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)
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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