FREDERICK LONGO v. ASSOCIATED LIMOUSINE SERVICES, INC. and LIMOUSINE MANAGEMENT, INC. , 236 So. 3d 1115 ( 2018 )

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
FREDERICK LONGO,
Appellant,
v.
ASSOCIATED LIMOUSINE SERVICES, INC. and LIMOUSINE
MANAGEMENT, INC.,
Appellees.
No. 4D17-516
[ January 24, 2018 ]
Appeal from the Circuit Court for the Seventeenth Judicial Circuit,
Broward County; John J. Murphy, III, Judge; L.T. Case No. CACE10-
045646 (09).
Mark W. Rickard of Law Guard, Plantation, for appellant.
Edward J. Jennings and Jenna L. Wulf of Edward J. Jennings, P.A.,
Fort Lauderdale, for appellees.
TAYLOR, J.
The judgment creditor, Frederick Longo, appeals a final order denying
his Motion for Proceedings Supplementary to Execution and to Implead.
We affirm in part and reverse in part. We find that the trial court erred in
denying the judgment creditor’s request for proceedings supplementary,
but that the trial court properly refused to issue Notices to Appear to the
proposed impleader defendants where the judgment creditor’s motion and
affidavit did not satisfy the description requirement of section 56.29(2),
Florida Statutes (2016). However, our affirmance on the impleader issue
is without prejudice to the judgment creditor submitting a supplemental
affidavit in compliance with section 56.29(2).
Facts
In 2011, the judgment creditor obtained a final judgment against the
judgment debtor, Associated Limousine Services, Inc., in the amount of
$623,370.05.
On June 29, 2016, the judgment creditor filed a Motion for Proceedings
Supplementary to Execution and to Implead, alleging that the final
judgment remained unsatisfied and that the judgment debtor was
administratively dissolved in 2012. Attached to the motion was an
Affidavit of Unsatisfied Final Judgment.
In the motion, the judgment creditor named the judgment debtor as a
respondent, moved the court to grant proceedings supplementary, and
requested an order directing Robert Boroday, as the sole officer of the
judgment debtor, to appear before the court for an examination of the
judgment debtor’s assets and finances.
The judgment creditor also sought to implead Robert Boroday, three
other members of the Boroday family, and eight business entities
connected to the Boroday family. The parties that the judgment creditor
sought to implead will be collectively referred to as the “impleader
defendants.”
The judgment creditor essentially alleged that the impleader defendants
were operating a business that was a continuation of the judgment
debtor’s business. The judgment creditor further alleged that the eight
business entities named as impleader defendants were “alter egos of the
Judgment Debtor and the Boroday family business.” Among other things,
the judgment creditor claimed that the impleader defendants:
 Conspired to organize and operate alternate business
entities that would acquire the accounts and clients of the
judgment debtor, while avoiding creditors;
 Comingled assets with each other and the judgment debtor;
 Acted and operated as a single business entity;
 Used fictitious names that were similar to and substantially
the same as the judgment debtor; and
 Profited from the judgment debtor’s business, procured the
judgment debtor’s clients for their own benefit, and attempted
to conceal the transactions to prevent existing creditors from
collecting from the judgment debtor.
The judgment debtor did not file any response to the judgment
creditor’s motion for proceedings supplementary. However, the impleader
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defendants moved to dismiss, arguing that the judgment creditor failed to
comply with section 56.29, Florida Statutes (2016).
Following a hearing, the trial court denied the judgment creditor’s
motion in its entirety. The court found, in relevant part, that the judgment
creditor did not comply with section 56.29(2), Florida Statutes (2016), as
the judgment creditor’s motion and affidavit failed to describe any property
whatsoever of the judgment debtor in the hands of the impleaders or any
property, debt, or other obligation due to the judgment debtor which may
be applied toward the satisfaction of the judgment. 1 The judgment creditor
appealed.
Standard of Review
Where a trial court’s ruling on a motion for proceedings supplementary
presents an issue of law, the standard of review is de novo. Sargeant v.
Al-Saleh, 137 So. 3d 432, 434 (Fla. 4th DCA 2014).
Background on Proceedings Supplementary
Section 56.29, Florida Statutes (2016), governs proceedings
supplementary, which allow for a judgment creditor “to ferret out what
assets the judgment debtor may have or what property of his others may
be holding for him, or may have received from him to defeat the collection
of the lien or claim, that might be subject to the execution.” Young v.
McKenzie, 46 So. 2d 184, 185 (Fla. 1950). The statute governing
proceedings supplementary is “equitable in nature and should be liberally
construed.” Mejia v. Ruiz, 985 So. 2d 1109, 1112 (Fla. 3d DCA 2008).
Proceedings supplementary “enable speedy and direct proceedings in
the same court in which the judgment was recovered to better afford to a
judgment creditor the most complete relief possible in satisfying the
judgment.” Zureikat v. Shaibani, 944 So. 2d 1019, 1023 (Fla. 5th DCA
2006). “The statutory procedure was designed to avoid the necessity of
the judgment creditor initiating an entirely separate action for a creditor’s
bill.” Regent Bank v. Woodcox, 636 So. 2d 885, 886 (Fla. 4th DCA 1994).
Judges thus have the power and duty “to bring in and implead third
parties wherever it appears relief against them may be warranted.”
1In the order, the trial court first determined that section 56.29, as amended on
July 1, 2016, was a procedural statute that would be applied retroactively to the
case, even though the judgment creditor’s motion was filed on June 29, 2016.
The judgment creditor does not challenge this ruling on appeal.
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Richard v. McNair, 164 So. 836, 840 (Fla. 1935). However, “an order
allowing impleader of third parties under section 56.29 does no more than
allow third parties to be sued, and does not determine any substantive
rights.” NTS Fort Lauderdale Office Joint Venture v. Serchay, 710 So. 2d
1027, 1028 (Fla. 4th DCA 1998).
Section 56.29, as amended effective July 1, 2016, now states in relevant
part:
(1) When any judgment creditor holds an unsatisfied
judgment or judgment lien obtained under chapter 55, the
judgment creditor may file a motion and an affidavit so
stating, identifying, if applicable, the issuing court, the case
number, and the unsatisfied amount of the judgment or
judgment lien, including accrued costs and interest, and
stating that the execution is valid and outstanding, and
thereupon the judgment creditor is entitled to these
proceedings supplementary to execution.
(2) The judgment creditor shall, in the motion described in
subsection (1) or in a supplemental affidavit, describe any
property of the judgment debtor not exempt from execution in
the hands of any person or any property, debt, or other
obligation due to the judgment debtor which may be applied
toward the satisfaction of the judgment. Upon filing of the
motion and affidavits that property of the judgment debtor, or
any debt, or other obligation due to the judgment debtor in
the custody or control of any other person may be applied to
satisfy the judgment, then the court shall issue a Notice to
Appear. The Notice to Appear shall direct such person to file
an affidavit . . . stating why the property, debt, or other
obligation should not be applied to satisfy the judgment. . . .
The Notice to Appear must describe with reasonable
particularity the property, debt, or other obligation that
may be available to satisfy the judgment, must provide such
person with the opportunity to present defenses, and must
indicate that discovery as provided under the rules of civil
procedure is available and that there is a right to a jury trial
as provided in s. 56.18. . . . A responding affidavit must raise
any fact or defense opposing application of the property
described in the Notice to Appear to satisfy the judgment,
including legal defenses . . .
§ 56.29(1), (2), Fla. Stat. (2016) (emphasis added).
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The 2016 amendment left section 56.29(1) largely unchanged, but
substantially amended section 56.29(2) in order to clarify the procedure
for bringing non-parties into proceedings supplementary. See Ch. 2016-
33, § 19, Laws of Fla.
Whether the Trial Court Erred in Denying Proceedings
Supplementary?
On appeal, the judgment creditor first argues that the trial court erred
in denying proceedings supplementary to execution where he filed a
motion and affidavit that fully complied with section 56.29(1). We agree.
To initiate proceedings supplementary, section 56.29(1) “requires that
the judgment creditor have an unsatisfied judgment and file an affidavit
averring that the judgment is valid and outstanding.” Fundamental Long
Term Care Holdings, LLC v. Estate of Jackson ex rel. Jackson-Platts, 110
So. 3d 6, 8 (Fla. 2d DCA 2012). When a judgment creditor holds an
unsatisfied judgment and files a motion and affidavit in compliance with
section 56.29(1), “the judgment creditor is entitled to these proceedings
supplementary to execution.” § 56.29(1), Fla. Stat. (2016). “Upon a
showing of the statutory prerequisites, the court has no discretion to deny
the motion.” Biloxi Casino Corp. v. Wolf, 900 So. 2d 734 (Fla. 4th DCA
2005).
Here, the trial court erred in denying the judgment creditor’s request
for proceedings supplementary. The judgment creditor’s motion and
affidavit satisfied the requirements of section 56.29(1), so the judgment
creditor was entitled to proceedings supplementary. The trial court’s
ruling was based on section 56.29(2), but that provision governs the
process for bringing third parties into proceedings supplementary. The
judgment creditor’s entitlement to proceedings supplementary is a
separate issue from whether the judgment creditor complied with section
56.29(2)’s procedure for impleading third parties into the proceedings.
Notably, under section 56.29(2), the required description of “any
property of the judgment debtor . . . or any property, debt, or other
obligation due to the judgment debtor” need not be provided in the initial
motion and affidavit, but may instead be provided in a supplemental
affidavit. Moreover, section 56.30 allows for the examination of the
judgment debtor to occur before a third party is issued a Notice to Appear.
See § 56.30, Fla. Stat. (2016). This provision contemplates that
proceedings supplementary may be commenced, and discovery may occur,
before the impleader of third parties.
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In short, because the judgment creditor submitted a motion and
affidavit in compliance with section 56.29(1), the trial court erred in
denying proceedings supplementary altogether.
Whether the Trial Court Erred in Denying Impleader of Third
Parties?
The judgment creditor next argues that the trial court erred in denying
the impleader of third parties. We disagree, but our affirmance on this
issue is without prejudice to the judgment creditor submitting a
supplemental affidavit in compliance with section 56.29(2).
As noted above, section 56.29(2) governs the process of impleading
third parties into proceedings supplementary. The plain language of
section 56.29(2) requires that a judgment creditor “describe any property
of the judgment debtor not exempt from execution in the hands of any
person or any property, debt, or other obligation due to the judgment
debtor which may be applied toward the satisfaction of the judgment.” §
56.29(2), Fla. Stat. (2016). Moreover, when a trial court issues a Notice to
Appear to a third party, the Notice to Appear “must describe with
reasonable particularity the property, debt, or other obligation that may
be available to satisfy the judgment . . . .” § 56.29(2), Fla. Stat. (2016).
Simply put, the entire statutory scheme of section 56.29(2)
contemplates that the judgment creditor describe “any property of the
judgment debtor” or “any property, debt, or other obligation due to the
judgment debtor” that may be applied to satisfy the judgment, so as to
enable the trial court to issue Notices to Appear that describe the property,
debt, or other obligation “with reasonable particularity.”
Here, the trial court properly refused to issue Notices to Appear to the
impleader defendants. The judgment creditor’s motion and affidavit failed
to comply with section 56.29(2)’s requirement to “describe any property of
the judgment debtor not exempt from execution in the hands of any person
or any property, debt, or other obligation due to the judgment debtor which
may be applied toward the satisfaction of the judgment.” Thus, the
judgment creditor failed to meet the statutory prerequisite for the trial
court to issue Notices to Appear to the impleader defendants.
The judgment creditor complains that the trial court should have given
section 56.29 a liberal construction. This argument is unpersuasive.
While it is true that section 56.29 is a remedial statute, the rule of liberal
construction “comes into play only when there is some ambiguity in the
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statutory text.” Gallagher v. Manatee Cty., 927 So. 2d 914, 919 (Fla. 2d
DCA 2006). “When the statute is clear and unambiguous, courts will not
look behind the statute’s plain language for legislative intent or resort to
rules of statutory construction to ascertain intent.” Daniels v. Fla. Dep’t
of Health, 898 So. 2d 61, 64 (Fla. 2005). Here, the description requirement
in section 56.29(2) is clear and unambiguous. Indeed, while the judgment
creditor urges us to adopt a liberal interpretation of the statute, he fails to
explain what such an interpretation might be, apart from simply ignoring
the plain language of the statute.
To be sure, we have some practical concerns with the 2016 amendment
to section 56.29(2), but those concerns do not change our conclusion.
Although the current statutory scheme set forth in section 56.29(2) is well-
suited to fraudulent transfer cases, it is unclear if the legislature
contemplated cases involving alter ego liability.
Before the 2016 amendment to section 56.29, Florida case law
permitted a judgment creditor to implead third parties into proceedings
supplementary based on a showing that the third parties were the alter
egos of the judgment debtor. See, e.g., Johnson v. Merry Go Round, Inc.,
45 So. 2d 181 (Fla. 1950). For example, applying an earlier version of
section 56.29, we explained that “a court may fashion an appropriate
equitable remedy to afford a judgment creditor as complete relief as
possible including finding a new corporation liable for a judgment against
its predecessor corporation when the new corporation is merely the alter
ego of the predecessor corporation.” Amjad Munim, M.D., P.A. v. Azar, 648
So. 2d 145, 150 (Fla. 4th DCA 1994).
The concept of alter ego or continuation of business “arises where the
successor corporation is merely a continuation or reincarnation of the
predecessor corporation under a different name.” Id. at 154. “The bottom-
line question is whether each entity has run its own race, or whether there
has been a relay-style passing of the baton from one to the other.” Orlando
Light Bulb Serv., Inc. v. Laser Lighting & Elec. Supply, Inc., 523 So. 2d 740,
742 n.1 (Fla. 5th DCA 1988) (citation and internal quotation marks
omitted).
In cases where the judgment creditor is seeking to implead a third party
on the basis that the third party is the alter ego of the judgment debtor (as
opposed to cases where the third party is the recipient of a fraudulent
transfer of property), it seems odd to require the judgment creditor to
“describe any property of the judgment debtor” or “any property, debt, or
other obligation due to the judgment debtor.” A third party’s liability under
an alter ego theory is not premised upon a fraudulent transfer of the
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judgment debtor’s property, but is instead premised on the notion that the
judgment debtor and third party should be treated as the same entity.
Still, the description requirement in section 56.29(2) is a clear requirement
of the statute, and the judgment debtor failed to satisfy that requirement
in this case.
Based on the foregoing, we affirm the trial court’s order to the extent
that the trial court refused to issue Notices to Appear to the impleader
defendants. However, our affirmance on this issue is without prejudice to
the judgment creditor inquiring further into the assets of the judgment
debtor and submitting a supplemental affidavit in compliance with section
56.29(2).
Furthermore, to provide clarity on remand, we conclude that in cases
alleging alter ego liability, the description requirement of section 56.29(2)
is satisfied if the judgment creditor describes any property of an alter ego
of the judgment debtor not exempt from execution in the hands of any
person, or any property, debt, or other obligation due to an alter ego of the
judgment debtor which may be applied toward the satisfaction of the
judgment.
Contrary to the impleader defendants’ suggestion, the judgment
creditor’s affidavit does not need to identify property that had been
transferred to the impleader defendants. Because a judgment debtor and
an alter ego are treated as the same entity, we find that section 56.29(2)’s
required description of “any property of the judgment debtor . . . or any
property, debt, or other obligation due to the judgment debtor” may
include property of an alleged alter ego of the judgment debtor. Cf. In re
Am. Int’l Refinery, 402 B.R. 728, 744–45 (Bankr. W.D. La. 2008) (because
the law deems a corporation and its alter ego to be a single entity, a debtor
corporation has an equitable interest in the assets of its alter ego).
Conclusion
We reverse the trial court’s denial of proceedings supplementary, but
affirm the trial court’s refusal to issue Notices to Appear to the impleader
defendants. 2 Our affirmance on the impleader issue is without prejudice
2 The judgment creditor also argues that the trial court erred in entering a
proposed order prepared by counsel for the impleader defendants without giving
the judgment creditor’s counsel an opportunity to review it. Because we are
reversing in part and remanding for further proceedings, we find this issue to be
moot. See Hamilton v. Ford Motor Co., 936 So. 2d 1203, 1207 (Fla. 4th DCA 2006)
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to the judgment creditor submitting a supplemental affidavit in
compliance with section 56.29(2). We remand for further proceedings
consistent with this opinion.
Affirmed in part, Reversed in part, and Remanded.
WARNER and DAMOORGIAN, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
(alleged error in adopting a party’s proposed order was moot where we reversed
in part on other grounds and remanded for further proceedings).
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