Alesco Request

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IN THE UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA JACKSONVILLE DIVISION ALESCO FINANCIAL, INC. f/k/a SUNSET FINANCIAL RESOURCES, INC., a Maryland corporation, Movant, v.

CASE NO. 3:07-cv-00032-12HTS

ANTHONY R. PORTER, an individual, DOROTHY M. PORTER, an individual, FRANK AMELUNG, an individual, EUGENIA AMELUNG, an individual, and RICHARD AMELUNG, an individual, Respondents. / ALESCO FINANCIAL INC., a Maryland corporation, Plaintiff, v. FRANK A. AMELUNG and EUGENIA M. AMELUNG, Trustees under the Amelung Family Revocable Trust dated December 14, 2005, Defendant. / JUDGMENT CREDITOR ALESCO FINANCIAL INC.’S FIRST MOTION FOR PROCEEDINGS SUPPLEMENTARY AND FOR INTERPLEADER OF THIRD PARTIES COMES NOW Plaintiff ALESCO FINANCIAL, INC. (hereinafter “Alesco”), by and through its undersigned counsel, pursuant to Fed. R. Civ. P. 69 and Fla. Stat. § 56.29 (2007) and respectfully moves this Court for the conduct of Proceedings Supplementary and for the entry of an Order impleading Defendants Frank A. Amelung and Eugenia M. Amelung, Trustees under the Amelung Family Revocable Trust dated December 14, 2005.

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As grounds for this Motion, Alesco states as follows: 1.

Alesco Financial, Inc. is the judgment creditor named under and is the

current holder of a judgment entered in this cause on March 29, 2007, against the judgment debtors Frank A. Amelung and Eugenia M. Amelung in the principal amount of $13,060,614.63 (hereinafter the “Judgment”). Alesco Financial, Inc. is the holder of the March 29, 2007, judgment. 2.

The Judgment referred to in Paragraph 1 above remains unsatisfied and is

not currently the subject of an appeal or of a motion for reconsideration which would stay the Judgment. 3.

On June 19, 2007, Writs of Execution directed to each of the Judgment

Debtors Frank A. Amelung and Eugenia M. Amelung were issued by the Clerk of the Court. 4.

The Writs of Execution are valid and outstanding.

See Affidavit in

Support of Judgment Creditor Alesco Financial, Inc.’s first Motion for Proceedings Supplementary and for Impleader of Third Parties (Exhibit A). 5.

Upon information and belief, Defendants Eugenia M. Amelung and Frank

A. Amelung are the acting co-trustees of the Amelung Family Revocable Trust dated December 14, 2005 (hereinafter referred to as the “Trust”). 6.

Pursuant to a Trustee’s Deed dated April 4, 2002 (Exhibit B), which is

recorded at Book 1791, Page 611 of the Official Public Records of Monroe County, Florida, Eugenia M. Amelung acquired ownership of the following described real property situate in Monroe County, Florida:

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Lot 2, Block 1, Sombrero Beach Village, according to the Plat thereof recorded in Plat Book 5, Page 86 of the Public Records of Monroe County, Florida (hereinafter referred to as the “Property”). 7.

On April 10, 2007, the judgment debtors Frank A. Amelung1 and Eugenia

M. Amelung caused to be recorded in the Official Public Records of Monroe County, Florida, a Warranty Deed nominally dated December 14, 2005 (Exhibit C), whereby the judgment debtors purported to transfer the Property to Frank A. Amelung and Eugenia M. Amelung, Trustees under the Amelung Family Revocable Trust dated December 14, 2005. 8.

Alesco has retained the undersigned attorneys to represent its interests in

this matter and is obligated to pay its attorneys a reasonable attorneys fee for their services herein. COUNT I (Fraudulent Transfer) 9.

Alesco incorporates by reference the allegations of Paragraphs 1 through 8

above to the same extent as if incorporated herein in their entirety. 10.

The transfer of the Property to the Trust as referred to in Paragraph 8

above is avoidable as a Fraudulent Transfer pursuant to the provisions of Fla. Stat. § 726.105 (2007) (i) as having been made with the actual intent to hinder, delay or defraud creditors of Frank A. Amelung and Eugenia M. Amelung, including Alesco, and/or (ii) as having been made without Frank A. Amelung and Eugenia M. Amelung

1

The referenced Warranty Deed identifies Frank A. Amelung as a “Grantor”. It is not clear how Frank A. Amelung obtained an interest in the Property as Eugenia M. Amelung is the sole named Grantee under the April 4, 2002, Trustee’s Deed. 3

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having received reasonably equivalent value at a time when Frank A. Amelung and Eugenia M. Amelung (A) were engaged or were about to engage in a business or a transaction for which the remaining assets of Frank A. Amelung and Eugenia M. Amelung were unreasonably small in relation to the business or transaction, or (B) intended to incur or believed or reasonably should have believed that they would incur, debts beyond their ability to pay as they became due. 11.

Alternatively, the transfer of the Property to the Trust is fraudulent as to

Alesco as having been made after the Judgment was entered and was made without Frank A. Amelung and Eugenia M. Amelung having received reasonably equivalent value for the transfer at a time when Frank A. Amelung and Eugenia M. Amelung either were insolvent or became insolvent as a consequence of such transfer. 12.

Proceedings supplementary are necessary for the purpose of affording

Alesco relief to allow Alesco to proceed against the Property held in the Trust in partial satisfaction of the Judgment debt. 13.

Alesco has and will continue to suffer irreparable harm as a consequence

of the judgment debtors Frank A. Amelung and Eugenia M. Amelung fraudulent transfers of assets such that injunction relief is appropriate in the context of this action. COUNT II (Revocable Trust) 14.

Alesco realleges and incorporates by reference the allegations of Para-

graphs 1 through 8 above as if realleged and incorporated herein in their entirety. 15.

As a matter of law, any assets titled in the name of the Trust are subject to

the claims of the creditors of Frank A. Amelung and Eugenia M. Amelung to the extent

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that those assets were transferred to the trust by Frank A. Amelung and/or Eugenia M. Amelung regardless of whether Frank A. Amelung or Eugenia M. Amelung have the right, whether independently, jointly or with the consent of a third party, to demand that the assets in the Trust be returned to them. 16.

Proceedings supplementary are necessary and appropriate for purposes of

determining the interest of the Judgment Debtors Frank A. Amelung and Eugenia M. Amelung in assets held in the Trust and for purposes of causing the Property and any other assets held in the Trust in which the Judgment Debtors Frank A. Amelung and Eugenia M. Amelung to be applied in partial satisfaction of the Judgment Debt. MEMORANDUM OF LAW A.

Proceedings Supplementary Generally Fed. R. Civ. P. 69(a) directs the application of state procedure for enforcement of

a judgment including, but not limited to, the resort to proceedings supplementary authorized under state law. That Rule provides in pertinent part as follows: (a) In General. Process to enforce a judgment for the payment of money shall be a writ of execution unless the court directs otherwise. The procedure on execution, in proceedings supplementary to and in aid of a judgment, and in proceedings on and in aid of execution shall be in accordance with the practice and procedure of the state in which the district court is held, existing at the time the remedy is sought, except that any statute of the United States governs to the extent that it is applicable. In aid of the judgment or execution, the judgment creditor or a successor in interest when that interest appears of record, may obtain discovery from any person, including the judgment debtor, in the manner provided in these rules or in the manner provided by the practice of the state in which the district court is held. “Under Fed. R. Civ. P. 69, state law concerning supplementary proceedings to enforce a judgment will govern to the extent that it is not preempted by federal law.” See General

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Trading Inc. v. Yale Materials Handling Corp., 119 F.3d 1485 at n. 22 (11th Cir. 1997), citing Allied Indus. Int’l, Inc. v. AGFA-GENVAERT, Inc., 688 F. Supp. 1516, 1517 (S.D. Fla. 1988). B.

Florida Practice and Procedure Fla. Stat. § 56.29 (2007), the Florida proceedings supplementary statute, provides,

in pertinent part, as follows: 56.29. Proceedings Supplementary (1) When any person or entity holds an unsatisfied judgment or judgment lien obtained under chapter 55, the judgment holder or judgment lienholder may file an affidavit so stating, identifying, if applicable, the issuing court, the case number and the unsatisfied amount of the judgment or judgment lien, including accrued costs and interest, and stating that the execution is valid and outstanding, and thereupon the judgment holder or judgment lienholder is entitled to those proceedings supplementary to execution. … (5) The judge may order any property of the judgment debtor, not exempt from execution, in the hands of any person or due to the judgment debtor to be applied toward the satisfaction of the judgment debt. … (9) The court may enter any orders required to carry out the purpose of this section to subject property or property rights of any defendant to execution. … (10) Costs for proceedings supplementary shall be taxed against the defendant as well as all other incidental costs determined to be reasonable and just by the court including, but not limited to, docketing the execution, sheriff’s service fees and court reporter’s fees. Reasonable attorneys fees may be taxed against the defendant.

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Fla. Stat. § 56.29 (2007)(emphasis added). “‘Under decisional law interpreting section 56.29, the two jurisdictional prerequisites for supplementary proceedings are (1) an unsatisfied writ of execution, and (2) an affidavit averring that the writ is valid and unsatisfied along with a list of persons to be impleaded. . . . [F]ederal courts may implead for supplemental proceedings in aid of execution by order to show cause.” General Trading Incorporated, id.; see also Fla. Stat. § 56.29 (2007). It is not a jurisdictional prerequisite for the initiating of proceedings supplementary that a writ of execution be returned unsatisfied. See Bleidt v. Lobato, 664 So. 2d 1074 (Fla. 5th DCA 1995). The proceedings supplementary statute is intended “to empower the court to follow through with the enforcement of its judgment, so that there would be no necessity for an independent suit to reach property which legally should be applied to the satisfaction of the judgment.” Florida Guaranteed Securities v. McAllister, 47 F.2d 762 (S.D. Fla. 1931). “Proceedings supplementary are equitable in nature and should be liberally construed… They enable speedy and direct proceedings in the same court in which the judgment was recovered to better afford to a judgment creditor the most complete relief possible in satisfying the judgment.” Zureikat v. Shaibani, 944 So. 2d 1019, 1023 (Fla. 5th DCA 2006). In conducting proceedings supplementary, “the court has the authority and in fact a duty to implead third parties.”

Allied Industries

International, Inc. v. AGFA-GEVAERT, Inc., 688 F. Supp. 1516, 1518 (S.D. Fla. 1988); see also Florida Guaranteed Securities, Inc. v. McAllister, 47 F.2d 762 (S.D. Fla. 1931) (allowing the use of proceedings supplementary to enforce a judgment against real property which had been fraudulently transferred); Zureikat, 944 So. 2d 1019 (approving

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the use of supplementary proceedings for purposes of impressing an equitable lien on the judgment debtor’s homestead). In the context of this case, the impleading of Frank A. Amelung and Eugenia M. Amelung in their representative capacities as the Trustees of the Amelung Revocable Family Trust dated December 14, 2005, is warranted for purposes of compelling Frank A. Amelung and Eugenia M. Amelung, Trustees of the Amelung Revocable Family Trust dated December 14, 2005 to reconvey the Property to Eugenia M. Amelung, individually, and/or for purposes of allowing Alesco to cause the interest of Frank A. Amelung and/or Eugenia M. Amelung in the Trust to be determined and subjected to the reach of the Alesco’s Judgment. C.

Fraudulent Transfer A transfer of property to a trust is a “transfer” for purposes of the Florida

Fraudulent Transfer Act (hereinafter the “FFTA”). See generally In re: Crawford, 172 B.R. 365 (Bkrtcy. M.D. Fla. 1994) (amendment of a trust to make the trust irrevocable held a transfer for purposes of the FFTA). Whether a given transfer is defined as fraudulent for purposes of FFTA depends upon the circumstances attending that transfer. Moreover, the nature of the proof required to establish a transfer as fraudulent depends, in part, on whether the judgment creditor was a “present” creditor or a “future” creditor of the Judgment debtor. Compare Fla. Stat. § 726.105(2007) (applicable to “present” and “future” creditors) and § 726.106(2007) (applicable to “present” creditors). For purposes of this Motion and the FFTA, Alesco respectfully submits that Alesco was a “present” creditor of the Judgment Debtors Frank A. Amelung and Eugenia M. Amelung at the time of the “transfer” of the Property to the Trust.

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For purposes of the FFTA, a transfer of real estate is made “when the transfer is so far perfected that a good faith purchaser of the asset from the debtor against whom applicable law permits the transfer to be perfected cannot acquire an interest in the asset that is superior to the interest of the transferee.” Fla. Stat. § 726.107(1)(a). In the context of this case, the transfer of the Property was made on April 10, 2007, when the Warranty Deed nominally executed as of December 14, 2005, was recorded in the official public records of Monroe County, Florida. See Warranty Deed (Exhibit A); see also In re: Mizrahi, 179 B.R. 322 (Bankr. M.D. Fla. 1995) (noting that under the FFTA, the date of a transfer of real property is determined by the date of recordation). As such, for purposes of the FFTA the “transfer” was made twelve days after the Judgment was issued against the Judgment Debtors. As such, Alesco was a “present” creditor at the time the transfer of the Marathon, Florida property was made from Frank and Eugenia Amelung to the Trust. Accordingly, the transfer of the Property to the Trust is avoidable as to Alesco pursuant to the provisions of either Fla. Stat. §§ 726.105 or 726.106 (2007). i.

Actual Intent to Hinder, Delay or Defraud Creditors (Fla. Stat. § 726.105(a))

For purposes of Fla. Stat. § 726.105(1)(a), so-called badges of fraud are referred to for purposes of establishing the actual intent to defraud by the judgment debtor. See In re: McCarn’s Allstate Finance, Inc., 326 B.R. 843 (Bankr. M.D. Fla. 2005).

For this

purpose, Fla. Stat. § 726.105(2) contains a non-exhaustive list of badges of fraud which may be relied upon as establishing the requisite intent. “While a single badge of fraud may only create a suspicious circumstance and may not constitute the requisite fraud to set aside a conveyance, several of them when considered together may afford a basis to infer fraud.” General Trading Inc., 119 F.3d at

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1498, citing, Johnson v. Dowell, 592 So. 2d 1194 (Fla. 2d DCA 1992) see also In re: Mizrahi, 179 B.R. 322, 329 (Bankr. M.D. Fla. 1995). “[C]ourts take into account the particular facts surrounding the conveyance, and avoid determining in a vacuum the presence or absence of a debtor’s actual intent to hinder or delay a creditor.” Id., citing Kirk v. Edinger, 380 So. 2d 1336. “The existence of badges of fraud create a prima facie case and raises a rebuttable presumption that the transaction is void.” Nationsbank, N.A. v. Coastal Utilities, 814 So. 2d 1228 (Fla. 4th DCA 2002); In re: PSI Industries, Inc., 306 B.R. 377 (Bkrtcy S.D. Fla. 2003) (“[W]hile a single badge of fraud may create only a suspicious circumstance, several of them together may afford a basis to infer fraud.”). Alesco respectfully submits that the facts attendant to the transfer of the Property to the Trust compel a conclusion that the transfers were fraudulent and were entered into with actual intent to hinder, delay and defraud the creditors of Frank A. Amelung and Eugenia M. Amelung for the following reasons, each of which are among the badges of fraud enumerated in Fla. Stat. § 726.105(2)(a).

·

Transfer to an Insider [Fla. Stat. § 726.105(2)(a)]. The transfer was made to a revocable self-settled trust in which the Judgment Debtors Frank A. Amelung and Eugenia M. Amelung are the trustees. See December 14, 2005, Warranty Deed (Exhibit C)2. Accordingly, the transfer was made to an “insider” for purposes of Chapter 726 of the Florida Statutes and Fla. Stat. § 726.105(2)(a). See In re: Mizrahi, 179 B.R. at 329 (holding that the transfer to a revocable family trust was a transfer to an “insider” for purposes of the FFTA); see also, Fla. Stat.

2

Alesco is not presently in possession of a copy of the Trust Agreement. 10

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§ 726.102(7) (providing a non-exclusive definition of the term “insider” for purposes of the FFTA).

·

Retention of Control [Fla. Stat. § 726.105(2)(b)]. By its very nature a revocable trust entails the retention of control over the trust assets within the meaning of Fla. Stat. § 726.105(2)(b) as a revocable trust, by definition, includes the right of the transferor to revoke the trust and receive the return of the property contributed to the trust or to otherwise change the beneficial enjoyment of that property. See generally Black’s Law Dictionary 1321 (6th ed. 1990).

·

Non-Disclosure of Transfer [Fla. Stat. 726.105(2)(c)].

The transfer of the

Property was not disclosed to Alesco at the time of the transfer. The Judgment Debtors were well aware of Alesco’s claim at the time of the transfer as the Judgment Debtors had, prior to the date of such transfer, (i) arbitration proceedings initiated against them, (ii) an arbitration award entered against them, (iii) confirmation proceedings initiated against them for confirmation of the arbitration award in a proceeding in which they retained counsel and filed an appearance, and (iv) ultimately had the Judgment entered against them. The transfer was only discovered by Alesco in connection with Alesco’s investigations in anticipation of the filing of these supplementary proceedings while confirming the recording of Alesco’s judgment lien in the Monroe County, Florida Official Public Records. See generally In re: Crawford, 172 B.R. 365 (Bkrtcy. M.D. Fla. 1994).

·

The Relative Timing of the Transfer [Fla. Stat. § 726.105(2)(d) and (j)]. The transfer of the Property occurred after the Frank A. Amelung and Eugenia M.

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Amelung had been sued on their personal guaranties by Alesco and after a substantial judgment had been entered against them for purposes of Fla. Stat. § 726.105(2)(d) and/or for purposes of Fla. Stat. § 726.105(2)(j). In this regard, it bears noting yet again that the transfer of the Property to the Trust occurred a mere twelve days after the Judgment was entered.

·

Transfer for No or Nominal Consideration [Fla. Stat. 726.105(2)(h)]. The face of the deed itself reflects that the conveyance was made for no or nominal consideration and, therefore, the transfer was not made for reasonably equivalent value for purposes of Fla. Stat. § 726.105(2)(h). This is borne out by the stated consideration of “TEN AND 00/100 ($10.00) DOLLARS” as reflected in the Deed as well as the fact that the Clerk of Court’s notation on the Deed reflects the payment of documentary stamp tax in the total amount of only seventy cents ($0.70) which is indicative of the transferors having reported no or nominal consideration as having been paid at the time of the transfer. See Fla. Stat. § 201.02(1) (2007) (imposing a tax at a rate of $0.70 on each $100 of consideration paid for the transfer of real property); see also Fla. Admin. Code § 12B-4.012 (2007). For each of the foregoing reasons, Alesco respectfully submits that the transfer of

the Property to the Trust was made with the actual intent to hinder, delay or defraud the Judgment Debtor Frank A. Amelung and Eugenia M. Amelung’s creditors within the meaning of Fla. Stat. § 726.105(1)(a) and, as such, such transfer represents a fraudulent transfer avoidable in accordance with the provisions of the FFTA. ii.

Transfer for Less than Reasonably Equivalent Value at a Time when the Judgment Debtor was Engaged or was About to Engage in a

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Business or Transaction for which the Remaining Assets of the Debtor were Unreasonably Small in Relation to the Business or Transaction (Fla. Stat. § 726.105(1)(b)) Under Fla. Stat. § 726.105(1)(b) a transfer made for less than reasonably equivalent value may be avoided by a present or future creditor if such transfer was made for less than reasonably equivalent value at a time when the debtors Frank A. Amelung and Eugenia M. Amelung were engaged in or about to engage in a business or transactions for which the remaining assets of the debtors Frank A. Amelung and Eugenia M. Amelung were unreasonably small in relation to the business or transaction. While Alesco maintains its position that the subject transfer of the Property to the Trust took place on April 10, 2007, when the December 14, 2005, Warranty Deed was recorded in the Monroe County, Florida Official Public Records, Alesco notes that even if the transfer is deemed to have occurred on December 14, 2005, when the Warranty Deed was purportedly executed, the transfer of the Property to the Trust at that time, made for less than adequate consideration, would itself be avoidable pursuant to Fla. Stat. § 726.105(1)(b). That transfer took place a mere six months after the personal guarantee executed by the Judgment Debtors Frank Amelung and Eugenia Amelung in favor of Alesco; a transaction in which the Judgment Debtors incurred a debt of $16,700,000.00. Moreover, as affirmatively appears from the Complaint filed by the North Carolina Attorney General against the Judgment Debtor Frank A. Amelung (Composite Exhibit D) at that time the Judgment Debtor Frank Amelung was an active participant in a business venture in which the Judgment Debtor Frank A. Amelung and his co-venturers defrauded third parties out of tens of millions of dollars in transactions in which the Judgment Debtor Frank A. Amelung and his co-venturers personally guaranteed those

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debts to third parties. See North Carolina Attorney General Complaint (Composite Exhibit D). Alesco respectfully submits that the evidence in the supplementary proceedings will affirmatively establish that the transfer of the Property to the Trust was made at a time when the Judgment Debtor Frank A. Amelung’s remaining assets were unreasonably small in relation to the business and transactions then being conducted by the Judgment Debtor Frank Amelung. iii.

Transfers for Less than Reasonably Equivalent Value while the Judgment Debtor was Insolvent (Fla. Stat. § 726.106(1))

Under Fla. Stat. § 726.106(1), a transfer made for less than reasonably equivalent value may be avoided by a creditor whose claim arose prior to the date of the transfer if the debtor was insolvent at the time of the transfer. See Fla. Stat. § 726.106(1). “Under section 726.106, a transfer is fraudulent, without regard to intent, when two elements are met: (1) there is a transfer without consideration, and (2) the debtor either was insolvent at the time or was made insolvent as a result of the transaction.” Nationsbank, N.A. v. Coastal Utilities, 814 So. 2d 1227, 1231 at n. 1 (Fla. 4th DCA 2002). The judgment was entered on March 29, 2007. See March 29, 2007 Judgment (Docket No. 21). The Deed was not recorded until April 10, 2007 and, therefore, the transfer of the Property to the Trust occurred on that date for purposes of the FFTA. See In re: Mizrahi, 179 B.R. 322 (Bankr. M.D. Fla. 1995) (noting that under the FFTA, the date of a transfer of real property is determined by the date of recordation); see also Sasha & Sasha, Inc. v. Stardust Marine, 741 So. 2d 558, 559 (Fla. 4th DCA 1999) (Where a deed was not recorded, “the statute . . . merely postpones the date of the transfer to immediately prior to the commencement of the action.”).

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Alesco submits, upon information and belief, that the evidence in the proceedings supplementary will show that the transfer of the Property to the Trust was not made for reasonably equivalent value. The Monroe County Property Appraiser lists the assessed value of the Property for ad valorem tax purposes as $799,438.00. See Monroe County Florida Property Appraiser Property Information Card (Exhibit E). By contrast the face of the December 14, 2005 Warranty Deed itself reflects that the transfer was made for no or nominal consideration. These facts affirmatively establish that the Property was transferred to the Trust for less than reasonably equivalent value. Finally, Alesco believes, upon information and belief, that the evidence in the proceedings supplementary will show that Eugenia M. Amelung and Frank A. Amelung were insolvent at the time of the transfer. As evidenced by the certain pleadings filed in the State of North Carolina Superior Court, Frank A. Amelung is a party to a receivership proceeding and may have participated in conduct for which Frank A. Amelung may have liability for tens of millions of dollars both by virtue of personal guarantees executed by Frank A. Amelung and/or by virtue of civil or criminal penalties implicated by the Judgment Debtor Frank A. Amelung’s fraudulent conduct. See Complaint and Order filed in State of North Carolina v. Peerless Real Estate Services, Inc., North Carolina Superior Court, Waku County (Composite Exhibit D). D.

Revocable Trust Regardless of whether the transfer is avoidable as a fraudulent transfer, the

interests of Frank A. Amelung and/or Eugenia M. Amelung in the Trust are also reachable pursuant to proceedings supplementary brought for the enforcement of the March 29, 2007, Judgment in accordance with the Florida law on trusts. “A strong public

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policy exists to prevent any person from placing his property in what amounts to a revocable trust for his own benefit which would be exempt from the claims of his creditors…. Therefore, if a settlor creates a trust for his own benefit and inserts a spendthrift clause, it is void as far as then existing or future creditors are concerned. The existing or future creditors can reach the beneficiary’s interests under the trust.” In re: Cattafi, 237 B.R. 853 (Bkrtcy. M.D. Fla. 1999) (applying Florida law); see also Bogert, Trusts and Trustees, Rev. 2d ed. s 223 (“If a settlor creates a trust for his own benefit and inserts a spendthrift clause, it is void as far as to then existing or future creditors are concerned, and they can reach his interest under the trust.”)3. 3

The above principles were recently codified in Fla. Stat. § 736.0505 (2007), a provision which is part of the new Florida Trust Code which is scheduled to take effect on July 1, 2007, which provides in pertinent part as follows: 736.0505 Creditors' claims against settlor. -(1) Whether or not the terms of a trust contain a spendthrift provision, the following rules apply: (a) The property of a revocable trust is subject to the claims of the settlor's creditors during the settlor's lifetime to the extent the property would not otherwise be exempt by law if owned directly by the settlor. (b) With respect to an irrevocable trust, a creditor or assignee of the settlor may reach the maximum amount that can be distributed to or for the settlor's benefit. If a trust has more than one settlor, the amount the creditor or assignee of a particular settlor may reach may not exceed the settlor's interest in the portion of the trust attributable to that settlor's contribution. This provision will be given effect to Trusts existing as of that date and which will govern all judicial proceedings concerning trusts commenced on or after such date as well as all judicial proceedings concerning trusts which were commenced prior to such date unless the court finds that application of the provision in question would substantially interfere with the conduct of such judicial proceedings or would substantially prejudice the rights of a party thereto. Fla. Stat. § 736.1303(1)(a) – (c).

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Despite Eugenia M.. Amelung and Frank A. Amelung having conveyed their respective interests in the Property to the Trust, that transfer will not immunize the Property from the reach of Alesco’s judgment. For example, in In re: Brown, 303 F. 3d 1261 (11th Cir. 2002), the Court, applying Florida law, held in the context of a self-settled irrevocable charitable remainder unitrust containing a spendthrift clause that the income interest of the settlor/debtor subject to the reach of the settlor/debtor’s creditors. In re: Brown, 303 F.3d at 1271; see also Matter of Witlin, 640 F.2d 661 (5th Cir. 1981), citing Bogert, Trusts and Trustees, 2d ed. s 223, pp. 438, 439; In re: Cattafi, 237 B.R. 853, 856 (Bkrtcy. M.D. Fla. 1999) (“Public policy prevents Debtor from placing his property in a revocable trust for his own benefit, thereby shielding the property from the claims of his creditors. The Trust is void as to Debtor’s existing and future creditors, and such creditors can reach his interest under the Trust.”); Fehlhaber v. Fehlhaber, 850 F.2d 1453 (11th Cir. 1988) (applying Florida law and permitting the garnishment of a revocable trust); compare Mason v. Mason, 798 So. 2d 895 (Fla. 5th DCA 2001) (finding a spendthrift provision enforceable to prevent a creditor from reaching the discretionary interest of the debtor/trustee in a trust established for the benefit of the debtor/trustee by a third party). “[W]hen a person creates a discretionary trust for his own benefit, … ‘his creditors can reach the maximum amount which the trustee under the terms of the trust could pay to him or apply for his benefit, even though the trustee in the exercise of his discretion wishes to pay nothing to the beneficiary or to his creditors, and even though the beneficiary could not compel the trustee to pay him anything.” Lawrence v. Chapter 7 Trustee, 251 B.R. 630, 642 (S.D. Fla. 2000). This is true regardless of the solvency or

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insolvency of the debtor/settlor at the time the trust was established and the property was conveyed to the trust. In re: Brown, 303 F.3d at 1267. Accordingly, the interest in the Property in the possession of Eugenia M. Amelung and Frank A. Amelung, as Trustees of the Amelung Family Revocable Trust dated December 14, 2005, is subject to the reach of Alesco’s judgment and, therefore, Alesco may compel the transfer of the Property back to Eugenia M. Amelung and Frank A. Amelung and the subsequent levy and execution of Alesco’s judgment on the Property pursuant to Alesco’s judgment. E.

Injunctive Relief Fla. Stat. § 726.108(1)(c)1. (2007) authorizes the Court to issue an injunction

preventing the judgment debtor from making further transfers of the asset which is the subject of the fraudulent transfer action, or of other assets, in accordance with the applicable principles of equity and the applicable rules of civil procedure. See Fla. Stat. § 726.108(1)(c)1. (2007). Alesco Financial Inc. respectfully submits that the circumstances are such, given the history of the Judgment Debtors having made fraudulent transfers of their assets, as to warrant the issuance of permanent injunction to prevent the judgment debtors Frank A. Amelung and Eugenia Amelung, or either of them, from making any further transfers or other dispositions of any of their assets for purposes of placing those assets beyond the reach of their creditors. WHEREFORE, Alesco respectfully requests the entry of an Order directed to Defendants Frank A. Amelung and Eugenia M. Amelung, Trustees of the Amelung Family Revocable Trust dated December 14, 2005 as follows:

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A.

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Directing the impleader of Frank A. Amelung and Eugenia Amelung in

their respective capacities as trustees of the Amelung Revocable Family Trust dated December 14, 2005; B.

Directing that Frank A. Amelung and Eugenia M. Amelung, Trustees of

the Amelung Revocable Family Trust dated December 14, 2005, make an appearance and show cause why the Property and other Trust assets (if any) should not be applied to the partial satisfaction of the Judgment debt within 20 days after the date of service; C.

Declaring that the judgment lien of Alesco Financial Inc. which was

recorded on April 17, 2007, in the Official Public Records of Monroe County, Florida attached to the Property as of April 17, 2007; D.

Declaring that the interest of the Amelung Revocable Family Trust dated

December 14, 2005, in the Property (and any other property for which a fraudulent transfer of property by the Judgment Debtors Frank A. Amelung and Eugenia M. Amelung was made to the Trust) to levy and execution on Alesco’s March 29, 2007, Judgment or, alternatively, directing Frank A. Amelung and Eugenia M. Amelung, as Trustees of Amelung Revocable Family Trust to reconvey title to the Property to Eugenia M. Amelung and Frank A. Amelung, individually; E.

Entering an injunction against the Judgment Debtors Frank A. Amelung

and Eugenia M. Amelung both individually and in their representative capacities as Trustees of the Amelung Family Revocable Trust dated December 14, 2005, enjoining the making of any further transfers or dispositions of any property, or any interest therein, including the Property; and

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F.

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Awarding Alesco Financial Inc. its costs and attorneys fees incurred in the

prosecution of this action, jointly and severally against Eugenia M. Amelung, individually, Frank A. Amelung, individually, and Frank A. Amelung and Eugenia M. Amelung, Trustees of the Amelung Revocable Family Trust dated December 14, 2005; and G.

Granting to Alesco Financial Inc. such other and further relief as this

Honorable Court may deem just and equitable. RESPECTFULLY SUBMITTED this 29th day of June, 2007. MOSELEY, PRICHARD, PARRISH, KNIGHT & JONES

/s Eric L. Hearn Eric L. Hearn Florida Bar No. 0094269 501 W. Bay Street Jacksonville, Florida 32202 (904) 356-1306; (904) 354-0194 (facsimile)

CERTIFICATE OF SERVICE I certify that on June 29, 2007, I electronically filed the foregoing Motion for Proceedings Supplementary and for Interpleader with the Clerk of the Court by using the CM/ECF filing system, which will send a notice of electronic filing to the following counsel of record: John Barber MacDonald Akerman Senterfitt 50 N. Laura St., Suite 2500 Jacksonville, FL 32202 /s Eric L. Hearn Eric L. Hearn, Attorney

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INDEX OF EXHIBITS Exhibit

Document Title/Description

A

Affidavit in Support of Judgment Creditor Alesco Financial, Inc.’s first Motion for Proceedings Supplementary and for Impleader of Third Parties April 4, 2002, Trustee’s Deed December 14, 2005, Warranty Deed Receivership Proceeding Filings Monroe County, Florida Property Report Information Printout

B C D E

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