the trial court was without jurisdiction to amend the judgment. For that procedural reason, we reverse the amended judgment. The original judgment, of course, remains intact.