By Randall D. Burks.
In a previous blog post, we detailed our success in obtaining an appellate reversal of a divorce judgment in which the trial court had misapplied or failed to enforce a foreign prenuptial agreement while adjudicating equitable distribution in Florida. Today, we will explain how we protected nearly a million dollars of our client’s funds that were inappropriately obtained by his former wife during the appeal.
The purpose of an appeal is to ask a higher court to reverse an erroneous order or judgment entered against you. The appeal process starts by filing a notice of appeal in the trial court within 30 days of the order or judgment. You would then be called the Appellant in the appellate court. An appeal can often take a couple of years or more, and related proceedings can continue in the trial court during that time. For example, the party who won in the trial court (the Appellee) can enforce the order or execute the judgment while the appellate court is reviewing the case. However, the Appellant can seek a stay to stop such proceedings in the trial court.
For a simple example, imagine that your neighbor gets a court order decreeing that your favorite tree must be cut down within two weeks. Even if you file an immediate appeal, that alone would not relieve you of the obligation to cut down the tree while the appeal is pending. In fact, disregarding the trial court’s order could result in the appellate court’s dismissing your appeal.
It may not seem fair, but judicial precedent says a person can be held in contempt for violating an erroneous order because “the need for obedience to a court order outweighs the individual’s temporary detriment.” Robbie v. Robbie, 726 So. 2d 817, 819 (Fla. 4th DCA 1999). These legal principles can sometimes put an appellant in a Catch-22 position, such as where obedience to the erroneous order could make it difficult or impossible for the appellate court to correct the error. For instance, once a tree is cut down, an appellate decision cannot restore that tree no matter how strongly the appellate court says the trial court erred.
Fortunately, the appellate rules provide a possible solution: you can file a motion asking the trial court to stay its order or judgment while the appeal is pending. In Florida, the rule is Fla. R. App. P. 9.310. If the trial court grants your motion, you are relieved of the obligation to comply with the order while it is on appeal. If the trial court denies your motion, you can ask the appellate court to override that decision and grant the stay. But if the appellate court upholds the trial court’s denial of a stay, you will have to comply with the trial court’s order in spite of believing it to be erroneous. The Supreme Court has said that “absent a stay, [the Appellant] must comply promptly with the order pending appeal.” Maness v. Meyers, 419 U.S. 449, 458 (1975).
Now imagine another scenario: you sell your home and the trial court erroneously decrees that someone else will get half of the proceeds. Then that person convinces your bank to give them “their half” of your money. Even if you immediately pursue an appeal, that alone would not stop the person from dissipating your money that is erroneously in their possession. You could, however, ask the trial court for a stay pending appeal. In that scenario, the purpose of the stay would be to keep the status quo and prevent the person from dissipating your money during the lengthy appellate proceedings. The court can grant a stay if the Appellant shows a likelihood of success on the merits and a likelihood of harm absent the entry of a stay.
That second scenario essentially reflects what happened to our client when he sold his two homes in Florida and the court erroneously awarded half of the proceeds to his former wife. She had no right to any of the money because the homes were solely our client’s property according to a valid prenuptial agreement. Our client (the “Former Husband”) timely filed a notice of appeal. Then he promptly filed a motion for stay pending appeal, seeking to keep the status quo by retaining the proceeds in an escrow account at his bank instead of giving half of his funds to the Former Wife.
However, unbeknownst to the Former Husband, the Former Wife or her attorney had already managed to convince the Former Husband’s bank to wire nearly a million dollars to her brokerage account the day before the Former Husband filed his original motion for stay pending appeal. Incredibly, the bank did not consult or notify our client before wiring such a large sum out of his restricted escrow account and sending the funds to the Former Wife. The Former Husband did not discover the money was missing until four days later while performing a routine review of his accounts.
After our client discovered that the Former Wife had already received the money, we filed an amended motion for stay seeking to protect the funds from being dissipated while in the Former Wife’s brokerage account. Our client was particularly concerned because the Former Wife could easily transfer money to her accounts in a foreign country.
The Former Wife argued that our client’s motion for stay pending appeal was a “moot issue” because the Former Wife had already received the money, supposedly in accordance with the Final Judgment, which she claimed was self-executing. But we showed that the final judgment was not self-executing and was not even final for purposes of execution at that time. We also pointed out that the purpose of a stay pending appeal is not limited to only a stay of execution of a judgment. The purpose of a stay pending appeal is to “stay further judicial proceedings in the trial court, [or] to restore or preserve the status quo or to stay execution of an order or judgment.” Hirsch v. Hirsch, 309 So. 2d 47, 50 (Fla. 3d DCA 1975) (e.s.). We argued that the trial court should “restore or preserve the status quo” of the funds to preserve and protect them in the Former Wife’s brokerage account during the appeal. We also sought a stay of enforcement or execution of the equitable distribution portions of the final judgment.
The trial court ruled in favor of our client, finding that he showed a likelihood of success on appeal and a likelihood of harm absent entry of a stay. The court granted a stay to restore and maintain the status quo of the nearly one million dollars that the Former Wife inappropriately got the our client’s bank to transfer from our client’s escrow account into the Former Wife’s brokerage account. The order also halted the enforcement or execution of the equitable distribution portions of the final judgment and prohibited the Former Wife from spending, dissipating, or concealing the funds, or moving the funds out of the jurisdiction during the Former Husband’s appeal and until further order of the court. As a result, the Former Husband’s funds would remain secure in spite of being in the Former Wife’s brokerage account during the appeal.
The Fourth District Court of Appeal ultimately held that all of the proceeds belonged to the Former Husband as his separate property according to the prenuptial agreement. The appellate court remanded the case to the trial court with instructions to award him the proceeds from the sale of both homes.
As for the proceeds in the Former Wife’s brokerage account frozen by the stay pending appeal, the trial court recently ordered their immediate release to the Former Husband. We are pleased that nearly a million dollars of our client’s funds were safeguarded by the stay pending appeal.
This information is provided for general educational purposes and may not apply to your specific situation. Please consult with an attorney before relying on this information.