Zitani v. Reed

• Decision Date: 15 October 2008
• Docket Number: No. 2D07-4777.,2D07-4777.
• Citation: 992 So.2d 403
• Parties: Gregory ZITANI, Appellant, v. Charles REED and Sharon Reed, Appellees.
• Court: Florida District Court of Appeals

992 So.2d 403

Gregory ZITANI, Appellant, v. Charles REED and Sharon Reed, Appellees.

No. 2D07-4777.

District Court of Appeal of Florida, Second District.

October 15, 2008.

Benjamin G. Martin, Sarasota, for Appellant.

Karen E. Maller of Powell Carney Maller Ramsay & Grove, P.A., St. Petersburg, for Appellees.

ALTENBERND, Judge.

Gregory Zitani appeals a final summary judgment dismissing his action to "vacate" a judgment that Charles and Sharon Reed obtained against him in the State of California and domesticated in Sarasota County, Florida. Mr. Zitani maintains that the California judgment was entered against him in violation of a bankruptcy discharge injunction and is thus void and unenforceable.

The circuit court dismissed Mr. Zitani's complaint to vacate the judgment on the theory that all material legal issues had already been resolved against Mr. Zitani in the prior California action and thus the Reeds were entitled to summary judgment as a matter of collateral estoppel. We are uncertain whether the circuit court's reasoning was correct,¹ but we conclude that it reached the correct result.

Although Mr. Zitani asked the Sarasota circuit court to "vacate" the judgment, his request is more accurately described as one to prevent the Sarasota circuit court from recording and enforcing the California judgment under the Florida Enforcement of Foreign Judgments Act. The issue presented is thus whether the circuit court in Florida properly domesticated the California judgment under the procedures of the Florida Enforcement of Foreign Judgments Act. §§ 55.501-.509, Fla. Stat. (2005). The judgment was entered by a California state court that had both subject matter jurisdiction over the claim and personal jurisdiction over Mr. Zitani. A Florida court is generally obliged to give full faith and credit to a foreign state's judgment and lacks authority to simply vacate a judgment entered by a trial court in another state.

Mr. Zitani argues that the California judgment was entirely void from its inception because it was entered after he had received a discharge in a no-asset bankruptcy case and in violation of the bankruptcy discharge injunction. The Reeds, although they were not listed as creditors in the bankruptcy, apparently knew about the bankruptcy discharge yet proceeded to obtain a default judgment against Mr. Zitani on multiple theories, some of which may have permitted a discharge of the resulting obligation in bankruptcy and others of which may have resulted in a nondischargeable obligation. The Reeds did not expressly allege in the California action that the claims had not been discharged in bankruptcy nor did they seek an express determination of the issue of dischargeability in the California state court. Likewise, Mr. Zitani declined to defend the California action or raise his discharge as a defense, and he has since affirmatively encouraged the bankruptcy court in California to abstain from resolving these bankruptcy issues.

We conclude that the California judgment may be voidable in whole or in part but that it was not void from its inception as a result of Mr. Zitani's discharge in bankruptcy. It may be that either the California state court or the bankruptcy court in California still has the authority to vacate the California judgment or otherwise prevent its enforcement, but the Sarasota circuit court did not err in recording the existing judgment and giving it full faith and credit and in denying Mr. Zitani's claim to vacate the judgment. Accordingly, we affirm the order on appeal.

I. PROCEEDINGS IN CALIFORNIA SUPERIOR COURT

Mr. Zitani is a lawyer who was previously licensed to practice law in California but now is licensed to practice law in Florida. Mr. and Mrs. Reed retained Mr. Zitani in San Diego, California, to represent them in connection with an automobile accident in 1990 in which they both apparently sustained injuries. Mrs. Reed also retained Mr. Zitani to represent her concerning a slip-and-fall accident at her place of employment, which happened to be a chiropractic clinic. The Reeds claimed that Mr. Zitani mishandled these cases and then disappeared.

The Reeds thus retained another lawyer who sued Mr. Zitani in a California superior court in 1995. The complaint included two other defendants, a lawyer and a law firm. The complaint contained twelve causes of action, including breach of contract, fraud, conversion, and negligence. It sought both compensatory and punitive damages. Mr. Zitani was served with this complaint but never appeared to defend the lawsuit. A default was entered against Mr. Zitani in August 1995. Record documents suggest that Mr. Zitani somehow orally communicated to the California court the existence of the bankruptcy and the court verified that no bankruptcy stay was in place before proceeding to judgment.² Ultimately, in April 1998, the superior court entered a judgment against Mr. Zitani in favor of Mr. Reed for $45,000 and in favor of Mrs. Reed for $159,178.66. This judgment was entered on "all causes of action" and included itemized amounts for special, compensatory, and punitive damages.

Mr. Zitani claims he did not defend this action because he had filed a petition for bankruptcy in August 1994. This bankruptcy was a no-asset bankruptcy. It allegedly was filed after the contingent liability to the Reeds arose but before the Reeds filed their lawsuit. Mr. Zitani did not list the Reeds as creditors, although he now claims they had actual notice of the proceeding. Mr. Zitani obtained a discharge from the bankruptcy court in January 1995. The discharge states in pertinent part:

2. Any judgment heretofore or hereafter obtained in any court other than this court is null and void as a determination of the personal liability of the debtor with respect to any of the following:

(a) debts dischargeable under 11 U.S.C. § 523;

(b) unless heretofore or hereafter determined by order of this court to be nondischargeable, debts alleged to be excepted from discharge under clauses (2), (4) and (6) and 11 U.S.C. § 523(a);

(c) debts determined by this court to be discharged.

3. All creditors whose debts are discharged by this order and all creditors whose judgments are declared null and void in paragraph 2 above are enjoined from instituting or continuing any action or employing any process or engaging in any act to collect such debts....

From our record it does not appear that any additional activity occurred in California concerning the 1998 judgment during the following years. Mr. Zitani never took any steps to appeal, set aside, or otherwise challenge the judgment. He apparently assumed the judgment was void from its inception in light of his bankruptcy discharge but never sought confirmation of this from the bankruptcy court.

II. PROCEEDINGS IN FLORIDA TO DOMESTICATE THE FOREIGN JUDGMENT

In November 2005, the Reeds took the steps necessary to record this foreign judgment in Sarasota County, Florida, pursuant to section 55.501. Mr. Zitani was provided with notice of the recording. He did not file an action within thirty days contesting the enforcement of this judgment in Florida as authorized by section 55.509. Instead, he responded with a "suggestion of bankruptcy" and a representation that he was retaining counsel to reopen the bankruptcy case to determine whether the California proceedings were void as a violation of bankruptcy law. He alleged that "all litigation" concerning the judgment must be stayed until a determination by the bankruptcy court. The Reeds moved to strike the suggestion of bankruptcy, which the circuit court granted.

Because Mr. Zitani did not file an action within thirty days, the California judgment became enforceable like any judgment entered by a circuit court in Florida. See §§ 55.503(1), .505(3), .507; Nichols v. Nichols, 613 So.2d 137, 139-40 (Fla. 4th DCA 1993). Mr. Zitani's delay, however, did not bar him from seeking to challenge the judgment's enforcement in Florida. See Jones v. Directors Guild of Am., Inc., 584 So.2d 1057, 1060 (Fla. 1st DCA 1991). Thus, he filed the action to vacate the judgment in an effort to prevent further enforcement proceedings in Florida. In his complaint, he expressly asked the Florida court to "[d]etermine that [the Reeds'] claims of indebtedness by [Zitani] are discharged pursuant to 11 U.S.C. section 727(b) and are not one of the exceptions to discharge pursuant to 11 U.S.C. 523[.]" He also requested "damages and attorneys' fees ... for [the Reeds'] willful violation of the discharge injunction."

III. A BRIEF RETURN TO THE CALIFORNIA BANKRUPTCY COURT

Apparently, Mr. Zitani decided not to take the steps necessary to reopen his bankruptcy proceeding. The Reeds, however, filed a motion to reopen that proceeding in September 2006 to determine what, if any, impact the bankruptcy had had upon their judgment. Mr. Zitani responded with a motion for abstention, arguing that California no longer had any interest in this matter and that the bankruptcy court should allow the Florida courts to resolve this matter under concurrent jurisdiction. The bankruptcy court agreed that it had "no particular interest in the outcome" because it would not generate assets for creditors.³ It decided that the motion to abstain would result in "judicial economy" and thus declared that the Florida courts had concurrent jurisdiction and were "presumed competent" to resolve the issues regarding discharge and the enforceability of the California judgment. We cannot avoid the observation that the "judicial economy" perceived by the bankruptcy judge was his alone. The Florida courts are now left attempting to resolve issues of bankruptcy law arising out of alleged misconduct by a lawyer licensed in California. The resulting legal delays have undoubtedly frustrated Mr. Reed, who still lives in California.

IV. A RETURN TO THE "PRESUMPTIVELY COMPETENT" FLORIDA COURTS

When the California bankruptcy court declined to...