Under Georgia law, a court that issues a judgment against an LLC member may also issue an order in the same case charging the member’s LLC interest with payment of the judgment; the LLC need not be a party to the suit, and the judgment creditor need not establish that jurisdiction and venue over the LLC is proper. Mahalo Invs. III, LLC v. First Citizens Bank & Trust Co., No. A14A1940, 2015 WL 687922 (Ga. Ct. App. Feb. 19, 2015).
A creditor obtained a trial court judgment against two individuals, then learned in post-judgment discovery that the individuals owned interests in a number of limited liability companies. The creditor filed an application in the same case seeking an order under Georgia’s limited liability act (OCGA § 14-11-504(a)), charging the individuals’ interests in the LLCs with payment of their unsatisfied judgment. The trial court entered the charging order, and the individuals appealed, contending that the trial court erred by entering the order as part of the same action in which the original judgment was entered and without first establishing that venue and jurisdiction over the LLCs was proper.
The Court of Appeals of Georgia held that under Georgia’s limited liability company act, the trial court’s jurisdiction over the individual LLC members was sufficient for the court to enter charging orders against their LLC interests. The court rejected the individuals’ argument that the statute requires a judgment creditor of an LLC member to initiate a separate action against the LLC to obtain a charging order, concluding that such an order could be entered in the original action against the member. The court also found that the judgment creditor did not have to establish proper venue and jurisdiction over the LLC to have the court issue the charging order; venue and jurisdiction with respect to the LLC member was sufficient. The court reasoned that although a charging order allows a judgment creditor to satisfy its unpaid judgment by attaching the judgment debtor’s distributional LLC interest, the order does not permit the creditor otherwise to interfere in the LLC’s governance.
