Regions Bank v. Stewart

Filing 67

MEMORANDUM OPINION AND ORDER entered, GRANTING 63 Plaintiffs Renewed Application for Charging Order, as further set out. Signed by Magistrate Judge Bert W. Milling, Jr on 5/10/2011. (clr)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
REGIONS BANK, as Successor
Trustee of the Carl T. Martin
Estate-Trust Part One, and the
Carl T. Martin Estate-Trust
Part Two, as established under
the last will and testament of
Carl T. Martin, deceased,
Plaintiff,
vs.
DAVID STEWART,
DEFENDANT.

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CIVIL ACTION 10-0145-M

MEMORANDUM OPINION AND ORDER
Plaintiff has filed a Renewed Application for Charging Order
pursuant to the Fed.R.Civ.P. 69(a)(1) and Alabama Code § 10-12-35
(Doc. 63).

Defendant has filed a response (Doc. 65) to which

Plaintiff has replied (Doc. 66).

After consideration of the

pleadings of record, Plaintiff’s Renewed Application for Charging
Order is GRANTED (Doc. 63).
The Court notes that on November 8, 2010, the undersigned
found that Plaintiff Regions Bank had demonstrated a breach of
contract against ZLM Acquisitions, LLC, an Alabama limited
liability company which is not a party to this action, and that
Defendant Stewart was liable, pursuant to his Personal Guaranty,
for damages of seven hundred eighty-six thousand, one hundred
eighty-four dollars and thirty-nine cents ($786,184.39) as of

November 8, 2010 (Doc. 53).

Judgment was entered on that same

date in favor of Regions Bank and against Stewart (Doc. 54).
Plaintiff has now filed a Renewed Application for Charging
Order, moving for an Order from this Court “against Judgment
Debtor David Stewart [], attaching Stewart’s membership interest
in ZLM Acquisitions, LLC, Shimmering Sand Development Company,
and P&P Acquisitions, LLC” pursuant to the Fed.R.Civ.P. 69(a)(1)
and Alabama Code § 10-12-35 (Doc. 63).

Plaintiff notes that

Defendant did not appeal the judgment and asserts that the
judgment is still not satisfied (Doc. 63, ¶¶ 7-8).
The Rules of Civil Procedure state that “[a] money judgment
is enforced by a writ of execution unless the court directs
otherwise.

The procedure on execution—and in proceedings

supplementary to and in aid of judgment or execution—must accord
with the procedure of the state where the court is located.”
Fed.R.Civ.P. 69(a)(1) (2011).

The law of Alabama, where this

Court is located, provides for the following:
On application to a court of competent
jurisdiction by any judgment creditor of a
member or assignee, the court may charge the
interest of the member or assignee with
payment of the unsatisfied amount of the
judgment with interest. To the extent so
charged, the judgment creditor has only the
rights of an assignee of financial rights.
This section shall be the sole and exclusive
remedy of a judgment creditor with respect to
the judgment debtor's membership interest.

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Ala. Code 10-12-35(a).

The Court notes that this Court has

previously issued a charging order pursuant to this statute, see
Vision Bank v. Swindall, C.A. 09-442-CG-M (S.D. Ala. November 30,
2010 (Doc. 71)), and that other federal courts have done so as
well under the state statutes of their jurisdiction.

See, e.g.,

The First National Bank of Louisville, N.A. v. Young, 1995 WL
549128, *3 (D. Mass. 1995); Wooten v. Lightburn, 2009 WL 2424686,
*2-3 (W.D. Va. 2009); General Electric Capital Corp. v. JLT
Aircraft Holding Co., LLC, 2010 WL 3023316, *3 (D. Minn. 2010);
and Lumbermens Mut. Cas. Co. v. Luciano Enterprises, LLC, 2005 WL
2340709, *1 (D. Alaska 2005).
Plaintiff has asserted that Stewart has admitted in postjudgment discovery that he owns interest in three different
limited liability companies (hereinafter LLC) in Alabama (Doc.
63, pp. 6-77).

Those interests are as follows:

(1) Eighty percent (80%) in ZLM
Acquisitions, LLC, with its principal place
of business located at 3145 Gulf Shores
Parkway, Gulf Shores, Alabama 36542. The
registered agent is Daniel G. Blackburn,
located at 110 Courthouse Square, Bay
Minette, Alabama 36507. There are two other
LLC members: Tom Steber, 6397 E. Quarry
Drive, Elberta, Alabama 36530; and Maurice J.
Fitsimons, 190 Country Club Drive, Daphne,
Alabama 36526.
(2) Fifty percent (50%) in Shimmering
Sands Development Company, LLC. The

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registered agent is The Corporation Company,
2000 Interstate Park Drive, Suite 204,
Montgomery, Alabama 36109. The only other
LLC member is TDTM Investments, LLC.
(3) Fifty percent (50%) in P&P
Acquisitions, LLC. The registered agent is
Daniel G. Blackburn, 110 Courthouse Square,
Bay Minette, Alabama 36507. The only other
LLC member is Terry Stewart.
(Doc. 63, pp. 6-7).
Defendant has urged that this Application be denied because
the LLC’s have not been notified of the Application or given any
opportunity to respond.

Stewart further argued that granting the

Application would “make Regions Bank a participating member of
each LLC” (Doc. 65, ¶ 2).

Defendant references no legal

authorities for these arguments, however.
The Court finds that the Application should be GRANTED (Doc.
63) as federal law and state law both allow it.

With regard to

Stewart’s arguments, the Court notes that the LLC’s have been put
on notice in that all have a member with, at least, a fifty
percent interest in the company.

Furthermore, Defendant’s

argument that granting the application would make Regions Bank a
participating member of each LLC is unsupported in that the law,
and this Court, will only allow Plaintiff to step into Stewart’s
shoes as “an assignee of financial rights.”
Therefore, after consideration of the relevant pleadings,
the Court GRANTS Plaintiff’s Renewed Application for Charging

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Order (Doc. 63) and will enter a separate Order to effectuate the
decision in this memorandum.
DONE this 10th day of May, 2011.

s/BERT W. MILLING, JR.
UNITED STATES MAGISTRATE JUDGE

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