Opinion
Case No. 2D20-1762
02-03-2021
LIV I LLC, Petitioner, v. REGIONS BANK; Deanna Brown ; Chris Brown; Golden Girls LLC, a Florida limited liability company; and Quest Alloy LLC, a Florida limited liability company, Respondents.
Charles PT Phoenix of Rhodes Tucker, Sanibel, for Petitioner. John A. Anthony, Stephenie Biernacki Anthony, Andrew J. Ghekas and Lydia M. Gazda of Anthony & Partners, LLC, Tampa, for Respondent Regions Bank. No appearance for remaining Respondents.
Charles PT Phoenix of Rhodes Tucker, Sanibel, for Petitioner.
John A. Anthony, Stephenie Biernacki Anthony, Andrew J. Ghekas and Lydia M. Gazda of Anthony & Partners, LLC, Tampa, for Respondent Regions Bank.
No appearance for remaining Respondents.
SILBERMAN, Judge.
LIV I LLC ("LIV") filed the underlying action for breach of loan, security, and forbearance agreements against Deanna Brown, Chris Brown, Golden Girls LLC, and Quest Alloy LLC (together "Underlying Defendants"). LIV now seeks certiorari review of three orders entered in response to Regions Bank's motion to intervene in the underlying action. Regions filed its motion to intervene after LIV and the Underlying Defendants had reached a settlement agreement. Regions sought to intervene as a potential creditor of LIV pursuant to an unrelated federal judgment entered against nonparty Lisa Phoenix and others. The circuit court permitted intervention based on Regions' assertion that it might be entitled to LIV's assets if it could establish that LIV was a single-member LLC owned by Ms. Phoenix. The court also ordered LIV to disclose the confidential terms of the parties' settlement agreement to Regions and froze the settlement proceeds until Regions' interest, if any, could be determined. LIV argues that the circuit court departed from the essential requirements of the law by allowing Regions to intervene without establishing a sufficient interest in the settlement proceeds. We agree and quash the orders now before us.
In 2018, LIV filed the underlying action, and on March 20, 2020, LIV and the Underlying Defendants agreed to settle the case under a confidential settlement agreement. Regions filed its motion to intervene on March 31, 2020, asserting entitlement "[i]nasmuch as Regions is a judgment creditor of L. Phoenix and L. Phoenix is a member of [LIV]." Regions sought to collect a money judgment it held against Lisa Phoenix and other defendants from a federal action for breach of unrelated loan, security, guaranty, and perfection agreements ("the Periwinkle loan").
LIV filed an objection to the motion in which it asserted that Regions had not established a sufficient interest in the case, the motion was untimely, Regions had obtained a foreclosure judgment on the property securing the Periwinkle loan but not a deficiency judgment, and the federal judgment did not contain sufficient language of finality for execution to issue. LIV filed a sworn declaration of Ivy Jo Nemeth asserting that there have been two members of LIV since its inception and that she is currently a member and manager. LIV also sought judicial notice of the Florida Division of Corporation's record on www.Sunbiz.org for LIV which reflects that Ms. Nemeth is LIV's Manager.
In August 2017, Regions filed a foreclosure complaint in Florida circuit court in Regions Bank v. Periwinkle Partners LLC, Case No. 17-CA-2696. Regions has obtained a final judgment of foreclosure in which the court reserved jurisdiction to enter a deficiency judgment. That judgment is currently on appeal in this court in Periwinkle Partners LLC v. Regions Bank, No. 2D18-2520, 2020 WL 7663160 (2020).
The federal district court ruled that "[Regions Bank] is entitled to recover $1,664,272.65 from Defendants for the Periwinkle loan, plus any interest accrued since March 31, 2017."
After a nonevidentiary hearing, the circuit court entered an "Order Granting Intervention Motion" which permitted Regions "to intervene and be heard before distribution of the judgment or any settlement proceeds herein, if a judgment is entered in favor of LIV, or settlement proceeds are proposed to be paid to LIV." Shortly thereafter, the Underlying Defendants filed a motion to approve the settlement agreement, dismiss the action, and order that the settlement payments be deposited into the court registry. The court entered an order granting the motion to approve and the requested relief.
Regions then moved for clarification and rehearing of the order granting intervention, asserting that LIV's counsel refused to provide information regarding the details of the settlement agreement despite its status as an intervenor. While that motion was pending, the Underlying Defendants deposited the settlement proceeds into the court's registry and LIV filed a motion to disburse the funds in which it asserted, in part, that Regions had no interest in LIV's settlement funds and LIV was not a single-member LLC.
In response, Regions asserted that LIV was in fact a single-member LLC. As factual support for this assertion, Regions relied on a deposition excerpt from Ms. Phoenix's husband in which he vaguely referenced LIV as "[his] wife's company." Regions also relied on several documents, some of which are unsigned, that appear to reflect a 2013 transfer of Ms. Nemeth's interest in LIV to The AT Company.
Although Ms. Phoenix signed the transfer agreement as a representative of the "Buyer," The AT Company, Regions mischaracterized the agreement both in its pleadings and at oral argument by asserting that it proves that Ms. Phoenix is the sole owner of LIV.
In a single order, the court denied LIV's motion for disbursement and granted Regions' motion for clarification or rehearing, finding that (1) Regions remained entitled to be heard before the settlement funds were disbursed, (2) LIV must disclose to Regions the amount of the settlement funds and whether the funds are to be paid directly to LIV or to another person (i.e., Lisa Phoenix), and (3) the court would hold an evidentiary hearing on LIV's entitlement to the settlement funds.
The order is entitled "Order Granting Intervenor Regions' Motion for Clarification or Rehearing of Settlement Order and Denying LIV's Motions for Rehearing and Disbursement of Settlement Proceeds."
In this court, LIV filed its petition for a writ of certiorari and an amended and corrected petition in which it argues that the circuit court departed from the essential requirements of the law by allowing Regions to intervene after settlement, requiring LIV to disclose terms of the confidential settlement agreement, and refusing to disburse the settlement proceeds.
"To obtain a writ of certiorari, the 'petitioner must establish (1) a departure from the essential requirements of the law, (2) resulting in material injury for the remainder of the trial (3) that cannot be corrected on postjudgment appeal.' " Brundage v. Evans, 295 So. 3d 300, 303 (Fla. 2d DCA 2020) (quoting Parkway Bank v. Fort Myers Armature Works, Inc., 658 So. 2d 646, 648 (Fla. 2d DCA 1995) ). Appellate courts must first determine whether there is an irreparable injury that is not correctable on appeal before determining whether the circuit court departed from the essential requirements of law. Allen v. State Farm Fla. Ins. Co., 198 So. 3d 871, 873 (Fla. 2d DCA 2016).
Because a party's right to privacy in its financial information is a protected constitutional interest, the forced disclosure of the financial terms of a settlement agreement may constitute irreparable injury if the disclosure constitutes a departure from the essential requirements of the law. Id.; Knauf Plasterboard (Tianjin) Co., Ltd. v. Ziegler, 219 So. 3d 882, 885 (Fla. 4th DCA 2017). Furthermore, postjudgment orders granting intervention may result in irreparable harm if they stay execution of a final judgment. See Neon Invs., LLC v. Afina Pallada, Inc., 299 So. 3d 45, 47 (Fla. 4th DCA 2020) ; Fed. Nat'l Mortg. Ass'n v. Gallant, 211 So. 3d 1055, 1057-58 (Fla. 4th DCA 2017). Accordingly, this court has jurisdiction to consider LIV's certiorari petition.
The essence of LIV's argument is that the circuit court departed from the essential requirements of the law by allowing Regions to intervene without establishing a sufficient interest in the settlement proceeds. "[T]he departure from the essential requirements of the law necessary for the issuance of a writ of certiorari is something more than a simple legal error." Allstate Ins. Co. v. Kaklamanos, 843 So. 2d 885, 889 (Fla. 2003). A reviewing court should only grant certiorari review "when there has been a violation of a clearly established principle of law resulting in a miscarriage of justice." Id.
It is well-settled that a party seeking entitlement to intervene must establish an interest in the litigation "of such a direct and immediate character that the intervenor will either gain or lose by the direct legal operation and effect of the judgment." Union Cent. Life Ins. Co. v. Carlisle, 593 So. 2d 505, 507 (Fla. 1992) (quoting Morgareidge v. Howey, 75 Fla. 234, 78 So. 14, 15 (1918) ). "In other words, the interest must be that created by a claim to the demand in suit or some part thereof, or a claim to, or lien upon, the property or some part thereof, which is the subject of litigation." Id. (quoting Morgareidge, 78 So. at 15 ). A contingent or indirect interest is insufficient to meet this standard. Stefanos v. Rivera-Berrios, 673 So. 2d 12, 13 (Fla. 1996).
LIV is a Florida limited liability company, which "is an entity distinct from its members." § 605.0108(1), Fla. Stat. (2019). Generally, the only remedy available to a judgment creditor of a member of an LLC is a charging order that allows satisfaction of the judgment from the member's interest in the LLC or from the member's rights to distributions from the LLC. § 605.0503(3), (6). If the LLC has more than one member, "foreclosure on a judgment debtor's interest in the limited liability company or against rights to distribution from the limited liability company is not available to a judgment creditor." § 605.0503(6). However, in single-member LLCs, a judgment creditor of the member may be entitled to "the sale of that interest in the limited liability company pursuant to a foreclosure sale." § 605.0503(4). In order for this additional remedy to be available, however, there can be no factual questions regarding whether the LLC is a single-member LLC. See Pansky v. Barry S. Franklin & Assocs., P.A., 264 So. 3d 961, 962-63 (Fla. 4th DCA 2019).
In this case, Regions' remedy against Ms. Phoenix via LIV has not been determined, so any interest it has in the proceedings is contingent and indefinite. Furthermore, there is a factual dispute regarding whether Ms. Phoenix is the sole member of LIV. Thus, it cannot be said that Regions' interest in the settlement proceeds was "of such a direct and immediate character that the intervenor will either gain or lose by the direct legal operation and effect of the judgment." Union Cent. Life Ins., 593 So. 2d at 507 (quoting Morgareidge, 78 So. at 15 ).
This violation of a clearly established principle of law resulted in a miscarriage of justice because it allowed Regions to bypass proper collection procedures in proceedings supplementary and the corresponding due process rights for the debtor. Accordingly we grant LIV's petition for writ of certiorari and quash the (1) "Order Granting Intervention Motion," (2) "Order Granting Motion," and (3) "Order Granting Intervenor Regions' Motion for Clarification or Rehearing of Settlement Order and Denying LIV's Motions for Rehearing and Disbursement of Settlement Proceeds."
See § 56.29, .30, Fla. Stat. (2019).
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Petition granted.
MORRIS and LUCAS, JJ., Concur.