BLACH v. DIAZ-VERSON
Filing
179
ORDER denying [34, 120, and 138] motions for disbursement; granting [37, 75, 76, 77, 78, 82, 134, 135, 136, 142, 154, and 175] motions for disbursement as to funds garnished pursuant to garnishments filed before May 12, 2016; denying [65, 66, 114, 115, and 116] motions to dismiss; denying 178 motion to stay, and granting 177 motion to bifurcate. Ordered by US DISTRICT JUDGE CLAY D LAND on 5/8/2017.(tlp)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
HAROLD BLACH,
*
Plaintiff,
*
ROBERT FREY,
*
Third Party Claimant,
*
vs.
*
AFLAC, INC.,
*
Garnishee,
CASE NO. 4:15-MC-5
*
SAL DIAZ-VERSON,
*
Defendant.
*
O R D E R
Plaintiff Harold Blach holds a $158,343.40 Alabama judgment
against Defendant Sal Diaz-Verson.
Verson’s former employer.
Garnishee AFLAC is Diaz-
AFLAC makes bimonthly payments to
Diaz-Verson,
twenty-five
percent
of
which
is
subject
to
garnishment.
On October 6, 2015, Blach registered his judgment
in this Court and began filing garnishment actions against AFLAC
to
collect
$150,000.00
garnishments.
holds
a
on
the
into
judgment.
the
Court’s
AFLAC
has
registry
deposited
pursuant
to
over
the
Third Party Claimant Robert Frey claims that he
$219,982.78
judgment
superior to Blach’s judgment.
against
Diaz-Verson
Blach and Frey
that
is
filed dueling
motions for disbursement of the garnished funds (ECF Nos. 34,
37, 75, 76, 77, 78, 82, 103, 120, 134, 135, 136, 154, & 175).1
At the hearing on those motions, Diaz-Verson claimed that he is
entitled to have all funds garnished pursuant to garnishments
filed after May 12, 2016 returned to him because Blach failed to
meet the requirements in the new Georgia garnishment statute for
garnishments against a “financial institution.”
18-4-4.
See O.C.G.A. §
The Court certified that question to the Supreme Court
of Georgia pursuant to O.C.G.A. § 15-2-9 (ECF No. 174).
The
Court cannot grant Blach’s or Frey’s motions for disbursement as
to
garnishments
filed
after
May
12,
2016
until
the
Georgia
Supreme Court responds to the certified question.
The pendency of this certified question, however, does not
affect
the
disbursement
garnishments
previously
filed
before
rejected
of
May
funds
12,
Diaz-Verson’s
filed before May 12, 2016.2
garnished
2016.
And
objections
pursuant
the
to
Court
to
has
garnishments
Thus, the issue of whether Frey or
Blach is entitled to disbursement of the funds deposited into
the
registry
garnishments
of
is
the
ripe
Court
for
pursuant
decision.
1
to
pre-May
Consequently,
12,
the
2016
Court
Frey titled ECF Nos. 103 & 175 as motions for summary judgment, but
he seeks summary judgment as to whether he is entitled to disbursement
of the funds.
2
The Court denies Diaz-Verson’s motions to dismiss that raise the same
arguments that the Court has already rejected (ECF Nos. 65, 66, 114,
115, & 116). Diaz-Verson has preserved his right to appeal the denial
of these motions.
2
grants Frey’s motion asking the Court to make that determination
now (ECF No. 177).
The
Court
understands
how
the
arrangement
between
Diaz-
Verson and his former counsel, Frey, regarding the use of a
partially satisfied judgment to secure a debt for attorney’s
fees could raise suspicion.
But legal decisions cannot be based
on suspicion.
Based on the present record, the Court finds that
Frey
legitimate,
holds
a
unsatisfied
judgment
Verson that is superior to Blach’s judgment.
entitled
to
disbursement
garnishments filed
of
the
funds
Diaz-
Frey is therefore
garnished
before May 12, 2016,
granted as to those funds.
against
pursuant
to
and his motions are
Frey’s motions for disbursement
remain pending as to garnishments filed after May 12, 2016 (ECF
Nos. 37, 75, 76, 77, 78, 82, 134, 135, 136, 142, 154, & 175).
As of the January 18, 2017 hearing in this case, the unpaid
balance of Frey’s judgment plus interest was $299,354.69.
Frey
Aff. at 2 (Jan. 2, 2017), ECF No. 133.
The funds in the Court’s registry do not satisfy the full
amount
of
Frey’s
judgment,
and
Blach
cannot
judgment until Frey’s judgment is satisfied.
collect
on
his
Thus, regardless
of the pendency of the certified question to the Supreme Court
of Georgia, Blach is not entitled to any of the funds in the
Court’s registry at this time.
Accordingly, the Court denies
3
Blach’s motions for disbursement in full (ECF Nos. 34, 120, &
138).
Finally, the Court denies Diaz-Verson’s motion to stay all
garnishments until the Supreme Court of Georgia responds to the
certified
question
(ECF
No.
178).
The
Court
may
consider
whether disbursement pursuant to today’s Order should be stayed
if
any
party
files
a
notice
of
appeal
challenging
today’s
ruling.
FACTUAL BACKGROUND
The following facts are relevant to whether Frey holds a
legitimate judgment against Diaz-Verson.
Frey
is
Diaz-Verson’s
former
attorney.
He
represented
Diaz-Verson in various matters between 2009 and 2014, including
Diaz-Verson’s disputes with non-party Porter Bridge Loan Company
(“Porter
Bridge”).
In
2009,
Porter
Bridge
$397,386.87 Florida judgment against Diaz-Verson.
Party Claim ¶ 1, ECF No. 32.
obtained
a
Frey’s Third
Porter Bridge domesticated the
judgment in Georgia on June 23, 2010, id., and filed several
state court garnishment actions against the same bimonthly AFLAC
payments at issue in this case.
the
domestication
unsuccessfully
and
defended
Frey represented Diaz-Verson in
garnishment
Diaz-Verson
actions.
in
judgment/interpleader action in this Court.
Frey
a
also
declaratory
In that case, this
Court held that twenty-five percent of each AFLAC payment is
4
subject to garnishment.
AFLAC v. Diaz-Verson, No. 4-11-CV-81
(CDL), 2012 WL 1903904, at *6-*7 (M.D. Ga. May 25, 2012).
Diaz-Verson hired additional counsel and appealed.
While
the appeal was pending, Diaz-Verson and Porter Bridge mediated
and settled the case in a Confidential Settlement Agreement.
The Agreement provided that Diaz-Verson would pay Porter Bridge
$275,000.00
and
dismiss
his
appeal.
Confidential
Agreement ¶ 4, ECF No. 59 (“Agreement”).
Settlement
It also provided that
Porter Bridge would:
[F]orever discharge Diaz-Verson . . . of and from all
manner of actions, causes of action, suits at law or
equity, asserted or unasserted claims, future claims
which may hereafter arise, judgments, costs, demands,
damages,
debts,
attorneys’
fees,
liens,
losses,
injuries,
or
any
liabilities
or
obligations
whatsoever . . . that Porter Bridge ever had, are now
existing or that Porter Bridge may hereafter have
against Diaz-Verson . . . that arise, grow out of,
relate to or are in any way whatsoever incident to or
connected with the Florida Action, [and] the Florida
Judgment . . . .
Id. ¶ 1.
Porter Bridge also promised that:
Within five (5) business days of the receipt of the
Settlement Amount, Porter Bridge shall transfer and
assign
Robert
J.
Frey,
Esq.
the
Florida
Judgment . . . .
Id. ¶ 5.
Diaz-Verson
paid
Porter
Bridge
$275,000.00,
and
Porter
Bridge assigned the Florida judgment to Frey.
Def.’s Mot. to
Dismiss Ex. 16, Assignment of J., ECF No. 5-17.
On February 11,
2013, Frey recorded the assignment.
5
Id.
At the time of the
settlement,
Diaz-Verson
owed
Frey
$361,433.93
in
Frey’s Reply Ex. 1, Billing Records, ECF No. 35-1.
legal
fees.
The judgment
was meant to secure Frey’s right to collect $219,982.78 of the
unpaid legal fees—the balance of the judgment after Diaz-Verson
paid $275,000.00 to Porter Bridge.3
Pl.’s Renewed Mot. for
Disbursement Ex. 1, Frey Aff. at 2 (Feb. 19, 2016), ECF No. 342.
This left $141,451.15 of Frey’s unpaid legal fees unsecured.
Additionally, after the assignment, Diaz-Verson incurred another
$20,569.00 in unsecured debt to Frey.
Id.
Frey has never sued Diaz-Verson to recover the unsecured
legal fees.
Nor did Frey seek to garnish Diaz-Verson’s payments
to satisfy the Florida judgment until Blach filed a garnishment
action
against
AFLAC.
Prior
to
Blach’s
garnishments,
Frey
allowed Diaz-Verson to make “unstructured,” voluntary payments
“from
time
to
time”
(Feb. 19, 2016).
to
pay
off
his
debt.
Frey
Aff.
at
2
Frey applied the voluntary payments against
the balance of unsecured legal fees before applying any payments
against the Florida judgment.
The payments have not satisfied
the amount of unsecured legal fees, and therefore, the balance
of the Florida judgment remains unsatisfied.
When Blach began filing garnishment actions against AFLAC,
Diaz-Verson’s
disposable
earnings
3
decreased,
and
he
became
Including interest, Diaz-Verson owed Porter Bridge $494,982.78 on the
Florida judgment at the time of the settlement. Frey’s Reply Ex. 2,
Porter Judgment Amount, ECF No. 35-2.
6
unable to make voluntary payments to Frey.
Id.
In order to
protect his right to collect his judgment, Frey intervened in
this action, claiming that his judgment against Diaz-Verson is
superior to Blach’s judgment, and therefore, he is entitled to
have his judgment satisfied first.
DISCUSSION
I.
Blach’s and Frey’s Motions for Disbursement
Frey’s judgment was domesticated in Georgia before Blach’s
judgment.
See
Def.’s
Mot.
to
Dismiss
Ex.
15,
Order
to
Domesticate Foreign J., ECF No. 5-16; Def.’s Mot. to Dismiss Ex.
16, Assignment of J., ECF No. 5-17; Frey’s Reply to Pl.’s Resp.
to Third Party Claim 2, ECF No. 35.
Thus, if Frey holds a
legitimate, unsatisfied judgment, he is entitled to disbursement
of the funds garnished pursuant to garnishments filed before May
12, 2016.
See O.C.G.A. § 18-4-18 (providing that the oldest
judgment has priority); NationsBank, N.A. v. Gibbons, 487 S.E.2d
417, 419 (Ga. Ct. App. 1997) (holding that the relevant date for
priority of foreign judgments is the date that the judgment is
domesticated in Georgia).
Blach claims that Frey does not hold
a legitimate, unsatisfied judgment because: (1) the Agreement
between Diaz-Verson and Porter Bridge satisfied the judgment by
releasing Diaz-Verson from all liability on it; and (2) even if
Porter
Bridge
assigned
an
unsatisfied
7
judgment
to
Frey,
the
assignment
is
void
under
the
Georgia
Uniform
Voidable
Transactions Act (GUVTA).4
A.
The Confidential Settlement Agreement
Blach first argues that the Agreement released Diaz-Verson
from
all
liability
on
the
Florida
judgment,
essentially
“satisfying” the judgment before Porter Bridge assigned it to
Frey.
The construction of a contract in Georgia is first a
question
of
law
for
the
Court.
O.C.G.A.
§ 13-2-1.
Under
Georgia law:
The trial court must first decide whether the contract
language is ambiguous; if it is ambiguous, the trial
court must then apply the applicable rules of
construction (O.C.G.A. § 13–2–2); if after doing so
the trial court determines that an ambiguity still
remains, the jury must then resolve the ambiguity.
Georgia-Pac. Corp. v. Lieberam, 959 F.2d 901, 904 (11th Cir.
1992) (quoting Copy Sys. of Savannah, Inc. v. Page, 398 S.E.2d
784, 785 (Ga. Ct. App. 1990)).
A contract is ambiguous “if the
terms are duplicitous, uncertain, unclear, indistinct, difficult
to comprehend, or open to various interpretations.”
Vinnett v.
Gen. Elec. Co., 271 F. App'x 908, 912 (11th Cir. 2008) (per
curiam) (citing Early v. Kent, 108 S.E.2d 708, 709 (Ga. 1959)).
The Agreement arguably is ambiguous.
Paragraph one states
that Porter Bridge and its assigns:
4
Blach also contends that Frey is not entitled to collect his judgment
because he is acting on Diaz-Verson’s behalf by allowing Diaz-Verson
to pay off the debt voluntarily.
But Blach cites no authority to
support his contention that a benevolent creditor forfeits his right
to collect. Thus, the Court finds this argument unpersuasive.
8
[F]orever discharge Diaz-Verson . . . of and from
all . . . judgments . . . that Porter Bridge ever had,
are now existing or that Porter Bridge may hereafter
have against Diaz-Verson . . . that arise, grow out
of, relate to or are in any way whatsoever incident to
or connected with the Florida Action, [and] the
Florida Judgment . . . .
Agreement ¶ 1.
out
of,
and
The Florida judgment clearly arose from, grew
related
to
the
Florida
action.
Thus,
read
in
isolation this provision appears to release Diaz-Verson from all
liability
to
judgment.
Porter
But
“the
Bridge
whole
and
its
contract
assigns
should
arriving at the construction of any part.”
2(4).
The
Court
must
therefore
interpret
on
be
the
looked
Florida
to
in
O.C.G.A. § 13-2paragraph
one
in
conjunction with paragraph five, which provides that:
Within five (5) business days of the receipt of the
Settlement Amount, Porter Bridge shall transfer and
assign
Robert
J.
Frey,
Esq.
the
Florida
Judgment . . . .
Agreement ¶ 5.
If the parties intended for paragraph one to
release Diaz-Verson from all liability on the Florida judgment
without exception, then the purported assignment of the Florida
judgment to Frey in paragraph five makes little sense.
The Court must use Georgia’s rules of contract construction
to resolve the dissonance between paragraph one and paragraph
five.
Under Georgia law, “[t]he construction which will uphold
a contract in whole and in every part is to be preferred.”
O.C.G.A. § 13-2-2(4).
And generally, “[w]hen two contract terms
9
conflict,
the
specific
term
controls
over
the
general
one.”
United States v. Pielago, 135 F.3d 703, 710 (11th Cir. 1998);
accord RLI Ins. v. Highlands on Ponce, LLC, 635 S.E.2d 168, 172
(Ga. Ct. App. 2006).
In order to give meaning to all paragraphs
in the contract, the Court finds that the parties intended for
paragraph
one
liability
on
to
the
generally
Florida
release
judgment
Diaz-Verson
subject
to
the
from
all
specific
exception in paragraph five—that Porter Bridge would assign the
balance
of
the
Florida
judgment
to
Frey.
Based
on
this
interpretation, the Court finds that Porter Bridge assigned the
unsatisfied balance of the Florida judgment to Frey.5
B.
Georgia Uniform Voidable Transfers Act
Blach next argues that the assignment is voidable as a
fraudulent transaction under GUVTA.
The Act provides:
A transfer made or obligation incurred by a debtor is
voidable as to a creditor, whether the creditor's
claim arose before or after the transfer was made or
the obligation was incurred, if the debtor made the
transfer or incurred the obligation:
With actual intent to hinder, delay, or defraud any
creditor of the debtor; . . . .
5
Because Georgia’s rules of contract construction resolve the
ambiguity in paragraph one, the Court need not look to extrinsic
evidence to interpret the provision. See Livoti v. Aycock, 590 S.E.2d
159, 164 (Ga. Ct. App. 2003) (“[N]ormally, only if the ambiguity is
not resolved by application of the rules of construction may parol
evidence be introduced to explain the agreement, . . . .”). The Court
notes, however, that Frey and Diaz-Verson submitted extrinsic evidence
consistent with the Court’s interpretation.
10
O.C.G.A. § 18-2-74(a).
to
the
assignment
To determine whether Diaz-Verson agreed
with
actual
intent
to
“hinder,
delay,
or
defraud” his other creditors, the Court may consider several
factors, including whether:
(1) The transfer or obligation was to an insider;
(2) The debtor retained possession or control of the
property transferred after the transfer;
(3) The transfer
concealed;
or
obligation
was
disclosed
or
(4) Before the transfer was made or obligation was
incurred, the debtor had been sued or threatened with
suit;
. . . .
(8) The value of the consideration received by the
debtor was reasonably equivalent to the value of the
asset transferred or the amount of the obligation
incurred; [and]
. . . .
(10) The transfer occurred shortly before or shortly
after a substantial debt was incurred; . . . .
Ga. Code Ann. § 18-2-74 (b).
Blach claims that the assignment is voidable under several
of the statutory factors.
that
fees.
Diaz-Verson
owed
But Blach does not appear to dispute
Frey
over
$300,000.00
in
unpaid
legal
If the assignment was meant to cover a legitimate debt
that Frey intends to collect, it is difficult to see how the
assignment is fraudulent.
11
Blach’s
analysis
Specifically,
Blach
of
claims
the
that
factors
the
is
following
unpersuasive.
facts
indicate
fraud under the factors: (1) Frey was Diaz-Verson’s attorney;
(2) Frey failed to file garnishments to promptly collect his
judgment;
Bridge
(3) the
was
Agreement
between
Diaz-Verson
confidential;
for
consideration
(4) Frey
of
assignment
the
did
not
judgment;
and
Porter
offer
and
any
(5) Porter
Bridge assigned the judgment shortly after Blach obtained his
judgment
and
Diaz-Verson
learned
that
his
bimonthly
AFLAC
payments are subject to garnishment.
Although Frey was Diaz-Verson’s attorney, he was not an
“insider” as defined by the statute.
See O.C.G.A. § 18-2-71(8)
(dictating
the
general
that
“insider”
partners
partnerships,
control).
and
And
confidential,
the
and
includes
general
the
relatives,
partners’
corporations
while
debtor’s
relatives,
of
the
terms
assignment
which
of
itself
the
was
general
debtor
Agreement
publicly
is
in
were
filed.
Additionally, the assignment benefitted Diaz-Verson by securing
part
of
the
unsecured
debt
that
Diaz-Verson
owed
Frey,
essentially “satisfying” part of the unsecured debt with secured
judgment debt.
Moreover,
Diaz-Verson
does
not
appear
control over the assets that he owes Frey.
to
have
unlimited
Frey concedes that
if Blach stops filing garnishments, Frey will allow Diaz-Verson
12
to make voluntary, unstructured payments to pay off his debt.
And Diaz-Verson may have some control over the timing and amount
of the voluntary payments.
But this control is limited.
When
Diaz-Verson stopped making voluntary payments, Frey intervened
in this garnishment to assert his right to collect.
record does
not
Thus, the
support the conclusion that Frey intends to
never collect his judgment.
Finally, Blach points to Porter Bridge’s assignment of the
judgment to Frey shortly after Blach and several other creditors
obtained judgments against Diaz-Verson and Diaz-Verson learned
that his AFLAC payments were subject to garnishment.
But the
timing of the assignment alone is insufficient to prove DiazVerson’s actual intent to hinder, delay, or defraud his other
creditors.
Blach has failed to point to evidence from which a
reasonable juror could conclude that the assignment is voidable
under GUVTA.
II.
Diaz-Verson’s Motion to Stay
Diaz-Verson
Supreme
Court
of
moves
to
Georgia’s
stay
all
answer
garnishments
to
this
pending
Court’s
the
certified
question because: (1) the funds in the Court’s registry exceed
the amount of Blach’s judgment; and (2) Blach continues to use
the “nonfinancial institution” garnishment form.
Diaz-Verson’s
first argument fails in light of the Court’s determination that
Frey’s judgment is superior to Blach’s judgment.
13
Given that
finding,
Blach
may
continue
filing
garnishments
until
his
judgment and Frey’s judgment are satisfied.
The Court also finds that a stay based on Blach’s use of
the “nonfinancial institution” garnishment form is inappropriate
under
the
circumstances.
If
the
Georgia
Supreme
Court
determines that Blach used the wrong form for his garnishments,
the funds in question may have to be returned to Diaz-Verson,
and Blach
form.
may have
to
re-garnish
funds with the appropriate
But Diaz-Verson’s potential success on his “financial
institution” argument
does not change the fact that
hundreds of thousands of dollars to Frey and Blach.
undisputed fact, it
is
he
owes
Given this
appropriate to allow Blach to decide
whether to risk garnishing funds that may eventually be returned
to Diaz-Verson.
CONCLUSION
For
the
reasons
stated
above,
the
Court
denies
Blach’s
motions for disbursement in full (ECF Nos. 34, 120, & 138) at
this time.
The Court grants Frey’s motions for disbursement as
to all garnishments filed before May 12, 2016.
Before May 12,
2016, Blach filed applications for writs of garnishment against
AFLAC on December 18, 2015 (ECF No. 1 in 4:15-MC-5), February
22, 2016 (ECF No. 1 in 4:16-MC-1), and April 19, 2016 (ECF No. 1
in 4:16-MC-2).
The Clerk issued summonses of garnishment on
December 23, 2015, March 14, 2016, and April 20, 2016.
14
Pursuant
to these garnishments, AFLAC deposited $13,380.82, $15,379.62,
and
$9,675.32
into
the
Court’s
registry
for
a
total
of
$38,435.76.6
The Clerk is instructed to enter judgment in favor of Frey
with regard to these three garnishments.
Fourteen days from the
date of today’s Order, the Clerk shall disburse $38,435.76 to
Frey, unless any party files a notice of appeal relating to
today’s rulings.
If any party seeks a stay pending an appeal of
today’s
they
rulings,
shall
file
a
motion
with
applicable authority with the notice of appeal.
citation
to
Frey’s motions
for disbursement (ECF Nos. 37, 75, 76, 77, 78, 82, 134, 135,
136, 142, 154, & 175) shall remain pending as to funds garnished
pursuant to garnishments filed after May 12, 2016.
Finally, the
Court
garnishments
denies
Diaz-Verson’s
motion
to
stay
the
pending resolution of the Supreme Court of Georgia’s answer to
the certified question (ECF No. 178).
IT IS SO ORDERED, this 8th day of May, 2017.
S/Clay D. Land
CLAY D. LAND
CHIEF U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA
6
On July 25, 2016, AFLAC deposited $4837.66 into the Court’s registry.
See 4:16-MC-2. But it is not clear from the entry that this deposit
was pursuant to a garnishment filed before May 12, 2016.
Thus, the
Court will not order disbursement of these funds at this time.
15
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