381651 Alberta, Ltd. v. 279298 Alberta, Ltd., 94-1653

• Decision Date: 10 July 1996
• Docket Number: No. 94-1653,94-1653
• Citation: 675 So.2d 1385
• Parties: 21 Fla. L. Weekly D1581 381651 ALBERTA, LTD., Appellant, v. 279298 ALBERTA, LTD., Lawrence John Adams, and Eljada Holdings, Ltd., Appellees.
• Court: Florida District Court of Appeals

Page 1385

675 So.2d 1385

21 Fla. L. Weekly D1581

381651 ALBERTA, LTD., Appellant, v. 279298 ALBERTA, LTD., Lawrence John Adams, and Eljada Holdings, Ltd., Appellees.

No. 94-1653.

District Court of Appeal of Florida Fourth District.

July 10, 1996.

Charles Wender of Smith, Smith & Wender, P.A., Boca Raton, for appellant.

Garry M. Glickman, of Glickman, Witters and Marell, P.A., for Appellee-27298 Alberta, Ltd.

SHAHOOD, Judge.

Appellee, 279298 Alberta, Ltd. ("27 Alberta"), is a Canadian corporation which received by assignment a $2,375,811.17 judgment against an individual named L.J. Adams ("Adams"). All of Adams' personal property, as well as two condominiums, one which Adams and his wife used as a winter residence and one which Adams' son lived in on a permanent basis, were held by Eljada Holdings, Ltd. ("Eljada"), a family trust corporation. Eljada paid all of Adams' and his wife's personal living and entertainment expenses as well as the bills for Adams' family members and obligations of other corporations which Adams controlled. After the entry of the judgment, Eljada transferred the mortgages on the condominiums to Adams' brother's company, 381651 Alberta, Ltd. ("38 Alberta"), allegedly as security for a loan.

Thereafter, 27 Alberta filed suit against Adams, Eljada, and 38 Alberta seeking an order setting aside the transfers as fraudulent conveyances and mandating the sale of the real property to satisfy the judgment. The trial court struck 38 Alberta's demand for jury trial. Following a two-day bench trial, the trial court found that Eljada was the alter ego of Adams and that since the entry of the money judgment, Adams has evaded personal liability by titling all of his personal assets in the name of Eljada. In addition, the trial court found that the mortgages were fraudulent conveyances, and ordered that they be set aside. Consequently, the court ordered that the lien of the judgment held by 27 Alberta would attach to all of Eljada's assets, including the mortgages. The trial court determined that the alleged loan from 38 Alberta to Eljada actually represented payment to Adams for his ownership interest in another corporation which his brother owned.

On appeal, 38 Alberta raises three issues, none of which has merit. Because there is competent evidence in the record to support the trial court's findings of fact, we affirm the final judgment, see Shaw v. Shaw, 334 So.2d 13 (Fla.1976), but write briefly to address the jury trial issue.

We acknowledge the law that, if possible, questions regarding the right to a jury trial should be resolved in favor of jury trial. King Mountain Condominium Ass'n v. Gundlach, 425 So.2d 569 (Fla. 4th DCA 1982). The right to jury trial, however, applies only to legal and not equitable causes of actions. Id. Florida courts have held that an action to set aside a conveyance of real property is cognizable in equity. Raulerson v. Metzger, 375 So.2d 576 (Fla. 5th DCA 1979); Bryant v. Small, 271 So.2d 808 (Fla. 3d DCA 1973). Conversely, an action seeking a money judgment is traditionally one at law. See Hutchens v. Maxicenters, U.S.A., 541 So.2d 618, 622-23(Fla. 5th DCA 1988). The issue in the instant case becomes, then, whether 27 Alberta's action to set aside the conveyances is one at law or equity given the fact that 27 Alberta seeks also that the proceeds from the sale of the property be applied to satisfy the money judgment.

Because of the paucity of state decisional law on point, a review of various federal decisions is helpful. In Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989), the United States Supreme Court addressed the issue of whether a fraudulent conveyance of a determinate sum of money is an action at law. Although the issue of fraudulent conveyances of real property was not before the Granfinanciera court, it stated in dicta that actions to recover real property are "quintessentially equitable actions." 492 U.S. at 47, 109 S.Ct. at 2791. In spite of that acknowledgement, again in dicta, the court reaffirmed its earlier holding in Whitehead v. Shattuck, 138 U.S. 146, 11 S.Ct. 276, 34 L.Ed. 873 (1891), that actions for "the recovery and possession of specific real or personal property, or for the recovery of a money judgment" are at law. Id., n. 5.

Thus, based on the dicta in Granfinanciera, subsequent courts held that actions to recover fraudulently conveyed real property are at law. See, e.g., In re Southeast Connectors, Inc., 113 B.R. 85 (S.D.Fla.1990)(defendant in an action to recover a specific parcel of real property alleged to have been fraudulently transferred by the bankrupt company was entitled to a jury trial.) The following from Southeast Connectors explains the rationale behind such a holding:

[t]he right which in this case the plaintiff wishes to assert is his title to certain real property; the remedy which he wishes to obtain is its possession and enjoyment; and in a contest over title both parties have a constitutional right to call a jury.

Id. We distinguish the case sub judice from Whitehead and its progeny since, here, 27 Alberta does not seek possession and enjoyment of the property, and title is not in dispute.

More factually similar to the instant case is Mission Bay Campland, Inc. v. Sumner Financial Corp., 72 F.R.D. 464 (M.D.Fla.1976), wherein a judgment creditor who had previously been unable to execute and satisfy its judgment sought to have set aside certain fraudulent transfers by the judgment debtor. Id. at 467. The transferees of the assets were impled, and they requested a jury trial. Id. at 464. As to the propriety of the circuit court's denial of the request, the district court held that "[b]ecause the equitable remedy of annulment for a fraudulent transfer of assets was sought, there was no federal constitutional right to a jury trial." Id. at 468 (citing Hyde Properties v. McCoy, 507 F.2d 301 (6th Cir.1974)). In so holding, the court reasoned that

[a] judgment-creditor, by virtue of its judgment, obtains an equitable claim against the assets of the judgment-debtor that have been transferred fraudulently to third persons. Equity will afford relief by setting aside the effect of the fraudulent transfer insofar as it affects the right of the judgment-creditor to execute and satisfy its judgment. To that extent only the equitable remedy correspondingly affects the claim of right by third parties to the judgment-debtor's assets. To all others, the third-party transferees' claim of right remains valid and effective because there has been no general adjudication of their title to the assets (admittedly a question at law). Adler v. Fenton, 65 U.S. [24 How.] 407, 411-12, 16 L.Ed. 696 (1860); Kane v. Sesac, Inc., 54 F.Supp. 853, 861-62 (S.D.N.Y.1943). Df. (sic) In re Swan-Finch Oil Corp. v. Levin, 58 Cust.Ct. 487, 269 F.Supp. 386, 391 (S.D.N.Y.1967).

Id.

Similarly, in the case at bar, 27 Alberta, as a judgment creditor, has an equitable claim against Adams' assets. As such, an action to set aside the fraudulent conveyance of Adams' real property is equitable in nature since it does not result in a general adjudication of title to the property.

Section 56.29, Florida Statutes (1993), provides the statutory basis for the avoidance of any gift, transfer, assignment or other conveyance made in an attempt to hinder or defraud creditors. In Allied Industries International, Inc. v. AGFA-Gevaert, Inc., 688 F.Supp. 1516 (S.D.Fla.1988), aff'd, 900 F.2d 264 (11th Cir.Fla.1990), the court noted that the purpose of the statute is to provide creditors with "a swift, summary disposition of issues," while "preserv[ing] the equitable character of both proceedings and the remedies available." Id. at 1517 (citations omitted). The court stated that when the remedies for satisfaction of a judgment are inadequate, parties may resort to equitable remedies such as utilizing supplemental proceedings to reach property not subject to levy. Id. (citing Gantz v. First Nat'l Bank of Miami, 138 So.2d 367 (Fla. 3d DCA 1962)).

Thus, we hold that the situation in the instant case mandates the same results as those reached in Mission Bay and Allied Indus. We believe also that that is the outcome contemplated by section 56.29. Indeed, having been thwarted in its efforts to satisfy its judgment by Adams' "shell game," 27 Alberta opted to pursue other means of reaching Adams' property. We hold that such an action is equitable in nature, and that no right to jury trial attaches.

STONE, J., concurs.

PARIENTE, J., concurs specially with opinion.

PARIENTE, Judge, concurring specially.

The creditor, having an inadequate remedy at law, sought to invoke the equitable powers of the trial court to set aside a mortgage which he alleges to be a fraudulent conveyance. I agree that appellants are not entitled to a jury trial under the Florida Constitution. I write, however, to explain my reasoning, which is based not only on a historical analysis of the cause of action, but also on the nature of the remedy sought--vacating a duly recorded mortgage.

Article I, Section 22 of the Florida Constitution simply provides that the "right to trial by jury shall be secure and remain inviolate." Yet the constitutional right to a jury trial does not extend to every type of civil action. The guarantee extends only to those categories of actions in which the right to a jury trial was enjoyed as of 1845, the date that Florida's first constitution became effective. See In re Forfeiture of 1978 Chevrolet Van, 493 So.2d 433, 434 (Fla.1986); State v. Webb, 335 So.2d 826, 828 (Fla.1976).

Determining whether there were jury trials in particular types of actions at common law (and in particular in Florida prior to 1845) can be a daunting task because there is no single reliable historical source which neatly categorizes the causes of actions as they existed in the eighteenth and early nineteenth centuries. The task is further complicated by the...