SSRGA Obtains Reversal of Order Denying Motion for Relief from Judgment Where Trial Court Applied Incorrect Law

March 22, 2023*

          SSRGA recently secured the reversal of an order denying a judgment debtor’s motion for relief from judgment because the trial court applied the incorrect law. The judgment arose from a business venture with the judgment creditor that later ended up in litigation. The judgment creditor obtained a judgment against our client’s LLC for approximately $194,000 and against our client individually for approximately $58,000.

The parties negotiated a settlement in which our client would pay $102,500 from her personal funds to satisfy both judgments. The wire transfer of the funds arrived late by less than a week, and the creditor’s counsel deemed our client in default. However, the creditor retained the $102,500 in settlement funds and still proceeded to execute and levy upon an investment property our client owned that was then worth approximately $223,800. The judgment creditor would not provide our client with a satisfaction of judgment despite having obtained monies and real property in excess of $325,000 on a judgment against our client personally for $58,000.

Our client filed a motion for relief from judgment under Florida Rule of Civil Procedure 1.540(b). Our client requested the return of the monies and property wrongfully taken from her. Alternatively, she requested a determination of an offset based on the monies she had delivered to the judgment creditor and a determination of the fair market value of the real property as of the date of the sheriff’s sale to the judgment creditor. The judgment creditor took the position that it was entitled by law to apply the settlement funds to whichever judgment it wished because our client defaulted on the settlement agreement and failed to direct that the funds be applied to the personal judgment. The trial court agreed with the judgment creditor and denied our client’s motion for relief from judgment.

          SSRGA represented the client on appeal to the Third District Court of Appeal (“Third DCA”) along with co-counsel. We argued that the judgment creditor had no authority, under the settlement agreement or law, to retain money and property well in excess of the judgment against our client. We argued that the judgment creditor violated the rule that payment shall be used by the creditor only to pay valid debts of the debtor and the creditor cannot apply the payment to a claim upon which the creditor was never liable. We explained that the trial court had erroneously applied the law relating to situations involving multiple judgments against the same debtor. In contrast, here two separate judgments were entered against two different judgment debtors, one against the LLC and one against the client personally.

          The Third DCA issued a written opinion in which it agreed with SSRGA’s argument. The Third DCA held that the trial court had abused its discretion in relying on inapplicable case law and avoiding the appropriate analysis under rule 1.540(b)(5). The court reversed and remanded with instructions for the trial court to analyze our client’s motion under the rule. The Third DCA also conditionally granted our client’s request for appellate attorney’s fees and remanded to the trial court for consideration of that issue. This favorable result for our client eliminates the judgment creditor’s primary argument, allows our client to seek redress for the money and property wrongfully taken from her, and enables her to seek an award of appellate attorney’s fees in the trial court.

* Not final until disposition of timely filed motion for rehearing.