Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-02646/USCOURTS-azd-2_12-cv-02646-3/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

---

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Equity Solutions LLC, 

Plaintiff, 

v. 

Reginald D. Fowler, et al., 

Defendants. 

No. CV-12-02646-PHX-FJM (BSB)

REPORT AND 

RECOMMENDATION 

 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.1

 

/// 

/// 

 

1

 Pursuant to 28 U.S.C. 636(B)(1)(b) and LRCiv 72.1(b), the assigned magistrate judge proceeds by report and recommendation. 

Case 2:12-cv-02646-FJM Document 98 Filed 07/14/14 Page 1 of 8
- 2 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

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.2

 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)). 

 

2

 In addition, the Judgment Debtor did not respond to Equity’s Application before the Court referred this matter for post-judgment collection proceedings. (Doc. 95.) 

Case 2:12-cv-02646-FJM Document 98 Filed 07/14/14 Page 2 of 8
- 3 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 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. 

 Accordingly, 

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). 

/ / / 

/ / / 

/ / / 

/ / / 

/ / / 

Case 2:12-cv-02646-FJM Document 98 Filed 07/14/14 Page 3 of 8
- 4 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 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. 

 Dated this 14th day of July, 2014. 

Case 2:12-cv-02646-FJM Document 98 Filed 07/14/14 Page 4 of 8
ATTACHMENT A 

Case 2:12-cv-02646-FJM Document 98 Filed 07/14/14 Page 5 of 8
1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Equity Solutions LLC, 

Plaintiff, 

v. 

Reginald D. Fowler, et al., 

Defendants. 

No. CV-12-02646-PHX-FJM 

CHARGING ORDER 

RE: JUDGMENT DEBTOR’S 

INTEREST IN THOR, LLC 

 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 

Plaintiff/Judgment Creditor Equity Solutions, LLC (Equity). 

 THE COURT FINDS AND CONCLUDES:

 A. On or about March 4, 2014, the Court entered judgment (the Judgment) in 

favor of Equity and against Judgment Debtor Reginald D. Fowler (Judgment Debtor) 

(among others); and 

 B. The Judgment, not including any credits applied toward satisfaction of the 

Judgment, remains outstanding, due and owing. 

 Accordingly, based on the record in this case, and good cause appearing, 

 IT IS ORDERED: 

 1. Judgment Debtor’s interests in Thor, LLC (Thor), a Delaware limited 

liability company, are charged for payment of the unsatisfied amount of the Judgment; 

Case 2:12-cv-02646-FJM Document 98 Filed 07/14/14 Page 6 of 8
- 2 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

2. Subject to the prior, perfected, lien interests of: (1) Sumitomo Mitsui 

Banking Corp., as Collateral Agent under that certain Amended and Restated Credit 

Agreement dated June 14, 2010, as amended by Amendment No. 1, dated June 11, 2012; 

(2) U.S. Bank National Association, arising pursuant to that certain Charging Order dated 

February 22, 2013, in Case No. CV2011-021907; and (3) JPMorgan Chase Bank, N.A., 

arising pursuant to that certain Charging Order dated September 19, 2013, in Case No. 

CV2012-003401 (collectively referred to as the Prior Liens); 

3. Upon entry of this Order, and until the Judgment is paid in full, subject to 

the Prior Liens, Equity is entitled to and shall receive all payments, money, or property 

due or to become due to Judgment Debtor, including any and all monies, distributions, 

and allocations payable to Judgment Debtor (collectively Distributions), with respect to 

any of Judgment Debtor’s interests in Thor; 

4. Upon entry of this Order, and until the Judgment is paid in full, subject to 

the Prior Liens, should Judgment Debtor receive any Distributions from Thor, Judgment 

Debtor is ordered to relinquish such Distributions, along with a full accounting of such 

distributions; 

5. Upon entry of this Order, and until the Judgment is paid in full, Thor shall 

make no further distributions of any kind to Judgment Debtor with respect to his interests 

in Thor; 

6. Upon entry of this Order, and until the Judgment is paid in full, subject to 

the Prior Liens, Thor shall make to Equity any and all Distributions to which Judgment 

Debtor is or would be entitled. Such Distributions shall be made to Equity within three 

business days following the date such Distribution would or could have been made to 

Judgment Debtor, or within three business days following the date that Judgment Debtor 

would be entitled to receive said Distributions, whichever is sooner; 

7. To the extent that Thor is currently a debtor-in-possession in any 

bankruptcy pending in the United States Bankruptcy Court, and to the extent that the 

Case 2:12-cv-02646-FJM Document 98 Filed 07/14/14 Page 7 of 8
- 3 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

automatic stay of 11 U.S.C. § 362 remains in effect as to Thor, this Order is not intended 

to be immediately effective to grant affirmative relief against Thor, to the extent doing so 

would violate the automatic stay, although it is intended to grant immediate, affirmative 

relief as to the rights of Judgment Debtor to otherwise comply with the terms of this 

Order as it relates to such entities. It is also contemplated that Equity may provide notice 

of this Order in any such pending bankruptcy proceedings to enforce its terms against 

Judgment Debtor, or to obtain such other relief as Equity may request; and 

 8. Equity is entitled to seek any further or other relief from this Court for the 

purposes of obtaining such further orders as are reasonably necessary to enforce this 

Order or to collect on the Judgment. 

Case 2:12-cv-02646-FJM Document 98 Filed 07/14/14 Page 8 of 8