United States – Florida
Below is a brief summary on Florida’s treatment of freezing orders, otherwise known in the United States as prejudgment attachments. Prejudgment attachment is a provisional remedy that allows for seizure of a defendant’s property prior to judgment. This ensures that a plaintiff successful on the merits may recover the amount owed by the defendant.
Note: Federal Courts only allow for prejudgment attachment to the extent that applicable state statutes allow it.
1. Are freezing orders (or their equivalent referred to below) available in civil legal proceedings in this jurisdiction and what is their effect?
Yes. Through a writ of attachment, plaintiffs can fix the property of the debtor into legal custody temporarily until a judgment is obtained. Attachment is an ancillary proceeding entirely dependent on the maintenance of an independent action or suit.
In Florida a mere injunction cannot be used to enforce money damages or prevent a party from disposing of assets prior to judgment. However, a trial Court may, as an exception, enter a pre-trial injunction to protect the interest of a constructive trust.
Florida’s appellate Courts also recognize and enforce worldwide asset-freeze injunctions issued by foreign Courts over any property the debtor owns in the state of Florida.
Prejudgment attachment is dictated by state law, regardless of whether the action is brought in state or federal Court.
2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?
No. However, the motion must be supported either by a separate affidavit or a verified complaint that clearly alleges specific facts that demonstrate that attachment is available under statutory grounds.
3. Briefly what is the relevant legal test?
A writ of attachment may be issued whether the debt is currently due or not.
If the debt is currently due, the creditor must state in their motion that the debtor:
(i) is or is about to fraudulently dispose of the property before judgment can be obtained;
(ii) is or is about to remove the property from Florida, is absconding with the property, or is concealing the property;
(iii) is concealing themselves; or
(iv) is or is about to remove themselves from the jurisdiction. The motion must also include the amount of debt.
When the debt is not yet due, the creditor must state that the debtor is:
(i) removing the property out of Florida;
(ii) fraudulently disposing of the property to avoid payment of their debts; or
(iii) fraudulently secreting the property to avoid payment of their debts. The motion must also state there is existing debt.
A foreign decree is entitled to comity if the parties have been given notice and the opportunity to be heard, the foreign Court had original jurisdiction, and the foreign decree does not offend the public policy of Florida.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
Once a plaintiff has initiated the main action against a debtor based on an existing debt, the plaintiff may seek a writ of attachment against the defendant’s property by filing a motion in Court of the amount claimed in the main action.
Under an attachment proceeding, the debtor’s property is seized and retained by the sheriff until the creditor obtains a judgment (and the property becomes available for execution).
Regarding foreign freezing orders, once a foreign Court enters an injunction, the party can apply to Florida Courts for recognition and enforcement of the foreign injunction under principles of comity.
5. Does the applicant have to provide any form of security or commit to compensation if its claim is ultimately unsuccessful and any freezing (or equivalent) order granted causes loss and damage to the respondent?
Yes. The plaintiff, or the plaintiff’s agent or attorney, must post a bond with surety to be approved by the clerk before an attachment writ will be issued. The bond must be payable to the defendant and at least twice the amount of debt claimed by the plaintiff, conditioned to pay all damages the defendant may sustain from improper attachment.
When entertaining a foreign injunction, Florida law provides judges with discretion to defer to the foreign Court’s bond rules. If a bond was already posted in the foreign jurisdiction, or if the foreign jurisdiction does not require a bond, it is most likely that Florida Courts will not require a bond when enforcing the injunction in Florida.
6. Can it be sought against third parties?
Yes. If the property to be attached is in the defendant’s possession at the time of issuance but passes into a third party’s possession before execution, the sheriff shall execute the writ on the property in the possession of the third person and shall serve the writ on the defendant and the third person. The action then proceeds against the third person.
Garnishment is allowed prejudgment or post-judgment. A creditor seeking prejudgment attachment must file a motion or affidavit that alleges specific facts regarding the nature and amount of the claim and grounds and post a bond.
7. What assets are covered by a freezing (or equivalent) order?
An attachment may be secured against goods, chattels, lands, tenements, and shares of stock of any corporation incorporated under the laws of Florida. Vessels can also be subject of attachment when the main action involves damages arising from the negligent operation of any watercraft.
8. Can a freezing (or equivalent) order be made in support of substantive proceedings abroad?
Yes.
9. Can a freezing (or equivalent) order be made in support of arbitration proceedings or awards?
We have not identified any Florida Court cases addressing this question.
10. At what stage of proceedings can a freezing (or equivalent) order be sought?
Once a plaintiff has initiated the main action against a debtor-defendant based on an existing debt, the plaintiff may seek a writ of attachment against the defendant’s property.
11. Are there typically any exceptions to the general prohibition on the respondent’s use of assets subject to a freezing (or equivalent) order?
No.
12. What happens after a freezing (or equivalent) order is granted?
The judge will issue the writ of attachment if they determine doing so is proper. The plaintiff then serves a copy of the writ and supporting affidavit on the defendant and on the sheriff of the county where the property is located. The sheriff then attaches and takes into custody as much of the lands, tenements, goods, and chattels as is sufficient to satisfy the debt plus costs.
13. Who pays the costs of the application for a freezing (or equivalent) order?
The plaintiff.
14. What protections are there typically in a freezing (or equivalent) order for third parties to such orders?
If any attachment is levied on property claimed by any person other than defendant, such person may seek to recover it or interpose a claim at any time during the attachment proceedings.
15. What are the consequences of breach of a freezing (or equivalent) order?
A respondent who disobeys an attachment order or freezing order may be held in contempt of Court.
16. Does a third party notified of (but not a party to) a freezing (or equivalent) order owe a duty of care to the applicant (meaning it can be liable to the applicant for non-compliance)?
No.
17. Can a freezing (or equivalent) order be enforced abroad?
Yes.
18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?
Yes.
Contacts
William O’Brien Partner – Head of Cross-Border Litigation & International Commercial Arbitration Eversheds Sutherland Washington, DC, United States williamobrien@eversheds-sutherland.us www.eversheds-sutherland.com Kymberly Kochis Partner – Co-Head of Global Litigation Co-Head of Insurance Litigation and Class Action groups Eversheds Sutherland New York, United States kymberlykochis@eversheds-sutherland.us www.eversheds-sutherland.com Francis X. Nolan IV Partner Eversheds Sutherland New York, United States franknolan@eversheds-sutherland.us www.eversheds-sutherland.com
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