HB 253

1	A bill to be entitled
2	An act relating to limited liability companies; amending
3	s. 608.433, F.S.; providing that a charging order against
4	a member's transferable interest is the sole and exclusive
5	remedy available to enforce a judgment creditor's
6	unsatisfied judgment against a member or member's
7	transferee; providing an exception for enforcing a
8	judgment creditor's unsatisfied judgment against a
9	judgment debtor or assignee of the judgment debtor of a
10	single-member limited liability company under certain
11	circumstances; providing legislative intent; providing for
12	retroactive application; providing an effective date.
13
14	WHEREAS, on June 24, 2010, the Florida Supreme Court held
15	in Olmstead v. Federal Trade Commission (No. SC08-1009),
16	reported at 44 So.3d 76, 2010-1 Trade Cases P 77,079, 35 Fla. L.
17	Weekly S357, that a charging order is not the exclusive remedy
18	available to a creditor holding a judgment against the sole
19	member of a Florida single-member limited liability company
20	(LLC), and
21	WHEREAS, a charging order represents a lien entitling a
22	judgment creditor to receive distributions from the LLC or the
23	partnership that otherwise would be payable to the member or
24	partner who is the judgment debtor, and
25	WHEREAS, the dissenting members of the Court in Olmstead
26	expressed a concern that the majority's holding is not limited
27	to a single-member LLC and a desire that the Legislature clarify
28	the law in this area, and
29	WHEREAS, the Legislature finds that the uncertainty of the
30	breadth of the Court's holding in Olmstead may persuade
31	businesses and investors located in Florida to organize LLCs
32	under the law in other jurisdictions where a charging order is
33	the exclusive remedy available to a judgment creditor of a
34	member of a multimember LLC, and
35	WHEREAS, the Legislature further finds it necessary to
36	amend s. 608.433, Florida Statutes, to remediate the potential
37	effect of the holding in Olmstead and to clarify that the
38	current law does not extend to a member of a multimember LLC
39	organized under Florida law, NOW, THEREFORE,
40
41	Be It Enacted by the Legislature of the State of Florida:
42
43	Section 1.  Section 608.433, Florida Statutes, is amended
44	to read:
45	608.433  Right of assignee to become member.-
46	(1)  Unless otherwise provided in the articles of
47	organization or operating agreement, an assignee of a limited
48	liability company interest may become a member only if all
49	members other than the member assigning the interest consent.
50	(2)  An assignee who has become a member has, to the extent
51	assigned, the rights and powers, and is subject to the
52	restrictions and liabilities, of the assigning member under the
53	articles of organization, the operating agreement, and this
54	chapter. An assignee who becomes a member also is liable for the
55	obligations of the assignee's assignor to make and return
56	contributions as provided in s. 608.4211 and wrongful
57	distributions as provided in s. 608.428. However, the assignee
58	is not obligated for liabilities which are unknown to the
59	assignee at the time the assignee became a member and which
60	could not be ascertained from the articles of organization or
61	the operating agreement.
62	(3)  If an assignee of a limited liability company interest
63	becomes a member, the assignor is not released from liability to
64	the limited liability company under ss. 608.4211, 608.4228, and
65	608.426.
66	(4)(a)  On application to a court of competent jurisdiction
67	by any judgment creditor of a member or a member's transferee,
68	the court may enter a charging order against the transferable
69	interest of the judgment debtor for charge the limited liability
70	company membership interest of the member with payment of the
71	unsatisfied amount of the judgment with interest.
72	(b)  To the extent so charged, the judgment creditor has
73	only the rights of an assignee of the transferable such
74	interest.
75	(c)  This chapter does not deprive any member of the
76	benefit of any exemption laws applicable to the member's
77	interest.
78	(5)  Except as provided in subsection (6), this section
79	provides the sole and exclusive remedy by which a person seeking
80	to enforce a judgment against a member or member's transferee
81	may, in the capacity of a judgment creditor, satisfy the
82	judgment from the judgment debtor's transferable interest in the
83	limited liability company. Foreclosure on the judgment debtor's
84	interest, and all other remedies to give effect to the charging
85	order, including, but not limited to, the appointment of a
86	receiver or a court order for directions, accounts, and
87	inquiries that the judgment debtor might have made, are not
88	available to the judgment creditor attempting to satisfy the
89	judgment out of the judgment debtor's transferable interest and
90	may not be ordered by a court.
91	(6)  In the case of a limited liability company having only
92	one member, this section does not provide the exclusive remedy
93	of a judgment creditor seeking to enforce a judgment against a
94	judgment debtor who is the sole member of a limited liability
95	company or the assignee of the sole member if the judgment
96	creditor establishes to the satisfaction of a court of competent
97	jurisdiction that distributions under a charging order will not
98	satisfy the judgment within a reasonable time.
99	Section 2.  The amendment to s. 608.433, Florida Statutes,
100	made by this act is intended by the Legislature to be clarifying
101	and remedial in nature and shall apply retroactively.
102	Section 3.  This act shall take effect upon becoming a law.

CODING: Words stricken are deletions; words underlined are additions.