On March 9, 2016, Governor Scott signed into law significant changes to Chapter 56, Florida Statutes, governing judgment collection, including a revised Section 56.29, which revamps proceedings supplementary completely. Until now, judgment collection law in Florida was a patchwork of related statutes with their origin in the codification over time of older common-law equitable remedies. The purpose of the 2016 revisions is to eliminate the inconsistency and confusion in the earlier versions of the statute, while remaining consistent with the purposes of the existing law – to provide an expeditious mechanism to enable judgment creditors to collect upon their judgments in Florida.
Pleading Proceedings Supplementary Under the New Section 56.29
Under the former legislative scheme, it was not clear how a judgment creditor would commence proceedings supplementary. Formerly, an affidavit attesting to the existence of an unsatisfied judgment was all that was required, leaving the parties and courts to guess as to how to frame the issues to be decided on proceedings supplementary. The uncertainty was particularly problematic in cases when the judgment creditor seeks to implead third parties, who may have been holding property of the judgment debtor or who were the recipients of fraudulent transfers from the judgment debtor.
The most significant changes in the new law relate to the process for commencing proceedings supplementary and impleading third parties. Under subsection (2) of the new statute, in the motion for proceedings supplementary or in a supplemental affidavit, the judgment creditor must describe the property of the judgment debtor in the hands of a third party, or the property, debt or other obligation due to the judgment debtor that may be applied toward the satisfaction of the judgment. Upon the filing of the motion and affidavit, the Court will issue a Notice to Appear, which shall direct the responding person to file an affidavit by a date certain, stating why the property, debt or other obligation should not be applied to satisfy the judgment. The Notice to Appear must: (1) describe with reasonable particularity the property, debtor, or obligation that may be available to satisfy the judgment; (2) provide the opportunity to present defenses; (3) indicate that discovery as provided under the rules of civil procedure is available; and (4) advise of the right to a jury trial. The responding affidavit, in turn, must raise any fact or defense opposing application of the property described in the Notice to Appear to satisfy the judgment, including legal defenses, such as lack of personal jurisdiction.
The New Section 56.29 Clarifies the Relationship between Proceedings Supplementary and Actions under the Chapter 726 Uniform Fraudulent Transfer Action
The First District Court of Appeal in Biel REO, LLC v. Barefoot Cottages Development Company, et al., 156 So. 3d 506 (Fla. 1st DCA 2015), explained that, although proceedings supplementary and fraudulent transfer claims under the Uniform Fraudulent Transfer Act (UFTA) may involve similar proof, proceedings supplementary may be commenced during the entire twenty-year life of the judgment and are not limited to the four-year statute of limitations applicable to UFTA claims pursuant to Section 726.105, Florida Statutes.
Subsection (9) of the revised Section 56.29 is consistent with the First District’s analysis in Biel REO. It explains that UFTA claims may be brought at the same time as the proceedings supplementary, but that such claims shall be initiated by an entirely different process. The judgment credit may file and serve a supplemental complaint, which shall be docketed in the original case. The law clarifies that “the claims under the supplemental complaint are subject to chapter 726 and the rules of civil procedure.” By implication, the proceeding supplementary initiated by the filing of an affidavit and motion are not subject to statute of limitations in Section 726.105.
The New Law Clarifies Discovery with Respect to Proceedings Supplementary
The changes to the judgment collection law also include an all-new Section 56.30, which governs discovery in proceedings supplementary. Under the former statute, an examination of the judgment debtor was part of the proceedings supplementary, but it was unclear whether the examination was to be had before, after or during the initiation of the proceedings supplementary.
In addition to a revised Section 56.29(2) requiring the inclusion of language in the Notice to Appear advising third parties of their right to discovery under the rules of civil procedure, Section 56.30 incorporates language deleted from Section 56.26(2) providing for an examination of the judgment debtor before the Court or a general or special magistrate that “cover[s] all and matters and things pertaining to the business and financial interests of the judgment debtor which may tend to show what property he or she has and its location.” Unlike the prior statute, Section 56.30 clarifies that the examination may be had before the issuance of the Notice to Appear.
Without disrupting the legislative purpose behind proceedings supplementary, the revised Chapter 56, Florida Statutes, eliminates the confusion of the prior statute and provides a clearer direction to judgment creditors and third parties with respect to judgment collection.