Judgment Collection: The Use of Proceedings Supplementary to Compel a Debtor to Pay a Judgment.

• Author: Devisse, Matthew B.

Generally, judgment collection is not easy. Judgment debtors will often move assets around and even keep them in foreign countries to make collection harder or impossible. Both public policy, and Florida's proceedings supplementary statute F.S. [section]56.29 (2019), however, favor judgment debtors satisfying their debts and the judgment creditor being afforded the most relief possible. This article walks through the law on a Florida court compelling a judgment debtor to transfer foreign (1) property to Florida and how a litigant may utilize this aspect of Florida law in efforts to collect on a judgment. Proceedings supplementary may obviate the need to go through the domestication of judgment process in other states and countries where the court in Florida has personal jurisdiction over the debtor. This prevents the debtor from simply moving assets from one jurisdiction or location to another to avoid paying a judgment.

Interpretation and Application of Proceedings Supplementary Statute

F.S. [section]56.29 (2019) (2) governs the procedure for proceedings supplementary. Subsection (6) states:

(6) The court may order any property of the judgment debtor, not exempt from execution, or any property, debt, or other obligation due to the judgment debtor, in the hands of or under the control of any person subject to the Notice to Appear, to be levied upon and applied toward the satisfaction of the judgment debt. The court may enter any orders, judgments, or writs required to carry out the purpose of this section, including those orders necessary or proper to subject property or property rights of any judgment debtor to execution, and including entry of money judgments as provided in ss. 56.16-56.19 against any person to whom a Notice to Appear has been directed and over whom the court obtained personal jurisdiction irrespective of whether such person has retained the property, subject to applicable principles of equity, and in accordance with chapters 76 and 77 and all applicable rules of civil procedure. Sections 56.16-56.20 apply to any order issued under this subsection. (3)

Proceedings supplementary under F.S. [section]56.29 are special statutory "proceedings subsequent to judgment to aid a judgment creditor in collecting his judgment against the judgment debtor." (4) Proceedings supplementary "are equitable in nature and should be liberally construed." (5) Accordingly, once the jurisdictional prerequisites for proceedings supplementary are met, the statute should be liberally construed to afford to the judgment creditor the most complete relief possible. (6) A trial court's powers under the proceedings supplementary statute are broad and equitable in nature. (7)

Compelling a Judgment Debtor to Transfer Assets to the Jurisdiction in Which the Judgment Is Entered

* Analysis of Schanck v. Gayhart--The First District Court of Appeal has made clear that it is permissible for a trial court to direct a defendant over whom it has personal jurisdiction to act on property located outside its jurisdiction if the title to the property is not directly affected while the property remains in the foreign jurisdiction. In Schanck v. Gayhart, 245 So. 3d 970, 971 (Fla. 1st DCA 2018), two judgments were entered in favor of the former wife. (8) In an effort to collect on the judgments, the former wife filed a motion seeking to compel the former husband to turn over the stock and membership certificates in two entities owned solely by the former husband, Stellar Recovery, Inc., and DataSignals, LLC. (9) In opposition, the former husband asserted that, because the stock certificates evidencing his ownership in Stellar and DataSignals were located in Canada, the trial court lacked jurisdiction to compel the former husband to return or re-issue the stock certificates to the former wife. (10) The former husband further argued the former wife was required to seek relief in the foreign jurisdiction, Canada. (11) The trial court rejected the former husband's argument and entered an order compelling him to cancel the existing stock and membership certificates in Stellar and DataSignal, re-issue the stock certificates in his name, and deliver the stock certificates to counsel for the former wife. (12)

In affirming the trial court, the First District Court of Appeal explained that it had previously recognized a trial court's authority to direct a defendant over whom it has personal jurisdiction to act on property located outside its jurisdiction, if the title to the property is not directly affected while the property remains in the foreign jurisdiction. (13) The court explained that, in Ciungu v. Bulea, 162 So. 3d 290, 294 (Fla. 1st DCA 2015), it found that a probate court had authority to direct a party to effect distribution of property located in Romania by virtue of its personal jurisdiction over the party:

It has long been established... that a court which has obtained in personam jurisdiction over a defendant may order that defendant to act on property that is outside of the court's jurisdiction, provided that the court does not directly affect the title to the property while it remains in the foreign jurisdiction. (14) Because ordering a party to re-issue or return stock certificates to Florida from a foreign country does not directly affect title to the assets while they remain in the foreign jurisdiction, the court declared that it had jurisdiction to either order the former husband to return the stock and membership certificates and also had jurisdiction to order the former husband to re-issue the stock and membership certificates. (15) Accordingly, the court affirmed the trial court and held that the court had jurisdiction to order the former husband to turn over the stock and membership certificates to the estate of the former wife and also had jurisdiction to order the alternative remedy of cancellation and reissuance. (16)

In addition to the First District Court of Appeal's clear holding in Schanck, the Third District Court of Appeal has similarly made clear that it has long been established that a court that has obtained in personam jurisdiction over a defendant may order that defendant to act on property that is outside of the court's jurisdiction, provided that the court does not directly affect the title to the property while it remains in the foreign jurisdiction. (17)

* Analysis of Sargeant v. Al-Saleh--The Fourth District Court of Appeal in Sargeant v. Al-Saleh, 137 So. 3d 432 (Fla. 4th DCA 2014), arrived at the opposite conclusion. In Sargeant, the trial court granted the judgment creditors' motion for proceedings supplementary and compelled...