Morton v. Cord Realty, Inc.

• Decision Date: 31 July 1996
• Docket Number: No. 94-1884,94-1884
• Court: Florida District Court of Appeals
• Parties: 21 Fla. L. Weekly D1728 Michael MORTON, Appellant, v. CORD REALTY, INC., et al., Appellees.

Page 1322

677 So.2d 1322

21 Fla. L. Weekly D1728

Michael MORTON, Appellant, v. CORD REALTY, INC., et al., Appellees.

No. 94-1884.

District Court of Appeal of Florida,

Fourth District.

July 31, 1996.

Gregg H. Glickstein of Schwartz, Gold, Cohen, Zakarin & Kotler, P.A., Boca Raton, and John Beranek of Macfarlane, Ausley, Ferguson & McMullen, Tallahassee, for appellant.

John K. Copeland of Copeland, Kramer, Sewell & Sopko, P.A., Stuart, for appellees.

WARNER, Judge.

This is an appeal by Michael Morton, who was impled into proceedings supplementary to a final judgment. The order appealed set aside a transfer to Morton from Tradewinds Development Corporation ("Tradewinds"), a judgment debtor of the appellee, Cord Realty ("Cord"). Tradewinds was not represented in the proceedings supplementary, yet the trial court still determined that it had the burden to prove that the transfer to Morton was not fraudulent, even though Morton appeared and presented evidence on the issue. Because the trial court erred by placing the burden of proof on Tradewinds and further erred in determining that section 726.105, Florida Statutes (1993), was inapplicable to the transaction, we reverse.

Morton was a shareholder in, and president of, Tradewinds Development, a development company. In 1987, Tradewinds entered into an agreement with a third party regarding land known as the Prosperity Projects property. As part of that agreement, Tradewinds agreed to indemnify the third party for any sales commissions to Cord Realty for which the third party may become liable. Cord Realty eventually sued the third party and Tradewinds in 1989 for the commissions. Tradewinds was dismissed from the suit, and a judgment by default was entered against the third party.

Both prior to the 1987 transaction as well as during the time of the 1989 suit, Tradewinds was involved in litigation with the City of Boynton Beach over a joint venture development called Woolbright Place in which Tradewinds was a joint venturer. The litigation was extensive and included allegations of defamation by Morton against the city. In January 1990 the city, the joint venturers, and Morton all agreed to settle the litigation. The city agreed to pay $8 million in settlement. In a separate agreement not part of the settlement agreement with the city, Tradewinds transferred its interest in the Woolbright joint venture to Morton as additional consideration for Morton's execution of a release of the city from his defamation claim. Morton's release was required by the city to settle the entire litigation. As a result of the settlement, Tradewinds and Morton both received a portion of the settlement proceeds. In addition, Morton obtained the transfer from Tradewinds of Tradewinds' interest in the Woolbright joint venture. The settlement was completed in March of 1990. It is the transfer from Tradewinds to Morton of Tradewinds' interest in the Woolbright joint venture which is the subject of this appeal.

In June of 1990, Cord sued Tradewinds on the Prosperity Projects development indemnification agreement. This suit resulted in a judgment entered in January 1993 against Tradewinds for the amount of the judgment against the third party in the earlier litigation. Having suffered various business reverses, Tradewinds stopped doing business in August of 1993. Cord then filed proceedings supplementary seeking to set aside Tradewinds' transfer of the interest in Woolbright to Morton. Morton was impleaded as a defendant in these proceedings.

Tradewinds, having ceased to do business, did not participate in the proceedings supplementary. Morton, however, presented various witnesses to show that the transaction was not fraudulent as to creditors. The trial court's final judgment states:

15. Under Section 56.29(6)(a), Florida Statutes, TRADEWINDS has the burden to show that the January 24, 1990, transfer from TRADEWINDS to MORTON was not made to delay, hinder or defraud creditors.

16. The Defendant, TRADEWINDS, was not represented by counsel at the trial in this matter. The case proceeded to trial with testimony, and arguments by attorney for Plaintiff and attorney for MORTON. Based upon the evidence introduced at trial, this Court finds that the Defendant, TRADEWINDS has failed to sustain its burden of proof.

17. The Court holds that Section 726.105, Florida Statutes, is inapplicable here and therefore the cases cited by MORTON are not persuasive.

(emphasis in original). The court then voided the transfer of Tradewinds' interest in Woolbright Place to Morton and ordered it placed in the hands of the Sheriff to partially satisfy the writ of execution. It is from this order that Morton appeals.

Section 56.29(6)(a), shifts the burden to the defendant in proceedings supplementary to prove that a transfer made within one year before service of process is not fraudulent as to creditors. It states:

When, within 1 year before...