Third District Court of Appeals holds the statute of limitations on a claim for a fraudulent transfer runs from the time of the discovery of the transfer, not from when the fraudulent nature of the transfer was discovered.
In Western Hay Company, Inc. v. Lauren Financial Investments Ltd., 36 Fla. L. Weekly D 953, the Third District Court of Appeals, which governs Miami-Dade County, held that the statute of limitations for a fraudulent transfer ran from the date of the discovery of the transfer, not the date on which the fraudulent nature of the transfer could have been discovered. Florida Statute Section 726.110 (specifying time limitation with regard to fraudulent transfers made with the intent to hinder, delay or defraud) provides that an action must be brought within four years after the transfer was made or, if later, within one year after the transfer could reasonably have been discovered by the claimant. In this case a judgment creditor conducted post judgment discovery and learned of certain transfers that had occurred more than 4 years prior, through a subpoena issued to a bank, but did not learn that the transfers were actually fraudulent payments (given for no consideration) until it deposed the judgment debtor many months later. At the deposition, the creditor learned that the transfers were, indeed, fraudulent in nature since they were made for no other reason than to strip the company of assets. The judgment creditor brought a fraudulent transfer action within 1 year of learning that the transfers were fraudulent, but more than 1 year after learning that the transfer had been made. The Third District applied an exacting standard holding that the action should have been brought within one year after the transfer was made, notwithstanding the fact that the judgment creditor did not know that the transfer was fraudulent. Consequently, persons or entities receiving judgments are cautioned to diligently pursue post judgment discovery.