Judge: Christopher K. Lui, Case: 22STCV02662, Date: 2024-11-14 Tentative Ruling

Case Number: 22STCV02662    Hearing Date: November 14, 2024    Dept: 76

            This is a lawsuit filed by Plaintiff general contractor alleging that Defendant subcontractor has breached a settlement agreement by filing an arbitration demand.

            The court granted Defendant’s motion to compel arbitration..

            Defendant KS Steel Corporation obtained an order confirming the arbitration award.

The Court entered judgment in favor of Defendant KS Steel Corporation and granted Defendant’s now motion to add Andrew Meyers Abdul-Wahab as an additional judgment debtor on the ground that there is a unity of interest and ownership between Debtor Shangri-La Construction, LP and Wahab.

Defendant judgment debtor now seeks an order imposing a lien and charging orders on the membership interests of Andrew Meyers Abdul-Wahab in certain limited liability companies. Defendant also seeks certain injunctive relief.

TENTATIVE RULING

Defendant/Judgment Creditor K S Steel Corporation’s motion for an order imposing a lien and charging orders on the membership interests of Andrew Meyers Abdul-Wahab in the identified California limited liability companies, and related orders, is GRANTED.

ANALYSIS

Motion For Charging Order

The Court entered judgment in favor of Defendant KS Steel Corporation and granted Defendant’s motion to add Andrew Meyers Abdul-Wahab as an additional judgment debtor on the ground that there is a unity of interest and ownership between Debtor Shangri-La Construction, LP and Wahab.

Defendant judgment debtor now seeks the following orders:

1. Creditor will seek Orders imposing a lien and charging orders on the membership interests of Andrew Meyers Abdul-Wahab (hereafter DEBTOR) in the following California limited liability companies: Veterans Housing Partnership, LLC; MH Industries, LLC, Shangri-La Industries, LLC, W Investments, LLC, 12 Conejo Preservation, LLC, Shangri-La Development, LLC, I.E. Properties Group, LLC, 37th Place, LLC and Shangri-La Capital, LLC. Creditor will seek a charging Order and lien equal to the amount of the current writ of favor of Creditor in the sum of$290,001.64 or according to proof at the time of the motion;

2. Creditor will seek Orders restraining DEBTOR and Veterans Housing Partnership, LLC; MH Industries (DE), LLC, Shangri-La Industries, LLC, W Investments, LLC, 12 Conejo Preservation, LLC, Shangri-La Development, LLC, I.E. Properties Group, LLC, 37th Place, LLC and Shangri-La Capital, LLC from paying any distributions to DEBTOR pursuant to C.C.P. Section 708.520 and restraining DEBTOR from transferring, selling, hypothecating, concealing, selling or encumbering any assets of the subject LLC's and including Debtor's membership interests subject to this motion until further Order of this court;

3. Creditor will seek Orders requiring Veterans Housing Partnership, LLC; MH Industries (DE), LLC, Shangri-La Industries, LLC, W Investments, LLC, 12 Conejo Preservation, LLC, Shangri-La Development, LLC, I.E. Properties Group, LLC, 3 7th Place, LLC and Shangri-La Capital, LLC to pay over to Creditor any distributions otherwise payable to DEBTOR until further Order of this court.  

This motion is made on the ground that DEBTOR is probably a member of Veterans Housing Partnership, LLC; MH Industries (DE), LLC, Shangri-La Industries, LLC, W Investments, LLC, 12 Conejo Preservation, LLC, Shangri-La Development, LLC, I.E. Properties Group, LLC, 37th Place, LLC and Shangri-La Capital, LLC which are limited liability companies that are authorized to conduct business in California. The DEBTOR's membership interests in the LLC's are assets, not subject to any judgment enforcement exemption and are subject to CREDITOR's enforcement of judgment rights.

Judgment Creditor argues that DEBTOR is listed as a member or officer in the Statements of Information filed with the secretary of state (Exhibit B), in public records databased (Exhibit C) or in records subpoenaed from various financial institutions, Exhibit D.

Civ. Proc. Code, § 699.720 (a)(2) provides:

(a) The following types of property are not subject to execution:

. . .

(2) The interest of a partner in a partnership or member in a limited liability company if the partnership or the limited liability company is not a judgment debtor.

     (Civ. Proc. Code § 699.720.)

            However, Civ. Proc. Code, § 708.310, provides:

If a money judgment is rendered against a partner or member but not against the partnership or limited liability company, the judgment debtor’s interest in the partnership or limited liability company may be applied toward the satisfaction of the judgment by an order charging the judgment debtor’s interest pursuant to Section 15907.03, 16504, or 17705.03 of the Corporations Code.

     (Civ. Proc. Code § 708.310.)

            Corporations Code § 17705.03 provides:

(a) On application by a judgment creditor of a member or transferee, a court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment. A charging order constitutes a lien on a judgment debtor’s transferable interest and requires the limited liability company to pay over to the person to which the charging order was issued any distribution that would otherwise be paid to the judgment debtor.

(b) To the extent necessary to effectuate the collection of distributions pursuant to a charging order in effect under subdivision (a), the court may do any of the following:

(1) Appoint a receiver of the distributions subject to the charging order, with the power to make all inquiries the judgment debtor might have made.

(2) Make all other orders necessary to give effect to the charging order.

(3) Upon a showing that distributions under a charging order will not pay the judgment debt within a reasonable time, foreclose the lien and order the sale of the transferable interest. The purchaser at the foreclosure sale obtains only the transferable interest, does not thereby become a member, and is subject to Section 17705.02.

(c) At any time before foreclosure under paragraph (3) of subdivision (b), the member or transferee whose transferable interest is subject to a charging order under subdivision (a) may extinguish the charging order by satisfying the judgment and filing a certified copy of the satisfaction with the court that issued the charging order.

(d) At any time before foreclosure under paragraph (3) of subdivision (b), a limited liability company or one or more members whose transferable interests are not subject to the charging order may pay to the judgment creditor the full amount due under the judgment and thereby succeed to the rights of the judgment creditor, including the charging order.

(e) This title does not deprive any member or transferee of the benefit of any exemption laws applicable to the member’s or transferee’s transferable interest.

(f) This section provides the exclusive remedy by which a person seeking to enforce a judgment against a member or transferee may, in the capacity of judgment creditor, satisfy the judgment from the judgment debtor’s transferable interest.

     (Corp. Code § 17705.03.)

(a) When an application is made pursuant to Section 708.510 or thereafter, the judgment creditor may apply to the court for an order restraining the judgment debtor from assigning or otherwise disposing of the right to payment that is sought to be assigned. The application shall be made on noticed motion if the court so directs or a court rule so requires. Otherwise, it may be made ex parte.

(b) The court may issue an order pursuant to this section upon a showing of need for the order. The court, in its discretion, may require the judgment creditor to provide an undertaking.

(c) The court may modify or vacate the order at any time with or without a hearing on such terms as are just.

(d) The order shall be personally served upon the judgment debtor and shall contain a notice to the judgment debtor that failure to comply with the order may subject the judgment debtor to being held in contempt of court.

     (Civ. Proc. Code, § 708.520 [bold emphasis added].)

            Moving party has made a sufficient showing that it is entitled to the relief sought under Corp. Code §§ 708.310 and 17705.03. The records attached to the Declaration of John M. Kalajian as Exhibits B, C, and D reflect that Andrew Meyers Abdul-Wahab likely has some membership interest in these entities—Shangri-La Capital, LLC; Shangri-La Industries, LLC; Veterans Housing Partnership, 12 Conejo Preservation, LLC; 37th Place, LLC; and W Investments, LLC.  that are subject to this judgment creditor remedy. (Kalajian Decl., ¶¶ 3 and 4.) To the extent Abdul-Wahab does not actually have any membership interest, the order simply will not apply.

As such, the motion for an order imposing a lien and charging orders on the membership interests of Andrew Meyers Abdul-Wahab in the identified California limited liability companies, and related orders, is GRANTED.