Winderting Invs., LLC v. Furnell
| Decision Date | 01 August 2014 |
| Docket Number | No. 2D14–6.,2D14–6. |
| Citation | 144 So.3d 598 |
| Parties | WINDERTING INVESTMENTS, LLC, a Florida limited liability company, and Helen Emily Kwok, an individual, Petitioners, v. Gregory FURNELL, an individual, Darlene Braden, an individual, and Jamie Johnston, n/k/a Jamie Tanner, an individual, Respondents. |
| Court | Florida District Court of Appeals |
OPINION TEXT STARTS HERE
Thomas C. Saunders and Alan L. Perez of Saunders Law Group, Bartow, for Petitioners.
Daniel F. Pilka and Dixie T. Brady of Pilka & Associates, P.A., Brandon, for Respondents.
Helen Emily Kwok, a nonparty in the proceedings in the circuit court, and Winderting Investments, LLC (Winderting), seek review by certiorari of an order denying a motion for a protective order seeking to prevent the discovery of Mrs. Kwok's personal financial information by three judgment creditors of KMPB Group USA, Inc. (KMPB). Because the judgment creditors failed to establish any facts demonstrating that the discovery of Mrs. Kwok's personal financial information was reasonably calculated to identify or to lead to the discovery of assets that could be reached to satisfy the judgment, we grant the writ and quash the circuit court's order.
In January 2005, Mrs. Kwok and Michael Kwok formed two entities in Florida: KFSL Investments, Inc. (KFSL), and Imperial Management Group, Inc. KFSL was converted to a limited liability company with a similar name in 2010. In May 2008, the name of Imperial Management Group, Inc., was changed to KMPB Group USA, Inc. For the sake of clarity, we will refer to this entity as KMPB in the remainder of this opinion.
The principal asset of KFSL was a hotel located in Lakeland known as the “Imperial Swan Hotel & Suites” (the Hotel). KMPB managed the Hotel in accordance with a written contract with KFSL. Because KMPB was a single purpose entity formed to manage the Hotel, it had little or no hard assets. Michael Kwok served as the registered agent and president or sole managing member of KFSL until 2010. In 2012, Mrs. Kwok became the registered agent and sole managing member of KFSL. Mrs. Kwok was the president of KMPB until 2011. The record does not disclose the identities of the shareholders of these companies, but Mrs. Kwok seems to have had some association with or connection to both of them.
In 2006 and early 2007, Gregory Furnell, Darlene Braden, and Jamie Johnston, n/k/a Jamie Tanner (the judgment creditors), became employed at the Hotel. KMPB issued the paychecks to the judgment creditors for their services. On December 8, 2008, the judgment creditors filed an action alleging a variety of employment and related claims against “KMPB Group, USA D/B/A Imperial Swan Hotel & Suites” and against an individual named Sherman Clark. Following service of process, the trial court entered defaults against both defendants and subsequently conducted a nonjury trial on damages. The judgment creditors ultimately recovered a judgment for $3,000,773 against KMPB. Of this amount, the trial court ordered Mr. Clark to pay $250,000 to Jamie Johnston, n/k/a Jamie Tanner.
On March 1, 2012, at a time when the judgment remained unpaid, KFSL executed a special warranty deed transferring ownership of the Hotel property to Winderting. Mrs. Kwok was then the sole member/manager of KFSL and Winderting; she was also the registered agent and the sole officer of KMPB. At this point in the narrative, the reader should bear in mind that the judgment was entered against KMPB, the management company, not against KFSL, the owner of the Hotel property.
On November 6, 2012, after the judgment creditors discovered the transfer of the ownership of the Hotel property from KFSL to Winderting, they filed an “Emergency Motion for Temporary Restraining Order and to Appoint Receiver.” In this motion, the judgment creditors moved for the appointment of a “receiver for the Imperial Swan Hotel & Suites to take all actions necessary to collect the judgment.” The judgment creditors also alleged that: (1) the transfer of the ownership of the Hotel is void; (2) the Kwoks created Winderting for the sole purpose of attempting to defraud creditors; (3) the Kwoks were always the sole owners of the Hotel and held themselves out as such; (4) the Kwoks were still in the possession of the Hotel; (5) Mrs. Kwok, Mr. Kwok, KFSL, and Winderting should be impleaded as defendants in proceedings supplementary; (6) Mrs. Kwok and Mr. Kwok dominate and control KMPB, KFSL, and Winderting in such a way that these entities are merely the “alter egos” of each other and are used for the personal benefit of Mrs. Kwok and Mr. Kwok; and (7) the judgment “is enforceable and may be executed against the property currently owned by Winderting.”
The appendices provided by the parties do not include an order specifically granting the “Emergency Motion for Temporary Restraining Order and to Appoint Receiver.” Insofar as we can tell, the trial court did not enter a restraining order or appoint a receiver of the Hotel property. However, on December 10, 2012, the trial court entered an order titled “Order on Plaintiffs' Motion to Add Defendant.” This order states that Winderting is added “as a party defendant to this lawsuit.” The status of Winderting in the proceedings as a result of this order is uncertain. There is no order reopening the underlying action or initiating proceedings supplementary under section 56.29, Florida Statutes (2012). One thing is clear—the trial court did not amend the judgment to add Winderting or any other person or entity as a judgment debtor.
From this point on, the parties appear to have treated the Emergency Motion as a supplemental pleading under Florida Rule of Civil Procedure 1.190(d). The judgment creditors commenced a new round of discovery. Here, we arrive at the subject of the petition for certiorari filed by Mrs. Kwok and Winderting. The judgment creditors issued subpoenas duces tecum without deposition to three nonparties. The subpoenas were directed to Bank of America, TD Bank, and Westpac Bank. The subpoena to Bank of America sought all bank account records for KMPB as well as all checking and savings account records for Mrs. Kwok from January 1, 2006, to the present. The subpoenas to TD Bank and Westpac Bank sought only Mrs. Kwok's bank account records for the same period.
Mrs. Kwok 1 and Winderting moved for a protective order blocking the production of Mrs. Kwok's financial information from the three banks. No objection was made to the production of the financial records of KMPB, the judgment debtor. In the motion, Mrs. Kwok and Winderting observed that they had already provided “a litany of banking information,” including bank statements for every company involved in the case. Mrs. Kwok and Winderting objected solely to the production of Mrs. Kwok's personal financial information. After a hearing, the circuit court entered an order denying the motion for a protective order. This petition for certiorari followed.
A petition for certiorari is appropriate to review a discovery order when the “order departs from the essential requirements of law, causing material injury to a petitioner throughout the remainder of the proceedings below and effectively leaving no adequate remedy on appeal.” Allstate Ins. Co. v. Langston, 655 So.2d 91, 94 (Fla.1995) (citing Martin–Johnson, Inc. v. Savage, 509 So.2d 1097, 1099 (Fla.1987)). An order compelling the production of documents by a nonparty is reviewable by certiorari because he or she has no adequate remedy by appeal. Price v. Hannahs, 954 So.2d 97, 100 (Fla. 2d DCA 2007) (citing Nussbaumer v. State, 882 So.2d 1067, 1072 (Fla. 2d DCA 2004)). Thus, in order to obtain relief, the petitioner must demonstrate a departure from the essential requirements of law and material injury. See id. (citing Syken v. Elkins, 644 So.2d 539 (Fla. 3d DCA 1994), approved,672 So.2d 517 (Fla.1996)).
Florida Rule of Civil Procedure 1.560(a) provides as follows: “In aid of a judgment, decree, or execution the judgment creditor or the successor in interest, when the interest appears of record, may obtain discovery from any person, including the judgment debtor, in the manner provided in these rules.” “A judgment creditor should be allowed broad discovery into the debtor's finances.” Jim Appley's Tru–Arc, Inc. v. Liquid Extraction Sys. Ltd. P'ship, 526 So.2d 177, 179 (Fla. 2d DCA 1988). The matters relevant to postjudgment discovery “are concerned with information that will enable the judgment creditor to collect the debt.” Regions Bank v. MDG Frank Helmerich, LLC, 118 So.3d 968, 969 (Fla. 2d DCA 2013) (citing Citibank, N.A. v. Plapinger, 461 So.2d 1027 (Fla. 3d DCA 1985)). In cases that have already proceeded to the entry of a money judgment,
The creditor has the right to discover any assets the debtor might have that could be subject to levy or execution to satisfy the judgment, or assets that the debtor might have recently transferred. Broad discovery of a debtor's assets is permitted postjudgment—the debtor's assets, whether held individually or jointly, are relevant to collecting the debt...
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