– The Second District Court of Appeal held that equitable tolling does not apply to actual fraud under Florida’s Uniform Fraudulent Transfer Act (FUFTA).
– The court interpreted Fla. Stat. § 726.110 as a statute of repose, not a statute of limitations, which is critical to the outcome of many actual fraudulent transfers.
– The time limitations for filing a fraudulent transfer claim vary depending on the type of fraudulent transfer asserted.
– Claims for “actual” intent to defraud a creditor will be time-barred if they are brought outside the time period of four years after the transfer was made, or one year after the transfer was discovered or could have reasonably been discovered. 1. Equitable estoppel is recognized in Florida as a bar to a statute of limitations defense, as stated in Major League Baseball v. Morsani, 790 So. 2d 1071, 1078–79 (Fla. 2001).
2. Equitable estoppel is based on the premise that a defendant cannot benefit from a statute of limitations defense if the reason for the delay in the plaintiff’s filing is due to the defendant’s own misconduct in concealing the cause of action, as also noted in Major League Baseball v. Morsani.
3. The Bankruptcy Court for the Middle District of Florida has held that Fla. Stat. § 726.110(1) is a statute of limitation subject to equitable doctrines, as seen in In re Hill, 332 B.R. 835, 841 (Bankr. M.D. Fla. 2005).
4. However, the National Auto court held the opposite view, stating that equitable defenses are not available under § 726.110(1) because it is a statute of repose, as stated in Nat’l Auto, 192 So. 3d at 504.
5. The distinction between classification of § 726.110 as a statute of repose rather than a statute of limitation is considered critical in determining the applicability of equitable estoppel. 1. A statute of limitation sets a time limit within which an action must be filed, and relief is barred after that time.
2. In contrast, a statute of repose extinguishes valid causes of action regardless of when the cause of action accrues.
3. Statutes of repose are unrelated to when a plaintiff suffers or discovers an actual injury and are the outermost date in which claims can be brought.
4. National Auto court noted that § 726.110 is intended as a statute of repose and does not apply equitable estoppel to the cause of action after it is extinguished.
5. The one-year savings clause related to the discovery of the transfer is merely an exception to the 4-year statute of repose, and it does not render the statute subject to equitable principles.
6. The National Auto court rejected Hill as a misinterpretation of the plain language of the statute and is consistent with decisions of other Florida courts and courts of other jurisdictions interpreting similar codifications of UFTA. 1. Florida federal district courts are bound to follow the decisions of the state’s intermediate appellate courts on issues that have not been presented to the Florida Supreme Court.
2. Florida federal courts are unlikely to find an indication that the Florida Supreme Court would hold otherwise regarding the application of statute § 726.110.
3. Statute § 726.110 will be deemed a statute of repose, and a debtor’s assertion of the statute as a defense to a creditor’s claims under FUFTA will not be barred by equitable estoppel.
4. Lenders and creditors should be aware of the time limitations to assert actual fraudulent transfer claims under FUFTA.
5. Other states such as New Jersey, Pennsylvania, Massachusetts, New Mexico and Texas also hold that the provision in question is a statute of repose that extinguishes the cause of action.
6. It has been found in previous cases that the statute § 726.110 extinguishes the cause of action under FUFTA one year after the date of transfer.
7. Equitable tolling does not apply to claims under § 726.110(2) because the claim is extinguished if not brought within 4 years.
https://www.jimersonfirm.com/blog/2016/10/floridas-fraudulent-transfer-claims-subject-equitable-tolling/
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