Opinion ID: 2537285
Heading Depth: 2
Heading Rank: 4

Heading: Creditor's Remedies Against the Ownership Interest in a Single-Member LLC

Text: Since the charging order remedy clearly does not authorize the transfer to a judgment creditor of all an LLC member's right, title and interest in an LLC, while section 56.061 clearly does authorize such a transfer, the answer to the question at issue in this case turns on whether the charging order provision in section 608.433(4) always displaces the remedy available under section 56.061. Specifically, we must decide whether section 608.433(4) establishes the exclusive judgment creditor's remedyand thus displaces section 56.061with respect to a judgment debtor's ownership interest in a single-member LLC. As a preliminary matter, we recognize the uncontested point that the sole member in a single-member LLC may freely transfer the owner's entire interest in the LLC. This is accomplished through a simple assignment of the sole member's membership interest to the transferee. Since such an interest is freely and fully alienable by its owner, section 56.061 authorizes a judgment creditor with a judgment for an amount equaling or exceeding the value of the membership interest to levy on that interest and to obtain full title to it, including all the rights of membershipthat is, unless the operation of section 56.061 has been limited by section 608.433(4). Section 608.433 deals with the right of assignees or transferees to become members of an LLC. Section 608.433(1) states the basic rule that absent a contrary provision in the articles or operating agreement, an assignee of a limited liability company interest may become a member only if all members other than the member assigning the interest consent. See also § 608.432(1)(a), Fla. Stat. (2008). The provision in section 608.433(4) with respect to charging orders must be understood in the context of this basic rule. The limitation on assignee rights in section 608.433(1) has no application to the transfer of rights in a single-member LLC. In such an entity, the set of all members other than the member assigning the interest is empty. Accordingly, an assignee of the membership interest of the sole member in a single-member LLC becomes a memberand takes the full right, title, and interest of the transferorwithout the consent of anyone other than the transferor. Section 608.433(4) recognizes the application of the rule regarding assignee rights stated in section 608.433(1) in the context of creditor rights. It provides a special meansi.e., a charging orderfor a creditor to seek satisfaction when a debtor's membership interest is not freely transferable but is subject to the right of other LLC members to object to a transferee becoming a member and exercising the management rights attendant to membership status. See § 608.432(1), Fla. Stat. (2008) (setting forth general rule that an assignee shall have no right to participate in the management of the business affairs of [an LLC]). Section 608.433(4)'s provision that a judgment creditor has only the rights of an assignee of [an LLC] interest simply acknowledges that a judgment creditor cannot defeat the rights of nondebtor members of an LLC to withhold consent to the transfer of management rights. The provision does not, however, support an interpretation which gives a judgment creditor of the sole owner of an LLC less extensive rights than the rights that are freely assignable by the judgment debtor. See In re Albright, 291 B.R. 538, 540 (D.Colo.2003) (rejecting argument that bankruptcy trustee was only entitled to a charging order with respect to debtor's ownership interest in single-member LLC and holding that [b]ecause there are no other members in the LLC, the entire membership interest passed to the bankruptcy estate); In re Modanlo, 412 B.R. 715, 727-31 (D.Md.2006) (following reasoning of Albright ). Our understanding of section 608.433(4) flows from the language of the subsection which limits the rights of a judgment creditor to the rights of an assignee but which does not expressly establish the charging order remedy as an exclusive remedy. The relevant question is not whether the purpose of the charging order provision i.e., to authorize a special remedy designed to reach no further than the rights of the nondebtor members of the LLC will permitprovides a basis for implying an exception from the operation of that provision for single-member LLCs. Instead, the question is whether it is justified to infer that the LLC charging order mechanism is an exclusive remedy. On its face, the charging order provision establishes a nonexclusive remedial mechanism. There is no express provision in the statutory text providing that the charging order remedy is the only remedy that can be utilized with respect to a judgment debtor's membership interest in an LLC. The operative language of section 608.433(4)the court may charge the [LLC] membership interest of the member with payment of the unsatisfied amount of the judgment with interestdoes not in any way suggest that the charging order is an exclusive remedy. In this regard, the charging order provision in the LLC Act stands in stark contrast to the charging order provisions in both the Florida Revised Uniform Partnership Act, §§ 620.81001-.9902, Fla. Stat. (2008), and the Florida Revised Uniform Limited Partnership Act, §§ 620.1101.2205, Fla. Stat. (2008). Although the core language of the charging order provisions in each of the three statutes is strikingly similar, the absence of an exclusive remedy provision sets the LLC Act apart from the other two statutes. With respect to partnership interests, the charging order remedy is established in section 620.8504, which states that it provides the exclusive remedy by which a judgment creditor of a partner or partner's transferee may satisfy a judgment out of the judgment debtor's transferable interest in the partnership. § 620.8504(5), Fla. Stat. (2008) (emphasis added). With respect to limited partnership interests, the charging order remedy is established in section 620.1703, which states that it provides the exclusive remedy which a judgment creditor of a partner or transferee may use to satisfy a judgment out of the judgment debtor's interest in the limited partnership or transferable interest. § 620.1703(3), Fla. Stat. (2008) (emphasis added). [W]here the legislature has inserted a provision in only one of two statutes that deal with closely related subject matter, it is reasonable to infer that the failure to include that provision in the other statute was deliberate rather than inadvertent. 2B Norman J. Singer & J.D. Shambie Singer, Statutes and Statutory Construction § 51:2 (7th ed.2008). In the past, we have pointed to language in other statutes to show that the legislature `knows how to' accomplish what it has omitted in the statute [we were interpreting]. Cason v. Fla. Dep't of Mgmt. Services, 944 So.2d 306, 315 (Fla.2006); see also Horowitz v. Plantation Gen. Hosp. Ltd. P'ship, 959 So.2d 176, 185 (Fla.2007); Rollins v. Pizzarelli, 761 So.2d 294, 298 (Fla.2000). The same reasoning applies here. The Legislature has shownin both the partnership statute and the limited partnership statutethat it knows how to make clear that a charging order remedy is an exclusive remedy. The existence of the express exclusive-remedy provisions in the partnership and limited partnership statutes therefore decisively undermines the appellants' argument that the charging order provision of the LLC Actwhich does not contain such an exclusive remedy provisionshould be read to displace the remedy available under section 56.061. The appellants' position is further undermined by the general rule that repeal of a statute by implication is not favored and will be upheld only where irreconcilable conflict between the later statute and earlier statute shows legislative intent to repeal. Town of Indian River Shores v. Richey, 348 So.2d 1, 2 (Fla.1977). We also have previously recognized the existence of a specific presumption against the [s]tatutory abrogation by implication of an existing common law remedy, particularly if the remedy is long established. Thornber v. City of Fort Walton Beach, 568 So.2d 914, 918 (Fla.1990). The rationale for that presumption with respect to common law remedies is equally applicable to the abrogation by implication of a long-established statutory remedy. See Schlesinger v. Councilman, 420 U.S. 738, 752, 95 S.Ct. 1300, 43 L.Ed.2d 591 (1975) (`[R]epeals by implication are disfavored,' and this canon of construction applies with particular force when the asserted repealer would remove a remedy otherwise available.) (quoting Reg'l Rail Reorganization Act Cases, 419 U.S. 102, 133, 95 S.Ct. 335, 42 L.Ed.2d 320 (1974)). Here, there is no showing of an irreconcilable conflict between the charging order remedy and the previously existing judgment creditor's remedy and therefore no basis for overcoming the presumption against the implied abrogation of a statutory remedy. Given the absence of any textual or contextual support for the appellants' position, for them to prevail it would be necessary for us to rely on a presumption contrary to the presumption against implied repeal that is, a presumption that the legislative adoption of one remedy with respect to a particular subject abrogates by implication all existing statutory remedies with respect to the same subject. Our law, however, is antithetical to such a presumption of implied abrogation of remedies. See Richey; Thornber; Tamiami Trail Tours, Inc. v. City of Tampa, 159 Fla. 287, 31 So.2d 468, 471 (Fla.1947). In sum, we reject the appellants' argument because it is predicated on an unwarranted interpretive inference which transforms a remedy that is nonexclusive on its face into an exclusive remedy. Specifically, we conclude that there is no reasonable basis for inferring that the provision authorizing the use of charging orders under section 608.433(4) establishes the sole remedy for a judgment creditor against a judgment debtor's interest in single-member LLC. Contrary to the appellants' argument, recognition of the full scope of a judgment creditor's rights with respect to a judgment debtor's freely alienable membership interest in a single-member LLC does not involve the denial of the plain meaning of the statute. Nothing in the text or context of the LLC Act supports the appellants' position.