Wednesday, January 22, 2014

Proceedings Supplementary

The case of Mejia vs. Ruiz, 3rd DCA, May 14, 2008, 3D07-2254 involved  proceedings supplementary against shareholders and directors of a judgment debtor corporation. After the corporation was sued, shareholders took corporate assets and left the corporation insolvent. A writ of execution was issued on corporation. Proceedings supplementary were subsequently pursued pursuant to 56.29.

The court explained that there are two prerequisite for proceedings supplementary - a returned and unsatisfied writ of execution and an affidavit that the writ is of execution is valid and unsatisifed along with list of third parties to be impleaded. Impleading does not imply liability but provides them with an opportunity to raise their defense and protect their interests.

The court noted that pursuant to Florida Statutes Section 56.29 provides that a transfer, assignment, or other conveyance of personal property made or contrived to delay, hinder, or defraud per 726.105is creditors is void. The burden of proof is a preponderance of the evidence. Fraudulent intent may be presumed from "badges of fraud." The badges of fraud create a prima facie case and raise a rebuttable presumption that transaction void.

The court found prima facie proof of badges of fraud. Also known creditors were not notified of dissolution of corporation per 607.1406. The court explained that shareholders follow 607.1406 given limited immunity.