Charging Order Opinions New

NEW OPINIONS

Stich v. Mattingly, 2024 WL 2788210 (Ky.App., May 31, 2024).
♦ Stich v. Mattingly, 2024 WL 2788210 (Ky.App., May 31, 2024), involves a dispute between Kevin Stich, a member of a limited liability company (LLC) called Haunt Brothers, LLC, and Kevin Mattingly, a judgment creditor. Mattingly obtained a judgment against Stich for unpaid rent and sought to collect on the judgment by foreclosing on Stich's interest in Haunt Brothers. (1) Key Points: (a) Charging Order: Mattingly obtained a charging order against Stich's interest in Haunt Brothers, which gave him the right to receive distributions from the LLC up to the amount of the judgment. (b) Foreclosure: Mattingly sought to foreclose on Stich's interest in Haunt Brothers, arguing that he was entitled to the entire interest, not just the right to receive distributions. (c) Stich's Argument: Stich argued that the foreclosure should be limited to his right to receive distributions up to the amount of the judgment. (d) Court's Decision: The court affirmed the foreclosure order, finding that the statute (KRS 275.260) allows for the foreclosure of the entire interest in the LLC, not just the right to receive distributions. (2) Reasoning: (a) The court interpreted the statute to mean that the "limited liability company interest subject to the charging order" in KRS 275.260(4) refers to the judgment debtor's entire transferable interest in the company. (b) The court found that limiting the foreclosure to the right to receive distributions would render the foreclosure provision meaningless. (c) The court reasoned that the foreclosure process is intended to provide a more drastic remedy for creditors, allowing them to recoup their debts through a forced sale of the member's entire interest. (3) Outcome: The court upheld the foreclosure order, allowing Mattingly to foreclose on Stich's entire interest in Haunt Brothers, LLC. This means that Stich will lose his membership in the LLC, and the purchaser at the foreclosure sale will acquire his rights as an assignee. (4) Implications: This case highlights the importance of understanding the specific provisions of the Kentucky Limited Liability Company Act (KRS 275.001 et seq.) when dealing with charging orders and foreclosures. It also demonstrates that creditors can use foreclosure as a powerful tool to collect on judgments against LLC members. ♦

245 Park Member LLC v. HNA Group (Int'l) Co., 2024 WL 1506798 (2nd Cir., April 8, 2024).

Campbell v. 1 Spring, LLC, 2024-Ohio-308, 2024 WL 342686 (Ct.App., Slip Op., Jan. 30, 2024).

Universal Life Ins. Co. v. Lindberg, 2023 WL 8379394 (N.C.App., Dec. 5, 2023).
♦ Universal Life Ins. Co. v. Lindberg, 2023 WL 8379394 (N.C.App., Dec. 5, 2023), is a legal opinion from the Court of Appeals of North Carolina in the case of Universal Life Insurance Company v. Greg E. Lindberg. The opinion addresses the validity of an injunction and a charging order issued by a lower court in an attempt to enforce a federal court judgment against Lindberg. Here's a breakdown of the key points: (1) The Injunction: (a) The court found that the trial court lacked jurisdiction to issue the injunction. This is because the plaintiff, Universal Life Insurance Company, did not attempt to execute the judgment through a writ of execution before seeking the injunction. North Carolina law requires a returned, unsatisfied writ of execution before supplemental proceedings, like the injunction, can be pursued. (b) The court vacated the injunction. (2) The Charging Order: (a) The court found that the charging order was too broad. It included LLCs in which Lindberg did not have an "economic interest" as defined by the North Carolina Limited Liability Company Act. (b) The court reversed the charging order in part. The trial court must reduce the number of LLCs included in the charging order to only those where Lindberg is a member or has a legally assigned economic interest. (c) The court also reversed the charging order's requirements for Lindberg to produce documents and freeze distributions. These requirements were deemed beyond the scope of the "exclusive remedy" provided by the NC LLC Act. (3) Overall: The Court of Appeals found that the lower court's attempts to enforce the judgment against Lindberg were flawed. The injunction was vacated, and the charging order was significantly narrowed. The case was remanded back to the trial court for further proceedings consistent with the appellate court's opinion. (4) Key Takeaways: (a) Jurisdiction is crucial. The court emphasized the importance of following proper procedures, such as attempting to execute a judgment before seeking supplemental relief. (b) Statutory interpretation is key. The court carefully analyzed the language of the NC LLC Act to determine the scope of the charging order. (c) The "exclusive remedy" principle matters. The court recognized that the NC LLC Act provides a specific remedy for judgment creditors, and any additional requirements must be justified by other legal authority. ♦

In re Canada, Bk.N.D.Tex. Case No. 23-30568 (Dec. 5, 2023).

Saregama India, Ltd. v. Subramanian Aiyer, N.D.Cal. Case No. 23-MC-80172 (Nov. 29, 2023).

Prime Victor Int'l Ltd. v. Simulacra Corp., D.Nev. Case No. 23-MS-00014 (Nov. 29, 2023).

Crabar/GBF, Inc. v. Wright, 2023 WL 8110737 (D.Neb., Nov. 22, 2023).

Pettine v. Direct Biologics, LLC (In re Pettine), 2023 WL 7648619 (BAP 10th Cir., Nov. 15, 2023).

Brockley v. Ellis, 2023 WL 6303748 (S.D., Sept. 27, 2023).

Mexico Foods Holdings, LLC v. Nafal, 2023 WL 6284705 (Tex.App. Dallas, Sept. 27, 2023).

Bran v. Spectrum MH, LLC, 2023 WL 5487421 (Tex.App., 14th Distr., August 24, 2023).

Klinek v. Luxeyard, Inc., 2023 WL 4497063 (Tex.App. 14th Distr., July 13, 2023).

In re McCuan, 2023 WL 4030468 (M.D.Fla. 2:19-CV-317, June 15, 2023).

Wright v. Shenandoah Investors, LLC, 2023 NY Slip Op. 31392(U)

Fremont Bank v. Signorelli, 2023 WL 2505021 (N.D.Cal., Feb. 24, 2023).