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2017 Opinions

2017 Site.Year2017ChargingOrderOpinions

2017 Charging Order Opinions

JPMorgan Chase Bank v. McClure, 2017 CO 22, 2017 WL 1321334 (Colo., April 10, 2017).

U.S. v. Wilhite, 2017 WL 5517410 (D.Colo., Nov. 17, 2017).

Branch Banking & Trust Co. v. Crystal Centre, 2017 WL 57345 (M.D.Fla., Jan. 5, 2017).

Capstone Bank v. Perry-Clifton Enterprises, LLC, 2017 WL 5894915 (Fla.App., Nov. 30, 2017).

DuTrac Community Credit Union v. Hefel, 2017 WL 461211 (Iowa 2017).

S.E. Property Holdings, LLC v. Chunn, 2017 WL 5167249 (La.App., Nov. 8, 2017).

German American Capital Corp. v. Morehouse, 2017 WL 3411941 (D.Md., 2017).

St. Louis Bank v. Kohn, 2017 WL 1650034 (Mo.App., May 2, 2017).

Peach REO, LLC v. Rice, 2017 WL 2963511 (W.D.Tenn., July 11, 2017).

Gillet v. ZUPT, LLC, 2017 WL 716633 (Tex.App. 14th Distr., Feb. 23, 2017).

Heckert v. Heckert, 2017 WL 5184840 (Tex.App., Nov. 9, 2017).

Pajooh v. Royal West Investments LLC, Series E, 2017 WL 1173892 (Tex.App., March 30, 2017).

Curci Investments, LLC v. Baldwin, 14 Cal.App.5th 214 (Cal.App.Distr. 4, 2017).

♦ The California Court of Appeal considered whether a judgment creditor (Curci) could use “outside reverse veil piercing” to reach the assets of an LLC (JPB Investments LLC, or JPBI) to satisfy a multimillion-dollar personal judgment against its controlling member, real estate developer James P. Baldwin. Curci argued Baldwin effectively owned and controlled JPBI (99% interest; his wife held 1%) and used it to avoid collection—treating it like a personal bank account, stopping distributions after judgment, and extending repayment terms on large insider loans tied to family estate-planning entities without consideration—rendering ordinary remedies like a charging order ineffective. The trial court denied Curci’s motion, believing reverse veil piercing was unavailable in California under Postal Instant Press, Inc. v. Kaswa Corp. On appeal, the court held Postal Instant Press was distinguishable because it addressed corporations, not LLCs, and because key policy concerns (like harming innocent shareholders) were not present on these facts; it also reasoned that the LLC charging-order statute does not categorically bar reverse piercing. The court reversed the denial and remanded for the trial court to conduct a fact-specific alter-ego/veil-piercing analysis (including whether Curci lacks a plain, speedy, and adequate legal remedy) to decide whether JPBI should be added as a judgment debtor. ♦

McClandon v. Dakem & Assoc., LLC, 219 So.3d 269 (Fla.App., 2017).

♦ Dakem sought to collect a twelve-year-old Nevada judgment (domesticated in Florida) from judgment debtor Joeann McClandon through proceedings supplementary targeting distributions from eleven LLCs in which she held a controlling interest. The trial court entered a charging order under section 605.0503, Florida Statutes, against McClandon’s transferable interests and, to enforce the order, appointed a receiver over four LLCs with broad authority that effectively made the receiver the companies’ financial officer and allowed managerial decision-making. On appeal, McClandon argued that a charging order is the “sole and exclusive remedy” for reaching a debtor’s interest in a multi-member LLC and does not authorize a receiver; Dakem responded that a receiver was permitted to give the charging order practical effect under the court’s continuing jurisdiction and equitable powers recognized in subsections 605.0503(7)(c)–(d). The Fifth District agreed in part: it held the trial court did not abuse its discretion by appointing a receiver to collect distributions subject to the charging order, but it exceeded the permissible scope by granting the receiver managerial control over the LLCs. Relying on RULLCA commentary, the court emphasized that a charging order divests only the debtor’s economic rights (profits/distributions) and does not permit interference with LLC management or acceleration of distributions. The order was therefore affirmed as to the charging order and receiver appointment, and reversed as to the provisions giving the receiver managerial/financial-officer control, leaving management with the LLCs. ♦

White v. White, 402 P.3d 136 (Utah.App., 2017).

♦ The Utah Court of Appeals affirmed orders entered in post-divorce proceedings arising from Dean White’s unpaid judgments to his ex-spouse, Julie White. Although the divorce decree awarded Dean the parties’ LLC (The White Empire, LLC)—which held title to a residential property—as well as “all right, title and interest” in that property, the property remained titled in the LLC, and Dean later lived there. To collect on approximately $53,000 in judgments, Julie sought a charging order against Dean’s LLC membership interest; before that hearing, the LLC sold the property and Dean, as sole member, received about $8,621 in net proceeds and dissolved the LLC. Dean claimed those proceeds were protected by Utah’s homestead exemption because the home had been his primary residence, but the courts rejected the claim, concluding the homestead exemption is a personal statutory right that requires a legally cognizable interest in the real property itself, and the property was owned by the LLC (an entity that cannot claim the exemption), while Dean’s membership interest is personal property that does not confer ownership of the LLC’s real property. The court also rejected Dean’s complaint about allegedly improper service of certain filings because he failed to show harmful error, denied Dean attorney fees (as a pro se litigant), and awarded Julie her attorney fees and costs on appeal. ♦