United States District Court, M.D. Florida, Tampa Division
D. MERRYDAY UNITED STATES DISTRICT JUDGE
and a half year ago in the Circuit Court for Hillsborough
County, Jerry Katzman sued Comprehensive Care Corporation, a
Florida citizen, for breach of contract. After protracted
litigation (the state-court docket shows more than four
hundred entries), the state court in March 2017 entered an
$866, 052.83 judgment for Katzman. According to Katzman,
Comprehensive Care refused to satisfy the judgment and
participate in post-judgment discovery, which refusal
prompted Katzman to initiate in the state court a
supplemental proceeding under Section 56.29, Florida
to Katzman's motion for a supplemental proceeding,
Comprehensive Care owns shares in Pharmacy Value Management
Solutions. Also, Comprehensive Care continues to litigate a
claim against Universal Health Care in another action;
Katzman attributes “significant value” to the
claim. Katzman requests that the state court declare that
Katzman owns both the shares and the Universal claim.
Alternatively, Katzman asks the state court to “place
Compcare in a receivership” and to direct the
liquidation of assets sufficient to satisfy the judgment. On
July 12, 2017, the state court scheduled a September 6, 2017
hearing on Katzman's motion.
week before the hearing, Sherfam, a Canadian corporation,
moved in the state court to intervene and to delay the
hearing. According to the motion, Sherfam lent more than $2,
000, 000 to Comprehensive Care between 2011 and 2015. In the
motion, Sherfam claims in the Pharmacy Value shares a
perfected security interest superior to Katzman's
interest. Finally, Sherfam's motion asserts that
Comprehensive Care assigned the Universal claim to Sherfam
before the judgment.
August 29, the state court granted Sherfam's motion to
intervene but denied the request to continue the hearing.
Sherfam renewed the request for a continuance, but the state
court persisted in the ruling. On the eve of the hearing,
Sherfam submitted a notice of removal (Doc. 1, the September
5, 2017 notice) and attempted to invoke diversity
jurisdiction. Katzman moves (Doc. 9) to remand the dispute,
and Sherfam opposes (Doc. 10) remand.
parties dispute the extent and effect of removal. Sherfam
argues that the notice removed only the supplemental
proceeding; Katzman responds that Sherfam removed the entire
action (that is, both the breach-of-contract claim between
Katzman and Comprehensive Care and the supplemental
proceeding between Katzman, Comprehensive Care, and Sherfam).
If Sherfam removed the entire action, the removal violates
the “forum-defendant” prohibition in 28 U.S.C.
§ 1441(2), the requirement in 28 U.S.C. §
1446(2)(A) that “all defendants who have been properly
joined and served” consent to removal,  and the one-year
limitation in 28 U.S.C. § 1446(c)(1). Improper for other
reasons, the removal of only the supplemental proceeding
requires examining the purpose and form of a supplemental
Chancing the chancery court
the 1919 enactment of Florida's supplemental-proceeding
statute, a judgment creditor navigated a cumbersome process
to collect a judgment. After entry of the judgment, the clerk
issued a writ of execution, which the judgment creditor
delivered to the sheriff. If the sheriff's investigation
revealed assets insufficient to satisfy the judgment, the
sheriff returned the writ of execution unsatisfied
decisions illustrate that the judgment debtor often
mischievously transferred assets to elude the sheriff's
grasp. Immediately before the entry of judgment, the debtor
might “sell” his property to a colluding relative
who paid a conspiratorially low price. Because the judgment
debtor formerly held title to the property, Florida's
fraudulent-transfer law permitted the judgment creditor to
attempt to void the fraudulent transfer. Barrow v.
Bailey, 5 Fla. 9 (Fla. 1853). But the judgment creditor
could void the fraudulent transfer only if he knew about the
other instances the judgment debtor might store money in a
bank account. Recognizing that the judgment creditor could
garnish the account and that the sheriff could levy on
property bought with the money, the judgment debtor, for
example, might purchase property but direct the seller to
convey title to another person (again, often a colluding
relative or someone privy to the scheme). Because the
judgment debtor never held legal title to the property, a
fraudulent-conveyance action “at law” could not
aid the judgment debtor.
a court of law, a chancery court afforded relief: The
judgment creditor could sue in chancery court for a
“creditor's bill, ” which requested a
declaration that the judgment debtor held “equitable
title” to the property bought with the judgment
debtor's money but titled in the third party's name.
Neubert v. Massman, 19 So. 625 (Fla. 1896);
Logan v. Logan, 22 Fla. 561 (Fla. 1886). If the
judgment debtor successfully concealed the transaction, no
suspicion attended the sudden disbursement of the
debtor's money. Even if a vigilant creditor somehow
learned about a dubious transaction, equity rarely afforded
relief. Confusion about the distinction between legal and
equitable remedies and about chancery procedure often
resulted in the judgment creditor's recovering nothing
after costly and prolonged litigation in the chancery court.
E.g., George E. Sebring Co. v.
O'Rourke, 101 Fla. 885 (Fla. 1931); Hewitt v.
Punta Gorda State Bank, 108 Fla. 39 (Fla. 1933).
the need for a separate action to collect on the judgment,
the supplemental proceeding provides a “speedy and
direct proceeding in the same court in which the judgment was
recovered.” Richard v. McNair, 121 Fla. 733,
743 (Fla. 1935). In the proceeding, the judgment creditor
deposes the judgment debtor to “secur[e] information
that would lead to the satisfaction, in whole or in part, of
any [writ of] execution.” Reese v. Baker, 98
Fla. 52, 55 (Fla. 1929); accord Young v. McKenzie,
46 So.2d 184, 185 (Fla. 1950) (“[T]he purpose of the
statutes, titled ‘Proceedings supplementary, ' is
to aid the holder of a ‘valid and outstanding'
execution to ferret out what assets the judgment debtor may
have or what property of his others may be holding for
him.”). If discovery reveals a hidden asset, ...