Judge: Michael P. Linfield, Case: 23STCP01228, Date: 2023-05-25 Tentative Ruling

Case Number: 23STCP01228    Hearing Date: March 1, 2024    Dept: 34

SUBJECT:        Motion for Order Charging Judgment Debtor Noah Ornstein’s Limited Liability Company Membership Interests

Moving Party: Petitioner EquityMultiple 132, LLC

Resp. Party:    None

The Motion for Charging Order is GRANTED.

BACKGROUND:

        On April 18, 2023, Petitioner EquityMultiple 132, LLC filed Judicial Council Form ADR-106, Petition to Confirm Contractual Arbitration Award against Respondents Onteora Partners, LLC and Noah Ornstein.

        On May 25, 2023, the Court granted the Petition and confirmed the arbitration award.

        On July 5, 2023, the Court entered Judgment in this matter.

        On January 30, 2024, Petitioner (now “Judgment Creditor”) filed Motion for Order Charging Judgment Debtor Noah Ornstein’s Limited Liability Company Membership Interests (“Motion for Charging Order”). In support of its Motion for Charging Order, Judgment Creditor concurrently filed: (1) Declaration of Cyndie M. Chang; (2) Proposed Order; and (3) Proof of Service.

        On February 23, 2024, Judgment Creditor filed its Reply.

        No opposition or other response was filed by Respondents (now “Judgment Debtors”).

ANALYSIS:

I.          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 15907.03, 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).)

“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.”

(Corp. Code, § 17705.03, subd. (b).)

“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.” (Corp. Code, § 17705.03, subd. (c).)

“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.” (Corp. Code, § 17705.03, subd. (d).)

“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.” (Corp. Code, § 17705.03, subd. (e).)

“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, subd. (f).)

II.       Discussion

Judgment Creditor moves the Court to enter an order charging Judgment Debtor Noah Ornstein’s interests in various limited liability companies. (Motion for Charging Order, p. 7:12–13.)

Judgment Creditor provides the Court with evidence that indicates Judgment Debtor Noah Ornstein has a transferable interest in each of these limited liability companies. (Decl. Chang, Exhs. B–S.) The Court has not been presented with evidence that would indicate the Judgment has been satisfied.

At this time, Judgment Creditor has only requested that the limited liability companies be charged, not that the liens on the transferable interests be foreclosed upon. (See Proposed Order.)

Judgment Debtors and the various limited liability companies have not opposed or otherwise responded to the Motion for Charging Order. The Proof of Service indicates that Judgment Debtors and the various limited liability companies were served notice of the Motion for Charging Order.

The evidence before the Court indicates that a charging order would be appropriate here.

III.     Conclusion

The Motion for Charging Order is GRANTED.