ATLANTIC MOBILE HOMES, INC., FLORIDA ATLANTIC ASSOCIATES, AND FLORIDA ATLANTIC ASSOCIATES, NUMBER TWO, PETITIONERS,
v.
ROBERT C. LEFEVER, GEORGE J. KRAUSE, AND JOE C. CLARK, RESPONDENTS

Fla. 4th DCA | 1986-01-29
No. 85-1260
ANSTEAD, GLICKSTEIN and HURLEY, JJ., concur.
481 So. 2d 1002 Florida District Court of Appeal, Fourth District (1986) Positive Treatment
Cited by 2 cases

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Synopsis

The Fourth District Court of Appeal held that judgment creditors cannot attach and liquidate a judgment debtor corporation's interest in partnership property under Florida's corporate liquidation statute when the partnership itself is not made a party to the action. The court quashed the trial court's order, ruling that the proper remedy is a statutory charging order under the Uniform Partnership Act.


Holding

Judgment creditors cannot attach and liquidate a corporate partner's interest in partnership property under section 607.274. Under Florida's adoption of the Uniform Partnership Act, a creditor proceeding against a partner individually must obtain a charging order under section 620.695, which allows recovery only of the debtor's share of profits, not partnership assets. The partnership must be made a party to any action seeking to reach partnership assets.


Headnotes

[1] A trial court's order authorizing the liquidation of a partner's interest in partnership assets, without the partnership being a party to the action, constitutes a depart…

[2] Florida's adoption of the Uniform Partnership Act prohibits the attachment and liquidation of a partner's interest in a partnership unless the partnership is also a party…

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Key Quotes

“Although section 607.274 authorizes a court to liquidate an insolvent corporate debtor, that authority does not extend to the liquidation of the assets of a partnership.”

Establishes the core holding that corporate liquidation statutes do not authorize partnership asset liquidation

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Facts & Procedural History

Respondents LeFever, Krause, and Clark obtained money judgments against Florida Mobile Home Communities, Inc. (FMHC), a corporate partner in a New Yor…

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Opinion of the Court
PER CURIAM.

PER CURIAM.

At issue in this petition for a writ of certiorari is whether the judgment creditors of an insolvent corporate partner can attach and liquidate its interest in partnership property. The trial court ruled that the corporation’s interest in partnership assets could be liquidated pursuant to section 607.274, Florida Statutes (1985). We conclude that the trial court’s order constitutes a departure from the essential requirements of the law. Therefore, we grant certiorari and quash the final judgment.

The respondents, LeFever, Krause, and Clark, obtained money judgments against Florida Mobile Home Communities, Inc. (FMHC). One of the petitioners, Atlantic Mobile Homes, Inc. is a co-partner of FMHC in a New York partnership. That partnership owns Florida Atlantic Associates and Florida Atlantic Associates Number 2, also petitioners before this court. Petitioners were not parties to the action against FMHC, nor was the partnership itself made a party. Nonetheless, the trial court fashioned an order giving petitioners thirty days in which to pay off FMHC’s debt to respondents. After thirty days, if the debt remained unsatisfied, the order authorized respondents to petition the court for liquidation of FMHC’s assets, including FMHC’s interest in the partnership itself.

The trial court based its authority to fashion the order on section 607.274, Florida Statutes (1985). Petitioners contend that because they were never served in the action below, and since respondents never sued the partnership directly, the trial court erred in ruling that some of the partnership assets could be liquidated. We agree.

Although section 607.274 authorizes a court to liquidate an insolvent corporate debtor, that authority does not extend to the liquidation of the assets of a partnership. A partner’s interest in partnership assets is personal property which was subject to attachment and levy under the common law, see Myrick v. Second National Bank, 335 So. 2d 343 (Fla. 2d DCA 1976); however, Florida has adopted the Uniform Partnership Act (UPA), section 620.68(2)(c), Florida Statutes (1985), which prohibits the attachment and liquidation of a partner’s interest in a partnership unless the partnership is also a party to the action.

In order to proceed against a debt-or/partner, a creditor must obtain a charging order pursuant to section 620.695, Florida Statutes (1985). Even then, the creditor cannot reach partnership assets but can only reach the debtor's share of profits from the partnership. Myrick v. Second National Bank, supra. Thus, the statutory charging order is the only means by which a judgment creditor can reach the debtor’s partnership interest. Krauth v. First Continental Dev-Con, Inc., 351 So. 2d 1106 (Fla. 4th DCA 1977). Other states which have construed their statutory enactments of the UPA have reached the same result. See, e.g., Schultz v. Ziegenfuss, 105 N.J.Super. 468, 253 A. 2d 180 (1969).

In the present case, respondents did not seek a charging order against FMHC, nor did they make the partnership a party to the action. Rather, they proceeded against FMHC individually. Under section 620.68(2)(c) and section 620.695, a creditor proceeding against a partner individually cannot reach partnership assets. Consequently, we quash the trial court’s order permitting the respondents to attach and liquidate FMHC’s interest in the partnership. The partnership agreements, however, indicate that FMHC’s liabilities have been assumed by petitioners. Therefore, this court’s ruling is without prejudice to the respondents’ right to sue the partnership itself.

ANSTEAD, GLICKSTEIN and HURLEY, JJ., concur.


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Citator

Cited By

  • Schiller v. Schiller, 625 So. 2d 856 (Fla. 5th DCA 1993)
    …Partnership Act, the only way to reach a partner’s interest in a partnership is to impose a charging lien pursuant to section 620.695 for a specific dollar amount on the partner’s interest, by court order. See Atlantic Mobile Homes, Inc. v. LeFever, 481 So. 2d 1002 (Fla. 4th DCA 1986); Addis; Warren; Riegler v. Riegler, 243 Ark. 113, 419 S.W. 2d 311 (1967); Baum v. Baum, 51 [*860] Cal.2d 610, 335 P. 2d 481 (1959); In re Marriage of Paul; 59 Am.Jur.2d Partnership § 790. On remand, the trial court in this case…
    1 / 2

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