Wieczoreck v. H & H Builders, Inc.

• Decision Date: 03 May 1984
• Docket Number: No. 83-425,83-425
• Citation: 450 So.2d 867
• Court: Florida District Court of Appeals
• Parties: Theodore L. WIECZORECK, Appellant, v. H & H BUILDERS, INC., a Florida corporation, Appellee.

Page 867

450 So.2d 867

Theodore L. WIECZORECK, Appellant, v. H & H BUILDERS, INC., a Florida corporation, Appellee.

No. 83-425.

District Court of Appeal of Florida,

Fifth District.

May 3, 1984.

Charles R. Steinberg of Holcomb, Theriac, Steinberg & Amari, Merritt Island, for appellant.

Charles M. Harris of Crofton, Holland, Starling, Harris & Severs, P.A., Titusville, for appellee.

DIAMANTIS, GEORGE N., Associate Judge.

Appellant, Theodore L. Wieczoreck, has filed an appeal from a final judgment dated January 19, 1983, entered in supplementary proceedings under section 56.29, Florida Statutes (1981), which found that he should be impleaded as a third party, and that the conveyance of certain real property to him was null and void since it constituted a fraudulent conveyance for the purpose of delaying, hindering or defrauding the creditors of Nelson L. Davis.

On September 10, 1981 appellee, H & H Builders, Inc., filed a complaint against Nelson L. Davis to recover money lent to him. The trial court rendered a final judgment for appellee against Davis on August 12, 1982.

Subsequently, on September 7, 1982, the appellee filed a motion for a rule to show cause and order impleading a third party. This motion was accompanied by two affidavits of George Howard, president of H & H Builders. In one affidavit for proceedings supplementary, Howard stated that the sheriff attempted to levy on Davis' property in order to satisfy the judgment but no property was found. The second affidavit was filed in support of the rule to show cause and to implead Wieczoreck as a third party defendant. Howard, in that latter affidavit, stated that on the date the action against Nelson L. Davis was filed that he had an interest in Lot 11, Hilltop Manor Subdivision; however Howard believed that Davis conveyed the property to the appellant to delay, hinder or defraud creditors for the following reasons: (1) the parties were close social friends; (2) Nelson L. Davis used the services of Wieczoreck or his business in several commercial enterprises; (3) the transfer was made for an inadequate consideration; (4) the conveyance was made after this action was filed against Davis; (5) Nelson L. Davis has continued in possession of the premises and has made no payment to Wieczoreck but has only continued to make the mortgage payment to GECC Financial Services; and (6) the transfer to Wieczoreck either rendered Davis insolvent or greatly diminished his available assets.

Nelson L. Davis and Joan E. Davis, his former wife, conveyed that property to Wieczoreck by warranty deed dated October 26, 1981, for a stated consideration of $10.00. The deed was subject to the following conditions: (1) ad valorem taxes and solid waste charges for the year 1981 and subsequent years; (2) zoning, restrictions, prohibitions and other requirements imposed by governmental authority; (3) restrictions on matters appearing on the plat or otherwise, to the subdivision; (4) public utility easements of records; and (5) that certain mortgage in favor of Gulf Bay Financial Corporation dated June 18, 1979, in the original sum of $40,000.00, recorded June 25, 1979 ... and assigned by assignment of mortgage dated June 22, 1979 to GECC Financial Services recorded June 25, 1979....

Upon the appellee's motion, the trial court ordered on September 3, 1982 that Wieczoreck was to show cause "why he should not be impleaded as a third party defendant, and if impleaded, for examination of the defendant and the impleaded third party in determination of the rights of the plaintiff against the defendant and third party defendant as to the property of the defendant which they have in their possession,...."

This order to show cause further provided as follows:

"ORDERED and RULED that the defendant and the third party proposed to be impleaded shall file a written answer, a response or other written pleadings to this Rule to Show Cause and the attached affidavits (which shall be served with the Rule to Show Cause) on or before Oct. 1, 1982, and serve a copy thereof upon the attorney for plaintiff; ...."

In an order dated October 8, 1982, the trial court denied Wieczoreck's motion to vacate the rule or order to show cause and gave him until October 15, 1982 in which to file an answer and the hearing which was set for October 7, 1982 was rescheduled for November 1, 1982.

At that hearing of November 1, 1982, appellant Wieczoreck, who was the only witness, testified that on October 16, 1981 he tendered $23,400.00 in cash for the property and that he would assume the liabilities that were on the property at that time. Although on that date the appellant knew that GECC had a second mortgage that would become the first mortgage after the first mortgage with First Federal Savings and Loan Association of Fort Pierce was paid off, he did not know the exact amount of the other indebtedness on the property. Wieczoreck purchased the property from Nelson L. Davis and his former wife, Joan E. Davis, on October 16, 1981, the day it was sold in a foreclosure suit to the mortgagee, First Federal Savings and Loan Association of Fort Pierce. Appellant paid the $23,400.00 to that Savings and Loan Association with Nelson L. Davis paying an additional sum of approximately $20,000.00 to the First Federal Savings and Loan Association of Fort Pierce to redeem the property.

Appellant subsequently discovered that there were additional liens to the $40,000.00 one of GECC Financial Services against the property entered prior to his purchase of the property. These liens were as follows: (1) Sentinel Star--$922.58; (2) John Sexton Company--$286.00; (3) D Q Corporation--$3,159.30; (4) Alfa Electric--$1,154.63; (5) Donald E. Biddelle--$16,944.46; (6) Department of Revenue--$248.00; (7) Howard Armstrong--$9,079.61; (8) Frank Pallachowski--$9,968.25; and (9) county taxes--$1,629.52. The amount of the liens, including the GECC one, interest charges and other matters totaled approximately $125,292.00.

The appellant further testified that he had satisfied two of these liens (the county taxes and the Howard Armstrong judgment lien) and that he had agreed to satisfy the remaining liens. Appellant also testified that at the time that he purchased the property, he was not aware of the pending action by the appellee against Davis nor did he and Davis ever discuss the sale in terms of Davis avoiding payment to appellee.

Appellant gave testimony regarding the circumstances of his purchase of the property. Some years ago he worked on the house, liked it, and told Davis to let him know if he would ever consider selling it. One night appellant saw Joan E. Davis, who told him that her former husband was having problems and stood a chance of losing the property because of a foreclosure action. For the past couple of years appellant saw Davis only at an occasional lunch. Joan E. Davis had her former husband call appellant, and Davis told appellant about his situation and what he needed. Although Davis first asked if appellant would loan him money, appellant said no, that he would buy the property instead. Davis then asked if appellant would give him a sixty day option to buy the property or house back for approximately $24,000.00. Appellant gave him a ninety day option and leased the house to him during that period for $730.00 a month, which Davis paid directly to GECC Financial Services (the mortgage payments are approximately $720.00 per month). Davis is currently in the house as a tenant on a month-to-month basis paying $1,650.00 a month as rent. The option is no longer in effect. Appellant intends to move into the house prior to age fifty-five (when he testified on November 1, 1982, he was fifty years old) because of a capital gains tax advantage. Appellant also stated that he did not promise Davis that he would pay the claims against the property and that he did not do a title search until after Davis failed to exercise his option. Wieczoreck further testified that he sat at dinners at the Rotary Club with Davis while Davis was married and that they had visited each other's homes socially on one occasion. Appellant stated that he did not have a long-term business relationship with Davis, but had done work for him on occasion. Davis told appellant that he thought the fair market value of the property was between $185,000.00 to $200,000.00. Appellant said that there was no time to do the title search and that he would not do such a search until the option was not exercised.

The trial court set aside the conveyance and directed the sheriff to levy on the interest of Nelson L. Davis that he conveyed to appellant for the following reasons: (1) said conveyance took place after the action was filed and service of process was obtained against defendant, Nelson L. Davis; (2) that at the time of said conveyance Nelson L. Davis was heavily indebted and had judgments against him; (3) that Wieczoreck was a business and social friend of Nelson L. Davis; (4) that Nelson L. Davis as owner of the property estimated the value of the property conveyed at between $185,000.00 and $200,000.00; (5) that after the conveyance Davis was made judgment proof; (6) Wieczoreck paid only $23,400.00 for the property and this was paid (along with additional money from Nelson L. Davis) to First Federal Savings and Loan Association; Wieczoreck paid nothing to either Nelson L. Davis or Joan E. Davis; (7) the deed to Wieczoreck placed no obligation at all on him to pay any creditors of Nelson L. Davis; (8) in fact, no other creditors were paid until after the hearing in this case and only then on the eve of court proceedings; (9) that a secret lease, i.e., an unrecorded lease, permitted Nelson L. Davis to remain in possession of the property by paying no obligations other than what he would have paid as owner, to wit: the mortgage paid directly to the mortgage company; (10) Davis controlled his possession of the premises; and (11) the consideration...