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Judgment Creditor Stops Sale of Debtor’s Assets Due to Lack of Compliance with Florida’s Assignment Statutes

deadline dayWhen you make the decision to take your commercial dispute to trial on a breach of contract claim, you obviously hope to obtain a judgment in your favor at the end of the trial. It is important to understand, though, that a successful judgment at the end of the trial may not be the final endpoint in obtaining recovery. There are many other hurdles that can intervene in your case and may require additional action in order to get the compensation you were awarded at trial, as one recent Fourth District Court of Appeal case demonstrated.

Pro Finish, Inc. and All American Trailer Manufacturers were parties to a commercial contract. The business relationship eventually fell apart, and the dispute resulted in Pro Finish suing All American in Broward County for breach of contract and fraud. Pro Finish succeeded in its litigation and obtained a judgment in its favor. After Pro Finish obtained this judgment, All American filed for Chapter 11 bankruptcy, but the bankruptcy court dismissed the case a year later. At around the time of that dismissal, All American named John Moffa as its assignee. The document naming Moffa as assignee was executed on July 15, 2013 and had an effective date of June 11, 2013.

Several months later, Moffa asked the court to approve a sale of All American assets “free and clear of liens, encumbrances, and interests” to another company, Bad 2D Bone Trailers, Inc. Unsurprisingly, Pro Finish objected to this. What Moffa was trying to do was “invalid, fraudulent, and” in violation of the Florida Statutes governing assignments, Pro Finish argued. The trial court disagreed with Pro Finish and approved the sale.

Pro Finish took its case to the appeals court, where it obtained a more favorable outcome. The problem that unraveled the assignment plan and gave Pro Finish its victory in the appeals court related to the statutes that govern assignments. Chapter 727 of the Florida Statutes, as Pro Finish correctly argued, demands strict compliance with its requirements. The chapter was designed to create “a uniform procedure for the administration of insolvent estates.” This goal of uniformity necessitated that entities attempting to complete an assignment under Chapter 727 follow the letter of the law precisely.

In this case, the assignment failed this test of precision compliance. Section 727.104 requires that, for an assignment to be valid, an assignee must “record the assignment in the public records as well as to file a petition and bond in the circuit court,” and the assignee must do so no more than 10 days after the assignment document is delivered to the assignee. Moffa signed his acceptance of the June 11 assignment on July 15 and did not ask the Circuit Court for an assignment proceeding under Section 727.104 until the following November. The assignee’s actions clearly did not meet the 10-day deadline.

The assignee in this case had another problem as well. Section 727.111 requires assignees to publish notice of the assignment four times in the newspapers, and it establishes the deadline for doing so. The assignee in this case did not publish until late January of the next year, well outside Section 727.111’s time requirement.

Since the assignee in this case did not follow the statutes exactly, Pro Finish was able to defeat this assignment and stop the sale of All American’s assets. Sometimes, collecting a debt as a judgment creditor is a straightforward, simple process. Other times, though, it can be very complicated. When you need help with litigating a commercial dispute, you need to contact experienced Florida counsel who will be prepared for any possible outcome. The skilled South Florida commercial litigation attorneys at Stok Folk + Kon have many years of experience helping commercial clients at all steps of the process and are ready to assist you too.

Contact us online or by calling (305) 935-4440 to schedule a consultation.

More blog posts:

Language in Contract Defeats Subcontractor’s Summary Judgment in Florida Contract Breach Case, Florida Business Lawyers Blog, June 14, 2016

Lack of Proof of Florida Company’s Profitability Causes Co-Founder to Lose Breach of Contract Case, Florida Business Lawyers Blog, July 15, 2016