Chapter 56 of the Florida Statutes provides the framework for judgment creditors to collect on money judgments. Section 56.29 governs the process by which a judgment creditor may seek to recover property transferred to, or concealed by, third parties.  However, the lack of procedural clarity in the statute led to conflicting decisions and uncertainty.  Amid due process concerns, courts often erected significant procedural hurdles to cost-effective collection efforts against third parties.  The new amendments to Section 56.29, which become effective on July 1, 2016, provide practitioners with some much needed clarity.

Notification and Rights of Third Parties

Under the current version of the statute, confusion existed as to the procedures to implead third parties. The revised statute streamlines the process to implead third parties. Except in the case of a fraudulent transfer claim, a judgment creditor initiates proceedings supplementary by filing a motion. Provided the motion meets certain criteria, the creditor “is entitled to” proceedings supplementary. Fla. Stat. §56.29(1).  Notably, the response to the notice must include any defenses, including the defense of lack of personal jurisdiction. By implication, this means that pre-answer motions (i.e. motions to dismiss) are not permitted.

Discovery in Proceedings Supplementary

Chapter 56 includes newly-created Section 56.30, entitled “Discovery in Proceedings Supplementary.” The prior version of  Section 56.29 included a provision requiring the judgment debtor to appear before a general or special magistrate to testify as to his or her financial interests. However, confusion existed over whether this testimony was to occur at a final hearing before the court to adjudicate the right to property or whether this was a preliminary hearing which should occur before the third party was summoned to appear before the court. The revisions make clear that this is simply a discovery tool which may be used “in addition to any other discovery permitted under the rules of discovery.” Fla. Stat. § 56.30.

Uniform Fraudulent Transfer Act Claims

Aside from the changes to the procedure by which third parties are brought into the action, revisions to the rule relating to fraudulent transfers represent the most significant revisions to the rules regarding proceedings supplementary. Previously, the statute simply provided that the court “may” entertain claims under Chapter 726. But courts and practitioners were left to wonder how such proceedings should be initiated and the interplay between Chapter 56 and Chapter 726. The new rules require that a judgment creditor initiate a fraudulent transfer action by filing a complaint. Unlike the provision dealing with the Notice of Action which requires the response to set forth any defenses, the new statutory provisions state that the Florida Rules of Civil Procedure apply. As such, fraudulent transfer complaints may be met with motions to dismiss or other appropriate defensive pleadings.

Practice Pointer

Proceedings supplementary are a powerful tool for collecting a money  judgment. Although the 2016 amendments to this statute represent a significant improvement over prior versions, utilizing it to collect on a money judgment in Florida remains challenging. The ability to ability to successfully navigate this statute and the attendant case law is crucial to cost-effective collection efforts.