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2019 Opinions

2019 Site.Year2019ChargingOrderOpinions

2019 Charging Order Opinions

MDQ, LLC v. Gilbert, Kelly, 2019 WL 948726 (Cal.App., Distr. 2, Feb. 27, 2019).

Pansky v. Barry S. Franklin & Assoc., 2019 WL 581620 (Fla.App., Feb. 13, 2019).

Preservation Holdings, LLC v. Norberg, 2019 IL App (1st) 181136 (June 14, 2019).

Wells Fargo Equip. Fin. v. Retterath, 2019 WL 1574686 (Iowa, April 12, 2019).

In re Graves Farms, 2019 WL 3407134 (Bk.D.Kan., July 26, 2019).

Open Road Trucking, LLC v. Swanson, 2019 WL 6768443 (N.D., Dec. 12, 2009).

Earthgrains Baking Companies, Inc. v. Sycamore Family Bakery, Inc., 2019 WL 6001940 (D.Utah, Nov. 14, 2019).

Bank of Hampton Roads v. Wilkins, 266 N.C.App. 404, 831 S.E.2d 635 (N.C.App., 2019).

♦ Defendant Saieed appealed an order amending earlier charging orders to correct the name of the judgment creditor from O’Mahoney Holdings, “LTD” to O’Mahoney Holdings, “LLC.” The underlying dispute began when the Bank sued to collect on a defaulted loan guaranteed by Saieed, obtained summary judgment, and later assigned that judgment; the assignee then secured charging orders against multiple LLCs in which Saieed allegedly held interests. After Saieed challenged a related lawsuit on the ground that the plaintiff lacked standing because the assignment and charging orders named “LTD,” O’Mahoney filed motions under North Carolina Rule of Civil Procedure 60(a), asserting the “LTD/LLC” designation was a long‑standing clerical misnomer. Although the trial court initially ruled LLC was not the real party in interest until the assignment was corrected, O’Mahoney filed an amended assignment and renewed its Rule 60(a) motion; the court then amended the charging order to reflect LLC as holder, effective as of the original entry date, and separately ruled LLC was the real party in interest (an order Saieed did not appeal). The Court of Appeals affirmed, holding Rule 60(a) permits correction of a misnomer that does not affect substantive rights; the change was a clerical error with no shown prejudice, did not improperly operate “nunc pro tunc,” could be made by a different judge, and was not barred by laches or judicial estoppel. ♦

Pearce v. Woodfield (In re Woodfield), 602 B.R. 747 (Bk.D.Ore. May 16, 2019). Bankruptcy, Executory Interest, 365

♦ The U.S. Bankruptcy Court for the District of Oregon considered a motion for summary judgment concerning the debtor's membership interests in three LLCs. The plaintiff, Pearce, sought declarations that the debtor, Woodfield, had dissociated from the LLCs upon filing bankruptcy and that the operating agreements were rejected. The court first addressed the debtor's dissociation. Under Oregon law, a member filing for bankruptcy dissociates, but retains the right to distributions and allocations. The LLC operating agreements modified this by entitling a dissociated member to a set monetary amount instead of ongoing distributions. The court found that the Bankruptcy Code's provision (§ 541(c)(1)) invalidating clauses that modify or forfeit a debtor's property interest due to bankruptcy preempted this dissociation provision. Therefore, Woodfield retained his economic rights. Regarding governance rights, the court determined that Woodfield retained general voting rights, as any provision to the contrary would also be preempted by § 541(c)(1). However, the debtor's right to manage the LLCs was analyzed separately. Since the LLCs were designated as "manager-managed" in their articles of organization, members generally only had the right to vote for managers. The court could not rule on whether Woodfield's management role was affected because the record lacked information on how he became a manager. Finally, the court addressed the plaintiff's request to declare the operating agreements rejected. The court noted that the debtor had not rejected them and that this issue would arise during plan confirmation. The court then determined whether the agreements were "executory contracts" under § 365, finding they were due to various unperformed obligations by both parties. The court also found that the LLC Act's restrictions on accepting performance from an assignee, even if the interest was assignable, meant that the debtor could not assume these agreements without Pearce's consent, as per § 365(c)(1). In summary, the court granted summary judgment for the plaintiff on the issue of non-assignability of the operating agreements but denied it on the debtor's dissociation and rejection of the agreements. ♦