Windsor-Thomas Group, Inc. v. Parker, 2D99-4364.

• Decision Date: 23 March 2001
• Docket Number: No. 2D99-4364.,2D99-4364.
• Citation: 782 So.2d 478
• Parties: WINDSOR-THOMAS GROUP, INC., Appellant, v. Patricia PARKER and American General Life Insurance Company, Appellees.
• Court: Florida District Court of Appeals

782 So.2d 478

WINDSOR-THOMAS GROUP, INC., Appellant, v. Patricia PARKER and American General Life Insurance Company, Appellees.

No. 2D99-4364.

District Court of Appeal of Florida, Second District.

March 23, 2001.

Robert L. McDonald, Jr., of Cramer, Haber & McDonald, P.A., Tampa, for Appellant.

No appearance for Appellee Patricia Parker.

Robert A. Freyer of Shutts & Bowen, LLP, Orlando, for Appellee American General Life Insurance Company.

ALTENBERND, Judge.

Windsor-Thomas Group, Inc. ("Windsor-Thomas"), appeals an order dissolving a writ of garnishment directed to American General Life Insurance Company as the issuer of an annuity for the benefit of Patricia Parker. We affirm. In Florida, the proceeds of annuity contracts "shall not in any case be liable to attachment, garnishment or legal process in favor of any creditor." § 222.14, Fla.Stat. (1997). At least in cases where the debtor/defendant is not the owner of the annuity, we conclude that either the owner or the issuer of the annuity can raise this prohibition. This is true even if the debtor/defendant does not raise it in a motion to dissolve the writ. We certify conflict with State Farm Life Insurance Co. v. Florida Asset Financing Corp., 25 Fla. L. Weekly D1546, ___ So.2d ___, 2000 WL 827161 (Fla. 4th DCA June 28, 2000), a Fourth District case that held a garnishee lacked standing to raise this statute as a defense. This is the second time this court has considered the propriety of a "Fund Acquisition Agreement" that attempts to obtain the assignment of an annuity benefit not subject to assignment or encumbrance. See First Colony Life Ins. Co. v. Sun State Capital Funding, Inc., 730 So.2d 735 (Fla. 2d DCA 1999)

. Coincidentally, both First Colony and this case involve transactions to recover benefits payable to the same person, Patricia Parker. As in First Colony, no one has appeared on Ms. Parker's behalf, although her attorney was served with the notice of appeal.

As explained in First Colony, Ms. Parker filed a lawsuit seeking damages related to the death of her husband. Ms. Parker and the defendant to that action settled the lawsuit using a structured settlement agreement that required the defendant's insurance company, Shelby Insurance Company, to pay Ms. Parker scheduled payments. The agreement allowed Shelby Insurance Company to make a qualified assignment of this obligation to American General Annuity Service Corporation (AGASC).¹ Shelby Insurance Company made this qualified assignment, and AGASC purchased from American General Life Insurance Company an annuity structured to make the scheduled payments. Thereafter, Ms. Parker sought to assign a portion of these benefits to Windsor-Thomas in exchange for an immediate lump sum payment. Because the annuity contains a clause prohibiting such assignment, the transaction was structured in an attempt to achieve the equivalent of an assignment without the use of this term.

The transaction in this case is only slightly different than that described in First Colony. In this case, the annuity issued by American General Life Insurance and owned by AGASC required three payments to Ms. Parker, with the first payment of $20,000 due to her on May 1, 1999. Ms. Parker signed a "Fund Acquisition Agreement" with Windsor-Thomas dated November 20, 1997. Windsor-Thomas paid Ms. Parker $8,400, and Ms. Parker agreed to pay Windsor-Thomas $20,000 on May 1, 1999.² Her promise was "secured" by the anticipated payment from the annuity. Obviously, Ms. Parker did not own a "fund" that Windsor-Thomas could "acquire." From a functional viewpoint, this agreement is a secured promissory note with an annual interest rate of approximately 100 percent.³

Like the transaction in First Colony, this Fund Acquisition Agreement required Ms. Parker to obtain a payment or performance bond. The Agreement provided that her failure to do so (in this case within twenty-five days) would constitute a default. Upon default, the entire $20,000 would become due and payable, and the agreement allowed for "specific performance." The agreement required that Alan Gonzalez, Esquire, receive a copy of any notices required to be sent to Ms. Parker. It is unclear whether Mr. Gonzalez represented Ms. Parker in the execution of the agreement, but he was her attorney in all subsequent legal proceedings. Although no document specifically acknowledged that all parties intended for Ms. Parker to default on this contract, the totality of the record suggests that the parties entered into this agreement with a preestablished plan to allow a default and thereby transform the obligation into a judgment that might be collected through garnishment or attachment.

On January 6, 1998, about six weeks after giving Ms. Parker the $8,400, Windsor-Thomas sued Ms. Parker seeking specific performance or damages for the breach of the Fund Acquisition Agreement, alleging Ms. Parker failed to obtain the required bond. At precisely the same time that Windsor-Thomas filed its lawsuit, Mr. Gonzalez filed three documents on behalf of Ms. Parker. The first two, dated December 23, 1997, consisted of an acceptance of service and an answer that admitted the allegations of the complaint and consented to "the entry of a judgment for all the relief requested in the complaint without further notice." The third document was a "Joint Stipulation for Entry of Judgment" agreeing, without hearing or notice, to the entry of a judgment in the amount of $20,000, with no prejudgment interest. A final judgment was entered on January 20, 1998, that tracked the language of the joint stipulation, including a provision that enjoined Ms. Parker from rescinding her agreement to change the beneficiary of the annuity to Windsor-Thomas. The judgment provides that interest at the statutory rate accrues on the amount due. As a result, the payment from the annuity will be insufficient to satisfy this judgment because of the interest that accrued on the judgment between January 1998 and May 1999.⁴

On February 10, 1998, upon the motion of Windsor-Thomas, the trial court issued a writ of garnishment directed to American General Life Insurance Company. American General Life Insurance Company filed a motion to quash the writ. It pointed out that AGASC owns the annuity. Under the terms of the annuity, AGASC, as the owner of the annuity, is entitled to receive the benefits. The owner possesses all of the rights under the annuity, including the right to determine and change the beneficiary. As explained in the "Uniform Qualified Assignment," which is appended to Windsor-Thomas's complaint, AGASC is the party that has assumed the liability of Shelby Insurance Company to pay Ms. Parker in May 1999. Technically, American General Life Insurance Company, a separate corporation, is simply a guarantor of AGASC's obligation. Thus, it is doubtful that this legal action could proceed without AGASC as a party.

American General Life Insurance Company also argued in its motion to quash the writ that Windsor-Thomas could not garnish future periodic payments, that the annuity funds were not subject to garnishment pursuant to section 222.14, Florida Statutes (1997), and that American General Life Insurance Company had not received written notice of the assignment as required in the annuity contract.

On April 9, 1998, Mr. Gonzalez filed another document on Ms. Parker's behalf that waived service of the garnishee's answer and consented to entry of a judgment in favor of Windsor-Thomas against American General without further notice or hearing.

After a hearing on these issues and the filing of memoranda of law, the trial court initially denied the motion to quash and entered a final judgment of garnishment on August 10, 1998. Thereafter, however, American General Life Insurance Company filed a timely motion for rehearing. While this motion was pending, we issued our opinion in First Colony, 730 So.2d 735. Based upon that precedent, the trial court granted rehearing and ultimately dissolved the writ of garnishment. In its final order, the trial court emphasized that its ruling was based solely on First Colony.

Although our opinion in First Colony certainly questioned the propriety and ethics of this type of transaction, we merely held that the case presented unresolved questions of fact, and thus the trial court had erred in resolving the matter without an evidentiary hearing. Id. The case was remanded to the trial court for such an evidentiary hearing. Id. Thus First Colony does not provide precedent as to whether the writ of garnishment in this case is appropriate.

We conclude, however, that the trial judge's decision to dissolve the writ of garnishment in this case was proper on a separate legal basis. See In re Estate of Yohn, 238 So.2d 290 (Fla.1970)

(holding appellate court may affirm trial court's decision based upon erroneous reasoning where different legal basis supports affirmance). This record is more extensive than the record in First Colony. It contains the annuity contract and the writ. Moreover, the pleadings and arguments below specifically questioned whether these annuity payments were subject to garnishment.⁵ We hold that they are not subject to garnishment, and that American General Life Insurance Company has standing to raise this issue. Therefore, we affirm the order dissolving the writ, notwithstanding our disagreement with the trial court's rationale.

In this appeal, Windsor-Thomas has conceded that section 222.14, Florida Statutes (1997), prohibits the garnishment or attachment of these benefits. See also LeCroy v. McCollam (In re McCollam), 612 So.2d 572 (Fla.1993)

. Nevertheless, Windsor-Thomas argues that this is an exemption personal to Ms. Parker, and American General has no standing to raise this issue as a defense to garnishment. Windsor-Thomas relies, in great part, upon the Fourth District case of State Farm Life Insurance Co. v. Florida Asset Financing Corp., 25 Fla. L. Weekly D1546...