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.