Litigation: The flaws of the Uniform Asset-Freezing Orders Act
In 2012, the National Conference of Commissioners on Uniform State Laws developed the Uniform Asset-Freezing Orders Act.
June 20, 2013 at 05:15 AM
4 minute read
The original version of this story was published on Law.com
In 2012, the National Conference of Commissioners on Uniform State Laws (NCCUSL) developed the Uniform Asset-Freezing Orders Act (UAFOA). An asset-freezing order freezes the assets of a person or entity who is a defendant in a lawsuit so long as those assets are not exempt from execution under state law. The NCCUSL argues that the UAFOA “creates a uniform process for the issuance of asset freezing orders, which are in personam orders freezing the assets of a defendant in order to prevent a party from dissipating assets prior to judgment.” However, the UAFOA contains a number of onerous provisions that create unfair burdens for parties who have not been found liable for anything.
The NCCUSL argues that states should adopt the UAFOA because it
- Provides a uniform process with procedural protections
- Applies to third party holders of a target defendant's assets
- Creates uniformity in recognition and enforcement
- Allows reciprocity or recognition of such orders in foreign courts
- Provides that the orders are entitled to full faith and credit in the same manner as a judgment
That sounds reasonable enough. However, a close examination of the UAFOA reveals its overly broad scope, and how much of a burden it places on parties who have yet to be found at fault for anything.
The UAFOA authorizes courts to issue asset-freezing orders in any action in which the plaintiff seeks monetary damages. The only exceptions are cases involving consumer debt or that arise from a state's family or domestic relations law. Thus, outside those two limited exceptions, the UAFOA potentially comes into play any time a plaintiff claims money damages to right an alleged wrong. The plaintiff does not even need to show that the target defendant has made some attempt to move or otherwise hide assets.
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Trending Stories
- 1Wine, Dine and Grind (Through the Weekend): Summer Associates Thirst For Experience in 'Real Matters'
- 2The Law Firm Disrupted: For Big Law Names, Shorter is Sweeter
- 3The 'Biden Effect' on Senior Attorneys: Should I Stay or Should I Go?
- 4BD Settles Thousands of Bard Hernia Mesh Lawsuits
- 5'You Are Not Alone': 120 Sex Assault Victims Plan to Sue Sean 'Diddy' Combs
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250