2245 Venetian Court Bldg. 4, Inc. v. Harrison

• Decision Date: 24 October 2014
• Docket Number: No. 2D14–1208.,2D14–1208.
• Citation: 149 So.3d 1176
• Parties: 2245 VENETIAN COURT BUILDING 4, INC., and San Marino Properties, LLC., Appellants, v. William and Margaret HARRISON as trustees of the Margaret Harrison Living Trust, Bateman and Martin Developments Inc., a Florida corporation; Arthur Bateman, an individual, and Daniel Martin, an individual, Appellees.
• Court: Florida District Court of Appeals

149 So.3d 1176

2245 VENETIAN COURT BUILDING 4, INC., and San Marino Properties, LLC., Appellants

v.William and Margaret HARRISON as trustees of the Margaret Harrison Living Trust, Bateman and Martin Developments Inc., a Florida corporation; Arthur Bateman, an individual, and Daniel Martin, an individual, Appellees.

No. 2D14–1208.

District Court of Appeal of Florida, Second District.

Oct. 24, 2014.

Jon D. Parrish and Kirt R. Posthuma of Parrish & Yarnell, P.A., Naples, for Appellants.

Guy Harrison of Etcheverry Harrison LLP, Fort Lauderdale, for Appellees William and Margaret Harrison.

No appearance for Appellees Bateman and Martin Developments Inc., Arthur Bateman, and Daniel Martin.

Opinion

MORRIS, Judge.

2245 Venetian Court Building 4, Inc., and San Marino Properties, LLC, (Venetian) appeal a postjudgment discovery order requiring them to produce various financial and organizational documents. We hold that the requested documents were relevant in the context of the postjudgment proceedings and that the trial court did not err in requiring their production. We therefore affirm.

In 2012, William and Margaret Harrison, as trustees of the Margaret Harrison Living Trust, obtained a default judgment¹ against two individuals: Arthur Bateman and Daniel Martin. After unsuccessfully attempting to recover on their judgment against Bateman, the Harrisons issued subpoenas duces tecum to Venetian in aid of execution of their judgment. These subpoenas were based on the Harrisons' review of various public records which reflected that:

• Bateman was a registered agent or president of various Venetian-related corporations and partnerships between 2004 and 2013;

• Bateman also executed the mortgage for a property owned by one of the Venetian corporations, and as of 2012, he was still listed on property tax records as the owner of that same property;

• A separate entity, San Marino Properties, LLC, was created in 2010, and that entity shared a managing member, Mr. Dana Bessette, with other Venetian-related corporations (in 2012, Bessette listed himself as president of 2245 Venetian Court Building 4, Inc.);

• In 2012, Mr. Bessette provided the same mailing address for both 2245 Venetian Court Building 4, Inc., and San Marino Properties, LLC.

Venetian objected to the subpoenas and filed motions to quash. The Harrisons filed a memorandum in opposition to the motions to quash and attached the public records they relied on in serving their subpoenas. Ultimately, the trial court denied Venetian's motions.

I. Relevance

We review the trial court's order for abuse of discretion. See Friedman v. Heart Inst. of Port St. Lucie, Inc., 863 So.2d 189, 194 (Fla.2003).

Venetian first argues that the requested documents are not relevant as Venetian was a nonparty to the proceedings underlying the deficiency judgment and the subpoenas do not limit the requests for documents to items relating solely to Bateman, the judgment debtor. Venetian also points out that the requests are not related to any claim for malfeasance.

Relevance is indeed the “polestar” in a discovery request. See McDonald's Rests. of Fla., Inc. v. Doe, 87 So.3d 791, 793 (Fla. 2d DCA 2012). However, this court has repeatedly noted the distinction between prejudgment and postjudgment discovery. In the prejudgment context, “a party is entitled only to the opponent's financial records that pertain to the pending action.” Regions Bank v. MDG Frank Helmerich, LLC, 118 So.3d 968, 969 (Fla. 2d DCA 2013). “But in postjudgment discovery, the dispute in the original civil action has been resolved [and, therefore] [t]he matters relevant for discovery [are those] that will enable the judgment creditor to collect the debt.” Id. ; see also Gen. Elec. Capital Corp. v. Nunziata, 124 So.3d 940, 943 (Fla. 2d DCA 2013) (“In the context of postjudgment discovery, matters relevant to the subject matter of the pending action or which would lead to the discovery of admissible evidence, per [Florida] Rule [of Civil Procedure] 1.280(b)(1), would encompass matters identifying or leading to the discovery of assets available for execution ....” (alteration in original) (internal quotation omitted)). This means that in a postjudgment discovery context, “the creditor has the right to discover any assets the debtor might have that could be subject to levy or execution to satisfy the judgment, or assets that the debtor might have recently transferred. ” MDG Frank Helmerich, LLC, 118 So.3d at 970 (emphasis added).

Venetian argues that the broad postjudgment discovery rule does not apply here and that the Harrisons are merely on a “fishing expedition.” But while we agree that generally “discovery in aid of execution cannot be used to pry into the assets and business of persons other than the judgment debtor,” we have also held that a nonparty may be subject to postjudgment discovery where the “judgment creditor can provide a good reason and close link between the unrelated entity and the judgment debtor.” Gen. Elec. Capital Corp., 124 So.3d at 942.

In General Electric Capital Corp., we granted certiorari and quashed an order permitting discovery against a nonparty. Id. at 943. Our decision was based on the facts that no judgment had been entered against the nonparty, the relationship between the nonparty and the judgment debtor had been remote even when in existence, and there was no relationship between the nonparty and the judgment debtor at the time of the discovery request. Id. at 942. Thus we concluded that the judgment creditor had “not laid the proper predicate” for the discovery requests. Id. at 943.

Here, we conclude that the Harrisons have established more than just a remote link between Bateman and Venetian. The public records relied upon by the Harrisons revealed that subsequent to Bateman's default, Venetian engaged in at least one name change and the appointment of new corporate officers to one of the Venetian entities. The records also revealed that Mr. Bessette was affiliated with at least three Venetian entities and that he provided the same mailing address for both 2245 Venetian Court Building 4, Inc., and San Marino Properties, LLC. Although the link between Bateman and San Marino Properties, LLC, is not as strong as the link between Bateman and the other Venetian entities, judgment creditors are allowed “broad discovery into [a] debtor's finances ... even if the discovery concerns property jointly owned with others,” particularly where “there are indications that the debtor might have individual assets or might have recently transferred assets that would otherwise be available for levy.” Jim Appley's Tru– Arc, Inc. v. Liquid Extraction Sys. Ltd. P'ship,

526 So.2d 177, 179 (Fla. 2d DCA 1988).

Venetian points out that the Harrisons did not bring a separate claim for fraudulent transfer, but we do not think that fact is dispositive. As we noted in General Electric Capital Corp., the requesting party must establish the proper predicate for purposes of serving discovery on a nonparty. 124 So.3d at 943. However, we did not go so far as to require a claim for malfeasance against the nonjudgment debtor in the pleadings. Rather, we determined that the requesting party must only provide a “good reason and close link” between the nonparty and judgment debtor. Id. at 942. We reject Venetian's attempts to apply prejudgment discovery case law to this issue, and we conclude that the Harrisons established a “good reason and close link” between Bateman and Venetian, thereby entitling them to discovery of the requested documents.² However, this does not end our analysis because Venetian raises alternative arguments relating to a constitutional right to privacy and the lack of an evidentiary hearing that we must address.

II. Constitutional Right to Privacy

Venetian contends that Article I, section 23 of the Florida Constitution provides a right of privacy that applies to financial records in the absence of a relevant and compelling reason to compel disclosure. Venetian also contends that it may assert this right on behalf of its shareholders, officers, and directors.

We note that ordinarily, corporations cannot raise the privacy rights of third parties unless they (the corporations) meet the third-party standing test enunciated in Alterra Healthcare Corp. v. Estate of Shelley, 827 So.2d 936 (Fla.2002). However, even in the absence of third-party standing, where a corporation objects to a discovery request on the basis of relevancy, a “trial court can consider the constitutional rights of third parties who would be substantially affected by the outcome of the litigation.” Id. at 945.

There is no issue of third-party standing here. Rather, the issue is one of relevancy. Clearly, the documents requested were relevant to the Harrisons' attempt to discover any assets that Bateman had or that he had recently transferred in aid of execution of their judgment against him, especially where the Harrisons proffered a “good reason and close link” between Bateman and Venetian. Gen. Elec. Capital Corp., 124 So.3d at 942. The case law on which Venetian relies is factually distinguishable.³ Thus we conclude that the discovery request here was not barred by any privacy interest of Venetian's shareholders, officers, and directors.

III. Lack of an Evidentiary Hearing

Lastly, Venetian argues that the Harrisons were required to prove the relevancy of the requested documents at an evidentiary hearing. Venetian asserts that the trial court erred by relying on the Harrisons' counsel's unsworn statements and the documents they provided relating to Bateman's link to...