2011-00109211-CU-BC

Wells Fargo Bank vs. Allen W. Warren

Nature of Proceeding: Motion for Order to Charge Member’s Interest in 1257 Alpine Terrace,

Filed By: Rodriguez, Christopher R.

Plaintiff/Judgment Creditor Wells Fargo Bank, National Association’s Motion for Order to Charge Member’s Interest in 1257 Alpine Terrace, LLC and Appointment of a Receiver is granted.

Judgment Debtor’s Request for Judicial Notice of the Abstract of Judgment issued March 2, 2018 is granted.

Plaintiff/Judgment Creditor seeks an order charging the interest of Judgment Debtor Allen W. Warren in 1257 Alpine Terrace, LLC (of which he is the sole member) and the appointment of Robert C Greeley as receiver over the affairs of 1257 Alpine Terrace, LLC to ensure that the proceeds of the sale of the property, an apartment complex at 1257 Fulton Ave, the sole asset of 1257 Alpine Terrace, LLC are maintained for the benefit of the Bank as judgment creditor. Moving party contends the unsatisfied amount of the judgment with accrued interest, as of October 9, 2018, is $2,179,429.75.

Pursuant to Corporations Code section 17705.03(b)(1), the court may appoint a receiver to take control over the share of the distributions due or to become due to Warren from the LLC, and to make all other orders, directions, accounts, and inquiries that Warren might have made or that the circumstances of the case may require. Bank believes the apartment complex that is the sole asset of the LLC is in the process of being transferred, since it received a call from the title company concerning the amount of its lien. Bank contends that the revenue to the LLC from the sale that could then be distributed to Warren and which would be subject to satisfaction of the outstanding judgment. Thus, once a receiver is appointed over the sales proceeds

(i.e., the “distributions subject to the charging order”), that receiver will have the power to “make all inquiries [Warren himself] might have made,” including inquiries about the amount of the sale proceeds to be received by the LLC and the treatment of those sales proceeds once they are received by the LLC. Furthermore, the order appointing the receiver in accordance with the Court’s powers under Corporations Code section 17705.03(b)(2), would enable the receiver to prevent the LLC from distributing the sales proceeds to any other person or entity in order to avoid distributing proceeds directly to Warren.

Code of Civil Procedure section 708.310 provides that when a money judgment is rendered against a member, but not against the limited liability company, the judgment debtor’s interest in the limited liability company may be applied toward the satisfaction of the judgment by an order charging the judgment debtor’s interest under Corporations Code section 17705.03. Corporations Code section 17705.03 permits a court of competent jurisdiction to charge the assignable

membership interest of the judgment debtor to satisfy the judgment on application by a judgment creditor of a member or of a member’s assignee. Code of Civil Procedure section 708.320 provides that a lien on a judgment debtor’s interest in a limited liability company is created by service of a notice of motion for a charging order on (1) the judgment debtor, and (2) all members of the limited liability company. If a charging order is issued, the lien created pursuant to Code of Civil Procedure section 708.320

(a) continues under the terms of the order. If the issuance of the charging order is denied, the lien is extinguished.

In opposition, judgment debtor states that despite the fact that the judgment is against Allen W. Warren as an individual, the abstract of judgment was recorded “against the property owned by 1257 Alpine Terrace LLC.” However, the Reply states that the Abstract of Judgment does not mention 1257 Alpine Terrace as the judgment debtor and that it was not recorded against the LLC or its property.

Judgment debtor objects to the appointment of a receiver “over the affairs” of 1257 Alpine Terrace LLC, contending the language is overbroad and a receiver is not necessary to satisfy the judgment. Corporations Code 17705.03 allows the appointment of a receiver only to the extent necessary to effectuate the collection of distributions pursuant to a charging order, and Judgment Debtor contends there is no evidence that the LLC plans to distribute any proceeds to Mr. Warren or that any sale will proceed. In Reply, Bank asserts that this statement that the LLC has no plans to distributed the proceeds of the sale to or that there is no pending sale demonstrates the need for a receiver to ensure Bank obtains the proceeds from the pending sale. The purpose of the lien of a charging order is to permit the judgment creditor to realize on his judgment by appropriate supplementary proceedings or orders against the debtor’s interest in the LLC; a limited purpose receiver is appointed to facilitate that purpose.

The prevailing party shall prepare a formal order for the Court’s signature pursuant to C.R.C. 3.1312.