By Michael P. Sampson (part 7 of 8)
Jurisdiction Over Real and Personal Property Located in County Where Florida Divorce Is Pending
If property at issue in a divorce case is within the court’s jurisdictional boundaries, it doesn’t matter if the owners or those claiming an interest in the property reside outside Florida. The court has jurisdiction over the property at issue. Such jurisdiction is known as in rem jurisdiction.
Jurisdiction in rem, founded on property in the court’s territorial bounds, can substitute for personal jurisdiction. See Stephens, Scott, Florida’s Third Species of Jurisdiction, Vol. 82, No. 3, Florida Bar Journal 10 (March 2008); Publix Super Markets, Inc. v. Cheesbro Roofing, Inc., 502 So. 2d 484, 486-87 (Fla. 5th DCA 1987) (an action asking the court to act directly on property or title to the property is an in rem action, which must be brought in the county where the land lies).
An example of in rem jurisdiction in a divorce case is an action to partition real property or personal property a spouse and another owner, such as a foreign trust or corporation, co-own. Under these circumstances, in rem jurisdiction over the property lies in the circuit court of the county in which the property is physically located.
Under Section 64.031, Florida Statutes, a spouse owning an interest in real property or personal property may file a partition action against the cotenants, coparceners, or others interested in the lands to be divided. In Martinez v. Martinez, 219 So. 3d 259 (Fla. 5th DCA 2017), a wife’s petition for dissolution of marriage included a partition count against her stepson and corporations her husband created during the marriage. She alleged her husband had been commingling the parties’ marital assets with assets owned by the stepson and corporate respondents. She sought partition of the marital assets, recognition and equitable distribution of her interest in the corporations, and to have the court “claw” back and equitably distribute to her husband and her marital assets transferred to the corporations and stepson.
Joinder of Nonparty Co-Owners of Property in Florida Divorce Is Necessary to Adjudicate Their Interests
A divorce judge cannot adjudicate property interests of co-owners unless joined as parties. In Bailey v. Bailey, Case No. 4D19-3459 (Fla. 4th DCA January 27, 2021) a mother-in-Law claimed interest in real property, to be distributed in a divorce. The wife sought partition of the property in her counterpetition. After joining mother-in-law as an indispensable party, the wife dropped her partition claim. The mother-in-law, who claimed she owned the property with the husband and wife as joint tenants with rights of survivorship, moved to intervene, but the trial court denied her motion. The divorce judge could adjudicate only the husband’s and wife’s respective one-third interest in the property, but that adjudication would likely impact the right of survivorship in the property held as joint tenants. Therefore, the mother-in-law’s joinder was required.
See also Salituri v. Salituri, 184 So. 3d 1250, 1252 (Fla. 4th DCA 2016), the court reversed a judgment purporting to distribute property in a divorce absent joinder of the husband’s dad, who co-owned the property. In a dissolution of marriage action, in Matajek v. Skowronska, 927 So. 2d 981, 985 (Fla. 5th DCA 2006), the trial judge erred in adjudicating the full value of and assigning to the wife real property titled to a partnership co-owned between Husband’s limited liability company and a partner not a party.
Property Business Entities and Trusts Own
Assets nonparty LLCs, corporations, partnerships, or trusts own are ordinarily not divisible in equitable distribution. See, e.g., Minsky v. Minsky, 779 So. 2d 375 (Fla. 2d DCA 2000) (reversing divorce judgment effectively dissolving a nonparty trust by characterizing trust funds it held as marital assets); Lassett v. Lassett, 768 So. 3d 472 (Fla. 2d DCA 2000) (divorce court had no jurisdiction to adjudicate or distribute assets or property rights of a nonparty partnership).
In Nelson v. Nelson, 206 So. 3d 818, 820-21 (Fla. 2d DCA 2016), a California home a couple transferred during their marriage to an irrevocable trust the ex-husband established for the benefit of his ex-wife and her descendants was not a marital asset subject to equitable distribution. The home lost its character as a marital asset once the couple transferred it into the irrevocable trust. To reach the assets of an irrevocable trust, all contingent beneficiaries were indispensable parties who would have to be joined.
Likewise, courts may consider stock in a family-owned business a marital asset, subject to equitable distribution, but cannot order the transfer of corporate property or assets without joinder of the entity. See Austin v. Austin, 120 So.3d 669, 674 (Fla. 1st DCA 2013) (without joining a corporation, the court may value and distribute corporate stock determined to be a marital asset and may preclude a spouse’s disposal of assets over which the spouse exercises exclusive control); Ehman v. Ehman, 156 So. 3d 7 (Fla. 2d DCA 2014); Mathes v. Mathes, 91 So. 3d 207, 208 (Fla. 2d DCA 2012) (trial court has no power or authority to transfer property of a corporation without joinder of the entity); Sandstrom v. Sandstrom, 617 So. 2d 327, 329 (Fla 4th DCA 1993) (the court lacked jurisdiction to order a transfer of a corporation’s assets because it was not made a party); Nichols v. Nichols, 578 So. 2d 851, 852 (Fla 2d DCA 1991) (an order distributing corporate property in a dissolution of marriage proceeding was reversed because the corporation was not made a party); Keller v. Keller, 521 So. 2d 273, 276 (Fla. 5th DCA 1988) (the court had no authority to award wife a Mercedes owned by husband’s corporation because the corporation was not joined). See also Buchanan v. Buchanan, 225 So. 3d 1002 (Fla. 1st DCA 2017) (court had no power to order a company not joined as a party to continue paying spouse’s salary).
Personal Jurisdiction Over Parties Gives the Court Power to Compel Them To Take Acts Regarding Property Outside the Court’s Jurisdiction
While court has no in rem jurisdiction over property located outside its jurisdiction, its in personam jurisdiction over parties properly before it empowers it to order them to take actions with respect to the property. See, e.g., General Electric Capital Corp. v. Advance Petroleum, Inc., 660 So.2d 1139 (Fla. 3d DCA 1995) (creditor who supplied fuel for a jet airplane had a perfected lien on the jet, which the trial court ordered the debtor to return to Florida).
If the court doesn’t directly affect title to real or personal property while it remains in a foreign jurisdiction, a court with personal jurisdiction over a party may order the party to take acts (or refrain from acting) regarding the property located in a foreign jurisdiction. Fall v. Eastin,215 U.S. 1, 30 S.Ct. 3, 54 L.Ed. 65 (1909); accord Dusesoi v. Dusesoi, 498 So.2d 1348 (Fla. 2d DCA 1986) (although a Texas divorce decree purported award to a husband of Collier County, Florida real estate was not entitled to full faith and credit by the Florida court, the in personam jurisdiction the Texas court retained, to order wife to sign a warranty deed to Florida property, was entitled to full faith and credit). See also Sammons v. Sammons, 479 So.2d 223 (Fla. 3d DCA 1985) (Colorado divorce decree wasn’t entitled to full faith and credit because it directly affected title to Florida real property); Belsky v. Belsky, 324 So.2d 111 (Fla. 3d DCA 1975), (Florida court properly entered an in personam order directing an ex-husband to extend a Massachusetts trust, the trustees or assets of the trust with which the Florida court did not interfere).
In Sargeant v. Al-Saleh, 137 So. 3d 432 (Fla. 4th DCA 2014) the court reversed a judgment compelling the turnover of stock certificates located in foreign countries because the trial court lacked in rem jurisdiction over certificates. The court’s in personam jurisdiction over debtors conferred no power on the court to enter orders affecting the certificates. The case outlines how a creditor may reach a debtor’s security interests and invoke the court’s power, by injunction or otherwise, to reach certificated securities or to satisfy the creditor’s claim by means allowed at law or in equity. The Court may order certificates to be cancelled and reissued. The entities (a corporation and LLC) didn’t need to be parties to the proceedings.
See also House v. Williams, 573 So. 2d 1012, 1012 (Fla. 5th DCA 1991) (When one debtor refused to respond to discovery, and the other said she didn’t know where stock certificate was, the court could order a corporation the debtors closely held and controlled to reissue a stock certificate).