Thursday, June 24, 2010

Florida Supreme Court Addresses Rights Of An LLC's Judgment Creditor

In Olmstead v. Federal Trade Commission, 44 So. 3d 76 (Fla. 2010) (SC08-1009), the Florida Supreme Court answered a certified question from the Eleventh Circuit.  The opinion that certified the question was published at 528 F.3d 1310 and can be viewed HERE.  The Florida Supreme Court rephrased the question from the Eleventh Circuit as follows:
Whether Florida law permits a court to order a judgment debtor to surrender all right, title, and interest in the debtor's single-member limited liability company to satisfy an outstanding judgment.
The court "answer the rephrased question in the affirmative" and concluded:
Section 608.433(4) does not displace the creditor's remedy available under section 56.061 with respect to a debtor‘s ownership interest in a single-member LLC.  Answering the rephrased certified question in the affirmative, we hold that a court may order a judgment debtor to surrender all right, title, and interest in the debtor‘s single-member LLC to satisfy an outstanding judgment.
Notably, there was a forceful dissent refusing to "join my colleagues in the judicial rewriting of Florida's LLC Act. Make no mistake, the majority today steps across the line of statutory interpretation and reaches far into the realm of rewriting this legislative act."

The briefs filed in the case can be viewed at the following links: Initial Brief (Olmstead), Answer Brief (FTC), Reply Brief (Olmstead), Amicus Brief (Zimmerman, Kiser &  Sutcliffe, P.A.), Amicus Brief (Prof. Daniel S. Kleinberger).  The court held oral argument on January 8, 2009 and the oral argument can be watched HERE.

**Update: A motion for rehearing was filed on July 8, 2010, which can be viewed HERE.  On July 23, 2010, the FTC filed its response to the rehearing motion which can be viewed HERE.  The Court denied the motion for rehearing on August 31, 2010, and the order can be viewed HERE.

**Update #2: After the certified question was answered, the case was returned to the Eleventh Circuit and on September 29, 2010, the Eleventh Circuit issued an opinion that can be viewed HERE.  See 621 F.3d 1327 (11th Cir. 2010).

Below is an article about the Florida Supreme Court's decision:
GrayRobinson Banking and Finance Newsletter, October 2010

Other articles about the decision can be viewed at the following links:
  • Professor Carter Bishop had a post about the decision HERE.  You can also view Professor Bishop's "Fifty State Series: LLC Charging Order Statutes" HERE.  The University of Pennsylvania Law School is hosting Professor Bishop's Memorandum Charging Order, HERE.  Professor Bishop's article "Desiderata: The Single Member Limited Liability Company Charging Order Statutory Lacuna" can be downloaded HERE.
  • Professor Gary Rosin at the "Unincorporated Business Entities Law" Blog had two posts about this decision, HERE and HERE.  
  • Professor Larry Ribstein had a discussion HERE at the "Truth on the Market" Blog. 
  • Professor Stephen Bainbridge had two posts at, HERE and HERE.
  • The "Business Law Prof Blog" has a post HERE.
  • The ABA webstore even has a CD CLE titled "Are Single-Member LLCs a Ticking Time Bomb for Asset Protection?" which can be viewed HERE.
  • The blog has a post titled "Your Single-Member LLC: Not A Mighty Fortress," which can be viewed HERE.
  • Professor Carter and Professor Kleinberger co-authored an article titled "The Single-Member Limited Liability Company as Disregarded Entity" which can be viewed HERE.
  • The Georgia State University Law Review published an article by , which is titled "The Olmstead Decision: The Road to Dignity and Freedom."  See 26 Ga. St. U. L. Rev. 651 (Spring 2010) Hein | LexisNexis | Westlaw
  • BNA Tax & Accounting has an article titled "Olmstead and Piercing the Veil" which can be found HERE.


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