The Right of Replevin and What May Be Taken

Tracing its roots back to the common law, replevin is not a novel concept. While the cause of action is simple—allowing for the recovery of personal property that is wrongfully detained—replevin can be confusing for some creditors. This article is a brief glance at the nuances of chapter 78, Florida Statutes, to demonstrate how replevin can be a valuable tool to creditors.

When is a claim contingent? When is a claim subject to a bona fide dispute and who has the burden of proof? When is a claim against a person? When is a claim too small to count? When is an alleged debtor generally not paying his debts as they come due? Are we there yet?

Your business receives payment for goods or services that your business provided to a customer (“XYZ Inc.”). Your business is paid from the customer’s corporate account. You know that the payment came from XYZ Inc.’s corporate account because the check or credit card used for payment is in the name of XYZ Inc. However, three years later, you receive a letter from the “trustee” of XYZ Inc., now a debtor in bankruptcy, demanding payment of the money your business received for having provided goods or services to XYZ Inc.

Florida’s proceedings supplementary statute (Fla. Stat. 56.29) provides a wide range of collection options to judgment creditors. Over the years, courts inconsistently applied various parts of the statute, which had remained virtually unchanged since its enactment approximately a century ago. The result was widespread confusion among the courts and practitioners concerning how parties were summoned into court, how to commence proceedings, and parties’ rights under the statute.

The U.S. Bankruptcy Court for the Southern District of Florida recently denied a mortgagee’s motion to reopen a Chapter 7 case to compel the surrender of real property, due to a five-year delay in filing the motion.

In so ruling, the court agreed with an earlier ruling from the U.S. Bankruptcy Court for the Middle District of Florida (In re Plummer, 513 B.R. 135 (Bankr. M.D. Fla. 2014)), distinguishing “surrender” from “foreclosure,” and holding that a creditor cannot use the Bankruptcy Code to circumvent the obligations imposed by state law.

The District Court of Appeal of Florida, Second District ("Second DCA"), recently held that a notice of assignment of a mortgage loan pursuant to the Florida Consumer Collection Practices Act ("FCCPA"), § 559.715, Florida Statutes, is not a condition precedent to filing a mortgage foreclosure action, but certified the question to the Florida Supreme Court for resolution as one of great public importance. 

The U.S. Bankruptcy Court for the Southern District of Florida recently denied a mortgagee's motion to reopen a Chapter 7 case to compel the surrender of real property, citing a five-year delay in filing the motion.

In so ruling, the Court agreed with an earlier ruling from the U.S. Bankruptcy Court for the Middle District of Florida (In re Plummer, 513 B.R. 135 (Bankr. M.D. Fla. 2014)), distinguishing "surrender" from "foreclosure," and holding that a creditor cannot use the Bankruptcy Code to circumvent the obligations imposed by state law. 

If you are considering bankruptcy for your insolvent business, an Assignment for the Benefit of Creditors (“ABC”) might be your answer.  An ABC is a less expensive, quicker, quieter, and simpler alternative to traditional bankruptcy.  An ABC is a state law procedure utilized to liquidate a failed, insolvent, or no longer viable business.  Fla. Stat. § 727.101.

Two decisions issued within a day of each other highlight the continuing debate over whether a time barred proof of claim violates the FDCPA and more importantly, whether the Bankruptcy Code  preempts the FDCPA.  As copycat cases continue to be filed, courts continue to resoundingly reject the rationale ofCrawford v. LVNV Funding, LLC, a decision out of the Eleventh Circuit. 

In Castellanos v. Midland Funding, LLC, 15-CV-559 (M.D. Fla. Jan. 4, 2016) the United States District Judge John Steele joined with several of his Middle District of Florida colleagues and held that the Bankruptcy Code preempts the FDCPA with respect to filing time-barred proofs of claim.