Judge: Peter A. Hernandez, Case: KC070500, Date: 2022-10-27 Tentative Ruling

Case Number: KC070500    Hearing Date: October 27, 2022    Dept: O

Plaintiff/Judgment Creditor Art Weiss, Inc.’s Amended Motion for Charging Order is GRANTED.

Background[1]  

Plaintiff Art Weiss, Inc. (“Plaintiff”) alleges as follows:

Plaintiff is the owner of the real property located at 13450 Brooks Drive, Unit A, Baldwin Park, CA 91706 (“Premises”). On or about May 23, 2017, Plaintiff leased the Premises to Defendant NRD, LLC (“NRD”) for a two-year term; Defendant Avshalom Cohen aka Abe Cohen (“Cohen”) executed a guaranty on that date. NRD returned possession of the Premises before the expiration of the lease, failed to pay rent, and failed to repair and maintain the Premises and other necessary systems of the Premises.

On March 10, 2020, Plaintiff filed a First Amended Complaint, asserting causes of action against NRD, Cohen and Does I-III for:

1.                  Common Counts

2.                  Breach of Contract

3.                  Breach of Written Guaranty

On February 16, 2021, NRD’s and Cohen’s defaults were entered; that day, Plaintiff dismissed Does I-III, without prejudice.

On May 26, 2021, default judgment was filed.

On June 14, 2021, an abstract of judgment was issued. On January 31, 2022, a writ of execution was issued. On September 29, 2022, a second writ of execution was issued.

Legal Standard

“[A]ll property of the judgment debtor is subject to enforcement of a money judgment.” (Code Civ. Proc., § 695.010, subd. (a).)

“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.)

Additionally, “(a) 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.” (Code Civ. Proc., § 708.320, subd. (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.” (Code Civ. Proc., § 708.320, subd. (b).)

“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 or 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).)

Discussion

Plaintiff/Judgment Creditor (“Judgment Creditor”) moves the court for an order charging Cohen’s interest in the limited liability company known as Bezrat Hashem, LLC (“Bezrat Hashem”) and directing Bezrat Hashem to pay any distributions made to Cohen to Judgment Creditor in order to satisfy the judgment entered by the court in this action.

Request for Judicial Notice

The court rules on Judgment Creditor’s Request for Judicial Notice (“RJN”) as follows: Granted as to Exhibit 1 (i.e., judgment entered May 26, 2021); Granted as to Exhibit 2 (i.e., June 21, 2022 minute order) and Granted as to Exhibit 3 (i.e., California Secretary of State LLC Registration—Articles of Organization for Bezrat Hashem LLC filed December 24, 2019, California Secretary of State Statement of Information for Bezrat Hashem LLC filed January 8, 2020 and California Secretary of State Statement of No Change filed December 22, 2021).

Merits

On May 26, 2021, the court entered judgment against NRD and Cohen and in favor of Judgment Creditor in the sum of $71,412.68. (RJN, Exh. 1.) Cohen has an interest in Bezrat Hashem LLC; per California Secretary of State filings, Cohen is the sole member, manager and chief executive officer of Bezrat Hashem LC, owning a 100% share in same. (Id., Exh. 3.)

No part of the judgment has been paid as of the date of the motion. (Motion, 3:17-18.)  The motion is granted.