Judge: Michael P. Linfield, Case: BC697147, Date: 2023-08-17 Tentative Ruling

Case Number: BC697147    Hearing Date: March 12, 2024    Dept: 34

SUBJECT:        Motion for Order to Charge Member Interest in Limited Liability Companies

Moving Party: Judgment Creditors United Escrow Co. and Tracy Ko

Resp. Party:    None

The Motion for Charging Order is GRANTED.

BACKGROUND:

I.          Procedural History Until Judgment

On March 7, 2018, Plaintiff Caroline S. Lee (“Plaintiff”) filed her Complaint against Defendants Jong Han Lee (“Lee”), Bow Tie Realty and Investment, Inc. (“Bow Tie”), Tracy Ko (“Ko”), and United Escrow Co. (“United”).

On June 5, 2018, by request of Plaintiff, the Clerk’s Office dismissed without prejudice Lee and Bow Tie from the Complaint.

On July 17, 2018, Bow Tie filed its Complaint in Intervention. 

On September 17, 2019, the Court entered Judgment in favor of Ko and United, and against Plaintiff.

Also on September 17, 2019, the Court entered Judgment in favor of Bow Tie and against Plaintiff.

II.       Post-Judgment Procedural History

        Since the entry of the Judgments, this case has had a long procedural history, most of which need not be recounted here.  Many awards of fees and costs have been entered against Plaintiff and in favor of Bow Tie, Ko, and United. These awards include fees and costs awarded after six appeals that Plaintiff repeatedly lost.

Plaintiff is the judgment debtor. The remaining Parties (“Bow Tie,” “Ko,” and “United”) are now judgment creditors.

        On July 21, 2020, the Court found related cases BC697147 and 20STCV14403, and designated case BC697147 as the lead case.

On October 25, 2023, by request of Judgment Creditors United and Ko, the Clerk’s Office issued a Writ of Execution, indicating the total amount due to them is $307,776.00.

On November 7, 2023, the Court issued its most recent award of fees and costs in favor of Judgment Creditors Bow Tie and United, jointly severally, and against Judgment Debtor in the total amount of $4,320.65.

On February 9, 2024, Judgment Creditor Bow Tie filed Judicial Council Form EJ-100, Acknowledgment of Satisfaction of Judgment — Partial.

On February 14, 2024, Judgment Creditors United and Ko filed their Motion for Order to Charge Member Interest in Limited Liability Companies (“Motion for Charging Order”).

No opposition or other response has been filed to the Motion for Charging Order.

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 Creditors United and Ko move the Court to enter an order charging Judgment Debtor’s interests in three limited liability companies: 7851 Holdings, LLC; Comet Hyesung, LLC; and Chung Soonkyo, LLC. (Motion for Charging Order, pp. 1:18–26, 4:19.)

Judgment Creditors United and Ko provide the Court with evidence that indicates Judgment Debtor has a transferable interest in each of these limited liability companies. (Motion for Charging Order, Exhs. 2–4.)

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. (Motion for Charging Order, p. 3:4–9.)

Judgment Debtor 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 Debtor and the various limited liability companies were served notice of the Motion for Charging Order. (Motion for Charging Order, Proof of Service.)

III.     Conclusion

The Motion for Charging Order is GRANTED.  Judgement Creditors to prepare the Order.