United States District Court, D. Arizona
REPORT AND RECOMMENDATION
BRIDGET S. BADE, Magistrate Judge.
Pursuant to Rule 69 of the Federal Rules of Civil Procedure, and Arizona Revised Statute § 29-655, Plaintiff/Judgment Creditor Equity Solutions, LLC (Equity or Judgment Creditor) has filed an "Application for (I) Charging Order; and (II) Order to Show Cause Why A Charging Order Should Not Be Granted" (Application). (Doc. 93.) In its Application, Equity requested an order charging Defendant/Judgment Debtor Reginald D. Fowler's (Judgment Debtor) interest in Thor, LLC with the payment of the unsatisfied amount of the Judgment entered in this matter on March 4, 2014. (Doc. 91.) As set forth below, Equity's Application should be granted and a charging order should be entered in the form attached to this Report and Recommendation as Attachment A.
I. The Judgment Debtor Received Notice and Did Not Respond to the Application for a Charging Order or the Order to Show Cause.
On referral for all post-judgment collection proceedings (Doc. 95), the assigned magistrate judge entered an order for the Judgment Debtor to show cause why a charging order should not be entered. (Doc. 96.) The Court directed Equity to serve the Judgment Debtor with the order to show cause and the Application, and directed Judgment Debtor to file and serve any written response to the Court's order or the Application within fourteen days of service. ( Id. ) Equity served the Judgment Debtor with the order to show cause on June 16, 2014. (Doc. 97.) The Judgment Debtor has not filed a response and the time to do so has passed. The order to show cause advised the Judgment Debtor "that failure to respond may result in the Court entering the requested charging order." (Doc. 96.) Therefore, the Court finds that the Judgment Debtor received notice of Equity's Application for a charging order and failed to respond.
II. A Charging Order is Authorized by the Federal Rules and Arizona Law.
Equity's request for a charging order is authorized by Rule 69(a)(1). See General Elec. Capital Corp. v. JLT Aircraft Holding Co., LLC, 2010 WL 3023316, at *3 (D. Minn. Jul. 28, 2010) (under Rule 69, federal courts follow state law in post-judgment collection proceedings, including any request for a charging order on a judgment debtor's interest in a limited liability company.) Under Arizona law, a charging order is "[t]he exclusive remedy by which a judgment creditor of a member may satisfy a judgment out of the judgment debtor's interest in the limited liability company." Ariz. Rev. Stat. § 29-655(C). "A charging order allows a judgment creditor to charge a judgment debtor's membership interest in a limited liability company to the extent of an unsatisfied amount of the judgment plus interest." Grecko Pools & Spas, LLC, v. Blackhawk Holdings, LLC, 2007 WL 5448130, at *1 n.1 (Ariz.Ct.App. Oct. 11, 2007) (citing Ariz. Rev. Stat. § 29-655(A)).
In its Application, Equity asserts that it "has been searching for assets of the Judgment Debtor out of which to satisfy the Judgment. Equity has learned that Judgment Debtor has a membership interest in Thor, LLC... a Delaware limited liability company." (Doc. 93 at 2.) The Judgment Debtor has not responded to or contested this assertion. Therefore, the Court finds that Equity has established that the Judgment Debtor has a membership interest in Thor, LLC, and, as the Judgment Creditor, Equity is entitled to charge that interest to the extent of an unsatisfied amount of the judgment in this matter, plus interest.
IT IS RECOMMENDED that Equity's Application be GRANTED and a charging order entered in the form attached to this Report and Recommendation as Attachment A.
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Federal Rule of Appellate Procedure 4(a)(1) should not be filed until entry of the District Court's judgment. The parties have fourteen days from the date of service of a copy of this recommendation within which to file specific written objections with the Court. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6 and 72. Thereafter, the parties have fourteen days within which to file a response to the objections. Failure to file timely objections to the Magistrate Judge's Report and Recommendation may result in the District Court's acceptance of the Report and Recommendation without further review. See United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003).
Failure to file timely objections to any factual determination of the Magistrate Judge may be considered a waiver of a party's right to appellate review of the findings of fact in an order or judgment entered pursuant to the Magistrate Judge's recommendation. See Fed.R.Civ.P. 72.
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA
The Court has considered the "Application for (I) Charging Order; and (II) Order to Show Cause Why A Charging Order Should Not Be Granted" (Doc. 93), filed by ...