Case Name: George G. LEVIN, Gayla Sue Levin, individually, Georgetown Manor, Inc., and Furniture Industries of Florida, Inc., corporations, Appellants, v. ETHAN ALLEN, INC., Appellee
Court: Florida District Court of Appeal
Jurisdiction: Florida
Decision Date: 2002-04-17
Citations: 823 So. 2d 132
Docket Number: No. 4D00-3942
Parties: George G. LEVIN, Gayla Sue Levin, individually, Georgetown Manor, Inc., and Furniture Industries of Florida, Inc., corporations, Appellants, v. ETHAN ALLEN, INC., Appellee.
Judges: WARNER, J., concurs.
Reporter: Southern Reporter, Second Series
Volume: 823
Pages: 132–139

Head Matter:
George G. LEVIN, Gayla Sue Levin, individually, Georgetown Manor, Inc., and Furniture Industries of Florida, Inc., corporations, Appellants, v. ETHAN ALLEN, INC., Appellee.
No. 4D00-3942.
District Court of Appeal of Florida, Fourth District.
April 17, 2002.
Rehearing Denied Aug. 26, 2002.
Woodrow M. Melvin, Jr. of Woodrow “Mac” Melvin, Jr., P.A., Miami, for appellants.
Jeffrey P. Shapiro of Jeffrey P. Shapiro, P.A., Miami, for appellee.

Opinion:
KLEIN, J.
This appeal and cross-appeal are from a judgment finding that one transaction was a fraudulent transfer and that another was not. We affirm the finding that there was a fraudulent transfer and reverse on the cross-appeal.
This case arises out of a prior business relationship between Ethan Allen, the furniture manufacturer, and the Levins, who operated several Ethan Allen furniture stores through Georgetown Manor, Inc. In January 1985, following a dispute between Georgetown and Ethan Allen, Georgetown informed Ethan Allen that it was converting its five Ethan Allen stores to Thomas-ville Furniture stores. Ethan Allen then placed an ad in several South Florida newspapers announcing the split, stating that Ethan Allen had discontinued distributing furniture to Georgetown because Georgetown was behind on its debts to Ethan Men, and asking customers with unfilled orders for Ethan Men furniture to contact new Ethan Men stores.
Georgetown sued Ethan Men in federal court for tortious interference with Georgetown's advantageous business relationships. One of the claims was for lost future business from customers who had shopped at Georgetown stores in the past and might shop there again in the future. Ethan Men filed a counterclaim against Georgetown for furniture which it had delivered, but for which it had not been paid.
The case went to trial, and a jury awarded Georgetown $285,000 for lost profits on existing contracts and $7,380,000 for the loss of future business which included goodwill. The jury also awarded approximately $2,500,000 to Ethan Men on its counterclaim. Ethan Men appealed the judgment against it to the Eleventh Circuit Court of Appeals, but Georgetown did not appeal the judgment against it on the counterclaim. The judgments were stayed during the appeal.
The future damage award for tortious interference was not supported by precedent in Florida, which prompted the eleventh circuit to certify the question to the Florida Supreme Court. Georgetown Manor, Inc. v. Ethan Allen, Inc., 991 F.2d 1533 (11th Cir.1993). The Florida Supreme Court held that the damages were not recoverable under the theory of tortious interference. Ethan Allen, Inc. v. Georgetown Manor, Inc., 647 So.2d 812 (Fla.1994). The eleventh circuit then reversed the judgment against Ethan Allen. Georgetown Manor, Inc. v. Ethan Allen, Inc., 47 F.3d 1099 (11th Cir.1995). This left Ethan Allen with a judgment against Georgetown, which had no assets.
When the judgments were entered in the federal district court, in 1992, Georgetown owned two pieces of real estate, one in Dania and the other in Pompano Beach. During the appeal process, the Levins, who owned Georgetown, gained ownership of these properties, leaving Georgetown judgment proof. Ethan Allen filed this case asserting that Georgetown had fraudulently transferred the two properties to the Levins.
In 1993 Georgetown conveyed the Dania property to another company of the Lev-ins, and a mortgage was placed on the Dania property in favor of the Levins. The Levins ultimately received $425,000 when the Dania property was sold, and Georgetown received nothing. The trial court found that this was a fraudulent transfer under Chapter 726, Florida Statutes.
The Levins argue that Georgetown was the creditor, not Ethan Allen. We disagree. A creditor is a person who has a claim, and a claim is very liberally defined as "a right to payment, whether or not the right is reduced to judgment . contingent . unmatured, disputed . or unsecured." § 726.102(3) and (4). Ethan Allen, by virtue of the judgment in its favor, met the statutory definition of creditor and could thus invoke Chapter 726.
The Levins also contend that at the time of the transfer Georgetown, having the larger judgment in its favor, was as a matter of law not insolvent as defined in section 726.103. This transfer could not, accordingly, have been fraudulent.
Section 726.103, Fla. Stat. (1993), however, defines insolvency as follows:
(1) A debtor is insolvent if the sum of the debtor's debts is greater than all of the debtor's assets at a fair valuation.
(2) A debtor who is generally not paying his debts as they become due is presumed to be insolvent.
What the Levins and the dissent overlook in arguing that Georgetown could not have been insolvent is that Georgetown was presumed insolvent under section 726.103(2), quoted above. The evidence was undisputed that Georgetown was not making the payments on the first mortgage on the Pompano property and had not paid the taxes on that property for several years at the time of the transfer. We therefore disagree that the judgment alone is sufficient to establish that they were not insolvent. It was for the trial court, as the finder-of-fact, to determine whether the judgment in favor of Georgetown, which was subject to reversal, was an asset having a sufficient value to rebut the statutory presumption, and the court found in favor of Ethan Allen.
A judgment on appeal may be presumed correct, but it does not follow that the judgment is, as the Levins argue, an asset worth the face amount. The significance of a pending appeal is recognized in numerous cases which hold that a judgment on appeal is recognized in numerous cases which hold that a judgment on appeal is not final until the appellate process is complete. GEICO Financial Services, Inc. v. Kramer, 575 So.2d 1345 (Fla. 4th DCA 1991), and cases cited. The judgment in favor of Georgetown, based on a theory that past customers might purchase furniture in the future, was unsupported by any precedent. A unanimous Florida Supreme Court concluded that it was "clear that Georgetown's relationship with its past customers was not one upon which a claim for tortious interference with a business relationship could be based." Ethan Allen, 647 So.2d at 815.
The Levins, who had the burden of rebutting the statutory presumption of insolvency, put on no evidence as to the value of the judgment while it was on appeal. They did attempt to elicit testimony about settlement offers from Georgetown during the appeal; however, the trial court excluded that evidence, and the Lev-ins did not proffer the substance of the settlement offers.
We cannot agree with the dissent that we should ignore the lack of a proffer because the appellee failed to assert it. Section 59.041, Florida Statutes (2002), our harmless error statute, provides that no judgment shall be reversed unless "after an examination of the entire case it shall appear that the error complained of has resulted in a miscarriage of justice." We routinely ascertain, on our own, whether excluded evidence has been proffered because, if it has not, we cannot determine if there has been a miscarriage of justice.
We therefore reject the Levins' argument, which is that as a matter of law they could not have been insolvent. Their failure to pay their debts raised the statutory presumption of insolvency, and it was a question of fact for the trial court to decide if Georgetown's financial condition, including the judgment on appeal, rebutted the presumption.
In the cross-appeal, Ethan Allen argues that there was also a fraudulent transfer involving the Pompano property. At the time the final judgment was entered in the trial court in 1992, that property was owned by Georgetown, but was encumbered by a $500,000 first mortgage to Prudential Insurance and a $125,000 second mortgage to a bank.
The questionable transfer occurred during the appeal of the tortious interference judgment, when a $516,590 third mortgage was placed on the Pompano property in favor of GGL Industries, another company owned by George Levin. The Levins then acquired the Prudential first mortgage, which was in default, and foreclosed on that mortgage. Ultimately the Levins acquired the Pompano property free and clear, for substantially less than the first mortgage. Georgetown received nothing for the equity it had in the property prior to the GGL mortgage being placed on it.
The trial court found that the Levins' placement of the GGL mortgage on the Pompano property was "evasive of creditors and, consequently, fraudulent" under Chapter 726. Implicit in this finding of fraud is that Georgetown did not receive "reasonably equivalent value." § 726.106(1). The court went on to state, however, that the subsequent purchase by the Levins of the first mortgage and the foreclosure were legitimate, and that the evidence was "not sufficient to establish the intent required by the Fraudulent Transfer Act."
The trial court was apparently only considering whether this was a fraudulent transfer under section 726.105(l)(a) which includes the element of "intent to hinder, delay, or defraud any creditor of the debt- or." Section 726.106(1), on which Ethan Allen was also proceeding, however, does not require intent. It provides:
A transfer made or obligation incurred by a debtor is fraudulent as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of the transfer or obligation.
In the present case, the transfer occurred when Georgetown executed the third mortgage on the property in favor of GGL without receiving value in exchange. See § 726.102(12), Fla. Stat. (1993). That transaction amounted to a transfer of over $500,000 of Georgetown's equity in the Pompano property. In addition, Georgetown was insolvent at the time it gave the mortgage, as it had not been paying its debts as they became due. This transfer, accordingly, satisfied all of the elements of section 726.106(1), which does not require intent. United States v. Ressler, 433 F.Supp. 459 (S.D.Fla.1977), affirmed, 576 F.2d 650. Under section 726.106(1), this was a fraudulent transfer as a matter of law.
Mrs. Levin argues that relief should not have been granted against her because of the judge's comment that he was "satisfied that she had absolutely no knowledge of the legal exposure she was accepting when she signed the various papers." The court concluded, however, that she could not escape the consequences of her involvement. Mrs. Levin's argument overlooks that section 726.106(1) does not require intent. Georgetown's transfers of both properties satisfy all of the elements of section 726.106(1), and accordingly a finding of intent was unnecessary as to Mrs. Levin.
We therefore affirm the judgment entered on the Dania property. We reverse the denial of relief on the Pompano property and remand for the trial court to determine the amount by which Ethan Allen was damaged as a result of the fraudulent mortgage being placed on the Pompano property.
WARNER, J., concurs.
FARMER, J., dissents with opinion.
. We agree with the Levins that the trial court erred in excluding evidence of settlement offers on the ground that settlement offers are inadmissible under section 90.408, Florida Statutes. Although settlement offers are generally not admissible as evidence in the lawsuit in which the offers are made, an offer of settlement in one case can be relevant in another case. Ritter v. Ritter, 690 So.2d 1372 (Fla. 2d DCA 1997)(evidence of an offer in a pending personal injury case is admissible in a dissolution of marriage case for the purpose of establishing the value of a potential 'marital asset).