If winning a lawsuit guaranteed recovery to the prevailing party, there would not be law firms such as Andre Law specializing in post-judgment collection. Often the entry of a judgment or a verdict is just the first step in complete recovery. Take the following and all too common example: Plaintiff seeks to recover, after a lengthy lawsuit and trial, from a Defendant who borrowed a large sum of money from Plaintiff and never paid it back. A judgment is awarded in favor of Plaintiff for $500,000.00. Defendant, in order to protect his assets from garnishment and levy, creates shell limited liability companies in order to hold bank accounts which are solely for personal use and to otherwise hide non-exempt assets subject to execution. How does Plaintiff recover? A simple of writ of garnishment in the name of Defendant would not freeze the assets held in the name of the shell companies, nor would a sheriff levy on tangible property titled in the name of a shell company.
Fla. Stat. 56.29 Proceedings Supplementary
The answer is found in Fla. stat. 56.29 which governs supplemental proceedings to execution in Florida. This statute is a powerful tool which grants the Court equitable powers to make the judgment creditor whole. The Court has the power to examine the judgment debtor and third parties regarding any possible property which may be subject to execution by the judgment creditor.
Supplemental proceedings provide a “useful, efficacious, and salutary remedy at law enabling the judgment creditor not only to discover assets which may be subject to his judgment, but to subject them thereto by a speedy and direct proceeding in the same court in which the judgment was recovered.” Regent Bank v. Woodcox, 636 So. 2d 885, 886 (Fla. 4th DCA 1994) (citation omitted).
Threshold Requirements
The requirements in opening a supplemental proceeding are minimal. There should be an unsatisfied Florida judgment and/or lien for this tool to be available. Also, upon filing of the motion for supplemental proceedings, the Judgment Creditor should have a valid and outstanding writ of execution issued, and an affidavit from the judgment creditor accompanying the motion for relief. To initiate the supplemental proceedings, the judgment creditor must file a motion and an affidavit in the court that the original action arose. The motion must (1) describe the judgment debtor’s nonexempt property or obligation to be used to satisfy the judgment; and (2) identify the third party in possession of the nonexempt property or who owes the obligation. Additionally, the affidavit must provide general information about the case, the parties, and the outstanding judgment, such as a statement that the execution on the judgment is “valid and outstanding.” After the motion and affidavit have been filed, the judgment creditor is entitled to proceedings supplementary as a matter of law.
Equitable Remedies
As previously mentioned, Fla. Stat. 56.29 is equitable, which means courts have the discretion to come up with an equitable remedy that affords a judgment creditor complete relief. See Donan v. Dolce Vita Sa, Inc., 992 So. 2d 859, 861 (Fla. 4th DCA 2008). A court can even enter a money judgment against any third parties who may hold the property subject to execution. Fla. Stat. §§ 56.29(6), 56.19 (2016); and if a third-party transferee retains the property solely for purposes of delaying satisfaction of the judgment, the court may award an additional 20 percent of the value of the property in damages. Fla. Stat. § 56.18 (2016).
Going back to our hypothetical posed above: A supplemental proceeding in this instance, assuming that the debtor had no plausible defenses (they hardly ever do), a money judgment could be entered against the shell companies, the Court could order the turnover of the property held by companies, and order any other such proper relief. Obviously, the Court would have to fashion a remedy powerful and flexible enough to deter the debtor from further devising assets to defraud creditors. The beauty of Fla. Stat. 56.29 is that it does allow for this creativity, by the court and the creditor.
Conclusion
Andre Law Firm has used this tool time and again to help its clients recover assets and coerce payment of judgments by judgment debtors. While Florida is generally a debtor friendly state, Fla. Stat. 56.29 is one the most powerful tools available at the creditor’s disposal. If you have any questions regarding this tool, contact us today.