Judge: Michael P. Linfield, Case: BC723015, Date: 2022-08-30 Tentative Ruling
Case Number: BC723015 Hearing Date: August 30, 2022 Dept: 34
SUBJECT: Motion
for a Charging Order
Moving Party: Judgment
Creditor Hollywood Garden, LLC
Resp. Party: None
Judgment Creditor Hollywood Garden,
LLC’s Motion for a Charging Order Against Judgment Debtor Ji Li is GRANTED.
I.
BACKGROUND
On September 24, 2018, Plaintiff
Hollywood Garden, LLC filed a complaint against Defendants Ji Li, Yong Bai, and
Does 1 through 20, inclusive, to allege the following causes of action:
1.
Breach of Operating Agreement
2.
Breach of Covenant of Good Faith and Fair
Dealing
3.
Breach of Fiduciary Duty
4.
Declaratory Relief
On March 3, 2022, the Court granted
Plaintiff Hollywood Garden, LLC's motion for terminating sanctions.
On April 6, 2022, Defendant Ji Li
moved the Court to reconsider its Order issued on March 3, 2022, granting
terminating sanctions in favor of moving party Plaintiff Hollywood Garden, LLC.
On May 10, 2022, the Court denied
Defendant Ji Li’s Motion for Reconsideration.
On June 7, 2022, the Court issued
default judgment for Plaintiff Hollywood Garden LLC against Defendant Ji Li in
the amount of $6,546,516.99. (Judgment, p. 2:5-13.) The Court declared that
Defendant Yong Bai has no membership interest in Hollywood Garden, LLC and that
any interest he purports to hold is void. (Judgment, p. 2:1-4.)
On June 27, 2022, the Court issued
a writ of execution that named Ji Li as the Judgment Debtor and listed the
total amount due in the amount of $6,582,428.19. (Writ of Execution, p. 1.)
On June 27, 2022, Judgment Creditor
Hollywood Garden, LLC moved for a charging order against Judgment Debtor Ji Li,
“based upon a judgment entered against Debtor Li, Creditor's reasonable meet
and confer attempt with Debtor Li, Debtor Li's refusal to pay the judgment,
Debtor Li's admitted ownership of certain limited liability and partnership
interests, Debtor Li's refusal to cooperate, Creditor Hollywood's need for the
charging order, as well as California Code of Civil Procedure §708.310, et
seq.” (Motion, p. 2:1-5.) Judgment Creditor Hollywood Garden, LLC “requests a charging
order and lien for the unpaid balance of the judgment on Debtor Li's interests
in the following entities:
a.
Arrowhead Spring Investment Group, LLC
b.
Fox Property Holdings, LLC
c.
Global China TV Media Group, LLC
d.
Henan Yujian Building Management Co., Ltd
e.
Hollywood Garden, LLC
f.
US Medical Group, LLC
g.
Yorba Linda Garden, LLC” (Motion, p. 2:6-14.)
Judgment Creditor further “requests
the Court order each entity and its principals to pay to Creditor's counsel any
monies now due or to become due in the future to Debtor Li until the judgment
is paid in full with interest or until further order of this Court.” (Motion,
p. 2:15-17.)
On July 29, 2022, Judgment Creditor
Hollywood Garden, LLC brought its Ex Parte Application for a Turnover Order in
Aid of Execution against Judgment Debtor Ji Li. Hollywood “requests turnover of
Debtor Li’s original securities and/or proof of ownership (stock/share
certificates) to the Los Angeles County Sheriff’s Department, Civil Division,
1427 West Covina Pkwy., Rm 127, West Covina, CA 91790 in:
a.
AA Sunrise, Inc.
b.
Auspicious International Medical
c.
China TV Media Group (USA), Inc.
d.
Fox Academy, Inc.
e.
Fox Holding USA, Inc.
f.
Fox University, Inc.
g.
Global Business Accelerator, Inc.
h.
Glory Enterprise, Inc.
i.
Henan Yujian Building Management Co., Ltd
j.
HTTV Holding, Inc.
k.
HTTV Media Management, Inc.
l.
J.L. Management & Construction Corporation
m.
PLG Crafts (USA), Inc.
n.
U.S. Noah Technology Corp.
o.
US Longton, Inc.
p.
US Noah Real Estate Corp.
q.
Washington Mutual Resource & Investment
Group, Inc.” (Ex Parte App. for a Turnover Order, filed July 29, 2022, p.
2:1-20.)
On August 1, 2022, Judgment Debtor
Ji Li opposed Judgment Creditor Hollywood Garden, LLC’s Ex Parte Application.
On August 2, 2022, the Court
granted Judgment Creditor Hollywood Garden, LLC’s Ex Parte Application for a
Turnover Order in Aid of Execution against Judgment Debtor Ji Li.
II.
ANALYSIS
A.
Legal Standard
"Corporations Code section
17705.03, subdivision (a), empowers a court to 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.” (Rice v. Downs (2021) 73
Cal.App.5th 213, 226 [cleaned up].)
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. (CCP § 708.310.) 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).) If a charging
order is issued, the lien created pursuant to subdivision (a) continues under
the terms of the order. If issuance of the charging order is denied, the lien
is extinguished. (CCP § 708.320(b).)
“Again, a charging order is against
an LLC's member's transferable interest, defined as 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 ....
(Corp. Code, § 17701.02, subd. (aa).) When a managing member of an LLC directs
the LLC to disburse funds for the managing member's own purposes, the managing
member does so based on the right ... associated with his or her capacity as a
member, invoking powers in accordance with the operating agreement. Put another
way, the managing member has access to that money only by virtue of his or her
status as managing member, just as members have the right to formal
distributions by virtue of their status as members.” (Rice, 73
Cal.App.5th at p. 227 [cleaned up].)
B.
Discussion
A money judgment in the amount of
$6,546,516.99 was entered against Judgment Debtor Ji Li on June 7, 2022. Service
of the notice of the instant motion for a charging order occurred by mail on
Judgment Debtor Ji Li, Li’s counsel William Walz, Judgment Creditor Hollywood
Garden, LLC, all third-party LLC members, and all domestic entities listed in
the instant notice of motion. (Proof of Service, filed July 27, 2022, Service
List.) Thus, the Court finds that a lien has been placed on Judgment Debtor’s
interest in Hollywood Garden., LLC pursuant to CCP § 708.320(a).
Judgment Creditor’s counsel
“initiated paid investigations and public records searches for Debtor Li’s
assets and liabilities”, and found that Li “has ownership interests in, and
holds memberships in, at least these seven partnership or limited liability
companies.” (Sampson Decl., ¶ 14(a-g).)
a.
Arrowhead Spring Investment Group, LLC
b.
Fox Property Holdings, LLC
c.
Global China TV Media Group, LLC
d.
Henan Yujian Building Management Co., Ltd
e.
Hollywood Garden, LLC
f.
US Medical Group, LLC
g.
Yorba Linda Garden, LLC
Judgment Creditor seeks a Charging
Order against Judgment Debtor’s interest in the aforementioned partnership and
limited liability company entities. (Sampson Decl., ¶ 14(a-g), 15, Exs. 3-9.)
The Court finds no evidence that Judgment Debtor Ji Li has paid the balance due
on the June 7, 2022 judgment. (Liang Decl., ¶ 7.)
The Judgement Debtor has not opposed
this motion.
Pursuant to CCP § 708.320 the Court
grants Judgment Creditor Hollywood Garden, LLC’s request.
III.
CONCLUSION
Judgment Creditor Hollywood Garden,
LLC’s Motion for a Charging Order Against Judgment Debtor Ji Li is GRANTED.