Judge: Mark H. Epstein, Case: 19SMCV02059, Date: 2023-02-09 Tentative Ruling

The Court generally uploads tentative rulings the morning of the hearing.  Because of that, the parties cannot submit on the tentative the night before and not appear.  However, if after reviewing the tentative ruling ALL COUNSEL submit, they should tell the Court's judicial assistant when checking in and the Court will endeavor to either not hear the case in light of the submission or, if the Court believes that a hearing is still needed for some other reason, then the Court will be inclined to give priority.

In some cases, tentative rulings may be given by email the morning of the hearing rather than on the tentative ruling site.  Please check your email if you have not seen the tentative.  The email is generally sent to the persons who have signed up for a remote hearing.

For those appearing in the courtroom, the Court will provide a hard copy of the tentative ruling. 

Case Number: 19SMCV02059    Hearing Date: February 9, 2023    Dept: R

The unopposed motion to charge  the member’s interest is DENIED WITHOUT PREJUDICE.

This case stems from a default judgment obtained against Marmon in favor of Gamaty on January 15, 2021.  The judgment was assigned to Harari, who brings the instant motion pursuant to Code of Civil Procedure section 708.310.  That statute allows the judgment debtor’s interest in a partnership or LLC to be applied toward satisfaction of the judgment by way of a charging order.  Such an order constitutes a lien on the judgment debtor’s transferable interest and requires the entity to pay over to the judgment creditor any money that would otherwise have been paid to the judgment debtor.

Here, Harari seeks a charging order for Marmon’s alleged membership in Joshua Tree 1, LLC.  Harari has presented evidence suggesting that Marmon attempted to transfer his interest to his wife as her sole and separate property in an effort to shield the property from the judgment.  Through a series of transactions, Marmon’s spouse now holds the interest in Joshua Tree 1 as her sole and separate property.  As the court understands it, the Joshua Tree property was originally held by Marmon and the LLC (and perhaps by Marmon’s wife).  But after the judgment was entered, Marmon transferred the LLC’s interest and his interest to his wife such that she owned the property in her name alone.  She then transferred the property back to the LLC, which now owns the property.  However, Marmon’s wife is the LLC’s sole owner.

The question is whether Marmon has any membership interest in the LLC that can be charged.  Harari has submitted the Kantor declaration, which shows (in a short period of time) the LLC transferring its interest in the property to Marmon’s wife, Marmon transferring his interest in the property to his wife, and his wife transferring the property back to the LLC. 

So what is really happening here is not that Marmon is attempting to get a charging order relating to his interest in the LLC; he apparently has none.  He is trying to get a charging order as to his wife’s interest in the LLC. The statute under which he seeks relief is the wrong vehicle. 

True, Family Code section 851 expressly provides that one cannot turn community property into separate property by means of a fraudulent transfer.  But the court is not even positive that Marmon himself was ever an actual member of the LLC.  And while there is some indication that the transfer might have been a voidable one, Harari has not really done what is needed to show as much.  The court has not seen any evidence that Marmon got no consideration for the transfer, for example.  Civil Code section 3439.04 governs the legitimacy of the transfer, but it is not discussed.

In short, the showing is not sufficient.  Harari will need to make a more robust showing that Marmon had an interest in the LLC and that the various transfers by which his interest were divested were not legitimate.  That is not a showing that will be impossible to make; it is just that it has not quite been made yet.  To be clear, there is certainly smoke here.  But plaintiff will have to do more.  Plaintiff really needs to show that this is a voidable transfer and, in that light, either take back the interest in the LLC or get a charging order on that basis.

The court also notes that there is no indication that the motion was served on the LLC.  Such service should have been made.