2025 Opinions

2025 Site.Year2025ChargingOrderOpinions

2025 Charging Order Opinions

Baker v. Duffus, 2025 WL 1416805 (Alaska, May 16, 2025) charging order lien and distribution

♦ The Alaska Supreme Court addressed a dispute over $300,000 in settlement funds. The claimants were Kenneth Duffus, a creditor with a charging order against distributions from Aurora Park, LLC to Lee Baker, and Jones Law Group (JLG), Baker's law firm, asserting an attorney's lien. Previously, the Supreme Court validated JLG's lien but remanded for the superior court to determine if the funds were LLC distributions subject to Duffus's charging order, and the lien's value based on fees owed for the specific case (the "Aurora Park litigation"). On remand, the superior court found: 1. The $300,000 (from Baker selling his LLC interest) were LLC distributions to Baker (and JLG as his designee), subject to Duffus's charging order. It ruled that LLCs cannot use operating agreements to redefine "distribution" under statute to evade creditors. 2. JLG's attorney's lien had no value because Baker and JLG failed to provide credible evidence (like fee agreements or billing records) proving Baker owed JLG for services specifically in the Aurora Park litigation. The $250,000 claimed seemed to be a settlement figure, not a proven debt. 3. The superior court also erroneously entered a second final judgment and improperly awarded attorney's fees against Duffus after a mistaken release and subsequent return of the funds. In the current appeal, the Supreme Court: 1. Affirmed that the funds were LLC distributions. The statutory definition of "distribution" controls, and the evidence supported that the funds were from the LLC for Baker's interest. 2. Affirmed that JLG's attorney's lien had no proven value due to the lack of credible evidence of the debt owed for the specific legal work. 3. Vacated the second final judgment, as a final judgment from 2013 already existed, and these were post-judgment enforcement proceedings. 4. Vacated the attorney's fee award against Duffus, finding it an abuse of discretion as there was no basis for sanctioning Duffus, who had complied with court orders. Ultimately, the Supreme Court upheld the superior court's substantive decisions, meaning Duffus is entitled to the settlement funds. The procedural errors by the superior court were corrected. ♦

Ohio Casualty Ins. Co. v. Beall, 2025 WL 726860 (M.D.Ga., March 6, 2025).

♦ None ♦

Ohio Casualty Ins. Co. v. Beall, 2025 WL 726860 (M.D.Ga., March 6, 2025). Charging Order

♦ The U.S. District Court for the Middle District of Georgia granted Ohio Casualty's motion for a charging order and injunctive relief. Following a $462,657 judgment against Kenneth and Deborah Beall, which remained unsatisfied, Ohio Casualty sought to collect by charging the Bealls' membership interests in several LLCs. The court found that the Bealls held interests in Beall & Company, LLC, Lake Welbrook Properties, LLC, and Springwood Investment Property, LLC (Kenneth), and KDAWG Investments, LLC and Lake Welbrook Properties, LLC (Deborah). As the Bealls did not oppose the motion, the court ordered the LLCs to pay any distributions owed to the Bealls directly to Ohio Casualty until the judgment is satisfied. Additionally, the court enjoined the Bealls from transferring their LLC interests to prevent collection. ♦

PB Brands LLC v. Patel Sister LLC, 2025 WL 655086, (M.D.Ga., Feb. 28, 2025).

♦ None ♦

JobsOhio v. EmKey Energy, LLC, 2025 WL 2780920 (S.D.Ohio, Sep. 30, 2025). Charging Order, Lien, Priority

♦ In JobsOhio v. EmKey Energy, LLC, the U.S. District Court for the Southern District of Ohio addressed JobsOhio’s motions for Charging Orders to satisfy a $4,958,905.32 Consent Judgment previously entered against Defendants EmKey Energy, LLC and EmKey Gathering, LLC, stemming from a defaulted $4 million loan. The Court granted JobsOhio’s motions, entering charging orders against: (1) EmKey Energy’s membership interests in EmKey Gathering, LLC and EmKey Gas Processing, LLC. (2) EmKey Gathering’s membership interest in CGE Ventures, LLC. Defendants opposed the orders, arguing that the interests were either worthless (due to lack of profit or superior liens) or had been previously assigned to a third party, Hallan Invest, SA. The Court rejected these arguments, holding that under Ohio Revised Code § 1706.342(A), a charging order is the sole remedy for a judgment creditor. The existence of prior liens or assignments does not bar the order; it only affects the priority of the distribution, which is a matter for future determination. The charging orders grant JobsOhio the right to receive any distributions, draws, or financial entitlements that the judgment debtors (EmKey Energy and EmKey Gathering) would otherwise be entitled to receive from the affiliated LLCs, now or in the future, until the $4.96 million judgment is fully satisfied. ♦

Business Aircraft Leasing, Inc. v. Ultra Energy Resources, LLC (In re Addington), 2025 WL 936686 (Bk.E.D.Ky., March 26, 2025).

♦ In the case of Business Aircraft Leasing, Inc. v. Ultra Energy Resources, LLC (In re Addington), the Bankruptcy Court denied Ultra Energy Resources' motion to dismiss for lack of jurisdiction but granted Ultra's motion for summary judgment, denying Business Aircraft Leasing, Inc.'s (BAL) cross-motion. The court ruled that BAL only purchased the economic rights (the right to distributions) associated with the Debtor's 36% membership interest in Ultra Energy Resources during the bankruptcy proceeding, not the governance rights. The court based its decision on the Sale Motion, Sale Order, Purchase Agreement, and the Operating Agreement for Ultra, finding that the documents clearly indicated an intent to sell and purchase only the distribution rights, which were subject to a charging lien. The court also noted that the Chapter 7 Trustee did not obtain the necessary approval from Ultra's Manager to transfer the entire membership interest, including governance rights, as required by the Operating Agreement. ♦

Mora v. Venegas, 2025 WL 51217 (S.D.Fla., Jan. 8, 2025).

♦ In the case of Mora v. Venegas, the U.S. District Court for the Southern District of Florida granted Plaintiff Juana Timotea Salazar Mora's motion for a charging order against Defendant Monica A. Venegas. Ms. Mora had previously won a $291,000 judgment against Ms. Venegas for employment-related violations, of which only $6,000 had been paid. To collect the remaining $285,000, Ms. Mora sought a charging order against Ms. Venegas's membership interest in Venegas International Group, LLC. The court, citing Florida law, found that a charging order is the appropriate remedy for a judgment creditor seeking to collect from a debtor's interest in an LLC. Since Ms. Venegas did not respond to the motion and public records confirmed her membership in the LLC, the court granted the motion. The order directs Venegas International Group, LLC to pay any distributions, transfers, or amounts owed to Ms. Venegas directly to Ms. Mora's counsel until the judgment is satisfied. Ms. Mora was also ordered to serve a copy of the order on Venegas International Group, LLC within three days. ♦

Arrowhead Capital Finance, Ltd. v. Seven Arts Entertainment, Inc., 2025 WL 551357 (S.D.N.Y., Feb. 18, 2025).

♦ The United States District Court for the Southern District of New York ruled in favor of Plaintiff Arrowhead, ordering Defendant Seven Arts Entertainment, Inc. (SAE) to turn over its membership interests in Picture Pro, LLC (PPL) to Arrowhead. The court found that SAE had a discernable property interest in PPL and that Arrowhead was entitled to it due to a previous judgment. PPL's arguments against the turnover, including improper service, the need to domesticate the judgment in Colorado (where PPL is incorporated), and that Colorado law only allows for the turnover of distribution rights, were rejected. The court emphasized that New York law governs the turnover proceeding and permits the turnover of membership interests in foreign LLCs, even if those LLCs are governed by other states' laws regarding internal operations. SAE was ordered to transfer all membership interests and related documentation to Arrowhead within five business days. ♦

HDDA, LLC v. Vasani, 2025 Ohio 2000, 2025 WL 1587261 (Ohio App., June 5, 2025), charging order discovery opinion

♦ The Ohio Tenth District Court of Appeals affirmed a trial court's decision compelling discovery in aid of execution of a judgment. Creditor HDDA, LLC sought to enforce Georgia judgments against debtors Abhijit and Bhavna Vasani. To aid execution, HDDA subpoenaed nine non-party limited liability companies (LLCs), where the Vasanis were members, for financial information. The Vasanis and the LLCs moved to quash the subpoenas and for a protective order, arguing discovery was improper because they were "only members," it imposed an undue burden, and a charging order was the sole remedy against LLC interests. The trial court denied their motions and compelled compliance. Reviewing for abuse of discretion, the appellate court rejected the Vasanis' arguments. It affirmed that Ohio Civil Rules 69 and 45 permit non-party subpoenas for relevant information in aid of execution. The court clarified the subpoenas sought to uncover commingled personal and business assets, not to execute directly on membership interests, thus the charging order rule was inapplicable. Regarding undue burden, the court found the Vasanis' claim lacked specific factual support. Moreover, HDDA demonstrated a substantial need for the discovery, citing evidence of commingling personal and business funds, which could reveal hidden assets. Finding no abuse of discretion, the court affirmed the trial court's order compelling compliance. ♦

Orix Re Holdings, LLC v. Collier, 2025 WL 2683986 (C.D.Cal., August 20, 2025). California charging order

♦ This order from the U.S. District Court for the Central District of California granted Plaintiff Orix Re Holdings, LLC’s motion to enforce an $8,095,029.21 default judgment against Defendant Michael Collier. The judgment originated in Michigan based on Collier’s breach of loan guarantees. Orix sought a charging order and permission to foreclose on Collier’s interest in 1421 Kings Road, LLC (Kings Road LLC). Collier opposed the motion, claiming he no longer held an ownership interest, having assigned his 100% share to his wife’s family trust in February 2020. The court required Orix to present substantial evidence of Collier’s current ownership interest. The court found Collier’s claim contradicted by public records. Taking judicial notice of documents filed after the alleged assignment date (spanning 2020 through 2024), the court noted Collier repeatedly signed deeds of trust and statements of information as the "managing member" or "sole member" of Kings Road LLC. The court found this created "significant doubt" regarding the assignment's validity or legal effect. Finding that Orix met the burden of proof, the court granted the motion. It issued a charging order against Collier’s transferable interest in the LLC for the full unsatisfied judgment amount. Furthermore, the court authorized Orix to conduct a foreclosure sale (auction) of that interest, detailing specific procedures for the commercially reasonable sale, including notice requirements and strict cash/wire transfer rules for bidders. ♦

SB PB Victory, L.P., v. Tonnelle North Bergen, LLC, 2025 WL 2394042 (E.D.Pa., Aug. 18, 2025).

♦ the U.S. District Court for the Eastern District of Pennsylvania granted in part and denied in part a motion by SB PB Victory, L.P. (Petitioner) to expand a receivership and for preliminary injunctive relief. Petitioner sought to expand the receivership over Respondent Thomas F. Verrichia's assets to include all assets of both Thomas and Nancy Verrichia, and to obtain a preliminary injunction. The court had previously appointed a receiver over Thomas Verrichia's interest in 29 corporate entities due to Petitioner's inability to collect on over $30 million in judgments. The court granted a limited expansion of the receivership to cover the Verrichias' transferable interests in specific corporate entities identified by Petitioner. However, it denied the request to expand the receivership to "all assets" and "future LLCs" at this time, deeming it overly broad. The court found sufficient grounds for the limited expansion due to insufficient legal remedies, evidence of asset transfers to avoid judgments, commingling of funds, and the Verrichias' non-compliance with court orders and discovery. Regarding the preliminary injunction, the court denied the request for the Verrichias to disclose asset locations, stating this falls under post-judgment discovery rules (Federal Rule of Civil Procedure 69), not preliminary injunctions. However, the court used its equitable powers to order the Verrichias to fully cooperate with the receiver and not obstruct their duties, citing the need to ensure compliance with the receivership order. ♦

WC 4th and Colorado, 2025 WL 1225841 (Tex.App., 14th Distr., April 29, 2025).

♦ The Texas Court of Appeals affirmed a trial court's dismissal of WC 4th's claims against Third Street. A receiver, appointed over WC 4th's parent company (WCCG) in a separate suit, appeared on behalf of WC 4th and moved to dismiss its lawsuit. WC 4th challenged the receiver's authority. The appellate court first determined that WC 4th's challenge was not an impermissible collateral attack on the receivership order. It then addressed the receiver's authority, finding that the trial court could have reasonably concluded WCCG owned or managed WC 4th, bringing it under the receiver's purview. Critically, the court held that while a 'charging order' is typically the exclusive remedy for a creditor against a partner's interest, an exception (from Heckert) applies when the entity is not an operating business and no other party's interests would be disrupted. Because WC 4th was not operating and failed to show disruption to other partners' interests, the receiver had authority to dismiss the suit. The court distinguished this from La Zona Rio, where the entity was operational and other partners' interests were at stake. ♦

Youngblood-McDaniel v. Diagnostic Bioscience Labs., M.D.Fla. Case No. 24-cv-700 (Jan. 17, 2025).

♦ In the case of Youngblood-McDaniel v. Diagnostic Bioscience Labs., the U.S. District Court for the Middle District of Florida issued a charging order in favor of plaintiffs Tracy Youngblood-McDaniel and Endpoint Capital, LLC against defendant Diagnostic Bioscience Laboratories, LLC. This order stems from a previous default judgment against the defendant for $118,938.00 plus $470.00 in costs, which remains unpaid. The charging order places a lien on the defendant's interest in Reliant Scientific, LLC, a Florida limited liability company where the defendant is a member and/or manager. The order requires the defendant to report all amounts distributable from Reliant Scientific, LLC, and prohibits Reliant Scientific from distributing any funds to the defendant, instead directing those funds to the plaintiffs until the judgment is satisfied. The court retains jurisdiction to issue further orders, including potentially appointing a receiver or foreclosing on the lien. ♦