Post-judgment collection: stepping into the shoes of the judgment debtor in claims against third parties.

AuthorBrouillet, Adam B.
PositionFlorida

The obvious, most efficient ways to collect on a money judgment are to garnish the judgment debtor's bank account or negotiate a voluntary payment by the judgment debtor. Unfortunately, not all judgment debtors are so collectible or cooperative. When collection will be more of a challenge, the judgment creditor's attorney must be creative and resourceful. One potential avenue for collection on a judgment may lie in the judgment debtor's relationships with third parties. If the judgment debtor has a claim or potential claim against a third party, the judgment creditor may acquire the right to assert that claim against the third party, with limited exceptions. If the judgment debtor already settled that claim and is owed any settlement payments, the judgment creditor may have a right to garnish whoever is holding the funds, whether the third party or even the judgment debtor's attorney. This article outlines caselaw governing the acquisition of a judgment debtor's interest in claims against third parties as a means of collecting on a money judgment.

Acquiring a Chose in Action

The recent decision in MYD Marine Distributor, Inc. v. International Paint Ltd., 201 So. 3d 843 (Fla. 4th DCA 2016), illustrates how a judgment creditor can acquire a judgment debtor's claim against a third party. Donovan Marine, Inc., obtained a final judgment against MYD Marine Distributor, Inc., for $550,000. (1) MYD Marine was a plaintiff in an unrelated lawsuit for breach of contract and of the implied duty of good faith and fair dealing against a third party, Lauderdale Marine. (2) After holding the judgment for 20 months and collecting only $120,000 on it, Donovan moved to institute a proceedings supplementary under F.S. [section]56.29. (3) Donovan sought to acquire MYD Marine's interest in the pending suit against Lauderdale Marine. (4) Donovan asserted that the suit against Lauderdale Marine was MYD Marine's only remaining asset and that it was subject to dismissal due to MYD Marine's failure to prosecute it. (5) The trial court granted Donovan's motion for proceedings supplementary and ordered that Donovan would assume all right, title, and interest of the plaintiff in the suit against Lauderdale Marine and could prosecute the claim as if Donovan were the original owner of the claim. (6)

On appeal, MYD Marine argued that the transfer of the suit against Lauderdale Marine was inequitable because the amount of damages sought from Lauderdale Marine was "substantially greater" than the balance owed to Donovan on the judgment. (7) MYD Marine argued that Donovan could "collusively settle" the suit for the amount owed on the judgment, and that such a result would deprive MYD Marine of the right to recover the balance of the claim against Lauderdale Marine. (8) The district court affirmed and held that the trial court did not abuse its discretion in transferring the claim. (9) The district court reasoned that [section]56.29 allows the court to order "any property" of the judgment debtor, not exempt from execution, to be applied toward satisfaction of the judgment. (10) The district court stated that nothing in the record supported MYD's argument that transfer of the suit would be inequitable. (11)

Critically, MYD Marine offered no evidence to the trial court of the actual value of the suit against Lauderdale Marine. (12) The district court disagreed with the notion that a pending lawsuit is so...

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