FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF
from the Circuit Court for Pinellas County; Jack Day, Judge.
Theodore A. Avellone and Marc Peoples, Assistant General
Counsels, Department of Transportation, Tallahassee, for
Michael Ullman of Ullman & Ullman, P.A., Boca Raton, for
Paige Glass of Glass Law Office, P.A., Boca Raton, for Amicus
Curiae, International Factoring Association.
Florida Department of Transportation appeals from a final
summary judgment declaring it legally obligated to United
Capital Funding Corp. for the payment of certain accounts
receivable that had been assigned to United Capital by one of
the Department's vendors, Arbor One, Inc. The appeal
centers on a provision of Article 9 of the Uniform Commercial
Code-codified at section 679.4061, Florida Statutes (2012)-
stating that, after receiving notice of an assignment, the
debtor on an account receivable can discharge its contractual
obligation to pay the account only by making payment to the
assignee and not the assignor. The Department was originally
under a contractual obligation to pay Arbor One for services
Arbor One provided. Arbor One sold its right to be paid for
those services to United Capital, but the Department
continued to pay Arbor One despite having received notice of
that sale. The issues in this case are (1) whether the
statute governs when a government agency is the account
debtor and, if so, (2) whether sovereign immunity bars a suit
against the government agency by an assignee when the agency
improperly pays the assignor instead of the
answer the first question in the affirmative and the second
question in the negative. As a result, we conclude that once
Arbor One's accounts receivable were sold, the Department
could discharge its contractual obligation to pay for those
services only by paying United Capital as required by section
679.4061 and that sovereign immunity does not bar United
Capital's suit against the Department to enforce its
contractual obligation to pay. We therefore affirm the
summary judgment in favor of United Capital.
case involves the business of factoring. Factoring is a
financial arrangement through which a business can obtain
immediate funding from a third party by using its accounts
receivable-sums owed to the business by its customers,
usually on invoices for goods sold or services provided-as
consideration. In a factoring arrangement, the business sells
its accounts receivable to a third party, called a factor, at
a discount from their face value. The factor takes ownership
of the accounts receivable and, as a consequence, takes the
sole right to receive the entirety of payments previously
owed to the business. Ordinarily, the factor notifies the
debtor on the sold accounts of the change in ownership and
thereafter receives payments directly from the account
relationships implicate Article 9 of the UCC because Article
9 applies to the sale of accounts, including accounts
receivable. § 679.1091(1)(c). In that connection,
section 679.4061 defines the rights and obligations of the
business that originates and sells the accounts receivable,
the debtors on the accounts, and the third parties to whom
the accounts are sold. As applied to a factoring arrangement,
the statute provides that an account debtor makes payments to
the business originating the account until such time as it is
notified by either the business or the factor that the
account has been assigned to the factor. § 679.4061(1).
Once that notification is given, an account debtor must make
all further payments to the factor, subject to a right of the
account debtor to demand proof from the business or the
factor that the account has in fact been assigned. §
679.4061(1), (3). The statute also provides that any term in
an agreement between the business originating the accounts
and its debtors that prohibits or restricts the assignment of
the accounts is ineffective. § 679.4061(4)(a).
effect of the statute is to place an account debtor at risk
if, after it receives notice of the assignment, it continues
to pay the business that originated the account instead of
the factor who bought the right to be paid under it. The
statute provides that a payment made to the business after
notice has been given does "not discharge the
obligation" owed by the account debtor on the account.
§ 679.4061(1). An account debtor who continues to pay
the business that originated the account after receiving
notice that the account has been assigned can be held liable
to the factor for the full amount of the account
notwithstanding its payment of that same amount to the
business. See Bldg. Materials Corp. of Am. v.
Presidential Fin. Corp., 972 So.2d 1090, 1092 (Fla. 2d
DCA 2008) ("[A] debtor who receives actual notice of the
assignment of an account receivable . . . may be held liable
to the assignee if the debtor later pays the assigned debt to
the assignor rather than the assignee."). This is
sometimes referred to as a risk of double payment.
Department entered into several contracts with Arbor One,
pursuant to which Arbor One provided it with roadside
maintenance services and the Department agreed to pay Arbor
One for services rendered. The Department became, in UCC
terms, an account debtor with an obligation to pay Arbor One.
Arbor One later entered into a factoring arrangement with
United Capital. Under that arrangement, Arbor One assigned
the accounts receivable generated under its contract with the
Department to United Capital, making Arbor One the assignor
of those accounts and United Capital the assignee.
Capital notified the Department of the assignments in
writing. The written notifications described the arrangement
between Arbor One and United Capital, explained that Arbor
One had assigned its accounts receivable to United Capital,
stated that all future payments should be made to United
Capital, and stated that payment to any other party would not
discharge the Department's obligations on the accounts.
Although it received the notices, the Department nonetheless
continued to pay Arbor One and refused to pay United Capital.
response, United Capital filed this declaratory judgment
action against the Department seeking to enforce its rights
to payment of the accounts receivable that Arbor One assigned
to it, which in its view was required by section 679.4061(1).
It later filed a motion for summary judgment that, as
relevant here, the Department opposed on two principal
grounds. First, the Department argued that section
679.4061(1) does not apply where, as here, a government
agency is the account debtor on assigned accounts receivable.
Second, the Department argued that it was entitled to
sovereign immunity because the Department had not originally
contracted with United Capital and had not otherwise agreed
to make contract payments to it.
trial court rejected the Department's arguments, granted
United Capital's motion for summary judgment, and entered
a final judgment in United ...