Judge: Gregory Keosian, Case: 20STCV01095, Date: 2023-01-23 Tentative Ruling

Case Number: 20STCV01095    Hearing Date: January 23, 2023    Dept: 61

Judgment Creditor Zachary Werner’s Motion for Order Charging Judgment Debtor Joseph Rubin’s Interest in Rubin Capital Group, LLC is GRANTED. No receiver is appointed.

Plaintiff to provide notice.

I.                MOTION TO CHARGE MEMBER’S INTEREST

“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 15907.3, 16504, or 17705.03 of the Corporations Code.” (Code Civ. Proc. § 708.310.)

“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.” (Corp. Code § 17705.03, subd. (a).) The court may make orders necessary to effectuate the charging order, including the appointment of a receiver of the distributions subject to the charging order, or if a showing is made that distributions under the charging order will not pay the judgment within a reasonable time, a foreclosure upon the lien and a sale of the transferable interest. (Corp. Code § 17705.03, subd. (b)(1)–(3).)

“The court may appoint a receiver to enforce the judgment where the judgment creditor shows that, considering the interests of both the judgment creditor and the judgment debtor, the appointment of a receiver is a reasonable method to obtain the fair and orderly satisfaction of the judgment.” (Code Civ. Proc. § 708.620.)

Judgment Creditor Zachary Werner (Werner) seeks an order charging judgment debtor Joseph Rubin’s interest in Rubin Capital Group, LLC. Rubin has a judgment entered against him in this action in the amount of $665,730.99.

Rubin confirmed both in responses to interrogatories and during his judgment-debtor examination that he owns a 100% interest in Rubin Capital Group, LLC (Capozzola Decl. Exh. G at p. 3; Exh. J at p. 44.) Rubin has testified that Rubin Capital Group receives $20,000.00 monthly from the Coachella Lighthouse, that the money goes to pay Rubin’s $6,000.00 monthly rent, plus a $1,480.00 monthly lease on a Range Rover for Rubin, as well as Rubin’s groceries and individual legal fees. (Capozzola Decl. Exh. J at pp. 16–19, 36–37, 45–46.) Rubin Capital Group has no employees or officers, other than Rubin. (Capozzola Decl. Exh. J at p. 10.)

Werner has demonstrated good cause for the charging order in this case. According to the evidence presented by Werner, Rubin Capital Group is little distinguishable from Rubin himself, given his status as sole owner and officer, and his use of Rubin Capital Group’s funds for his own purposes. As the judgment in this case is collectable against Rubin, a charging order of his interest in Rubin Capital Group is similarly appropriate.

Werner argues that a receiver is necessary to ensure the proper distributions are made, as the LLC in this case lacks independence from Rubin, who Werner claims will likely refuse to comply with the charging order. (Motion at p. 7.) While the appointment of a receiver may be appropriate where a judgment debtor controls “property which rightfully should be subject to execution, . . . [t]he power to appoint a receiver is a delicate one which is exercised sparingly and with caution, and only in an extreme case under such circumstances as demand or require summary relief, and never in a doubtful case or where there is no necessity or occasion for the appointment.” (Morand v. Superior Court (1974) 38 Cal.App.3d 347, 350.) Werner cites Rubin’s underlying misconduct that was the subject of the arbitration award, his failure to provide information in response to arbitrator inquiries, and Rubin’s efforts to avoid judgment-debtor examination in this matter, such as his failure to appear for examination on August 9, 2022, and his subsequent motion to quash. (Motion at pp. 8–9; Capozzola Decl. Exhs. C, H, I.) Werner also cites the receiverships appointed over the Lighthouse Palm Springs LLC in the case ANE Holdings, LLC v. Rubin, in Riverside County Superior Court. (Capozzola Decl. Exh. M.)

Werner has not demonstrated the necessity of a receivership in this case. This is not “an extreme case” where such an appointment is proper. (Morand, supra, 38 Cal.App.3d at p. 350.) Despite his prior failure to appear, Rubin appeared for his judgment debtor examination on October 5, 2022. (Capozzola Decl. Exh. J.) Werner has not demonstrated a likelihood that Rubin will fail to comply with this charging order such that the drastic remedy of a receiver is appropriate.

Accordingly, the motion for a charging order is GRANTED. No receiver is appointed.