Jacksonville Bulls Football, Ltd. v. Blatt

Decision Date13 December 1988
Docket NumberNo. 88-463,88-463
Citation13 Fla. L. Weekly 2699,535 So.2d 626
Parties13 Fla. L. Weekly 2699 JACKSONVILLE BULLS FOOTBALL, LTD., Appellant, v. Michael T. BLATT, Appellee.
CourtFlorida 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.

DANIEL S. PEARSON, Judge.

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.

I.
A. The Sale from the Bulls to International

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

B.

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.

C.

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.

II.

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

A.

Close connections between a judgment debtor and the entity to which it transfers assets may raise judicial eyebrows but do not in themselves signal a fraudulent transaction. This is especially so where, as here, the judgment debtor receives for its assets the cash equivalent or greater. See Nelson v. Cravero, 117 So.2d 764 (Fla. 3d DCA 1960) (consideration for transfer of real property by debtor to creditor-purchaser was adequate, and thus third-party creditor failed to establish prima facie case for setting aside conveyance as fraudulent). Compare Ostend Realty Co. v. Biscayne Realty & Ins. Co., 99 Fla. 1221, 128 So. 643 (1930) (affirming denial of motion to dismiss complaint which alleged conveyance without consideration of debtor's property to volunteer purchaser) with Godard v. Crenshaw, 136 Fla. 78, 186 So. 822 (1938) (affirming dismissal of complaint which failed to allege with certainty that there was inadequate consideration given by creditor for debtor's property). This is not to say, however, that a judgment debtor's transfer of an asset for adequate consideration ends the inquiry. It is, to the contrary, well understood that

"[a] purchase made by one not a creditor is fraudulent and void as against creditors, even though the purchaser has paid an adequate consideration, where the seller has at the time a purpose or intent to defraud his creditors, or to hinder and delay them in the collection of their debts, and the purchaser knew of such purpose or had knowledge of such facts or circumstances as would have induced an ordinarily prudent person to make inquiry, and which inquiry, if made with reasonable diligence, would have led to the discovery of such fraudulent purpose of the seller, and the buyer did not make such inquiry."

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) (conveyance may be set aside even though purchaser has paid fair market value if seller/debtor's purpose was to defraud creditors and reasonable purchaser would have known of such purpose).

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).

B.

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...

To continue reading

Request your trial
23 cases
  • In re Smtc Mfg. of Texas
    • United States
    • U.S. Bankruptcy Court — Western District of Texas
    • September 11, 2009
    ...pending or about to be commenced are in fraud of creditors and void as to such plaintiff."); see also Jacksonville Bulls Football, Ltd. v. Blatt, 535 So.2d 626, 629 (Fla.Dist.Ct.App.1988) ("[T]he mere fact that a suit is pending against a person, or that a person is indebted to another, doe......
  • Wiand v. Wells Fargo Bank, N.A.
    • United States
    • U.S. District Court — Middle District of Florida
    • February 9, 2015
    ...creditors.’ ” Sunshine Resources, Inc. v. Simpson, 763 So.2d 1078, 1081 (Fla. 4th DCA 1999) (quoting Jacksonville Bulls Football Ltd. v. Blatt, 535 So.2d 626, 629 (Fla. 3d DCA 1988) ).The Bank loaned Laurel Preserve, LLC5 $1.9 million in exchange for a security interest of the same amount. ......
  • Barbee v. Amerant Bank, Nat'l Ass'n (In re Luna Devs. Grp., LLC)
    • United States
    • U.S. Bankruptcy Court — Southern District of Florida
    • July 14, 2020
    ...transfer, even if the effect of the payment is to prefer one creditor over another).142 Id. (quoting Jacksonville Bulls Football Ltd. v. Blatt , 535 So.2d 626, 629 (Fla. 3d DCA 1988) ).143 Wiand v. Wells Fargo Bank, N.A. , 86 F. Supp. 3d 1316, 1326-27 (M.D. Fla. 2015).144 Because the Court ......
  • Advantus, Corp. v. Sandpiper of Cal., Inc.
    • United States
    • U.S. District Court — Middle District of Florida
    • September 30, 2019
    ...Sandpiper's potential liability for false advertising does not raise an inference of fraud. See Jacksonville Bulls Football, Ltd. v. Blatt, 535 So. 2d 626, 629 (Fla. 3d Dist.Ct. App. 1988) ("[T]he mere fact that suit is pending against a person, or that a person is indebted to another, does......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT