Judge Mark A. Young, Case SC127504 2022-08-05 Tentative Ruling

Judge: Mark A. Young, Case: SC127504, Date: 2022-08-05 Tentative Ruling

Case Number: SC127504 Hearing Date: August 5, 2022 Dept: M

CASE NO.: SC127504

MOTION: Motion for a Charging Order

HEARING DATE: 8/5/2022

Legal Standard

“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.” (CCP, § 708.310.)

Corporations Code section 17705.3(a) provides “[o]n 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.” Further, subsec. (b) provides: “[t]o the extent necessary to effectuate the collection of distributions pursuant to a charging order… the court may… [m]ake all other orders necessary to give effect to the charging order.”

“As used in Corporations Code section 17705.03, a ‘transferrable interest’ is ‘the right, as originally associated with a person’s capacity as a member, to receive distributions from a limited liability company in accordance with the operating agreement, whether or not the person remains a member or continues to own any part of the right.’ [Citation.] A ‘distribution’ is a ‘transfer of money or other property from a limited liability company to another person on account of a transferrable interest. [Citation.]” (Rice v. Downs (2021) 73 Cal.App.5th 213, emphasis added.)

“A lien on a judgment debtor’s interest in a partnership or limited liability company is created by service of a notice of motion for a charging order on the judgment debtor and on either of the following: [¶] (1) All partners or the partnership. [¶] (2) All members or the limited liability company.” (CCP, § 708.320(a).)

Analysis

There is no dispute that Judgment Debtors have paid no money towards satisfaction of judgment. Further, the Judgment Creditor establishes that she served the relevant limited liability corporation, La Brea 90036, LLC, via its Chief Executive Officer and agent for service of process.

The Court will therefore enter the charging order. The Judgment Debtors’ transferable interest in La Brea 90036 LLC is hereby charged with a lien until the judgment held by the Judgment Creditor has been satisfied in full. Any distributions made by La Brea 90036 LLC to the Judgment Debtors shall instead be paid immediately to the Judgment Creditor c/o the Judgment Creditor's attorney at Child & Marton LLP, 1055 W. 7th Street, Suite 3300 Los Angeles, CA 90017.

Based upon the current record, Judgment Creditor’s other requested orders are not reasonably necessary to give effect to the charging order. If circumstances change, however, the Court would grant the additional proposed requests.

Finally, the Court further notes that in Judgment Debtors’ opposition to a pending ex parte application, they indicate that they are prepared to pay the judgment in full. At the hearing, the Court will discuss whether a limited stay on this order is warranted so that this may be accomplished.