Dubose Obtains Favorable Order Interpreting Florida’s UCRERA

Jodi D. Dubose - Shareholder

Jodi D. Dubose - Shareholder

SRBP Shareholder Jodi Dubose Obtains Favorable Order Interpreting Florida’s Uniform Commercial Real Estate Receivership Act (UCRERA)

On April 23, 2024, in Calypso Towers Resort Community Association, Inc. v. The Calypso Group, LLC, et al., the Circuit Court in and for Bay County, Florida, entered an order denying the motion of two co-defendants to remove the Receiver of four defendant entities for cause. The movants’ legal arguments for removal included assertions that (i) UCRERA does not apply to solvent companies; (ii) UCRERA requires a receiver over an LLC to obtain every individual member’s consent before performing a post-judgment, court-approved settlement that results in the transfer of the LLC’s assets outside the ordinary course of business; and (iii) UCRERA allows a receiver to reject a contract that was breached before the receiver was appointed.

Representing Mark Healy of Michael Moecker & Associates as the Receiver in opposing the motion, Ms. Dubose argued that there is no provision in UCRERA limiting its applicability to solvent companies, that receivers only need court authorization to effectuate a post-judgment transfer of assets in order to carry the judgment into effect, that LLC members are not “owners” of LLC assets under UCRERA, and that a contract that is no longer in effect is not executory and therefore cannot be rejected under UCRERA.

In just the third reported case interpreting UCRERA in Florida since its adoption in July 2020, the Court agreed with the Receiver on each disputed point of law under UCRERA. Specifically, the Court ruled that section 714.06(1) creates a clear standard for appointment of a receiver under UCRERA and makes no reference to whether the proposed receivership estate or the owner of the assets to be placed in receivership is solvent. With respect to the issue of consent, the Court confirmed that the applicable provision of UCRERA was section 714.16(3) (dealing with post-judgment transactions) and, in any event, the movants’ consent would not be dispositive since they did not meet the definition of an “owner” under UCRERA because they are not the person for whose property the receiver was appointed. Finally, with respect to the issue of rejection, the Court held that UCRERA did not require or allow rejection of a contract that had been materially breached nearly four (4) years prior to the appointment of the Receiver. For these and other reasons, the Movants failed to demonstrate cause for removal and the Motion was therefore denied.

UCRERA was adopted in Florida in July 2020, making it the 9th state to adopt the uniform commercial law. UCRERA is contained within Chapter 714 of the Florida Statutes. Ms. Dubose is the current Vice Chair of the UCRERA Task Force of the Business Law Section of the Florida Bar, which was created to study UCRERA to determine whether it should enacted by the Florida Legislature, to make recommendations to the Section regarding such enactment, and to work with legislators to enact it into law.