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Mahalo Invs. III, LLC v. First Citizens Bank & Trust Co.

Court of Appeals of Georgia

February 19, 2015

MAHALO INVESTMENTS III, LLC et al.
v.
FIRST CITIZENS BANK & TRUST COMPANY, INC

Limited liability company. Cobb State Court. Before Judge Golick.

Judgment affirmed.

Schreeder, Wheeler & Flint, John A. Christy, Andrew J. Lavoie, for appellants.

Stokes Lazarus & Carmichael, William K. Carmichael, Rachel A. Humphrey, King & Spalding, N. Charles Campbell, for appellee.

MCMILLIAN, Judge. Phipps, C. J., and Ellington, P. J., concur.

OPINION

McMillian, Judge.

This appeal presents an issue of first impression -- whether under OCGA § 14-11-504 (a), an order charging a member's interest in a limited liability company with payment of an unsatisfied judgment must be initiated as a separate action against the limited liability company. As more fully set forth below, we discern no error in the issuance of the charging order by the trial court that also entered judgment on the underlying debt and therefore affirm.

Pertinent to the issues presented here, the record shows that on August 18, 2011, appellee First Citizens Bank & Trust Company, Inc. (" FCB" ) obtained a judgment in excess of three million dollars (hereinafter referred to as the " original judgment" ) against Mahalo

Page 155

Investments III, LLC (" Mahalo" ), Mark B. Epstein, and Andrew Kelly (hereinafter collectively referred to as " appellants" ) in the State Court of Cobb County. Appellants appealed to this Court, and we affirmed the original judgment without opinion pursuant to our Rule 36. See Mahalo Investments III v. First Citizens Bank & Trust Company, Inc., 319 Ga.App. XXVII (January 24, 2013) (unpublished opinion).[1]

Following remittitur, FCB engaged in discovery in an effort to collect its judgment. During their post-judgment depositions, both Epstein and Kelly revealed they owned interests in several limited liability companies (the " LLCs" ), and FCB filed an application under OCGA § 14-11-504 (a) seeking an order charging their interests in the LLCs with payment of the unsatisfied judgment. FCB filed its application in the same court under the same file number assigned to the original civil action in which the original judgment was rendered, and appellants opposed FCB's request for a charging order on the basis that, inter alia, OCGA § 14-11-504 (a) requires the judgment creditor seeking a charging order to initiate a separate proceeding, apart from the proceeding in which the judgment establishing the debt was rendered. Following a hearing, the trial court issued a charging order against appellants' interests in the LLCs, without specifically addressing whether the application had been properly filed in that court.

[330 Ga.App. 738] On appeal, appellants contend the trial court erred by entering the charging order against their interest in the LLCs as part of the same action in which the original judgment was entered, and without first establishing that venue and jurisdiction over the LLCs was proper.[2] Appellants argue that their position is supported by both the " statutory text and structure of the charging order remedy" as it relates to limited liability companies, limited partnerships, and partnerships, and our Supreme Court's decision in Prodigy Centers/Atlanta No. 1 v. T-C Assoc., 269 Ga. 522 (501 S.E.2d 209) (1998).

We begin with the premise that in construing a statute, we look at its terms, giving words their plain and ordinary meaning, and " [w]here the plain language of a statute is clear and susceptible of only one reasonable construction, we must construe the statute according to its terms." Atlanta Independent School System v. Atlanta Neighborhood Charter School, Inc., 293 Ga. 629, 631 (748 S.E.2d 884) (2013).

Under OCGA ยง 14-11-504, a judgment creditor of a member of a limited liability company has a statutory right to collect a judgment debt from the member's distributional interests in a limited liability company by obtaining a charging order and diverting payments to the creditor which would otherwise have been made to the ...


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