United States District Court, D. Arizona
REPORT AND RECOMMENDATION
EILEEN S. WILLETT, Magistrate Judge.
TO THE HONORABLE DOUGLAS L. RAYES, UNITED STATES DISTRICT JUDGE:
Pending before the Court is Dream Games of Arizona, Inc.'s ("Judgment Creditor") Application for Charging Order (Doc. 522). The matter is fully briefed. For the reasons explained herein, the undersigned recommends that the Court grant the Application for Charging Order.
On March 18, 2010, the Court entered judgment in the amount of $264, 763.28 (the "Judgment") in favor of Judgment Creditor and against Casey Hagon ("Judgment Debtor"). (Doc. 365). The Application for Charging Order, filed on September 18, 2015, seeks satisfaction of the Judgment. (Doc. 522 at 1-2). In his "Response in Opposition to Application for Charging Order" filed on November 16, 2015 (Doc. 526), Judgment Debtor asserts that the Court lacks jurisdiction to grant the Application for Charging Order.
On November 23, 2015, the undersigned conducted a telephonic status conference regarding the Application for Charging Order. (Doc. 531). Judgment Creditor stated that it intended to reply to Judgment Debtor's "Response in Opposition to Application for Charging Order" (Doc. 526). Judgment Debtor indicated that he may request further briefing on the jurisdictional issue raised in his Response. The undersigned ordered counsel to (i) meet and confer regarding the issues presented and (ii) file a Joint Status Memorandum no later than December 18, 2015. (Doc. 531).
On November 24, 2015, Judgment Creditor filed its Reply (Doc. 532) to Judgment Debtor's Response. (Doc. 526). In their December 18, 2015 Joint Status Memorandum (Doc. 533), the parties requested that Judgment Debtor be allowed until January 12, 2016 to file any supplemental briefing or a request for a hearing. The undersigned granted the parties' request. (Doc. 534). The undersigned's Order stated that if no supplemental briefing or request for a hearing is filed, then on or after January 13, 2016, the Court will grant or deny the Application for Charging Order based upon the pleadings on file. ( Id. ). Judgment Debtor did not file supplemental briefing or a request for a hearing by the deadline. In March 2016, the Court ordered the parties to provide additional information pertaining to whether C&D Consulting has received notice of the Application for Charging Order. (Docs. 537, 538). The parties provided the supplementary information on March 10, 2016. (Docs. 539, 540).
The enforcement of final judgments in federal court is governed by Rule 69(a) of the Federal Rules of Civil Procedure, which provides that:
A money judgment is enforced by a writ of execution, unless the court directs otherwise. The procedure on execution- and in proceedings supplementary to and in aid of judgment or execution-must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies.
Fed. R. Civ. P. 69(a) (emphasis added).
Under Arizona law, a charging order is the exclusive remedy by which a judgment creditor may satisfy a judgment out of a member's interest in a limited liability company ("LLC"). ARIZ. REV. STAT. § 29-655(A) states that:
On application to a court of competent jurisdiction by any judgment creditor of a member, the court may charge the member's interest in the limited liability company with payment of the unsatisfied amount of the judgment plus interest. To the extent so charged, the judgment creditor has only the rights of an assignee of the member's interest.
Judgment Debtor is a member of C&D Consulting LLC, a Texas LLC ("C&D Consulting"). (Doc. 532 at 10). Judgment Creditor seeks an order charging Judgment Debtor's interest in C&D Consulting. (Doc. 522 at 1). The form of the charging order proposed by Judgment Creditor compels C&D Consulting to provide certain financial disclosures to Judgment Creditor on a quarterly basis until the Judgment is paid in full. (Doc. 522 at 20-21). Judgment Debtor objects to the charging order on two grounds. First, Judgment Debtor asserts that Judgment Creditor has not shown that the Court has personal jurisdiction over C&D Consulting. (Doc. 526 at 1). Second, Judgment Debtor objects to the proposed requirement that C&D Consulting provide regular financial disclosure to Judgment Creditor. Judgment Debtor asserts ...