Judge: Ronald F. Frank, Case: 22TRCV00292, Date: 2023-09-19 Tentative Ruling
Case Number: 22TRCV00292 Hearing Date: October 25, 2023 Dept: 8
Tentative Ruling¿¿
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HEARING DATE: October 25, 2023¿
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CASE NUMBER: 22TRCV00292
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CASE NAME: Mahmoud Awad
v. Legion Builders, Inc., et al.
MOVING PARTY: Assignee of Judgment, KH Capital, LLC
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RESPONDING PARTY: None.
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MOTION:¿ (1) Motion for Order to Charge
Member’s Interest
Tentative Rulings: (1) GRANTED
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I. BACKGROUND¿¿¿
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On August 18, 2023, KH
Capital, LLC filed a Motion for Order to Charge Member’s Interest in LLC. To
date, no opposition has been filed. On September 19, 2023, this Court
continued this motion. On October 6, 2023, KH Capital, LLC filed a new Motion
for Order to Charge Member’s Interest in LLC.
¿II. ANALYSIS¿¿
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Under Code of
Civil Procedure section 708.310: “[i]f 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 15907.3, 16504, or 17705.03 of
the Corporations Code.” (Code Civ. Proc., § 708.310.)
Corporations Code
section 17705.03, subdivision (a) provides “[o]n 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, § 17705.3.)
“As used in
Corporations Code section 17705.03, a ‘transferrable interest’ is ‘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, whether or not the person remains a member or continues to
own any part of the right.’ [Citation.] A ‘distribution’ is a ‘transfer of
money or other property from a limited liability company to another person on
account of a transferrable interest. [Citation.]” (Rice v. Downs (2021)
73 Cal.App.5th 213.) (Emphasis added.)
Pursuant to Code
of Civil Procedure section 708.320, subdivision (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 … (2) all members or the limited liability company.”
B.
Discussion
Here, a judgment was entered against
Judgment Debtor, Oscar Augusto Davilla in favor of the Judgment Creditor,
Mahmoud Award, in the total sum of $129,937.46, plus accrued interest (at the
legal rate) from November 9, 2022 through the date of the current motion, and
post judgment costs. Now, KH Capital, LLC, who is allegedly the assignee of
record seeks this Court to direct Collection Legion Games, LLC to transfer its
membership interests held in the limited liability company by Judgment Debtor,
Davila, to KH Capital, LLC until the amount remaining due on the judgment, plus
all accrued interest and post-judgment costs are paid in full.
KH Capital, LLC has attached a declaration,
with exhibits, showing that Davila owns the managing membership interest in
Collection Legion Games, LLC (Declaration of Neil J. Kantor (“Kantor Decl.”), ¶
5, Exhibit C.) KH Capital also notes the entrance of an enforceable money
judgment by this Court against Judgment Debtor in favor of Plaintiff on
November 9, 2022, in the amount of $129,937.46. (Kantor Decl., ¶ 6, Exhibit B.)
KH Capital, LLC also notes that the assignee of record judgment is not a member
of any of the named entities, and that the Judgment debtor has failed to
voluntarily pay anything toward this judgment. (Kantor Decl., ¶ 4.) Based on
this, KH Capital, LLC assets that a charging would create a lien on the
judgment debtor’s membership interest in Collection Legion Games, LLC in order
to allow the Assignee of Record to collect the Judgment
Based
on the motion, declaration, and exhibits provided, and in the absence of any
objection or opposition from the judgment debtor, the Court GRANTS this motion
and charges the Debtor’s interest in Collection Legion Games, LLC with
management membership control over the LLC until such time the Judgment is paid
in full.
III.
CONCLUSION¿¿¿
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Based
on the foregoing, the Court GRANTS KH Capital, LLC’s motion.
Moving
party is ordered to give notice.