CITY OF ORLANDO, APPELLANT,
v.
SUN BANK, N.A., (LISA SEQUI), APPELLEE
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The City of Orlando appealed a judgment requiring it to pay $300 in attorney's fees to Sun Bank as part of the Bank's security interest in a forfeited vehicle. The court affirmed, holding that when a law enforcement agency retains forfeited property under the Florida Contraband Forfeiture Act, it must satisfy the lienholder's full interest, including contractually-provided attorney's fees.
A law enforcement agency that retains forfeited property must satisfy a lienholder's full interest, including attorney's fees that were properly provided for in the security agreement and duly incurred by the secured party. The preserved lien rights under the Florida Contraband Forfeiture Act encompass attorney's fees.
[1] A bona fide lienholder's interest in property seized under the Florida Contraband Forfeiture Act is not forfeited if the lien was duly perfected and the lienholder had no…
[2] When forfeited property is sold, a lienholder's interest must be satisfied from the sale proceeds, including attorney's fees provided for in the security agreement.
Previewing 2 of 5 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“[no] bona fide lienholder's interest shall be forfeited under the provisions of ss. 932.701 — 932.704 if the lien was duly perfected and if the lienholder did not know (actually or constructively) that the property was being used for an illegal activity.”
Establishes that properly perfected liens are protected from forfeiture under the statute.
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Join FLexlaw to unlock all legal intelligenceA 1979 Pontiac Firebird was seized pursuant to the Florida Contraband Forfeiture Act. The City of Orlando elected to forfeit and retain the vehicle fo…
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SHARP, Judge.
The City of Orlando appeals from an amended judgment of forfeiture which required it to pay Sun Bank, N.A., three hundred dollars ($300.00) in attorney’s fees in satisfaction of the Bank’s security interest in a 1979 Pontiac Firebird. The car was seized pursuant to the Florida Contraband Forfeiture Act,1 and the City elected to forfeit and retain it for its own use. The City recognized the Bank’s lien in its petition, and the Bank was duly served. The City urges on appeal that the trial court erred in requiring it to pay any attorney’s fees as part of the Bank’s lien. We affirm.
Section 932.703(3), Florida Statutes (1981), provides “[no] bona fide lienholder’s interest shall be forfeited under the provisions of ss. 932.701 — 932.704” if the lien was duly perfected and if the lienholder did not know (actually or constructively) that the property was being used for an illegal activity. Such was undisputedly the situation in this case.
When seized property is sold, a lienholder’s interest must be satisfied by paying it from the proceeds of the sale. § 932.703(3), Fla.Stat. (1981); § 932.704(3)(a), Fla.Stat. (1981). Counsel for appellant concedes that a purchaser at the sale of a forfeited item would have to pay attorney’s fees to a secured creditor as part of the lien. If the law enforcement agency elects to retain the forfeited item pursuant to section 932.704, we think the same obligation arises to satisfy the lienholder’s interest in full, including attorney’s fees.
In this case, the note and security agreement clearly provide that the collateral was intended to secure the Bank’s attorney’s fees and legal expenses which it incurred in connection with preserving its interest in the collateral and in enforcing payment of its lien. Florida’s UCC also clearly allows attorney’s fees to be included under the umbrella of a properly perfected security interest. § 679.504(l)(a), Fla.Stat. (1981). This bundle of rights is enforceable against subsequent purchasers and creditors of the collateral. § 679.201, Fla.Stat. (1981). The City argues that it is not technically a subsequent purchaser or a creditor. But the City is a successor to the original debtor’s interest in the car, and we think it has no greater rights than would the original secured party whose rights were forfeited.2
We think that the lien rights preserved by section 932.703 should include and encompass attorney’s fees duly provided for by the security agreement and properly incurred by the secured party. We adopt the reasoning of the court in State v. One 1976 Pontiac Firebird, 168 N.J.Super. 168, 402 A. 2d 254 (N.J.Super.Ct.App.Div.1979). Accordingly, the judgment appealed is
AFFIRMED.
DAUKSCH and FRANK D. UP-CHURCH, Jr., JJ., concur. . §§ 932.701-932.704, Fla.Stat. (1981).
. The Official Comment to § 9-201 of the UCC provides:
This section states the general validity of a security agreement. In general the security agreement is effective between the parties; it is likewise effective against third parties.
U.C.C. § 9-201 comment (1978).
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Tobias Knoblauch Private Bank v. S. Aero Traders, Inc., 443 So. 2d 202 (Fla. 3d DCA 1983)…ng the debtor and successors in interest to the collateral liable for attorneys’ fees, no such liability can be imposed on Southern. See § 679.504(l)(a), Fla.Stat. (1981); see also § 679.506, Fla. Stat. (1981); cf. City of Orlando v. Sun Bank, N.A., 428 So. 2d 769, 770 (Fla. 5th DCA 1983) (“lien rights preserved by section 932.703 should include and encompass attorney’s fees duly provided for by the security agreement ... ”) (emphasis added). The Bank predicates its entitlement to attorneys’ fees on a clause…
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In re The Forfeiture OF 1978 Cadillac 4-Door, 451 So. 2d 1054 (Fla. 4th DCA 1984)…. The proceeding itself neither adds to nor detracts from the claim and there is no statute which serves as the keystone for the claimed fee. Our companion court awarded an attorney's fee in a forfeiture setting in City of Orlando v. Sun Bank, N.A., 428 So. 2d 769 (Fla. 5th DCA 1983). The court expressly recited that the note and security agreement which had been introduced into evidence provided for such fee. It is obvious to us that if the security agreement had not been provided, no award would have been m…