2000-2009 Opinions
2000 Site.Year2000to2009ChargingOrderOpinions
2000 To 2009 Charging Order Opinions
Green v. Bellerive Condominiums LP., 135 Md.App. 563, 763 A.2d 252 (Md.Sp.App., 2000).
Keeler v. Academy of American Franciscan History, Inc. (In re Keeler), 257 B.R. 442 (Bk.D.Md., 2001).
♦ The bankruptcy court addressed whether a pre-bankruptcy charging order obtained by a judgment creditor against a debtor’s partnership interests is extinguished by the debtor’s subsequent Chapter 7 discharge. Robert Keeler filed Chapter 7 in December 1999, listing partnership interests (through Gaither Road Partnership) and listing the Academy and Wheeler & Korpeck, LLC (W&K) as unsecured creditors; he received a discharge and the case was closed in mid-2000. Keeler later moved to reopen, arguing that the Academy’s prepetition charging order (entered in 1989) could not survive discharge and that the Academy and W&K (as escrow agent distributing partnership proceeds) improperly continued diverting post-discharge distributions to the Academy. The court held the issue was purely legal and concluded Keeler’s “satisfaction” theory was wrong: discharge enjoins personal collection but does not extinguish the underlying debt or invalidate prepetition liens. Under bankruptcy principles, liens generally “ride through” bankruptcy unless avoided, and under Maryland law a charging order creates a lien-like interest in the partner’s partnership interest and related distributions. Because no order in the bankruptcy case avoided or altered the charging order lien, the Academy’s post-discharge enforcement of that prepetition lien through partnership distributions did not violate the discharge injunction; accordingly, the court denied Keeler’s motion and granted the Academy’s cross-motion for summary judgment. ♦
Webster v. Dalcoma Limited Partnership Four, No. CA2000-11-028 (Ohio App. Dist.12 09/17/2001).
Cadle Co. v. Ginsburg, 2002 WL 725500 (Conn., Unpublished, 2002).
♦ The plaintiff judgment creditor sought a charging order under Connecticut General Statutes § 34–171 against the defendant’s membership interest in Jai Alai Associates, LLC to satisfy an unsatisfied judgment (and a later attorneys’ fee award). The defendant objected, arguing that the LLC and the Internal Revenue Service had to be joined as parties and that a charging order would improperly allow an unlicensed person to hold an interest in a jai alai business contrary to state licensing law. The court rejected each objection, explaining that § 34–171 does not require making the LLC a party because a charging order simply gives the creditor the rights of an assignee—i.e., the right to receive distributions the member would otherwise receive—without conferring management rights or membership status. The court also held that the IRS need not be joined because any charging order would remain subject to whatever superior lien rights the IRS may have. Finally, the court concluded that jai alai licensing requirements do not bar issuance of a charging order because the order does not make the creditor a participating owner or manager of the jai alai operation. Accordingly, the court granted the application and ordered the LLC to remit to the plaintiff the distributions otherwise payable to the defendant until the judgment is satisfied, while declining (for lack of necessity shown) to appoint a receiver or compel disclosure of the LLC’s books and records at that time. ♦
Raccoon Recovery, LLC v. Navoi Mining & Metallurgical Kombinat, 244 F.Supp.2d 1130 (D.Colo., 2002).
♦ Raccoon Recovery, as assignee of a bankruptcy judgment, sought a charging order and discovery to enforce a judgment against Navoi, an Uzbek state-owned mining enterprise. Navoi removed the case to federal court and argued that it was an agency or instrumentality of the Republic of Uzbekistan entitled to sovereign immunity under the Foreign Sovereign Immunities Act (FSIA), that Raccoon failed to effect proper service under the FSIA, and that the assets targeted for execution—Navoi’s alleged interest in a gold-mining joint venture in Uzbekistan—were immune from attachment. After reviewing declarations, charters, and other evidence, the magistrate judge concluded that Navoi made a prima facie showing of foreign sovereign status and that Raccoon failed to meet its burden of establishing any applicable FSIA exception, including waiver or commercial-activity exceptions. The court found no sufficient nexus between the alleged commercial activity and the United States, rejected Raccoon’s request for jurisdictional discovery as an impermissible fishing expedition inconsistent with FSIA protections, and held that the charging order sought impermissibly targeted assets located outside the United States, which are immune from attachment under the FSIA. The magistrate judge therefore recommended denial of the charging order and discovery and dismissal of the action for lack of subject matter jurisdiction, and the district judge adopted that recommendation, dismissing the case. ♦
Herring v. Keasler, 563 S.E.2d 614 (N.C.App. 06/04/2002).
Koh v. Inno-Pacific Holdings, Ltd., 114 Wash.App. 268, 54 P.3d 1270 (2002).
In re Albright, 291 B.R. 538 (Bk.D.Colo., 2003).
♦ The U.S. Bankruptcy Court considered whether a Chapter 7 trustee could control and liquidate real property owned not by the debtor personally, but by Western Blue Sky LLC, a Colorado limited liability company of which debtor Ashley Albright was the sole member and manager when she filed bankruptcy (the LLC itself was not a bankruptcy debtor). The trustee argued that the debtor’s bankruptcy transferred her entire LLC membership interest to the estate under 11 U.S.C. § 541(a), making the trustee a substituted member with full governance rights, including the ability to cause the LLC to sell the property and remit net proceeds to the bankruptcy estate (or alternatively to dissolve/distribute the property to the estate and liquidate it directly). The debtor countered that the trustee was limited to a charging order against distributions and could not assume management or force a sale, also asserting the LLC’s “non-profit” nature meant her interest had no value. The court held that Colorado’s charging-order protection is aimed at protecting other non-debtor members from involuntary governance with outsiders; because this was a single-member LLC, there were no other members to protect, and unanimous-consent requirements were inapplicable. Accordingly, the court authorized the trustee to control the LLC and liquidate its real property, granted the motion to appoint a real estate broker, and noted the debtor could file a claim for post-petition payments made to preserve the property, without deciding that issue. ♦
Monroe v. Berger, 297 B.R. 97 (S.D.Ohio, 2003).
♦ The Southern District of Ohio reviewed and denied defendants’ appeal from a bankruptcy-court order that had enjoined their post-bankruptcy collection efforts. The dispute centered on a 1991 charging order obtained by Provident Bank against the plaintiff’s limited partnership interest in Amelia Estates; during the plaintiff’s Chapter 7 case, the parties agreed the partnership interest was valueless and the bank would be treated as a general unsecured creditor, ultimately receiving a distribution on that unsecured claim. After the bank later assigned the charging order to defendants and the partnership interest became valuable, defendants attempted to collect the remaining balance and pursued state-court actions (including efforts to revive a dormant judgment and appoint a receiver). The bankruptcy court found these actions violated the discharge injunction, concluding the charging order did not survive as an enforceable lien under Ohio law and, even if it did, the underlying judgment’s dormancy eliminated any viability; it therefore enjoined further enforcement and held defendants potentially liable for the plaintiff’s attorney fees. Applying clear-error review for fact findings and de novo review for legal conclusions, the district court agreed that Ohio law does not establish a charging order as a lien that “rides through” bankruptcy, that defendants lacked standing as “judgment creditors” after discharge, and that bankruptcy’s “fresh start” policy bars converting an agreed unsecured claim into a secured recovery after discharge; it affirmed the injunction and the fee-liability ruling (with the fee amount to be set by the bankruptcy court). ♦
Stewart v. Lanier Park Medical Office Building, Ltd., 578 S.E.2d 572 (Ga.App., 2003).
Ainslie v. Inman, 265 Va. 347, 577 S.E.2d 246 (Va., 2003).
In re Ehmann (Movitz v. Fiesta Investments, LLC), 319 B.R. 200 (Bkrpt.D.Ariz., 2005).
In re Baldwin (Miller v. Bill and Carolyn LP), 2006 WL 2034217 (10th Cir.BAP (Okla.), 2006) (Unpublished Disposition).
2008MarylandKeelerExpiredJudgment?