Florida Senate - 2020 COMMITTEE AMENDMENT Bill No. SB 660 Ì2589401Î258940 LEGISLATIVE ACTION Senate . House Comm: RCS . 02/04/2020 . . . . ————————————————————————————————————————————————————————————————— ————————————————————————————————————————————————————————————————— The Committee on Commerce and Tourism (Berman) recommended the following: 1 Senate Amendment (with title amendment) 2 3 Delete lines 237 - 636 4 and insert: 5 (4) This chapter does not displace any existing rule of 6 procedural or judicial administration of this state governing 7 service or notice, including, without limitation, Rule 1.070, 8 Florida Rules of Civil Procedure, and Rule 2.525, Florida Rules 9 of Judicial Administration, which shall remain in full force and 10 effect. 11 714.04 Scope; exclusions.— 12 (1) This chapter applies to a receivership initiated in a 13 court of this state for an interest in real property and any 14 incidental personal property related to or used in operating the 15 real property. 16 (2) This chapter does not apply to: 17 (a) Actions in which a state agency or officer is expressly 18 authorized by statute to seek or obtain the appointment of a 19 receiver; 20 (b) Actions authorized by or commenced under federal law; 21 (c) Real property improved by one or two dwelling units 22 which includes the homestead of an individual owner or an 23 affiliate of an individual owner; 24 (d) Property of an individual exempt from forced sale, 25 execution, or seizure under the laws of this state; or 26 (e) Personal property of an individual which is used 27 primarily for personal, family, or household purposes. 28 (3) This chapter does not limit the authority of a court to 29 appoint a receiver under the laws of this state other than this 30 chapter. 31 (4) This chapter does not limit an individual’s homestead 32 rights under the laws of this state or federal law. 33 (5) Unless displaced by a particular provision of this 34 chapter, the principles of law and equity, including the law 35 relative to capacity to contract, principal and agent, estoppel, 36 laches, fraud, misrepresentation, duress, coercion, mistake, 37 bankruptcy, or other validating or invalidating cause, 38 supplement this chapter. 39 714.05 Power of the court.—The court that appoints a 40 receiver under this chapter has exclusive jurisdiction to direct 41 the receiver and determine any controversy related to the 42 receivership or receivership property. 43 714.06 Appointment of receiver.— 44 (1) The court may appoint a receiver: 45 (a) Before judgment, to protect a party that demonstrates 46 an apparent right, title, or interest in real property that is 47 the subject of the action, if the property or its revenue 48 producing potential: 49 1. Is being subjected to or is in danger of waste, loss, 50 substantial diminution in value, dissipation, or impairment; or 51 2. Has been or is about to be the subject of a voidable 52 transaction; 53 (b) After judgment: 54 1. To carry the judgment into effect; or 55 2. To preserve nonexempt real property pending appeal or 56 when an execution has been returned unsatisfied and the owner 57 refuses to apply the property in satisfaction of the judgment; 58 (c) In an action in which a receiver for real property may 59 be appointed on equitable grounds, subject to the requirements 60 of paragraphs (a) and (b); or 61 (d) During the time allowed for redemption, to preserve 62 real property sold in an execution or foreclosure sale and 63 secure its rents to the person entitled to the rents. 64 (2) In connection with the foreclosure or other enforcement 65 of a mortgage, the court shall consider the following facts and 66 circumstances, together with any other relevant facts, in 67 deciding whether to appoint a receiver for the mortgaged 68 property: 69 (a) Appointment is necessary to protect the property from 70 waste, loss, substantial diminution in value, transfer, 71 dissipation, or impairment; 72 (b) The mortgagor agreed in a signed record to the 73 appointment of a receiver on default; 74 (c) The owner agreed, after default and in a signed record, 75 to appointment of a receiver; 76 (d) The property and any other collateral held by the 77 mortgagee are not sufficient to satisfy the secured obligation; 78 (e) The owner fails to turn over to the mortgagee proceeds 79 or rents the mortgagee was entitled to collect; or 80 (f) The holder of a subordinate lien obtains appointment of 81 a receiver for the property. 82 (3) The court may condition the appointment of a receiver 83 without prior notice or hearing under s. 714.03 on the giving of 84 security by the person seeking the appointment for the payment 85 of damages, reasonable attorney fees, and costs incurred or 86 suffered by any person if the court later concludes that the 87 appointment was not justified. If the court later concludes that 88 the appointment was justified and the order of appointment of 89 the receiver becomes final and no longer subject to appeal, the 90 court shall release the bond or other security. When any order 91 appointing a receiver or providing for injunctive relief is 92 issued on the pleading of a municipality or the state, or any 93 officer, agency, or political subdivision thereof, the court may 94 require or dispense with a bond, with or without surety, and 95 conditioned in the same manner, having due regard for public 96 interest. 97 (4) A party adversely affected by an order appointing a 98 receiver may move to dissolve or modify the order at any time. 99 If a party moves to dissolve or modify the order, the motion 100 must be heard within 5 days after the movant applies for a 101 hearing on the motion or at such time as the court determines is 102 reasonable and appropriate under the circumstances after the 103 movant applies for a hearing on the motion. After notice and a 104 hearing, the court may grant relief for cause shown. 105 714.07 Disqualification from appointment as receiver; 106 disclosure of interest.— 107 (1) The court may not appoint a person as receiver unless 108 the person submits to the court a statement under penalty of 109 perjury that the person is not disqualified. 110 (2) Except as otherwise provided in subsection (3), a 111 person is disqualified from appointment as receiver if the 112 person: 113 (a) Is an affiliate of a party; 114 (b) Has an interest materially adverse to an interest of a 115 party; 116 (c) Has a material financial interest in the outcome of the 117 action, other than compensation the court may allow the 118 receiver; 119 (d) Has a debtor-creditor relationship with a party; or 120 (e) Holds an equity interest in a party, other than a 121 noncontrolling interest in a publicly traded company. 122 (3) A person is not disqualified from appointment as 123 receiver solely because the person: 124 (a) Was appointed receiver or is owed compensation in an 125 unrelated matter involving a party or was engaged by a party in 126 a matter unrelated to the receivership; 127 (b) Is an individual obligated to a party on a debt that is 128 not in default and was incurred primarily for personal, family, 129 or household purposes; or 130 (c) Maintains with a party a deposit account, as defined in 131 s. 679.1021. 132 (4) A person seeking appointment of a receiver may nominate 133 a person to serve as receiver, but the court is not bound by the 134 nomination. 135 714.08 Receiver’s bond; alternative security.— 136 (1) Except as otherwise provided in subsection (2), a 137 receiver shall post with the court a bond that: 138 (a) Is conditioned on the faithful discharge of the 139 receiver’s duties; 140 (b) Has one or more sureties approved by the court; 141 (c) Is in an amount the court specifies; and 142 (d) Is effective as of the date of the receiver’s 143 appointment. 144 (2) The court may approve the receiver posting an 145 alternative security with the court, such as a letter of credit 146 or deposit of funds. The receiver may not use receivership 147 property as alternative security. Interest that accrues on 148 deposited funds must be paid to the receiver upon the receiver’s 149 discharge. 150 (3) The court may authorize a receiver to act before the 151 receiver posts the bond or alternative security required by this 152 section if the action is necessary to prevent or mitigate 153 immediate injury, loss, or damage to the party who sought the 154 appointment of the receiver, or immediate waste, dissipation, 155 impairment, or substantial diminution in value to the 156 receivership property. 157 (4) A claim against a receiver’s bond or alternative 158 security must be made not later than 1 year after the date the 159 receiver is discharged. 160 714.09 Status of receiver as lien creditor.—Upon 161 appointment of a receiver, the receiver has the status of a lien 162 creditor under: 163 (1) Chapter 679 as to receivership property or fixtures; 164 and 165 (2) Chapter 695 as to receivership property that is real 166 property. 167 714.10 Security agreement covering after-acquired 168 property.—Except as otherwise provided by law other than this 169 chapter, property that a receiver or an owner acquires after 170 appointment of the receiver is subject to a security agreement 171 entered into before the appointment to the same extent as if the 172 court had not appointed the receiver. 173 714.11 Collection and turnover of receivership property.— 174 (1) Unless the court orders otherwise, on demand by a 175 receiver: 176 (a) A person that owes a debt that is receivership property 177 and is matured or payable on demand or on order shall pay the 178 debt to or on the order of the receiver, except to the extent 179 the debt is subject to setoff or recoupment; and 180 (b) Subject to subsection (3), a person that has 181 possession, custody, or control of receivership property shall 182 turn the property over to the receiver. 183 (2) A person that has notice of the appointment of a 184 receiver and owes a debt that is receivership property may not 185 satisfy the debt by payment to the owner. 186 (3) If a creditor has possession, custody, or control of 187 receivership property and the validity, perfection, or priority 188 of the creditor’s lien on the property depends on the creditor’s 189 possession, custody, or control, the creditor may retain 190 possession, custody, or control until the court orders adequate 191 protection of the creditor’s lien. 192 (4) Unless a bona fide dispute exists about a receiver’s 193 right to possession, custody, or control of receivership 194 property, the court may sanction as civil contempt a person’s 195 failure to turn the property over when required by this section. 196 714.12 Powers and duties of receiver.— 197 (1) Except as limited by court order or the laws of this 198 state other than this chapter, a receiver may: 199 (a) Collect, control, manage, conserve, and protect 200 receivership property; 201 (b) Operate a business constituting receivership property, 202 including preservation, use, sale, lease, license, exchange, 203 collection, or disposition of the property in the ordinary 204 course of business; 205 (c) In the ordinary course of business, incur unsecured 206 debt and pay expenses incidental to the receiver’s preservation, 207 use, sale, lease, license, exchange, collection, or disposition 208 of receivership property; 209 (d) Assert a right, claim, cause of action, or defense of 210 the owner which relates to receivership property; 211 (e) Seek and obtain instruction from the court concerning 212 receivership property, exercise of the receiver’s powers, and 213 performance of the receiver’s duties; 214 (f) Upon subpoena, compel a person to submit to examination 215 under oath, or to produce and permit inspection and copying of 216 designated records or tangible things, with respect to 217 receivership property or any other matter that may affect 218 administration of the receivership; 219 (g) Engage a professional pursuant to s. 714.15; 220 (h) Apply to a court of another state for appointment as 221 ancillary receiver with respect to receivership property located 222 in that state; and 223 (i) Exercise any power conferred by court order, this 224 chapter, or the laws of this state other than this chapter. 225 (2) With court approval, a receiver may: 226 (a) Incur debt for the use or benefit of receivership 227 property other than in the ordinary course of business; 228 (b) Make improvements to receivership property; 229 (c) Use or transfer receivership property other than in the 230 ordinary course of business pursuant to s. 714.16; 231 (d) Adopt or reject an executory contract of the owner 232 pursuant to s. 714.17; 233 (e) Pay compensation to the receiver pursuant to s. 714.21, 234 and to each professional engaged by the receiver under s. 235 714.15; 236 (f) Recommend allowance or disallowance of a claim of a 237 creditor pursuant to s. 714.20; and 238 (g) Make a distribution of receivership property pursuant 239 to s. 714.20. 240 (3) A receiver shall: 241 (a) Prepare and retain appropriate business records, 242 including a record of each receipt, disbursement, and 243 disposition of receivership property; 244 (b) Account for receivership property, including the 245 proceeds of a sale, lease, license, exchange, collection, or 246 other disposition of the property; 247 (c) File with the recording office of the county in which 248 the real property is located a copy of the order appointing the 249 receiver and, if a legal description of the real property is not 250 included in the order, the legal description; 251 (d) Disclose to the court any fact arising during the 252 receivership which would disqualify the receiver under s. 253 714.07; and 254 (e) Perform any duty imposed by court order, this chapter, 255 or the laws of this state other than this chapter. 256 (4) The powers and duties of a receiver may be expanded, 257 modified, or limited by court order. 258 714.13 Duties of owner.— 259 (1) An owner shall: 260 (a) Assist and cooperate with the receiver in the 261 administration of the receivership and the discharge of the 262 receiver’s duties; 263 (b) Preserve and turn over to the receiver all receivership 264 property in the owner’s possession, custody, or control; 265 (c) Identify all records and other information relating to 266 the receivership property, including a password, authorization, 267 or other information needed to obtain or maintain access to or 268 control of the receivership property, and make available to the 269 receiver the records and information in the owner’s possession, 270 custody, or control; 271 (d) Upon subpoena, submit to examination under oath by the 272 receiver concerning the acts, conduct, property, liabilities, 273 and financial condition of the owner or any matter relating to 274 the receivership property or the receivership; and 275 (e) Perform any duty imposed by court order, this chapter, 276 or the laws of this state other than this chapter. 277 (2) If an owner is a person other than an individual, this 278 section applies to each officer, director, manager, member, 279 partner, trustee, or other person exercising or having the power 280 to exercise control over the affairs of the owner. 281 (3) If a person knowingly fails to perform a duty imposed 282 by this section, the court may: 283 (a) Award the receiver actual damages caused by the 284 person’s failure, reasonable attorney fees, and costs; and 285 (b) Sanction the failure as civil contempt. 286 714.14 Stay; injunction.— 287 (1) Except as otherwise provided in subsection (5), after 288 notice and opportunity for a hearing, the court may enter an 289 order providing for a stay, applicable to all persons, of any 290 act, action, or proceeding: 291 (a) To obtain possession of, exercise control over, or 292 enforce a judgment against all or a portion of the receivership 293 property as defined in the order creating the stay; and 294 (b) To enforce a lien against all or a portion of the 295 receivership property to the extent the lien secures a claim 296 against the owner which arose before entry of the order. 297 298 The court shall include in its order a specific description of 299 the receivership property subject to the stay, and shall include 300 the following language in the title of the order: “Order Staying 301 Certain Actions to Enforce Claims against Receivership 302 Property.” 303 (2) Except as otherwise provided in subsection (5), the 304 court may enjoin an act, action, or proceeding against or 305 relating to receivership property if the injunction is necessary 306 to protect against misappropriation of, or waste relating 307 directly to, the receivership property. 308 (3) If the court grants injunctive relief, the injunction 309 must specify the reasons for entry and must describe in 310 reasonable detail the act or acts restrained without reference 311 to a pleading or other document. The injunction is binding on 312 the parties to the action; on the parties’ officers, agents, 313 servants, employees, and attorneys; and on any person who 314 receives actual notice of the injunction and is in active 315 concert or participation with the parties. 316 (4) A person whose act, action, or proceeding is stayed or 317 enjoined under this section, or who is otherwise adversely 318 affected by such stay or injunction, may apply to the court for 319 relief from the stay or injunction. If a person moves for such 320 relief, the motion must be heard within 5 days after the movant 321 applies for a hearing on the motion or at such time as the court 322 determines is reasonable and appropriate under the circumstances 323 after the movant applies for a hearing on the motion. After 324 notice and a hearing, the court may grant relief for cause 325 shown. 326 (5) An order under subsection (1) or subsection (2) does 327 not operate as a stay or injunction of: 328 (a) Any act, action, or proceeding to foreclose or 329 otherwise enforce a mortgage by the person seeking appointment 330 of the receiver; 331 (b) Any act, action, or proceeding to perfect, or maintain 332 or continue the perfection of, an interest in receivership 333 property; 334 (c) Commencement or continuation of a criminal proceeding; 335 (d) Commencement or continuation of an action or 336 proceeding, or enforcement of a judgment other than a money 337 judgment, in an action or proceeding by a governmental unit to 338 enforce its police or regulatory power; or 339 (e) Establishment by a governmental unit of a tax liability 340 against the receivership property or the owner of such 341 receivership property, or an appeal of any such liability. 342 (6) The court may void an act that violates a stay or 343 injunction under this section. 344 (7) The scope of the receivership property subject to the 345 stay under subsection (1) may be modified upon request of the 346 receiver or other person, after notice and an opportunity for a 347 hearing. 348 (8) In connection with the entry of an order under 349 subsection (1) or subsection (2), the court shall determine 350 whether an additional bond or alternative security will be 351 required as a condition to entry of the stay or injunction and, 352 if required, direct the party requesting the stay or injunction 353 to post a bond or alternative security as a condition for the 354 stay or injunction to become effective. 355 714.15 Engagement and compensation of professional.— 356 (1) With court approval, a receiver may engage an attorney, 357 an accountant, an appraiser, an auctioneer, a broker, or another 358 professional to assist the receiver in performing a duty or 359 exercising a power of the receiver. The receiver shall disclose 360 to the court: 361 (a) The identity and qualifications of the professional; 362 (b) The scope and nature of the proposed engagement; 363 (c) Any potential conflict of interest; and 364 (d) The proposed compensation. 365 (2) A person is not disqualified from engagement under this 366 section solely because of the person’s engagement by, 367 representation of, or other relationship with the receiver, a 368 creditor, or a party. This chapter does not prevent the receiver 369 from serving in the receivership as an attorney, an accountant, 370 an auctioneer, or a broker when authorized by law. 371 (3) A receiver or professional engaged under subsection (1) 372 shall file with the court an itemized statement of the time 373 spent, work performed, and billing rate of each person that 374 performed the work and an itemized list of expenses. The 375 receiver shall pay the amount approved by the court. 376 714.16 Use or transfer of receivership property not in 377 ordinary course of business.— 378 (1) For the purposes of this section, the term “good faith” 379 means honesty in fact and the observance of reasonable 380 commercial standards of fair dealing. 381 (2) Before judgment is entered with respect to the 382 receivership property in the action in which the receiver is 383 appointed, with court approval after notice to all parties with 384 an interest in the property, including all lienholders, and a 385 hearing, a receiver may use or transfer by sale, lease, license, 386 exchange, or other disposition receivership property other than 387 in the ordinary course of business only if the owner of the 388 property: 389 (a) After the commencement of the action in which the 390 receiver is appointed, expressly consents in writing to the 391 receiver’s proposed use or transfer of the receivership 392 property, and the receiver notes the property owner’s express 393 consent in the motion to approve the proposed use or transfer; 394 or 395 (b) Before or at the hearing on the receiver’s motion to 396 approve the use or transfer of the receivership property, fails 397 to object thereto after the receiver in good faith has provided 398 reasonable advance written notice to the property owner of the 399 proposed use or transfer, and the receiver demonstrates in the 400 motion that the proposed use or transfer is necessary to prevent 401 waste, loss, substantial diminution in value, dissipation, or 402 impairment of the property or its revenue-producing potential or 403 to prevent a voidable transaction involving the property. 404 405 Service of notice to lienholders who are not parties to the 406 action must be made as provided in chapter 48 for service of 407 original process or, in the case of a financial institution 408 lienholder, as provided in s. 655.0201. If service cannot be 409 effectuated in such manner, upon authorization by court order, 410 the receiver may effect service of notice on the nonparty 411 lienholder pursuant to chapter 49 or as otherwise ordered by the 412 court. 413 (3) After judgment is entered against the property owner 414 and with court approval in the action in which the receiver is 415 appointed, a receiver may use or transfer 416 417 ================= T I T L E A M E N D M E N T ================ 418 And the title is amended as follows: 419 Delete lines 8 - 47 420 and insert: 421 for certain court orders; providing construction and 422 applicability; specifying that a court has exclusive 423 jurisdiction to direct receivers and determine 424 controversies under certain circumstances; providing 425 requirements and authorizations relating to the 426 appointment of a receiver; authorizing certain parties 427 to move to dissolve or modify certain orders; 428 requiring that such motions be heard within a 429 specified timeframe; specifying when a person is or is 430 not disqualified from appointment as a receiver; 431 authorizing certain persons to nominate someone to 432 serve as a receiver; specifying that the court is not 433 bound by such nomination; requiring a receiver to post 434 a bond with the court which meets certain 435 requirements; providing an exception; prohibiting a 436 claim against a receiver’s bond or alternative 437 security from being made after a certain time; 438 providing that an appointed receiver has certain 439 statuses of a lien creditor; providing that certain 440 property is subject to specified security agreements; 441 providing requirements relating to the collection and 442 turnover of receivership property; providing for 443 powers and duties of a receiver; authorizing the court 444 to expand, modify, or limit such powers and duties; 445 providing for duties of an owner; authorizing a court 446 to take certain actions if a person knowingly fails to 447 perform a duty; authorizing a court to take certain 448 actions relating to stays and injunctions; authorizing 449 certain persons to apply for relief from a stay or 450 injunction; requiring that certain motions be heard 451 within a specified timeframe; specifying when an order 452 does not operate as a stay or injunction; authorizing 453 receivers to engage and compensate certain 454 professionals under certain circumstances; requiring 455 certain persons to file an itemized statement with the 456 court; requiring a receiver to pay an amount approved 457 by the court; defining the term “good faith”; 458 authorizing a receiver to use or transfer receivership 459 property other than in the ordinary course of business 460 under certain circumstances; providing for the service 461 of notice to lienholders who are not parties to the 462 action;