Supreme Ct: no liability for fraudulent transfer
In May, 2003, The Eleventh Circuit Court of Appeals certified to the Florida Supreme Court the question of whether under Florida's Uniform Fraudulent Transfer Act or FUFTA there is a cause of action for aiding and abetting a fraudulent transfer when the alleged aider-abettor is not a transferee. The Supreme Court's unanimous answer in Lewis B. Freemen, etc., et al., vs. First Union National Bank ( decided January 29, 2004 ) was an unqualified "No."
After considering legislative intent, the Supreme Court stated that, There is simply no language in FUFTA that suggests the creation of a distinct cause of action for aiding-abetting claims against non-transferees. Rather, it appears that FUFTA was intended to codify an existing but imprecise system whereby transfers that were intended to defraud creditors were to be set aside. The Court further stated, "Consistent with this analysis we conclude that FUFTA was not intended to serve as a vehicle by which a creditor may bring a suit against a non-transferee party (like First Union in this case) for monetary damages arising from the non-transferee party=s alleged aiding and abetting of a fraudulent money transfer.
This unanimous decision impacts all lawyers, accountants, bankers, and any other person who provide services to people transferring their assets. While Freeman v. First Union involved a banking institution, its legal principles apply to any situation where a client=s asset transfers elicit a claim under Florida's Uniform Fraudulent Transfer Act. Lawyers, accountants and others whose client is, or may become, a debtor cannot be held liable for simply aiding and abetting their clients' asset transfers found to be reversible under the FUFTA. Freeman v. First Union is another milestone in the ongoing balancing of creditor remedies and debtor rights under Florida law
