219 So. 3d 126
Fla. Dist. Ct. App.2017Background
- Arbor One contracted with the Florida Department of Transportation (the Department) to provide roadside maintenance; the Department was the account debtor on those payment obligations.
- Arbor One sold (factored) the accounts receivable from those contracts to United Capital, which became the assignee and notified the Department in writing of the assignments and that future payments must be made to United Capital.
- Despite receiving notice, the Department continued paying Arbor One and refused to pay United Capital.
- United Capital sued the Department seeking declaratory relief/enforcement under section 679.4061(1), Florida Statutes (UCC Article 9) that after notice the debtor must pay the assignee to discharge the obligation.
- The trial court granted summary judgment for United Capital; the Department appealed arguing (1) Article 9’s government-transfer exception excludes governmental account debtors from § 679.4061(1), and (2) sovereign immunity bars suit by an assignee who was not an original contracting party.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does § 679.4061(1) apply when the account debtor is a government agency? | United Capital: Yes; Article 9’s definitions include governmental entities as "person" and "account debtor," so § 679.4061(1) governs. | DOT: No; § 679.1091(4)(n) excludes "any transfer by a governmental unit," so the government-transfer exception means § 679.4061(1) does not apply to government payments. | Held: § 679.4061(1) applies. The scope provision shows Article 9 applies to sales of accounts (not to payments of money), so the government-transfer exception does not exempt a government acting merely as an account debtor. |
| Can the Department discharge its payment obligation to the assignor after notice (risk of double payment)? | United Capital: After notice, payment to Arbor One does not discharge the obligation; liability remains to assignee. | DOT: Payment to Arbor One should discharge its obligation; it did not contract with United Capital. | Held: After notice, only payment to the assignee (United Capital) discharges the obligation; payment to assignor does not. |
| Does sovereign immunity bar an assignee's suit against the Department for failure to pay the assignee? | United Capital: No; legislative waiver and Pan‑Am doctrine permit contract suits where the state entered an authorized written contract. | DOT: Yes; no direct contract between DOT and United Capital, so sovereign immunity protects it. | Held: Sovereign immunity does not bar the claim. When the State enters an authorized express written contract, it is subject to ordinary contract rules including assignment rules. |
| Are antiassignment clauses or other procedural defenses fatal to United Capital’s claim? | United Capital: Antiassignment clause ineffective under § 679.4061(4)(a); other defenses fail. | DOT: Antiassignment clause and procedural defenses (venue, arbitration, conditions precedent) defeat or limit United Capital’s recovery. | Held: Trial court properly rejected these arguments on the record; antiassignment clause not shown to apply and remaining defenses lack merit. |
Key Cases Cited
- Bldg. Materials Corp. of Am. v. Presidential Fin. Corp., 972 So.2d 1090 (Fla. 2d DCA) (UCC § 679.4061 permits assignee to recover when debtor pays assignor after notice)
- MP Star Financial, Inc. v. Cleveland State Univ., 837 N.E.2d 768 (Ohio) (Ohio Supreme Court) (held government-transfer exception barred § 679.4061 claim by assignee; court considered "transfer" to include government payment)
- Pan‑Am Tobacco Corp. v. Dep’t of Corrections, 471 So.2d 4 (Fla. 1984) (state may be sued on contracts it is authorized to enter; sovereign immunity does not protect authorized contract breaches)
- Kohl v. Blue Cross & Blue Shield of Florida, 988 So.2d 654 (Fla. 4th DCA) (state not immune from contract claim when insurer paid assignee improperly after notice)
- Broward Cty. v. Finlayson, 555 So.2d 1211 (Fla. 1990) (state liable for prejudgment interest in contract actions like a private party)