Transferring Assets After A Car Accident May Be Fraudulent

In the case of Rose Renda v. Joseph Price, Case Number 4D21-534 (Fla. 4th DCA July 27, 2022), Florida’s Fourth DCA held that using fraudulent funds to obtain a homestead for the purpose of defeating a judgment creditor results in an equitable lien on the homestead subject to foreclosure. Or, more simply put, making fraudulent transfers to purchase a homestead to avoid a judgment may not provide the protection sought.

Facts

This case arose from a 2016 car accident where Price was injured by an employee of Reliable Towing and Storage, Inc. Reliable Towing and Storage is described as “the debtor” in the case opinion. Price ended up suing for damages. Reliable Towing did not respond to the lawsuit and a $10,000,000 default judgment was eventually entered by the trial judge.

Mrs. Renda’s husband was the owner and manager of Reliable Towing. Unfortunately, Mr. Renda passed away in 2018. He had two life insurance policies totaling approximately $500,000 as well as four parcels of commercial land. After Mr. Renda’s death, the life insurance companies paid the proceeds to Mrs. Renda and Reliable Towing (under the direction of Mrs. Renda) sold all of its assets.

Mrs. Renda then used the money from the life insurance and the sale of the assets to purchase a new home that she claimed was her homestead.

After obtaining the judgment, Price sought to commence proceedings under section 56.29, Fla. Stat. for the fraudulent transfer of assets (relief is available under Chapters 726 and 56, Fla. Stat.). After conducting an evidentiary hearing, the trial judge found that the transfers had all of the badges of fraud upon them. However, the trial court did not grant Price a right to foreclose on an equitable lien on the homestead property. Mrs. Renda claimed that homestead properties are exempt from fraudulent transfer claims (relying on Havoco of America Ltd. v. Hill 790 So. 2d 1018 (Fla. 2001).

This appeal ensued.

Analysis on Appeal

The Florida Constitution (Article X, section 4) provides an an exception where a homestead is subject to judgment “only where funds obtained through fraud or egregious conduct were used to invest in, purchase, or improve the homestead.” The Fourth DCA further noted that it is well settled law in Florida that homestead protections “cannot be employed as a shield and defense after fraudulently imposing on others.” When this occurs, “an equitable lien may be foreclosed against homestead property purchased with funds obtained by fraud” (See Sweeteners Plus, Inc. v. Glob. Supply Source, Inc., No. 6:11-cv-1799-Orl-28DAB (M.D. Fla. Dec. 31, 2013) and Babbit Elecs. v. Dynascan Corp., 915 F. Supp. 335, 338 (S.D. Fla. 1995)).

In situations such as this, where there was a deliberate attempt to avoid a judgment, the courts will allow foreclosure on equitable liens imposed on homestead to prevent unjust enrichment (See Flinn v. Doty, 214 So. 3d 683 (Fla. 4th DCA 2017)). This type of “equitable lien” is also sometimes referred to as a “constructive trust”.

In any event, the Fourth DCA held that Mrs. Renda’s homestead was purchased with funds obtained by fraud and, therefore, foreclosure was allowed to occur.

Talk to a Lakeland Personal Injury Lawyer About Your Case

The obvious import of this case is that it is yet another reminder that people who have caused harm to others can only go so far to avoid paying debts caused to the other. This is also why having liability insurance is very valuable. If you have liability insurance and you have caused harm to another, the insurance company will provide you with a defense and will indemnify (or pay) your debt up to your policy limits. This case is also exemplary of how people sometimes go to great lengths to avoid paying.

Further, this case shows the value of having qualified and knowledgeable counsel for you as the plaintiff in your case. You may face defendants who attempt to hide their assets rather than make a fair settlement offer considering all of the liability facts. At Russo Law, we can help you obtain the most compensation from your Florida car accident case. Call us today to schedule your free consultation with a Lakeland car accident lawyer.

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