We Like Accountants, Too

Tax season is here.  If you have friends in the accounting business, chances are you have seen very little of them since January 1.  In fact, there is a good chance that you haven't seen them at all.

In any event, accountants are an overlooked breed.  We've got a stereotype of the accountant that gives the impression that they are un-lively, un-fun and consumed by the numbers that seem to rule their world.  We make jokes about the accountant personality and...well, you get the idea.

But accountants are guardians of our very being.  Say what you want, but our money rules our lives.  It buys our food, pays for our homes and puts gas in our cars.  It is literally the solvent that makes all things go.  Accountants are the caretakers of our money, the soothsayers who can tell us what money will do with time, the keepers of our fortunes (however great or minute they may be).

Accountants know our secrets.  They know how much we make, where we put it and they know what we do with it better than we do, in most instances.

Our relationships with these oracles of our commerce is so important that the law protects our communications with them.  Just like that attorney-client privilege you talk about with me every time you want to tell me about something you've done or that might hurt your case, Florida recognizes a specific accountant-client privilege that attaches to most communications between you and your numbers cruncher.

What do you know about that?  The federal system doesn't even do that (at least not expressly).  Florida understands that there must and should be a free flow of information between an accountant and his client.

And- just like lawyers- it doesn't have to be an accountant you hire and pay lots of money to.  There is no admission fee.  Even if you speak with an accountant once about how to handle the tax implications of your inheritance from Aunt Tilly and do not hire her because you didn't like her take on things, Ms. Accountant is not able to divulge the contents of your communication to anyone.

Now, before all of you tax fraudsters and Ponzi schemers out there get excited, please note that there is a crime-fraud exception to the privilege.  Meaning that an accountant can be compelled to divulge the contents of communications had with a client who, say, asked the accountant where to hide a large pile of cash stolen from investors.

But you would never do such a thing.  No.

With Just A Little Garnish

Happy Friday, all.  Today, I have garnishment on the brain (if for no other reason than I have a lot of cases right now that involve garnishments).  For those of you unfamiliar with what I am talking about, garnishment is a procedure whereby the party who holds a judgment seeks out people and entities that might be holding property or money that belongs to the judgment debtor as part of the effort to collect the judgment.

The most common scenario involves banks.  A gets a judgment against B.  A now has to figure out how to collect that judgment (nope, it doesn't just happen automatically- and we can discuss that on another day).  There are a lot of tools intended to aid the judgment creditor in recovering his or her judgment.  One of them is the garnishment procedure.  A learns that B has a bank account at First National Bank.  A applies to the Court for a writ of garnishment against First National Bank.  First National Bank has five days to identify whether it holds "any debt due to defendant by a third person or any debt not evidenced by a negotiable instrument that will become due absolutely through the passage of time only to the defendant by a third person, and any tangible or intangible personal property of defendant in the possession or control of a third person."  When it discloses it has the account, A will have the funds from the account turned over to him to satisfy the judgment (or part of it, if the funds are insufficient).


Garnishment is not limited to just banks.  A writ of garnishment can be issued to anyone the judgment creditor believes might owe the judgment debtor money or be holding his or her property.  If your cousin, Joe, owes you $1000 from the football pool you just won, it can be garnished.  If the debtor knew that the judgment was coming and decided to take his motorcycle to his parents home and hide it there, it can be garnished through the parents.


You may remember a few months back, I was explaining that there were many reasons not to just walk away from a mortgage you were having trouble with.  This is one of them.  Because the bank can come and find you if you don't pay the mortgage and garnish your account to pay for any part of the mortgage it is unable to recover in a foreclosure sale, you should try to work with your bank to renegotiate the debt.


In any event, have a great weekend.

It Happened Again

Happy Friday, everyone.   It's time for me to nag you a little.  If you've read any of my previous postings, you are undoubtedly familiar with my requests, pleadings and beggings that all of you get your business documentation in order.  It doesn't matter how small or how large your business, it's worth doing. I can only tell you that spending the time and money doing this now is exponentially smaller than the amount of money you will spend if you don't do it and something goes wrong.

Now, the conventional wisdom among friends and clients seems to be that nothing will go wrong or that your particular situation is such that it is not worth doing.  Both precepts are just wrong.  How do I know this?  Because, once again, a client has come through the door thinking: a) they didn't need a lawyer;  b) lawyers are just blood suckers out to get your money; and c) we can do this ourselves because there are a lot of great resources on the internet.

So, this is what happened.  "Jim" went to buy a house.  Jim did not use a lawyer because he thought it was too expensive.  The seller of the house, "Linus," was selling the house because he was in default of his mortgage's repayment obligations.  So, the bank that held the mortgage allowed Linus to sell the house on the condition that all of the sale proceeds go to the bank to pay the mortgage.  Linus didn't like that and wanted some money for himself, so he told Jim that he would sell some of the furniture in the house for a price.

Jim and Linus then went back and forth on what to buy, what would the price be and even got their respective real estate agents involved (who, as in any game of telephone, didn't seem to be able to communicate the messages as accurately as Jim and Linus would have liked).  Jim and Linus never did sit down and sign any kind of a contract for the furniture's purchase and sale.

Well, wouldn't you know it, there was trouble.  Linus, who moved to Lithuania, started sending emails saying he wants the money for the "deal" he made with Jim.  Jim replied saying there was no deal because Linus didn't move fast enough.  The tone of the exchanges went downhill from there.

Now, I'm involved, as is Linus' attorney.  Linus has threatened to sue Jim in Lithuania.  Linus has almost no rights at all to stand on, but, because there is no proper documentation and has the threat of litigation half away around the world in his pocket, we're off to the races.  Of course, we're not even discussing the problems with making the deal in the shadow of the bank's requirement to receive all of the sale proceeds.

Had Jim and Linus decided that it was worth hiring counsel to handle the real estate closing, there would be no problem now.  Sure, they would each be out a few hundred dollars, but that's nothing to what they  have now spent, will spend in the next few months and have lost in terms of time and aggravation.

So, once again, I plead with all of you.  Take the time and incur the expense of shoring up your defenses and documentation now.  It's so much cheaper and easier than fixing the problem because you never know when the problem is coming or what form it is going to take.

With that, I say, have a great weekend.

FDUTPA. That's right, I said it.

Greetings, all.  It's been a while.  Year end collection, administration and closing of the books consumed a lot of time and the holidays themselves kept me from reaching out to all of you for way too long.  But, now that it's late January, there really are no more reasons or excuses.  So, let's get down to it.

Florida's Deceptive And Unfair Trade Practices Act, known affectionately as FDUTPA.  For many years, this statute was out in the penumbra of the known galaxy of legal claims.  It really wasn't used all that often and it seemed sort of vague in what it was supposed to do.  In a nutshell, it prohibited anyone from engaging in any unfair or deceptive trade practice.  Wow, that's not very illuminating.

If you read a little deeper, you learned that the "anyone" really meant people and entities who were engaged in some form of business with consumers, making it a consumer protection statute.  When you dug even deeper, you learned that FDUTPA was a sort of state enactment of the FTC regulations (called the Little FTC Act- how original).  But, most people didn't really have a need to use a statute like FDUTPA because there were other laws out there designed specifically to cover many significant consumer transactions- buying a house, a car, a boat, a mobile home, livestock, etc.  A generic, nondescript statute like FDUTPA seemed to be a well-intended law without a home.

A shame really, because the statute has some nice features for consumers who used it.  But, why bother with a statute that has sub-parts and technical language and a seeming lack of explanatory case law when you can just sue for good old fraud and hit the other guy up for punitive damages?

Well, enter the financial crisis of 2008.  A year that saw great change in the law and the legal profession.  Not only did we gain a new president, the grounds for healthcare reform (which may or may not be here by this time next year), but the legal profession had to take a good hard look at the tools in our toolbox to figure out how we were going to handle the hundreds of thousands of foreclosures, the rampant mistakes (and sometimes fraud) by banks and mortgage servicers, the over-stated values of property by appraisers and the unbelievable confusion over who actually owned certain loans created by investment bankers?

We certainly couldn't wait for new laws to be written.  We had to work with what was out there.  In the hunt, someone dusted off FDUTPA and breathed new life into it.  With a little help from the legislature, FDUTPA was recently amended to broaden its application.  Not only does it protect consumers, but it now protects commercial parties (meaning all you business owners out there).

What does this mean for you?  It means, there's a whole new universe out there - both of opportunity and pitfalls.  As consumers and commercial parties alike, you have a new avenue to redress wrongs based in some sort of misconduct by your seller or contracting party.  The vagueness of the statute now seems to be part of its beauty.  I've seen it applied to real estate transactions, loans, distributorship agreements, auto lease arrangements and re-financing contracts.

What do I mean?  If you are buying groceries, for instance, and you notice that the supermarket overcharged you randomly for some items, you would probably let it go.  But suppose, when you back next week, you see that there are more overcharges.  You go back a third time and there are still more.  Now, you may have a "practice" that is intended to hurt you, the consumer.  Assuming the supermarket wasn't just employing a cashier with really inaccurate fingers, such a practice could be a FDUTPA violation.

There are a lot of reasons (read: technical) lawyers like FDUTPA in the new economy- it's not as hard to prove as fraud, there is no need to prove an intent to deceive (like in fraud), the plaintiff can recover his/her/its attorneys' fees and the statute is not barred by the economic loss rule (which, if you really want to know about, you should e-mail me and then get your head examined).

So, FDUTPA has taken on new life in the last few years and I think it's going to be here to stay.  So welcome.....and watch out!