Jacksonville Bulls Football, Ltd. v. Blatt
Decision Date | 13 December 1988 |
Docket Number | No. 88-463,88-463 |
Citation | 13 Fla. L. Weekly 2699,535 So.2d 626 |
Parties | 13 Fla. L. Weekly 2699 JACKSONVILLE BULLS FOOTBALL, LTD., Appellant, v. Michael T. BLATT, Appellee. |
Court | Florida District Court of Appeals |
Battaglia, Ross, Hastings, Ducus & Andrews and Anthony S. Battaglia and Kelli Hanley Crabb, St. Petersburg, for appellant.
James L. Ferraro, Miami, for appellee.
Before DANIEL S. PEARSON, FERGUSON and JORGENSON, JJ.
This case concerns a judgment creditor's efforts to set aside as fraudulent certain acts of a debtor which thwarted the creditor's ability to collect his judgment.
In August 1986, a federal court in California entered a judgment of more than $50,000 in favor of Michael T. Blatt against Jacksonville Bulls Football, Ltd. (hereafter, the Bulls), the owner of a football team in the then-recently defunct United States Football League. On October 3, 1986, Blatt recorded the judgment in the public records of Dade County, and the clerk of the court notified the Bulls of the recording. After the court denied the Bulls' attempt to stay the enforcement of the judgment, 1 Blatt, unsuccessful in his efforts to execute on his judgment, brought proceedings supplementary to execution, ultimately moving to set aside as fraudulent the following acts: (a) a sale of Bulls' assets to International Leasing, Inc. (International) for $150,000; (b) a sale of Bulls' assets to Sound Builders of Duval County, Inc. (Duval) for $100,000; and (c) a consent judgment in excess of $12,000,000 entered against the Bulls on October 21, 1986, in favor of Sound Builders, Inc. (SBI). 2 The trial court confirmed a master's recommendations to afford Blatt complete relief. The Bulls appeal, and we reverse.
International and the Bulls entered into an agreement under which the Bulls sold its football equipment to International for $150,000. Without dispute, the evidence showed that the $150,000 paid to the Bulls was considerably in excess of the fair market value which the evidence assigned to the equipment.
Despite the conceded adequacy of the sale price, Blatt suggested that other circumstances surrounding the sale indicate that it was a fraudulent transfer and thus susceptible to being set aside. For example, Fred B. Bullard, the sole owner of International, was also the sole owner of Jax Professionals, Inc., which was the sole general partner of the Bulls; there was evidence tending to prove that the agreement and sale documents were backdated to September 1986, but in fact were not signed until October 16, 1986, the date upon which the Bulls received the notice that Blatt's foreign judgment had been recorded; and, finally, the $150,000 in cash received by the Bulls was, almost immediately after its receipt, used by them to refund money received from season ticketholders. 3
The Sale from the Bulls to Sound Builders of Duval County, Inc.
Once again, this sale--of the Bulls' office equipment--was for an indisputably adequate cash amount. And, once again, Blatt points to other circumstances which, he contends, cast doubt on the legitimacy of the transaction. Mr. Bullard, in addition to controlling the Bulls, also controlled Duval, the purchaser of the assets. 4 Moreover, since, as will be seen, SBI had already obtained a judgment of more than $12,000,000 against the Bulls, Blatt claimed that it was strange indeed that SBI would have permitted its wholly-owned subsidiary, Duval, to make a $100,000 cash payment to its judgment debtor, the Bulls, when SBI, as a judgment creditor, could have executed against the Bulls' office equipment. Finally, as in the case of the $150,000 received from International, the money received from Duval was sent to season ticketholders as refunds.
The Consent Judgment in Favor of Sound Builders, Inc.
The third and last act which Blatt sought to void as an attempt to defraud creditors was the $12,157,565.69 consent judgment in favor of SBI. The evidence shows that on the day following the Bulls' receipt of notice of the recording of Blatt's judgment against it, SBI (as previously noted, also controlled by Bullard) brought suit against the Bulls on promissory notes then due and owing. Four days later, the Bulls agreed to the entry of a consent judgment, and SBI promptly placed in the hands of the sheriff a writ of execution.
Finding that the Bulls' use of the funds received from International and Duval to pay off the season ticketholders was "nothing more than a shifting and shielding of assets to avoid the Plaintiff's execution," the trial court declared the Bulls' sales of its football and office equipment fraudulent. We conclude to the contrary because, first, the sales themselves did not defraud or harm any creditor inasmuch as the Bulls received cash greater in value than the assets it conveyed, and, second, using the funds received to pay the season ticketholders rather than Blatt was merely a preference of certain bona fide creditors over another and, as such, did not make fraudulent the earlier sales which generated the funds. 5
Jackson v. Citizens' Bank & Trust Co., 53 Fla. 265, 283, 44 So. 516, 522 (1907) (emphasis added.)
See also Williams v. Finlayson, 49 Fla. 264, 38 So. 50 (1905) ( ).
But the mere fact that suit is pending against a person, or that a person is indebted to another, does not in and of itself render fraudulent that person's conveyance of property. Bay View Estates Co. v. Southerland, 114 Fla. 635, 154 So. 894 (1934); Stelle v. Dennis, 104 Fla. 384, 140 So. 194 (1932); Orlando Light Bulb Service, Inc. v. Laser Lighting and Electrical Supply, Inc., 523 So.2d 740 (Fla. 5th DCA 1988); Kirk v. Edinger, 380 So.2d 1336 (Fla. 5th DCA 1980); McCrary v. Bobenhausen, 366 So.2d 77 (Fla. 1st DCA 1978). An owner of property has the right to dispose of it as he or she sees fit; the only restriction on that right is that no transfer may be made which injures or prejudices existing creditors' rights. Bay View Estates Co. v. Southerland, 114 Fla. 635, 154 So. 894.
Thus, if a judgment debtor disposes of assets for adequate cash, the transaction will not be considered fraudulent in the absence of a showing that the debtor intended to give the funds received to other than existing creditors. Otherwise stated, it is not fraudulent to give the funds to some but not all existing creditors, even though the effect might be to injure or prejudice an existing creditor who was not chosen to receive the debtor's largesse. These so-called preferential transfers are not deemed fraudulent even though their natural effect is to hinder or delay the non-preferred creditors. Jackson v. Citizens' Bank & Trust Co., 53 Fla. 265, 44 So. 516; Godard v. Crenshaw, 136 Fla. 78, 186 So. 822; Jones v. Wear, 111 Fla. 69, 149 So. 345 (1933); Vickers v. Glenn, 102 Fla. 535, 136 So. 326 (1931); Baldwin v. La Fayette Land Co., 62 Fla. 129, 56 So. 943 (1912). A creditor may properly accept a preference even if the creditor knows that the debtor is making a "calculatedly preferential transfer" for the purpose of disfavoring other creditors. Baldwin v. La Fayette Land Co., 62 Fla. 129, 56 So. 943; Miles v. Katz, 405 So.2d 750 (Fla. 4th DCA 1981); Mission Bay Campland, Inc. v. Sumner Financial Corp., 731 F.2d 768 (11th Cir.1984).
Blatt argues, however, that even if a transfer for adequate funds which are thereafter used to prefer other bona fide creditors is not fraudulent, the refunds to the season ticketholders were not payments to bona fide creditors. Contrary to the trial court, we find this argument to be without merit. 6
It is generally recognized that admission tickets are revocable licenses. See Marrone v. Washington Jockey Club, 227 U.S. 633, 33 S.Ct. 401, 57 L.Ed. 679 (1913) (race track ticket); Burnham v. Flynn, 189 N.Y. 180, 82 N.E. 169 (1987) (theater ticket); Collister v. Hayman, 183 N.Y. 250, 76 N.E. 20 (1905) (theater ticket); Bickett v. Buffalo Bills, Inc., 122...
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