It is undeniable that debtors attempt to hide their assets by transferring assets to third parties, with the hope that their creditors will not pursue the third parties. In McCalla v. E.C. Construction Company, Inc., justice prevailed for one such judgment creditor, a man who retained the services of a general contractor, when the appellate court reversed the trial court and held that the Uniform Fraudulent Transfer Act (“UFTA”) authorizes an award of money damages. 183 So. 3d 1192 (Fla. 1st DCA 2016).
The case started out as follows: a consumer and his late wife sued the general contractor which had entered into an agreement to build a house and obtained a judgment against the general contractor for $627,657.58. Id. at 1193. In a subsequent fraudulent transfer action, the consumer alleged the principals of the general contractor transferred all of the general contractor’s assets to themselves before final judgment was entered in the first case without receiving reasonably equivalent value in exchange. Id. at 1193-1194.
Sections 726.105(1) and 726.106, Florida Statutes, allow a creditor to move to set aside a particular transaction, which if set aside, leaves the creditor free to pursue the asset. Id. at 1194(citing Gen. Elec. Co. v. Chuly, Int’l, LLC, 118 So. 3d 325, 326 n.1 (Fla. 3d DCA 2013). Section 726.108, Florida Statutes, provides a list of remedies available to creditors. While there is not a specific remedy for money damages §726.108(1)(c)(3) acts as a catch-all by providing “[a]ny other relief the circumstances may require.”
In the case at bar, the trial court concluded that the consumer was not a proper claimant under §726.108 as the statute does not authorize an award of money damages. Id. The appellate court disagreed and correctly pointed out that, “[t]he statute authorizes such awards against both fraudulent transferor and transferee, jointly and severally” McCalla, 183 So. 3d at 1194(citing Hansard Constr. Corp. v. Rite Aid of Fla. Inc., 783 So. 2d 307, 309 (Fla. 4th DCA 2001)(holding that a plaintiff could recover money damages under the catch-all provision in §726.108(1)(c)(3) of the Uniform Fraudulent Transfer Act).
In any ligation where you've obtained a judgment, you must be prepared that judgment debtors will attempt to shield their assets by liquidating or transferring them to friendly third parties. This case allows for some well-needed leverage to obtain a successful collection.
To find out more information on how the attorneys at Gill Law Firm can help your company collect its receivables, please contact us at: email@example.com or via phone at (561) 454-0301.