Nat'l Auto Serv. Ctrs., Inc. v. F/R 550, LLC
| Decision Date | 30 March 2016 |
| Docket Number | No. 2D14–3632.,2D14–3632. |
| Citation | 192 So.3d 498 |
| Parties | NATIONAL AUTO SERVICE CENTERS, INC., a Florida corporation; National Auto Properties, Inc., a Florida corporation; Leonard D. Levin, individually; Carol Levin, individually; Durant Holdings, LLC ; and Bedford Investments, LLC, Appellants, v. F/R 550, LLC, a Florida limited liability company; and F/R 3329, LLC, a Florida limited liability company, Appellees. |
| Court | Florida District Court of Appeals |
Stephen O. Cole and Nancy S. Paikoff of MacFarlane Ferguson & McMullen, Clearwater, and Michael J. Stanton of Stanton Cronin Law Group, PL, Tampa, for Appellants.
Courtney L. Fernald and Leonard S. Englander of Englander Fischer, St. Petersburg, for Appellees.
, Judge.
This is an appeal from a partial final judgment in proceedings supplementary in favor of appellees, F/R 550, LLC and F/R 3329, LLC (collectively F/R), based on efforts by F/R to collect on a judgment it obtained against appellant, National Auto Service Centers, Inc. (National Auto Service).1 The trial court voided the assignments of three promissory notes from National Auto Service to appellant, National Auto Properties, Inc. (National Auto Properties), pursuant to the Florida Uniform Fraudulent Transfer Act (FUFTA), our state's codification of the Uniform Fraudulent Transfer Act (Uniform Act). See §§ 726.105(1)(a), .108(1)(a), Fla. Stat. (2013). F/R alleged and the trial court found that these assignments were made by National Auto Service with “actual intent to hinder, delay, or defraud creditors.”
FUFTA provides that a claim based on such allegations “is extinguished” unless brought “within 4 years after the transfer was made ... or, if later, within 1 year after the transfer ... was or could reasonably have been discovered.” § 726.110(1)
. This case presents two issues of first impression in our state courts concerning this statutory provision: (1) whether the one-year savings clause is triggered by a creditor's discovery of the transfer or, instead, by the creditor's discovery of the facts showing the transfer to have been fraudulent; and (2) whether this statutory bar is subject to a claimant's assertion of equitable estoppel.2 We hold that discovery of the transfer is the operative fact and that the statute is one of repose that is not subject to equitable estoppel. As a result, the judgment must be reversed.
In September 2005, F/R entered into two thirty-year leases with National Auto Service. National Auto Service owned automobile repair businesses, and it operated two such businesses on the two properties that it leased from F/R. In September 2007, National Auto Service sold those two businesses, along with a third business operated at a different location, in three separate transactions to three different buyers. Each buyer gave National Auto Service a promissory note for a portion of the purchase price for the business it was buying. Roughly two months after the sales, on November 14, 2007, National Auto Service assigned the three promissory notes it received to National Auto Properties, its parent company, which was owned by appellant, Leonard Levin.
By November 2008, neither National Auto Service nor the buyers of its former car repair businesses were making rent payments to F/R as required by the leases. As a result, F/R sued National Auto Service for breach of contract. It prevailed and secured a final summary judgment against National Auto Service for $2,100,578.64 on October 26, 2010. F/R then began discovery in aid of execution.
On December 8, 2010, F/R served National Auto Service with a set of document production requests that sought, among other things, all of National Auto Service's accounting books and records. National Auto Service objected, and no documents were produced. On January 30, 2012, F/R took Mr. Levin's deposition. He testified that National Auto Service assigned the promissory notes to National Auto Properties to satisfy debts owed by National Auto Service to National Auto Properties. F/R states that this is the first time it learned of the assignments.
During the deposition, F/R orally requested accounting documents concerning the assignments and corresponding debts, and it confirmed that request in a follow-up letter in early February 2012. National Auto Service did not produce the records. Ten months later, on October 1, 2012, F/R filed a motion to compel asserting that National Auto Service was required to produce the accounting documents in response to F/R's December 2010 requests for production. That motion was granted, and the documents were produced on January 8, 2013. Those documents did not reflect the debts owed to National Auto Service by National Auto Properties about which Mr. Levin testified at his deposition. According to F/R, the documents established that Mr. Levin testified falsely about the reasons for the assignment and, for the first time, showed that the assignments were intended to hinder, delay, or defraud creditors.
On March 8, 2013, F/R filed motions for proceedings supplementary to execution and to implead National Auto Properties and Mr. Levin pursuant to section 56.29, Florida Statutes (2013)
, on the theory that National Auto Service had fraudulently transferred property to them. Later, on September 27, 2013, F/R sought to implead Mr. Levin's wife and two limited liability companies he controlled on the same theory.3 The trial court entered orders granting F/R proceedings supplementary, impleading the Levin Parties, and scheduling an evidentiary hearing on the merits of F/R's allegations of fraudulent transfer.
Morton v. Cord Realty, Inc., 677 So.2d 1322, 1324 (Fla. 4th DCA 1996).
does not regulate this procedure in detail, however, and its application in the real world can become messy. The statute does not require that the judgment creditor file a pleading stating the factual and legal basis for the proceedings supplementary or identifying the relief it seeks. § 56.29(1) ; Jackson–Platts, 110 So.3d at 8–9. Further, although the statute empowers courts to void transfers of property made “to delay, hinder[,] or defraud creditors,” § 56.29(6)(b), it does not explain whether a claim that a judgment debtor has made a fraudulent transfer is governed exclusively by section 56.29 or whether, and in what respects, FUFTA or some other law is equally or more applicable. As a result, the record does not disclose any pleading that stated the basis upon which F/R intended to proceed against the Levin Parties, identify the relief it sought, or specify the issues being presented to the trial court for resolution.4
The record of the proceedings in the trial court and briefs here, however, make it clear that the claim F/R presented to the trial court was a substantive cause of action under FUFTA.5 It was based on the theory that the assignment of the notes to National Auto Properties was actually fraudulent as to its creditors, and F/R's claim sought both to void those assignments and to obtain monetary relief pursuant to section 726.108 in an amount representing the fair market value of the notes at the time they were assigned.
The trial court heard this claim without a jury. The Levin Parties moved for an involuntary dismissal arguing that F/R's claim was extinguished under section 726.110(1)
because it was not brought within four years of the assignments or one year of the date the assignments were discovered. They argued that the assignments were made on November 14, 2007, more than five years before the March 8, 2013, commencement of the supplemental proceedings, and were discovered by F/R no later than Mr. Levin's January 30, 2012, deposition, more than thirteen months before the proceedings were commenced. F/R concedes that the claim was not brought within four years of the assignments but responded that the one-year savings clause was not triggered until January 8, 2013, when it claimed it first discovered the “fraudulent nature” of the transfers, by which it meant the facts showing that the assignments were made with actual intent to hinder, delay, or defraud creditors. F/R further asserted that the Levin Parties were equitably estopped from asserting section 726.110(1) as a bar to its claim because of the alleged false testimony regarding the reasons for the assignment and the delay in producing accounting documents.
In a written order denying the Levin Parties' motion for involuntary dismissal, the trial court agreed with F/R that the one-year savings clause in section 726.110(1)
was not triggered until F/R discovered or should have discovered the fraudulent nature of the assignments. It did not reach F/R's alternative argument that the Levin Parties were equitably estopped from asserting the protections of section 726.110(1). The trial court thereafter entered a partial final judgment finding that the assignments were made with actual intent to hinder, delay, or defraud creditors and declared those transfers void under FUFTA. This timely appeal followed.
We first address whether the one-year savings clause in section...
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