IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FIFTH DISTRICT
NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
DISPOSITION THEREOF IF FILED
JOEANN MCCLANDON,
Appellant,
v. Case No. 5D16-3300
DAKEM & ASSOCIATES, LLC,
Appellee.
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Opinion filed May 26, 2017
Non-Final Appeal from the Circuit Court
for Seminole County,
Jessica J. Recksiedier, Judge.
Stephanie L. Cook and Robert Clayton
Roesch, of Shuffield, Lowman & Wilson,
P.A., Orlando, for Appellant.
Jon Marshall Oden, of Ball Janik, LLP,
Orlando, for Appellee.
PER CURIAM.
This appeal arises out of proceedings supplementary below where
Appellee/judgment creditor Dakem & Associates, LLC is attempting to collect on a twelve-
year-old judgment from Appellant/judgment debtor, Joeann McClandon. Appellant has a
controlling interest in eleven limited liability companies ("LLCs"). Appellee filed the
proceedings supplementary to reach the distributions from these LLCs to satisfy its
judgment. The trial court granted a charging order in Appellee’s favor against Appellant’s
transferable interest in the LLCs. To enforce the charging order, the court appointed a
receiver to take control of four of the LLCs’ finances, acting as the de facto Chief Financial
Officer, and authorized the receiver to make financial management decisions.
Appellant takes issue with the portion of the trial court’s order appointing a receiver.
She argues that section 605.0503, Florida Statutes (2015), permits a charging order as
the sole exclusive remedy to attach a judgment debtor’s interest in a multi-member LLC
and that there is no authority under that statute for the appointment of a receiver. On the
other hand, Appellee counters that the receiver is necessary to give the charging order
“teeth” and that the court was well within its jurisdiction to appoint a receiver pursuant to
subsections 605.0503(7)(c) and (d). We agree with the trial court in part and reverse in
part.
Appellee obtained a judgment against Appellant in Nevada in 2005. In 2008,
Appellee domesticated the Nevada judgment in Florida and began proceedings to collect
the amounts owed, which culminated in the order at issue. Section 605.0503 permits the
court to enter a charging order against a judgment debtor’s transferrable interest and
requires the LLC to pay over to the judgment creditor any distribution that would otherwise
be paid to the judgment debtor. Subsection (3) dictates that “a charging order is the sole
and exclusive remedy by which a judgment creditor . . . or member's transferee may
satisfy a judgment from the judgment debtor’s interest in a limited liability company or
rights to distributions from the limited liability company.” § 605.0503(3), Fla. Stat. (2015).
That being said, subsection (7) provides that “[t]his section does not limit any of the
following”:
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(c) the availability of the equitable principles of alter ego,
equitable lien, or constructive trust or other equitable
principles not inconsistent with this section.
(d) the continuing jurisdiction of the court to enforce its
charging order in a manner consistent with this section.
§§ 605.0503(7)(c)-(d). It is clear to this Court that the trial court did not abuse its discretion
when it appointed a receiver to enforce its charging order.1 However, it did abuse its
discretion in determining the scope of the receiver’s power – specifically, by authorizing
the receiver to have managerial control over the LLCs. The commentary under RULLCA
provides that:
Under this section, the judgment creditor of a member or
transferee is entitled to a charging order against the relevant
1 Florida's Revised Limited Liability Act is based on the Revised Uniform Limited
Liability Company Act of 2006, as amended in 2011 (“RULLCA”). Section 503 of RULLCA
provides in part:
SECTION 503. CHARGING ORDER.
(a) On application by a judgment creditor of a member or
transferee, a court may enter a charging order against the
transferable interest of the judgment debtor for the unsatisfied
amount of the judgment. A charging order constitutes a lien
on a judgment debtor’s transferable interest and requires the
limited liability company to pay over to the person to which the
charging order was issued any distribution that would
otherwise be paid to the judgment debtor.
(b) To the extent necessary to effectuate the collection of
distributions pursuant to a charging order in effect under
subsection (a), the court may:
(1) appoint a receiver of the distributions subject to the
charging order, with the power to make all inquiries the
judgment debtor might have made; and
(2) make all other orders necessary to give effect to the
charging order.
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transferable interest. While in effect, that order entitles the
judgment creditor to whatever distributions would otherwise
be due to the member or transferee whose interest is subject
to the order. However, the judgment creditor has no say in the
timing or amount of those distributions. The charging order
does not entitle the judgment creditor to accelerate any
distributions or to otherwise interfere with the management
and activities of the limited liability company.
RULLCA § 503 cmt. Under RULLCA and section 605.0503, the charging order entered
by the court should have only directed the LLCs to divert Appellant’s rights to the LLCs'
profits and distributions to Appellee. Stated differently, the charging order should have
only divested Appellant of her economic opportunity to obtain profits and distributions
from the LLC, charging only her membership interest, not her managerial rights. To the
extent that the order appointing the receiver authorized the receiver to exercise
managerial control over the LLCs, it exceeded the permissible scope and is reversed. In
sum, the order granting the charging order and appointing the receiver is affirmed;
however, the portions of the order permitting the receiver to be the financial officer of the
LLC and exercise managerial control is reversed. The management control remains with
the LLCs.
AFFIRMED in part and REVERSED in part.
PALMER and WALLIS, JJ., and JACOBUS, B.W., Senior Judge, concur.
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