What happens after a final judgment in Florida
Video Description
A final judgment is the culmination of all of the work in a business dispute or commercial lawsuit. A judgment legally entitles the holder or judgment creditor as they are called to use the judgment to seize certain assets to pay off or satisfy the judgment. The party against whom the judgment was entered is the judgment debtor. Some of the ways a judgment holder can use a judgement in Florida to collect money from the judgment debtor are garnishment, attachment, and execution.
Final judgments can come into being after mediation as part of a settlement or from enforcing a settlement agreement. A judgment may also be entered on summary judgment before trial in a lawsuit or after the trial from the evidence presented or jury verdict obtained. A final judgment can also evolve out of an arbitration award being converted into a final judgment.
It is important to any business owner to understand what they can do if they win a suit and obtain a judgment. Equally so it is critical for business owners to know what assets may be taken from their business if a judgment is entered against it.
In this video, Board Certified expert Florida business attorney David Steinfeld explains for you how your business can enforce a judgment it obtains and discusses the implications to your company if a judgment is entered against it.
Final judgments can come into being after mediation as part of a settlement or from enforcing a settlement agreement. A judgment may also be entered on summary judgment before trial in a lawsuit or after the trial from the evidence presented or jury verdict obtained. A final judgment can also evolve out of an arbitration award being converted into a final judgment.
It is important to any business owner to understand what they can do if they win a suit and obtain a judgment. Equally so it is critical for business owners to know what assets may be taken from their business if a judgment is entered against it.
In this video, Board Certified expert Florida business attorney David Steinfeld explains for you how your business can enforce a judgment it obtains and discusses the implications to your company if a judgment is entered against it.
Video Transcript
Hello, I'm Dave Steinfeld a Florida Bar Board Certified business litigation attorney. This means I'm recognized as an expert in business litigation law in the State of Florida. This video you're about to watch is from a talk I gave entitled “A primer on business litigation law”. The topic of this video is what a business can do with the judgment it obtains and the potential impact that a judgment can have on a business . This video is not intended to provide you with legal advice but to give you a general understanding of this topic. After you've had an opportunity to watch the video please take a look at other videos and articles on my website www.DavidSteinfeld.com. Thanks for watching.
I'd like to talk to you about the end result of a lawsuit which is often times a judgment. What does a corporation do when it obtains a judgment and what can it do. Judgments can come either from a trial or they can come from pre-trial procedural mechanisms such as a default if the other side doesn't answer or summary judgment if the facts are so crystallized in the case that a court can decide the matter without a trial.
I'd like to talk to you about the end result of a lawsuit which is often times a judgment. What does a corporation do when it obtains a judgment and what can it do. Judgments can come either from a trial or they can come from pre-trial procedural mechanisms such as a default if the other side doesn't answer or summary judgment if the facts are so crystallized in the case that a court can decide the matter without a trial.
Judgment execution in Florida
When a company obtains a judgment in its favor it can execute on that judgment by legal means against the assets of the judgment debtor. When a third party obtains a judgment against the corporation or the company that judgment creditor the holder of that judgment has similar rights against the company. On the first matter what can a company do what can your business do with the judgment you can execute that judgment against the assets of the business. You can attach assets that are held by the business, you can garnish property that is held by third parties and you commonly see this with banks garnishing bank accounts because the bank holds the property for the judgment debtor, you can also in certain circumstances replevin property. If you're not familiar with these terms all of these are handed down to us from old English common law and there are writs that the sheriff executes on and the court directs the sheriff to take this action with those writs, writs of attachment, writs of garnishment, writs of execution.
What do you do with a judgment
There are certain abilities that a judgment holder or a company that has a judgment can have even in situations where there may not be assets to go after immediately because judgments have a certain lifespan. Additionally if parties do not cooperate with the court in the judgment execution process those parties can find themselves liable for the actions that they've taken and can also find themselves in a lot of trouble with the court. One example of this was a matter that I had of a company that loaned money to someone and then the individual did not pay on that debt. My client through my efforts in court obtained a judgment. The individual who was on the west coast of Florida refused to come to the east coast for any hearings, refused to attend any depositions in aid of execution, or to provide any information on what assets were there.
After a number of times of going through this process the court to enforce the judgment that the court had issued finally issued a writ of bodily attachment which is something similar to what you would commonly call a bench warrant. This individual was arrested by about six sheriff’s deputies at the individual’s place of business and put into the transport system in the State of Florida and it took five days to make a two hour journey across the state because the process was such that they had to go to different cities and transport through the State. By the time that that individual was brought before the judge to explain why the person had defied the court's order and had not shown up to the subpoena issued by an attorney that person was brought into court in a orange jumpsuit in leg irons and hand irons and had not had a shower for five days and the judge’s comment simply was I think the next time Mr. Steinfeld tells you to show up for a deposition you probably will. That's the power that our courts have. That's not something that that gets thrown around very carelessly but that is the power that a corporation can have in enforcing a judgment that it obtains in its favor.
After a number of times of going through this process the court to enforce the judgment that the court had issued finally issued a writ of bodily attachment which is something similar to what you would commonly call a bench warrant. This individual was arrested by about six sheriff’s deputies at the individual’s place of business and put into the transport system in the State of Florida and it took five days to make a two hour journey across the state because the process was such that they had to go to different cities and transport through the State. By the time that that individual was brought before the judge to explain why the person had defied the court's order and had not shown up to the subpoena issued by an attorney that person was brought into court in a orange jumpsuit in leg irons and hand irons and had not had a shower for five days and the judge’s comment simply was I think the next time Mr. Steinfeld tells you to show up for a deposition you probably will. That's the power that our courts have. That's not something that that gets thrown around very carelessly but that is the power that a corporation can have in enforcing a judgment that it obtains in its favor.
What if someone gets a judgment against my business
Conversely when a third party obtains a judgment against a business that third party has certain rights to go after the assets of the business which can include the shares of the business or the membership units of the limited liability company. We've just recently had a change in our LLC statutes in the limited liability company statutes that restrict what a judgment creditor can and cannot take of the members interest in an LLC. The limitation is that for a multi member LLC more than one person a judgment creditor cannot take an individual's membership interest. The limitation on the execution of a judgment now is just to a charging order of whatever monies that individual would get from the business that's what the judgment creditor can get. However with a single member LLC where it's just one person that owns the business a judgment creditor can literally take over the company by taking that member's interest [Note: this segment referred to the Olmstead Patch to Chapter 608 of Florida’s Statutes that was subsequently codified in the Amended LLC Act found at Chapter 605].
A perfect example of this is a situation that I encountered not too long ago just north of here. My client was a private money lender and had loaned about $12 Million to a developer who was going to build a golf course community with a commercial shopping center next to it. The real estate market didn't actually support in the end this development and the borrower defaulted on those loans. During the course of several years these loans have been rolled up into different notes and different mortgages. Somehow the commercial parcel was inadvertently allowed to fall out of these mortgages and wasn't subject to the final mortgages. I fortunately did not have anything to do with the drafting of the mortgages. I only came in to foreclose those mortgages.
When I foreclosed the mortgages we were able to take back all of the residentially zoned property but we didn't have the commercial property which made the whole project. So the plan that I came up with was to obtain a deficiency money judgment against the individual who had personally guaranteed the mortgages which is authorized by our Florida Statutes and then take that money judgment and execute it on the individual's membership interest in the business that held the title to the commercial property. Through that my client was able to take over the business and all of its assets including that commercial parcel and recover the commercial parcel by executing against the member’s interest in a single member limited liability company.
A perfect example of this is a situation that I encountered not too long ago just north of here. My client was a private money lender and had loaned about $12 Million to a developer who was going to build a golf course community with a commercial shopping center next to it. The real estate market didn't actually support in the end this development and the borrower defaulted on those loans. During the course of several years these loans have been rolled up into different notes and different mortgages. Somehow the commercial parcel was inadvertently allowed to fall out of these mortgages and wasn't subject to the final mortgages. I fortunately did not have anything to do with the drafting of the mortgages. I only came in to foreclose those mortgages.
When I foreclosed the mortgages we were able to take back all of the residentially zoned property but we didn't have the commercial property which made the whole project. So the plan that I came up with was to obtain a deficiency money judgment against the individual who had personally guaranteed the mortgages which is authorized by our Florida Statutes and then take that money judgment and execute it on the individual's membership interest in the business that held the title to the commercial property. Through that my client was able to take over the business and all of its assets including that commercial parcel and recover the commercial parcel by executing against the member’s interest in a single member limited liability company.
