BLACH v. DIAZ-VERSON

Filing 321

ORDER granting 303 , 304 , 305 , 309 Motions for Disbursement of Funds to the extent set forth in the Order; denying 316 Motion for Disbursement of Funds. Ordered by US DISTRICT JUDGE CLAY D LAND on 03/14/2018. (CCL)

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IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA COLUMBUS DIVISION HAROLD BLACH, * Plaintiff, * ROBERT FREY, REGENCY REALTY, LLC, and ROBERT FREY, TRUSTEE, * * Third Party Claimants, * vs. CASE NO. 4:15-MC-5 (CDL) * AFLAC, INC., * Garnishee, * SAL DIAZ-VERSON, * Defendant. * O R D E R Third Party Claimant Robert Frey held, pursuant to an assignment from Porter Bridge Loan Company, a judgment against his former Judgment”). client, Defendant Sal-Diaz Porter (“Porter Bridge That judgment secured certain unpaid legal fees that Diaz-Verson owed to Frey. the Verson Bridge Judgment to Frey asserts that he assigned Regency Realty, LLC and that Regency Realty assigned the Porter Bridge Judgment to Frey as trustee for the Robert J. Frey Living Trust. Plaintiff Harold Blach also holds a judgment against DiazVerson. Since 2015, Blach has been attempting to garnish funds owed to Diaz-Verson by his former employer, Garnishee AFLAC, Inc. AFLAC has been paying funds into the registry of the Court pursuant to Blach’s garnishments. Frey intervened in the garnishment action, claiming that the Porter Bridge Judgment he was assigned is superior to Blach’s. The Court agreed with Frey and ordered the disbursement of $43,273.42 to Frey in May 2017. See J. (May 9, 2017), ECF No. 181; J. (May 15, 2017), ECF No. 185. The Court declined to disburse funds that were deposited into the Court’s registry pursuant to garnishment applications made after garnishment May 12, 2016 applications garnishment statute. because were it was proper not under clear that Georgia’s the new See generally Blach v. Diaz-Verson, No. 4:15-MC-5, 2017 WL 1854675 (M.D. Ga. May 8, 2017). The Georgia Supreme Court answered this Court’s certified question on the issue. See generally Blach v. Diaz-Verson, No. S17Q1508, 2018 WL 700024 (Ga. Feb. 5, 2018). Based on the Supreme Court’s answer, Blach’s garnishment applications were proper, and the funds held in the Court’s registry pursuant to the following garnishment applications can now be disbursed:         ECF ECF ECF ECF ECF ECF ECF ECF No. No. No. No. No. No. No. No. 1 in 4:16-mc-6 (5/24/2016, $10,462.66) 1 in 4:16-mc-7 (7/6/2016, $9,675.32) 47 in 4:15-mc-5 (8/3/2016, $9,675.32) 61 in 4:15-mc-5 (8/31/2016, $10,462.66) 79 in 4:15-mc-5 (9/28/2016, $9,675.32) 99 in 4:15-mc-5 (10/26/2016, $9,675.32) 110 in 4:15-mc-5 (11/22/2016, $15,300.32) 121 in 4:15-mc-5 (12/22/2016, $9,392.80) 2              I. ECF ECF ECF ECF ECF ECF ECF ECF ECF ECF ECF ECF ECF No. No. No. No. No. No. No. No. No. No. No. No. No. 139 150 167 171 182 195 201 204 210 238 250 255 269 in in in in in in in in in in in in in 4:15-mc-5 4:15-mc-5 4:15-mc-5 4:15-mc-5 4:15-mc-5 4:15-mc-5 4:15-mc-5 4:15-mc-5 4:15-mc-5 4:15-mc-5 4:15-mc-5 4:15-mc-5 4:15-mc-5 (1/18/2017, $9,125.17) (2/16/2017, $9,403.46) (3/15/2017, $15,587.50) (4/12/2017, $4,945.60) (5/11/2017, $15,516.20) (6/8/2017, $9,891.20) (7/3/2017, $9,891.20) (8/2/2017, $9,891.20) (8/29/2017, $15,516.20) (9/27/2017, $4,945.60) (10/25/2017, $9,891.20) (11/21/2017, $15,516.20) (12/19/2017, $9,601.61) To Whom Should the Funds Be Disbursed? Frey filed motions for disbursement of $224,042.06 in garnished funds that AFLAC had paid into the registry of the Court as of February 10, 2018. He seeks disbursement of funds to the person or entity that held the Porter Bridge Judgment at the time of the garnishment application. judgment on December 5, 2012. ECF No. 5-17. Frey was assigned the Assignment of J. (Dec. 5, 2012), Frey assigned the judgment to Regency Realty, LLC, a limited liability company of which Frey is the manager, on June 1, 2017. Assignment of J. (June 1, 2017), ECF No. 257- 1. Regency Realty, LLC assigned the judgment to Frey as Trustee of the Robert J. Frey Living Trust on November Assignment of J. (Nov. 18, 2017), ECF No. 309-1. 18, 2017. Based on the certified copies of the assignments of judgment, Frey as Trustee currently holds the Porter Bridge Judgment. 3 Thus, Frey seeks disbursement of $138,897.65 to himself individually, $60,026.60 to Regency Realty, and $25,117.81 to Frey as Trustee. Blach filed his own motion for disbursement, and he opposes any disbursement to Frey, arguing that Frey (and his assigns) should holder. no longer be considered to be the superior judgment Blach previously argued that the assignment of the Porter Bridge Judgment to Frey is voidable under the Georgia Uniform Voidable Transfers Act (“GUVTA”), O.C.G.A. § The Court rejected that argument. 18-2-74. Blach v. AFLAC, Inc., No. 4:15-MC-5, 2017 WL 1854675, at *5 (M.D. Ga. May 8, 2017). Blach asks the Court to reconsider its prior ruling on two grounds. First, Blach now disputes that Diaz-Verson owed Frey legitimate unpaid legal fees of more than $300,000.00. Second, Blach asks the Court to reconsider its prior ruling on the priority of claims in light of new evidence. A. Are the Legal Fees Frey Seeks to Collect from DiazVerson Legitimate? Frey and Diaz-Verson have both asserted that Diaz-Verson owed Frey more than $360,000.00 in attorney’s fees and expenses incurred between 2009 and 2012. When Blach challenged Frey’s previous motions for disbursement, he did “not appear to dispute that Diaz-Verson fees.” owed Frey over $300,000.00 Blach, 2017 WL 1854675, at *5. in unpaid legal The Court observed that “[i]f the assignment was meant to cover a legitimate debt that 4 Frey intends to collect, it assignment is fraudulent.” statutory GUVTA factors is Id. and difficult to see how the The Court then considered the concluded that Blach “failed to point to evidence from which a reasonable juror could conclude that the assignment is voidable under GUVTA.” Blach incurred now by contends that some for Frey’s Diaz-Verson of the legal Id. fees and services expenses were not legitimate and that the assignment of the Porter Bridge judgment to Frey should thus be considered fraudulent. Blach contends that the following fees were not legitimate: Fees for representation in Florida cases. that Frey Florida: billed Diaz-Verson Walbridge Aldinger for v. work on Diaz-Verson Blach points out three et matters al., in Manatee County, FL (279.4 hours, $110,617.00); Mark Riley v. Diaz-Verson et al., Sarasota County, FL (36.6 hours, $14,473.50); and FIA Services v. $3,673.00). 1. Diaz-Verson, Sarasota County, FL (9.2 hours, Legal Fees Due as of October 31, 2012, ECF No. 35- Blach contends that these fees are not legitimate because Frey was not licensed to practice law in Florida. Frey admits that he is not licensed to practice law in Florida, but he asserts that he associated local counsel in the Florida cases and was admitted pro hac vice. Based on the present record, the Court declines to find that these fees were not legitimate. 5 Double Verson Billing. twice for According several to time Blach, entries however, significantly change the amount billed totaling ($1,417.50) during July and August of 2012. inadvertently double billed 3.5 hours. Frey 3.5 Diazhours Frey admits that he This error does not, Diaz-Verson owes to Blach, and it does not impact the amount of the fees that are secured by the Porter Bridge judgment. Billing for Appeal. Frey billed Diaz-Verson 11.5 hours, plus travel expenses, to attend court-mandated mediation in the Porter Bridge case even though responsibility for the appeal. did not participate in the new counsel had primary Frey asserts that although he negotiations, he attended the mediation at the request of Diaz-Verson and his new counsel because of his knowledge of the underlying case. Even if these fees and expenses were inappropriate, they do not significantly change the amount Diaz-Verson owes to Blach, and they not impact the amount of the fees that are secured by the Porter Bridge judgment. In summary, the Court concludes that Blach has not pointed to sufficient evidence to establish that Diaz-Verson did not owe Frey legitimate legal fees and expenses in at least the amount of the Porter Bridge Judgment. 6 B. Should the Court Reconsider its Prior Ruling Based on Blach’s New Evidence? Blach argues that even if the Porter Bridge Judgment secures a legitimate debt, new evidence establishes fraudulent intent with regard to the assignment of that judgment. Blach points out, as he did when he challenged Frey’s prior motions for disbursement, that Frey claims that Diaz-Verson incurred $391,899.00 in attorney’s fees and $9,079.93 in expenses before the Porter Bridge Judgment was assigned to Frey; before the assignment, Frey only received $39,545.00 in payments from DiazVerson. prior Blach also asserts, as he did when he challenged Frey’s motions for disbursement, effort to collect on the that Frey Porter Bridge did not make any Judgment until Blach filed a garnishment action against Diaz-Verson and that Frey has received sporadic voluntary payments from Diaz-Verson but applied them to the balance of unsecured legal fees, not to the Porter Bridge Judgment. The “new facts” Blach relies upon include Frey initiating several state court garnishment actions but dismissing them; Frey appearing to side with Diaz-Verson on the “financial institution form” question at a hearing before this Court; Frey taking no position on the certified question to the Georgia Supreme Court, even though his right to the garnished funds would be settled by the Georgia Supreme Court’s answer; Frey filing motions to sanction Blach for making an 7 argument that would have benefitted Frey, to the detriment of Diaz-Verson; and Frey appearing to communicate regularly with Diaz-Verson’s current attorneys. The Court is not persuaded that these “new facts” create a jury question on whether the assignment of the Porter Bridge Judgment is voidable under GUVTA. Blach’s new evidence does not change the balance of the GUVTA factors. The present record still meant suggests that the assignment was legitimate debt that Frey intends to collect. to cover a And, on the day it became clear that the garnished funds held in this Court’s registry would disbursement be to disbursed, collect Frey on the filed Porter his motions Bridge for Judgment. Accordingly, the Court rejects Blach’s request to reconsider its prior ruling on the superiority of Frey’s judgment. for disbursement Frey filed on behalf of The motions himself, Regency Realty, LLC, and Frey as Trustee (ECF Nos. 303, 304, 305, 309) are therefore granted to the extent set forth below. Blach’s motion for disbursement (ECF No. 316) is denied. II. What is the Outstanding Balance of Frey’s Judgment? Frey contends that the outstanding balance of his judgment was $318,182.12 as of January 30, 2018. (1) principal balance of $219,982.78; This amount includes: (2) accrued simple interest calculated at a rate of 8% per annum on the unpaid principal balance; (3) costs; and (4) attorney’s fees. 8 This amount takes into account the $43,273.42 disbursement Frey received in May 2017; according to Frey, this amount should be applied first to costs and then to interest. that Frey’s math is wrong. Blach contends The Court addresses each issue in turn. A. Principal Amount The Court previously found that the assignment to Frey of the Porter Bridge Judgment “was meant to secure Frey’s right to collect $219,982.78” in unpaid legal fees from Diaz-Verson. Blach v. AFLAC, Inc., No. 4:15-MC-5, 2017 WL 1854675, at *2 (M.D. Ga. May 8, 2017). In reaching this conclusion, the Court accepted Frey’s affidavit assertion that Diaz-Verson owed Porter Bridge $494,982.78 on the Florida judgment at the time of the settlement. Id. & n.3 (citing Frey Aff. 1-2 (Feb. 19, 2016), ECF No. 34-2; Porter J. Amount as of Nov. 1, 2012, ECF No. 352). Diaz-Verson paid Porter Bridge $275,000.00, and Frey seeks to collect the remaining balance of the judgment. In his first response to Frey’s motions for disbursement, Blach argued that the actually $218,282.31.1 principal balance of the judgment is In his second response, Blach argued that the principal balance of the judgment is $217,933.22. The Court does not recall Blach challenging Frey’s assertion regarding the 1 Blach retracted this estimate of the principal judgment amount, but the Court finds it useful to work through all three scenarios presented by the parties. 9 principal balance when the Court decided the previous disbursement issue. Frey calculated the $219,982.78 principal balance based on his assertion that the original judgment date of the Porter Bridge 2009 Judgment was October 5, and the settlement and release date was November 1, 2012. Frey Aff. 2 (Feb. 19, 2016), ECF original No. October 34-2 5, (stating 2009 and that that the the Porter judgment Bridge date was settlement was finalized on November 1, 2012); Frey Suppl. Reply 4, ECF No. 318. Using these dates, Frey calculated the principal balance based on an original judgment amount of $397,386.87, accruing 8% annual interest for three years plus a monthly interest rate of .667% accruing on 26 days of a 31-day month. Disbursement Ex. D, Balance Chart, ECF No. 309-4. Frey, the outstanding balance due to Porter Frey Mot. for According to Bridge as of November 1, 2012 was $494,982.78; after Diaz-Verson’s payment of $275,000.00 to Porter Bridge, the remaining balance was $219,982.78. Blach calculated the $218,282.31 principal balance based on an original judgment date of October 30, 2009 and a finalized settlement date of November 5, 2012. Based on these dates, the outstanding balance due to Porter Bridge as of the November 5, 2012 settlement was $493,282.31; after Diaz-Verson’s payment of $275,000.00 to Porter Bridge, 10 the remaining balance was $218,282.31. Although these original judgment and final settlement dates are not the same as the dates that Frey relies on, both dates are supported by an internally affidavit Frey previously submitted to the Court. inconsistent Frey Aff. 1-2 (Feb. 19, 2016), ECF No. 34-2 (stating that the judgment was “dated and ordered on 30 October 2009” and that the settlement and release were finalized on November 5, 2012). Finally, Blach calculated the $217,933.22 principal balance based on an original judgment date of October 30, 2009 and a finalized settlement date of November 1, 2012. above, these dates are supported by As discussed Frey’s internally inconsistent affidavit. To determine the correct dates, the Court reviewed the Florida Final Judgment and the Confidential Settlement Agreement that Frey relies on to support his claim to the funds. The Florida Final Judgment was signed by the judge and filed on October 30, 2009. See generally Frey Florida Final Judgment, ECF No. 318-1. Suppl. Reply Ex. A, And, the Confidential Settlement Agreement states that the judgment was entered “on or about October 30, 2009.” Release 1, ECF No. 59. Confidential Settlement Agreement & Therefore, the Court finds that the original judgment date was October 30, 2009. The effective date of the settlement agreement is November 5, 2012. Id. at 1 (defining effective date as the date on which the agreement has 11 been executed by all parties); id. at 8 (stating that Porter Bridge’s representative executed the agreement on November 5, 2012).2 The Court concludes that the outstanding principal balance of the Porter Bridge Judgment should be calculated using those dates; the correct principal balance is $218,282.31. B. Expenses and Attorney’s Fees Frey contends that he has incurred $13,259.99 in expenses and $35,820.00 attorney’s fees collecting the judgment.3 He asserts that is entitled to these expenses and fees as part of the judgment and that any disbursements must be applied toward these expenses and fees before they are applied to interest or principal. Frey did not point to any legal authority or evidence to establish that the expenses and fees he seeks are recoverable as part of the debt that is secured by the Porter Bridge Judgment that was assigned to him. Frey does point out that under Fla. 2 Blach asserted in a footnote that all payments were made to Porter Bridge by November 1, 2012; presumably, this assertion is the basis for his contention that the finalized settlement date is November 1, 2012. In support of this argument, Blach pointed to evidence that Diaz-Verson tendered a partial payment to Porter Bridge in the amount of $24,004.46 on October 31, 2012. Cashier’s Check, ECF No. 91 at 3. But as far as the Court can tell, Blach did not point to any evidence to establish that the settlement was actually finalized before its effective date of November 5, 2012. 3 The expenses include everything from notary and mailing fees to more than $9,000 in travel expenses. Perhaps recognizing that he would not be able to argue that he is entitled to attorney’s fees for seeking to collect the judgment on behalf of himself individually, Frey only seeks attorney’s fees for the timeframe after he assigned the judgment to the LLC of which he is the manager and again to himself as Trustee of the Robert J. Frey Living Trust. 12 Stat. § 57.115, a “court may award against a judgment debtor reasonable costs and attorney’s fees incurred thereafter by a judgment creditor in connection with execution on a judgment.” But that statute only applies to an execution on a judgment and does not apply when the garnishment statute. (Fla. Dist. Ct. judgment creditor proceeds under a Paz v. Hernandez, 654 So. 2d 1243, 1244 App. 1995). “It is well-settled law that attorneys’ fees may be awarded by a court only when authorized by statute or by agreement of the parties.” Id. to relies nothing in the Settlement Agreement he Frey pointed on as the foundation of his claim to the funds to establish that DiazVerson contractually agreed to pay the costs of collection as part of the debt he owes to Frey. suggesting that the costs of recovered as part of the debt. And Frey pointed to no law collection he seeks can be Therefore, Frey may not recover these costs as part of the debt. Even if costs and expenses associated with collecting the judgment were recoverable, a significant portion of Frey’s activities had little or nothing to do with actually collecting his judgment from Diaz-Verson. Frey has not filed one application for a summons of garnishment in this Court on behalf of himself or his “clients.” When Diaz-Verson tried to convince this Court and the Georgia Supreme Court that all of the funds garnished after May 12, 2016 should be returned to him and not 13 disbursed to Frey or Blach, Frey did not oppose him. however, file several dubious motions for Frey did, sanctions against Blach—motions that could not possibly be construed as part of an effort to collect his judgment against Diaz-Verson. these reasons, the Court finds that Frey may For all of not recover expenses and attorney’s fees as part of the debt Diaz-Verson owes to him. that any Accordingly, the Court rejects Frey’s argument disbursement—past or future—should be applied to expenses and fees before interest and principal. C. Accrued Interest It is undisputed that any disbursements Frey receives must be applied to accrued interest before they can be applied to reduce the principal. See O.C.G.A. § 7-4-17 (stating that payments on any debt “shall be applied first to the discharge of any interest due at the time, and the balance, if any, shall be applied to the reduction of the principal”). Frey has received one disbursement from this Court in the amount of $43,273.42 and one disbursement from the State Court of Gwinnett County in the amount of $12,821.83. satisfy the reduce it. totals total These disbursements were not enough to amount of accrued interest, but they did As of today, March 14, 2018, the accrued interest $37,592.71, and interest accrues at a rate of $47.84 per day. 14 CONCLUSION As discussed above, the Court denies Blach’s motion for disbursement (ECF No. 316) and grants Frey’s motions for disbursement (ECF Nos. 303, 304, 305, & 309) as follows:  In favor of Frey with regard to the thirteen garnishments totaling $138,897.65 based on the garnishment applications dated between May 24, 2016 and May 11, 2017 (ECF Nos. 1 in 4:16-mc-6; 1 in 4:16-mc-7; 47 in 4:15-mc-5; 61 in 4:15-mc5; 79 in 4:15-mc-5; 99 in 4:15-mc-5; 110 in 4:15-mc-5; 121 in 4:15-mc-5; 139 in 4:15-mc-5; 150 in 4:15-mc-5; 167 in 4:15-mc-5; 171 in 4:15-mc-5; 182 in 4:15-mc-5).  In favor of Regency Realty, LLC with regard to the six garnishments totaling $60,026.60 based on the garnishment applications dated between June 8, 2017 and October 25, 2017 (195 in 4:15-mc-5; 201 in 4:15-mc-5; 204 in 4:15-mc-5; 210 in 4:15-mc-5; 238 in 4:15-mc-5; 250 in 4:15-mc-5).  In favor of Frey as Trustee for the Robert J. Frey living trust with regard to the two garnishments totaling $25,117.81 based on the garnishment applications dated between November 21, 2017 and December 19, 2017 (255 in 4:15-mc-5; 269 in 4:15-mc-5). Fourteen days from the date of today’s Order, the Clerk shall disburse $138,897.65 (plus any interest earned on that amount while the funds were in the Court’s registry) to Frey individually, interest $60,026.60 earned on that to Regency amount while Realty, the LLC funds (plus were in any the Court’s registry), and $25,117.81 (plus any interest earned on that amount while the funds were in the Court’s registry) to Frey as Trustee of the Robert J. Frey Living Trust, 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 rulings, they shall 15 file a motion with citation to applicable authority with the notice of appeal. Once the disbursements are made, they shall all be applied to reduce the judgment that is now held by Frey as Trustee. The funds shall be applied first to accrued interest as of the date of the disbursement, then to principal. Frey should coordinate with the Clerk to ensure that the Clerk has all of the information necessary to process the disbursements, including tax identification numbers. IT IS SO ORDERED, this 14th day of March, 2018. S/Clay D. Land CLAY D. LAND CHIEF U.S. DISTRICT COURT JUDGE MIDDLE DISTRICT OF GEORGIA 16

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