Suntrust Bank v. Arrow Energy, Inc., Aviation Fuel International, Inc., and Sean Wagner

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FOURTH DISTRICT
SUNTRUST BANK,
Appellant,
v.
ARROW ENERGY, INC., AVIATION FUEL INTERNATIONAL, INC. and
SEAN WAGNER,
Appellees.
No. 4D15-1477
[May 18, 2016]
Appeal of a non-final order from the Circuit Court for the Seventeenth
Judicial Circuit, Broward County; Carol-Lisa Phillips, Judge; L.T. Case No.
CACE 2010-48678 (25).
William C. Davell, Carolyn B. Brombacher and Christopher D. Barber
of May, Meacham & Davell, P.A., Fort Lauderdale, for appellant.
Roger M. Dunetz of Roger M. Dunetz, P.A., Coral Gables, for appellee
Arrow Energy, Inc.
WARNER, J.
Appellant Suntrust Bank appeals an order denying its motion for relief
from a final judgment of garnishment. Suntrust contends that the final
judgment was void to the extent that it included postjudgment interest on
the amount of funds held by Suntrust. We agree with Suntrust that the
judgment is void because there is no authority to assess interest to be paid
by the garnishee. We reverse.
Appellee Arrow Energy, Inc., sued Aviation Fuel International, Inc., and
other defendants in federal district court in Michigan in 2010. Arrow
obtained a final judgment against Aviation and defendant Sean Wagner for
$313,036.08, plus statutory interest, in October 2010. This foreign
judgment was certified and filed in Florida. Arrow commenced execution
of the judgment.
In May 2011, Arrow served a writ of garnishment on Suntrust.
Suntrust answered, alleging that it was holding a total of $122,519.75
owed to the defendants. In 2013, the trial court entered a final judgment
against Suntrust for that amount, plus post-judgment interest at 4.75%
per annum. Suntrust sent Arrow a check for $122,519.75, but then
stopped payment on the check because another creditor of Aviation had
also filed a garnishment. Various proceedings ensued, including an appeal
and a bankruptcy.
In March 2014, Suntrust moved for relief from the final judgment,
contending that the inclusion of the requirement that it pay interest on the
sum garnished required it to pay an amount in excess of the garnished
amount, and the judgment was void to that extent. After much litigation,
the court denied the motion, prompting this appeal.
Garnishment is a quasi in rem proceeding. Burkhart v. Cir. Ct. of
Eleventh Jud. Cir., 1 So. 2d 872, 875 (Fla. 1941). “To have subject matter
jurisdiction in an in rem proceeding, a court must have both the
jurisdictional authority to adjudicate the class of cases to which the case
belongs and jurisdictional authority over the property which is the subject
matter of the controversy.” Ruth v. Dep’t of Legal Affairs, 684 So. 2d 181,
185 (Fla. 1996) (emphasis added). The court acquires jurisdiction over the
garnishee to the extent of the property garnished, as the extent of the
garnishee’s liability is the amount that it owes to the judgment debtor. See
Sec. Bank, N.A. v. BellSouth Advert. & Publ’g Corp., 679 So. 2d 795, 800
(Fla. 3d DCA 1996), approved by BellSouth Advert. & Publ’g. Corp. v. Sec.
Bank, N.A., 698 So. 2d 254 (Fla. 1997).
This is reflected in section 77.083, Florida Statutes (2013), which
provides that “[n]o judgment in excess of the amount remaining unpaid on
the final judgment against the defendant or in excess of the amount of the
liability of the garnishee to the defendant, whichever is less, shall be
entered against the garnishee.” (Emphases added). Thus, by entering a
judgment which includes liability for post-judgment interest, the court
exceeded its jurisdictional authority over the property which was the
subject matter of the controversy, namely the funds owed by Suntrust to
the judgment debtor. To that extent, the court did not have jurisdiction,
and the judgment is void.
Arrow contends that it is entitled to interest on the judgment pursuant
to section 55.03(2), Florida Statutes (2010), which provides for interest on
judgments for money damages, orders for judicial sale, and process or
writs directed to a sheriff for execution. A garnishment judgment,
however, is technically not a judgment for money but a judgment to permit
the garnishor to obtain monies owed by the judgment debtor but held by
the garnishee.
2
Because garnishment is a proceeding in derogation of common law, the
relevant statutes must be strictly construed. See Paz v. Hernandez, 654
So. 2d 1243, 1244 (Fla. 3d DCA 1995). In Paz, the court overturned an
award of attorney’s fees to the judgment creditor in a garnishment
proceeding, which were awarded under section 57.115, Florida Statutes
(1993), authorizing an award in connection with execution on a judgment.
Paz, 654 So. 2d at 1244. The court held that, without express statutory
or case law authority to the contrary, garnishment was not simply another
type of execution for which attorney’s fees could be awarded under section
57.115. Id.
Moreover, section 77.28, Florida Statutes (2013), provides that the
court must determine the garnishee’s attorney’s fees and costs, and that
those can be offset against the amount owed.
Thus, the statutes contemplate that the garnishee will have no liability
or out-of-pocket expense due to the garnishment. In this context, interest
on the amounts held by the garnishee is akin to such fees and costs. To
require the garnishee to pay such interest, without offsetting it against the
amount owed, is therefore contrary to these statutes.
In accordance with the foregoing, we cannot accept Arrow’s proposition
that garnishment is merely a form of money judgment on which interest is
awardable. Further, there is no express provision in the garnishment
statute for the award of interest, and there is a specific direction in section
77.083, Florida Statutes, that no judgment can be entered against a
garnishee in excess of the amount of its liability to the judgment debtor.
Awarding interest in excess of that amount would be contrary to that
statute and an unconstitutional deprivation of the garnishee’s property
without due process of law. See Carpenter v. Benson, 478 So. 2d 353, 354
(Fla. 5th DCA 1985).
We acknowledge Arrow’s concern that a garnishee could benefit by
intentionally withholding funds due to the garnishor, but we recognize that
the court has many tools to obtain compliance with its orders. And when
the court finds a party in contempt for refusal to obey a court order, 1 the
court may award compensation to the injured party for its loss. See
Johnson v. Bednar, 573 So. 2d 822 (Fla. 1991), receded from on other
grounds, Parisi v. Broward Cty., 769 So. 2d 359 (Fla. 2000).
1 We do not suggest that is the case here.
3
We therefore reverse the order denying Suntrust’s motion for relief from
final judgment and remand for vacation of the judgment and entry of a
judgment consistent with this opinion, eliminating any award of post-
judgment interest.
GROSS and FORST, JJ., concur.
* * *
Not final until disposition of timely filed motion for rehearing.
4