Collecting judgments in Florida is accomplished under the provisions of Chapter 56 of the Florida Statutes (appropriately titled “Final Process”). Seizing assets of a judgment debtor to satisfy a judgment is known as execution.
One part of Chapter 56 allows a judgment creditor to seize assets that may be available to satisfy a judgment from persons who were not parties to the lawsuit but who are in possession of assets that may properly be characterized as property of the judgment debtor. These claims arise in the context of a judgment debtor fraudulently disposing of assets to family or others to avoid paying the judgment.
After entry of a final judgment, Florida Statutes 56.29 requires a court to initiate proceedings (“Proceedings Supplementary”) against a non-party who may be in possession of assets that are subject to execution. Proceedings Supplementary have been a part of Florida’s judgment collection practice since the early 1900’s. Over the years court decisions have resulted in conflicting interpretations of how the law should be implemented and what rights are available to third parties who were summoned to appear and defend their entitlement to property in their possession that a judgment creditor claims should be used to satisfy a judgment. Courts disagreed whether proceedings supplementary were new lawsuits that had to be initiated and served on the third parties, whether the third parties had a right to a jury trial, and whether the judgment creditor had to prove the property belonged to the judgment debtor before summoning the third party to appear. These conflicts made Proceedings Supplementary unpredictable and unwieldy as trial and appellate courts worked through irreconcilable interpretations of the process.
On March 9, 2016, Governor Rick Scott signed a bill into law which substantially revised and clarified Proceedings Supplementary. The law is not intended to change Proceedings Supplementary. Rather, it is an effort to harmonize all of the conflicting procedures and to provide uniformity and clarity in the use of Proceedings Supplementary.
The new law provides a number of major clarifications. First, Proceedings Supplementary are not new lawsuits. The process is now initiated by a court issuing a Notice to Appear, summoning the third party to respond to a claim that property in their possession should be seized to satisfy a judgment. The party to whom the Notice to Appear is directed must file a response within the time frame set by the court. No motion practice, such as filing a motion to dismiss, is permitted.
Second, at the judgment creditor’s option, a judgment debtor may be required to appear before the court or a magistrate appointed by the court to give testimony about all of its financial affairs. Conducting this discovery is not a prerequisite to a Court issuing a Notice to Appear.
Third, a person summoned to appear is entitled to a jury trial on the issue of whether the property should be seized and applied to satisfy the judgment.
Fourth, a party who interposes a claim to retain property solely for the purpose of delaying payment of the judgment may, in addition to turning over the property, be required to pay a penalty not to exceed 20% of the value of the property. In addition, if the wrongfully conveyed property is no longer in the possession of the third party, a money judgment equal to the value of the property can be entered against them.
Finally, the new law clarifies that if a judgment creditor brings a fraudulent conveyance action against the third party as part of Proceedings Supplementary, that action is a separate proceeding and cannot be conflated with Proceedings Supplementary.
While the changes do not create new law, they do provide clear guidance on the implementation, use and scope of Proceedings Supplementary. By resolving the long simmering inconsistencies in court interpretations of Proceedings Supplementary, the new law restores the purpose of the statute to provide effective and prompt process to collect judgments.