ITT Community Dev. Corp. v. Barton

• Decision Date: 05 September 1978
• Docket Number: No. 76-370-Orlando-Civil-Y.,76-370-Orlando-Civil-Y.
• Citation: 457 F. Supp. 224
• Parties: ITT COMMUNITY DEVELOPMENT CORPORATION, a Delaware Corporation, Plaintiff, v. John BARTON, a/k/a John A. Barton, and Joan Barton, his wife, Defendants.
• Court: U.S. District Court — Middle District of Florida

457 F. Supp. 224

ITT COMMUNITY DEVELOPMENT CORPORATION, a Delaware Corporation, Plaintiff, v. John BARTON, a/k/a John A. Barton, and Joan Barton, his wife, Defendants.

No. 76-370-Orlando-Civil-Y.

United States District Court, M. D. Florida, Orlando Division.

August 18, 1978.

As Amended September 5, 1978.

COPYRIGHT MATERIAL OMITTED

Mark Hicks, Daniels & Hicks, Miami, Fla., Bradford, Williams, McKay, Kimbrell, Hamman & Jennings, P.A., Miami, Fla., for plaintiff.

Dan R. Warren, Daytona Beach, Fla., for defendants.

FINDINGS OF FACT AND MEMORANDUM OPINION

GEORGE C. YOUNG, Chief Judge.

This cause is before the Court on the motion of the defendants John and Joan Barton to dissolve the order of the Court entered on September 22, 1977. The defendants also moved ore tenus at a hearing before the Court on June 7, 1978 to dissolve a writ of attachment on defendants' real property on the ground that the Florida attachment statute, Section 76.01 et seq., Florida Statutes, is unconstitutional. Plaintiff filed a cross motion ore tenus to enjoin the defendants from any conveyance of the real property in question, pending the outcome of this law suit.

The issues now before the Court involve the same subject matter addressed by the Court in its September 22, 1977 order. That order is being reconsidered in light of the decision in ITT Community Development Corporation v. Barton, 569 F.2d 1351 (5th Cir. 1978), rendered by the Court of Appeals for the Fifth Circuit on March 24, 1978.

I. PROCEDURAL POSTURE OF THE CASE

The progress of this case is becoming increasingly complex. The Fifth Circuit's Barton opinion was rendered on an interlocutory appeal from a contempt order entered by Judge William O. Mehrtens. Judge Mehrtens' contempt order was entered while this case was pending in the U.S. District Court for the Southern District of Florida, after its removal from the Circuit Court for Dade County, Florida. The case was later transferred to this court in September 1976.

Subsequent to the transfer, the defendants requested that the Court hear their motions to dissolve certain prejudgment writs of garnishment and a writ of attachment. The motions were initially filed while the case was before Judge Mehrtens. The writs of garnishment had been issued by the Clerk of the Circuit Court of Dade County, Florida in March 1975, prior to removal of the case to the federal court. The writ of attachment was issued by the Clerk of the U.S. District Court for the Southern District of Florida on April 18, 1975. Judge Mehrtens never dissolved the writs, and once the case was transferred to this Court the defendants renewed their motions to dissolve the writs. The motions were noticed for hearing before this Court on April 12, 1977.

At the April 12th hearing the Court listened to the arguments of defendants' counsel with regard to the constitutionality of the Florida prejudgment garnishment statute, Chapter 77, Florida Statutes. For reasons unknown to the Court, however, the matter of the writ of attachment was never considered. In accordance with the ruling made from the bench, the Court entered its written order on September 22, 1977. This Court held the Florida prejudgment garnishment statute to be unconstitutional and the writs of garnishment were dissolved. At the same time, the Court enjoined transfer of the bank funds that had been garnished. Because the real property subject to the writ of attachment was never considered, the lien imposed by the attachment presumably remains in force. For this reason, at the June 7, 1978 hearing on the defendants' motion to dissolve the Court's September 22, 1977 order, the defendants again directed the Court's attention to the writ of attachment against their real property.

In turn, the plaintiff sought to have transfer of the real property enjoined in the same manner as were the bank accounts under the September 22, 1977 order. The plaintiff has not attempted to argue in support of the validity of the attachment statute. Instead, the plaintiff seeks an injunction under the same theory of constructive trust as that relied upon for enjoining transfer of the bank funds.

II. CONSTITUTIONALITY OF THE WRIT OF ATTACHMENT

The Court will first consider the constitutionality of the Florida statute which permitted the plaintiff to obtain a prejudgment writ of attachment against the defendants' real property. Looking to state law, the Court finds that on September 23, 1976, in the case of Unique Caterers, Inc. v. Rudy's Farm Company, 338 So.2d 1067 (Fla. 1976), the Florida Supreme Court held that Chapter 76, Florida Statutes, to the extent it provides for attachment prior to judgment, violates the Due Process Clause and is unconstitutional. Reference to this case concludes the Court's inquiry. The prejudgment writ of attachment against defendants' real property is invalid and has been so for nearly two years. The writ will be dissolved by the Court.

Having dissolved the writ of attachment, the Court must next proceed to the question of whether a constructive trust should be imposed, and if so, whether transfer of the defendants' real property should be preliminarily enjoined pending the outcome of this action. Resolution of this question requires consideration of the likelihood of plaintiff being successful on the merits of its claims against the defendants.

III. PLAINTIFF'S LIKELIHOOD OF SUCCESS ON THE MERITS

Plaintiff has asked the Court to impose a constructive trust pendente lite upon those funds described in the September 22, 1977 order, except for the childrens' trust funds. The childrens' trust funds, held in accounts at the Barnett Bank of Ormond Beach, were released by written order entered on June 12, 1978. The injunction of September 22, 1977 therefore no longer prohibits transfer of funds in the childrens' trust accounts. With respect to the remaining funds and the defendants' real property, during the hearing on June 7, 1978 the Court ordered counsel to submit briefs along with citations to any testimony at prior hearings or discovery depositions in this case. Based on these briefs and the accompanying excerpts from recorded testimony, the Court now makes findings of fact to supplement the findings contained in its September 22, 1977 order.

The findings made herein are preliminary only. They are being made solely for the limited purpose of determining whether the Court's preliminary injunction should be continued in effect. Different findings as to particular facts may ultimately be made at the conclusion of the case once there has been a complete presentation of evidence and arguments of counsel at trial.

A. FINDINGS OF FACT

The defendant John Barton was first employed by the plaintiff, ITT Community Development Corporation, as Chief Engineer at the plaintiff's Palm Coast land development project in Flagler County, Florida, beginning in 1969. The defendant¹ continued his employment with the plaintiff in various supervisory capacities through the fall of 1974. Initially, the defendant was paid a salary of $18,000.00 per annum for his full-time employment with the plaintiff. Each year the defendant got a raise of several thousand dollars so that in the year 1973 the defendant's income tax return indicates income from wages of approximately $32,000.00 for his services to the plaintiff.

During this time period, from 1971 through 1974, the defendant also received substantial outside income. His tax returns indicate that he made $27,828.00, $72,434.00, and $70,382.00 from outside consulting work during the years 1971, 1972, and 1973, respectively. Testimony of the contractors in this case and evidence in the form of their cancelled checks to the defendant indicates that the actual sums paid by them to the defendant were substantially greater. Halifax Paving, through its president, Leonard Durrance, Lowery Brothers, Inc., through its president, C. D. Lowery, and the various Mange construction companies through Joe Mange, Sr. paid the defendant money in the amount of three percent (3%) of their gross receipts from contracts with the plaintiff. All three of these contractors were doing work for the plaintiff on the Palm Coast project. The various payments to the defendant total about $350,000.00 during the period 1970 to 1975.

The defendant contends that these payments were received for engineering consulting work done by him for the contractors. The defendant claims he was merely moonlighting. No records were kept, however, either by the defendant or the contractors, that could indicate exactly what work the defendant did and what it entailed.

Leonard Durrance of Halifax Paving has testified that he initially agreed to pay the defendant at the rate of $15.00 per hour for some consulting work. When the defendant had built up several hours time and was due to be paid, a disagreement occurred between Durrance and the defendant as to the number of hours actually worked. At that time the defendant suggested to Durrance that, in order to make it easier and simpler, the defendant should be paid at the rate of 3% of all the monies received by Halifax Paving on account of work done for the plaintiff.

The defendant sent no invoices to the contractors for his alleged consulting work. The contractors delivered their checks personally to the defendant, who then deposited each of these checks in accounts held by his wife and him at Century Federal Savings and Loan Association of Ormond Beach and the Barnett Bank at Ormond Beach. In contrast, the defendant always put his salary paychecks from the plaintiff in the Citizens Bank of Bunnell. None of the contractors' payments were deposited in the Bunnell bank. The defendant explained this procedure, during his deposition on August 2, 1975, at page 114, by stating:

"I never liked to have more than three or four thousand dollars in that bank, frankly, because I know, as a matter of fact, they talk about your business in the Bunnell Restaurant."

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