General Electric Co. v. Chuly International, LLC
118 So. 3d 325
| Fla. Dist. Ct. App. | 2013Background
- GE leased medical equipment to Millennium Open MRI; Millennium’s obligations were guaranteed by de Cespedes.
- Millennium defaulted; GE sued Millennium and de Cespedes on the guaranty, obtaining a final judgment in 2009 for $1.2 million.
- In 2004, de Cespedes made $1.75 million loan to his girlfriend, Maria Palacio, and $1.74 million loan to her company, Chuly, which bought an office building.
- Palacio and Chuly made no payments; de Cespedes forgave the loans in 2007 during the underlying suit.
- GE learned of the loans and forgiveness via a parallel federal Medicare fraud case; the federal court allowed sale of Chuly property with proceeds in registry.
- GE filed suit in state court seeking a fraudulent transfer determination under Chapter 726 and sought a prejudgment writ of attachment or garnishment against Chuly.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether prejudgment attachment is available for fraudulent transfers. | GE contends badges of fraud establish prima facie case. | Chuly argues no improper transfer against it or debtor. | Remanded with direction to authorize prejudgment attachment and bond. |
| Whether GE proved a prima facie case of fraudulent transfer via badges of fraud. | GE showed insider transfer, lack of consideration, concealment, and timing with debt. | Chuly contends evidence insufficient to prove fraud. | GE's evidence created a prima facie case; fraud presumed pending later proof. |
| Whether Chuly is proper subject for attachment as a transferred asset. | Chuly assets can be reached despite ownership in another name. | Chuly was not the debtor; assets may not be reachable. | Prejudgment attachment available against assets held in another name. |
| What bond amount is appropriate for a prejudgment writ. | GE offered bond amount ($3,200,000) exceeding the claimed debt. | Insufficient bond consideration or excessive bond details not provided. | Remand to set a reasonable bond amount. |
Key Cases Cited
- Cerna v. Swiss Bank Corp. (Overseas), 503 So.2d 1297 (Fla. 3d DCA 1987) (attachment available for assets fraudulently transferred or held in debtor's name)
- Beal Bank SSB v. Almand & Assocs., 780 So.2d 45 (Fla. 2001) (badges of fraud inform actual intent; presumption of fraud when present)
- Mejia v. Ruiz, 985 So.2d 1109 (Fla. 3d DCA 2008) (combination of badges may establish fraud; burden on debtor to rebut)
- Tilghman v. U.S. Fid. & Guar. Co., 105 So. 823 (Fla. 1925) (purpose of writ of attachment to secure potential judgment)
- Zeskind v. Jockey Club Condo. Apartments, Unit No. II, Inc., 468 So.2d 1021 (Fla. 3d DCA 1985) (substantial competent evidence supports preliminary injunction)
- Yusem v. S. Fla. Water Mgmt. Dist., 770 So.2d 746 (Fla. 4th DCA 2000) (fraud action under section 726 requires proof of intent)