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Kennedy v. Res-Ga Lake Shadow, LLC

Florida Court of Appeals, First District

June 23, 2017

SUSAN S. KENNEDY, Appellant,
v.
RES-GA LAKE SHADOW, LLC, LAKE SHADOW LIMITED, LLC, AND WILLIAM G. KENNEDY, Appellees.

         NOT FINAL UNTIL TIME EXPIRES TO FILE MOTION FOR REHEARING AND DISPOSITION THEREOF IF FILED

         An appeal from the Circuit Court for Walton County. Thomas R. Santurri, Judge.

          Robert E. McGill, III of Robert E. McGill, III, P.A., Destin, for Appellant.

          Kyle S. Bauman and Jeffrey L. Burns of Anchors Smith Grimsley, Fort Walton Beach, for Appellee RES-GA Lake Shadow, LLC.

          No appearance for Appellee William G. Kennedy.

          PER CURIAM.

         Susan S. Kennedy appeals an order denying her motion to vacate a writ of execution and sheriff's deed issued on her Panhandle condominium. RES-GA Lake Shadow, LLC (RES-GA) brought proceedings supplementary to execution related to a money judgment against Ms. Kennedy's former husband. Without impleading Ms. Kennedy into the case, RES-GA received a writ of execution and sheriff's deed giving it a one-half interest in a condominium that Ms. Kennedy had previously been awarded in the divorce. We reverse for due process-related reasons.

         I.

         In February 2014, RES-GA received a $5 million judgment in Georgia against William G. Kennedy. At the time, Mr. Kennedy was married to the Appellant Ms. Kennedy, but they divorced in Alabama seven months later in September 2014. RES-GA moved to domesticate its Georgia judgment against Mr. Kennedy in Florida. And it also instituted supplementary execution proceedings directed at Mr. Kennedy's interests in Florida, including a Sandestin condominium that he had previously owned with his wife Ms. Kennedy as tenants by the entirety. In the divorce, however, the final decree awarded Ms. Kennedy the condo as part of its wider distribution of ten real property interests that the Kennedys had owned.

         In April 2015, after a hearing in the supplementary execution proceedings, the trial court approved RES-GA's request to consider Mr. Kennedy as part owner of the Sandestin condo. RES-GA had pointed to the Kennedys' final divorce decree as the basis for claiming that Mr. Kennedy still possessed a one-half interest in the property as tenants in common with Ms. Kennedy. The court agreed with RES-GA, converted the property to a tenancy in common, and permitted RES-GA to levy on Mr. Kennedy's apparent one-half interest in the condo. The court issued a writ of execution and authorized a sheriff's deed sale that ultimately conveyed RES-GA a right, title, and interest in the condo.

         Through all of this, Ms. Kennedy wasn't made a party to the supplementary execution proceedings, nor issued a Notice to Appear, see § 56.29(2), Florida Statutes. While the court reviewed the divorce decree, it gave no effect to its provision awarding the condo fully to Ms. Kennedy. One month after the sheriff's deed sale, Ms. Kennedy intervened to set aside the writ of execution and vacate the deed. She appealed after the court denied her request for relief.

         II.

         Ms. Kennedy argues on appeal that she should have been notified and impleaded into the supplementary execution proceeding before the trial court issued the writ of execution and sheriff's deed affecting the title to her condo. She is correct. Supplementary execution proceedings are designed to be "equitable in nature." Biel Reo, LLC v. Barefoot Cottages Dev. Co., LLC, 156 So.3d 506, 508 (Fla. 1st DCA 2014) (citing Ferguson v. State Exch. Bank, 264 So.2d 867, 868 (Fla. 1st DCA 1972)). After a party initiates proceedings supplementary, a creditor may pursue assets held by the debtor, assets of the debtor held by another, or assets that have been fraudulently transferred to another. See § 56.29, Fla. Stat. But the rights of any third party interest-holders must be accounted for by impleading them into the proceeding and allowing them to defend their interests. Biel Reo, 156 So.3d at 509. "It is well-settled that a party holding a claim adverse to both plaintiff and defendant must be brought into supplementary execution proceedings as a third-party defendant and given a full and fair opportunity to be heard before any adverse order may be entered." Sanchez v. Century Everglades, LLC, 946 So.2d 563, 565 (Fla. 3d DCA 2006) (citing Ryan's Furniture Exchange, Inc. v. McNair, 162 So. 483, 487 (1935)).

No rights of such third parties should be adjudged to be affected, impaired, or finally cut off by any order of court made in such proceedings supplementary to execution, unless such third parties have been first fully impleaded and brought into the case as actual parties to the proceeding, and, as such, given an opportunity to fully and fairly present their claims as parties entitled to a full and fair hearing after ...

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