Can a Florida Court Obtain Jurisdiction Over a Non-Florida Limited Liability Company to Enforce a Charging Lien Against a Florida Resident’s Membership Interest? South Florida Commercial Litigation and Collection Attorney?

If you are reading this article, you are likely a judgment creditor attempting to recover, on your judgment, against an individual or entity that is resident in Florida or that has moved to Florida in order to attempt to avoid paying you..  The Florida LLC Act provides a mechanism to have the court enter a charging order against the judgment debtor’s membership interest in a limited liability company or, under limited circumstances, to order that the member’s interest be foreclosed to satisfy the judgment.  One argument that is generally raised by the judgment debtor, concerning non-Florida limited liability companies, is that a Florida court may only exercise jurisdiction over property of a judgment debtor located within the court’s jurisdictional territory.  As a result, the judgment debtor argues that because a foreign limited liability is located outside the State of Florida, Florida courts do not have jurisdiction to enforce the judgment against those entities.  However, a membership interest in a limited liability company, including foreign limited liability companies, is intangible personal property which accompanies the person of the owner.  Therefore, because the member’s interest resides with the Judgment debtor in Florida, the membership interests are located in Florida and are properly subject to in rem jurisdiction in the State of Florida.

Please keep in mind that this article is for informational purposes only.  It is not designed to be complete in all material respects.  Moreover, there may be facts specific to your situation that would have to be considered to determine whether or not Florida courts would have jurisdiction to enforce your judgment against a foreign limited liability company.  Thus, if you have any questions relative to this post, please feel free to contact us.

The Florida Limited Liability Company Act, which is located in Florida Statutes 608.401 – 705, provides that a judgment creditor to any member of a limited liability company may obtain a charging order against the member’s interest in the company or foreclose that interest in the company under certain circumstances.  As to the charging order, the Florida LLC Act provides “On application to a court of competent jurisdiction by any judgment creditor of a member or a member’s assignee, the court may enter a charging order against the limited liability company interest of the judgment debtor or assignee rights for the unsatisfied amount of the judgment plus interest.”

A charging order issued under this provision acts as a lien on the member’s interest in the limited liability company and grants the judgment creditor the right to receive distributions from the company which the member would have otherwise been entitled to receive.  Generally, a charging order is the sole and exclusive remedy by which a judgment creditor may satisfy a judgment from a member’s interest in a limited liability company or distributions therefrom.  However, where the limited liability company has only one member, the Florida LLC Act allows a judgment creditor to foreclose the member’s interest in the company as follows:

If a judgment creditor of a member establishes to the satisfaction of a court of competent jurisdiction that distributions under a charging order will not satisfy the judgment within a reasonable time, a charging order is not the sole and exclusive remedy by which the judgment creditor may satisfy the judgment against a judgment debtor who is the sole member of a limited liability company and upon such showing, the court may order the sale of that interest in the limited liability company pursuant to a foreclosure sale.  A judgment creditor may make a showing to the court that distributions under a charging order will not satisfy the judgment within a reasonable time at any time after the entry of the judgment and may do so at the same time that the judgment creditor applies for the entry of a charging order.  The purchaser of the member’s interest at a foreclosure sale steps into the shoes of the member for all purposes and the member loses all interest and rights in the company.

On October 10th 2019, a final judgment in the amount of $46,000 was entered against Christophe Brayer, Oliver Chauve, Euro Global Distribution, LLC. and International Distribution Group, LLC. in favor of EGD Investment, LTD and MSS International Consultants (BVI) LTD in the case no. 2017-027394 filed in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida.  As of the date of this post, the final judgment has not  been satisfied and the full amount, with interest is still owed.  If you would like to review the final judgment, please click on the hyperlink labeled final judgment.

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

To establish a joint venture in Florida, the written contract must contain the following five elements: (1) a community of interest in the performance of a common purpose, (2) joint control or right of control, (3) a joint proprietary interest in the subject matter, (4) a right to share in the profits and (5) a duty to share in any losses which may be sustained.  Absence of one element precludes the finding of a joint venture.

A party asserting that an unwritten, implied contract is the basis of a joint venture faces a heavy and difficult burden, as it must allege and prove that the implied contract contains the same five elements required of a joint venture based on a written contract.

If these five elements exist, joint venturers owe each other a duty of loyalty, breach of which gives rise to a claim for breach of fiduciary duty.

The elements required for pleading a civil conspiracy in Florida are (1) a conspiracy between two or more parties, (2) to do an unlawful act or to do a lawful act by unlawful means, (3) the doing of some overt act in furtherance of the conspiracy, and (4) damage to the plaintiff as a result of the acts, performed in furtherance of the conspiracy.  Under Florida law, civil conspiracy is a derivative of the underlying claims which form the basis of the conspiracy.  The gist of a civil conspiracy is not the conspiracy itself but the civil wrong which is done through the conspiracy which results in injury to the Plaintiff.  There is no independent action for civil conspiracy.  Thus, generally an actionable conspiracy requires an actionable underlying tort or wrong.  An act which does not constitute a basis for a cause of action against one person cannot be made the basis for a civil action for conspiracy.  However, there is an exception to the rule where the plaintiff can show some peculiar power of coercion posses by the conspirators by virtue of their combination, which power an individual would not possess.

Please keep in mind that the above information is being provided for educational purposes only.  It is not intended to be complete in all material respects.  If you have any questions concerning the contents of the post, you should contact qualified counsel.

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The Securities and Exchange Commission recently announced that it has filed an emergency action  and obtained a temporary restraining order and asset freeze against two individuals and two companies they control in connection with an alleged $6 million Ponzi scheme that defrauded at least 55 investors, many of whom are senior citizens or small business owners.

According to the SEC’s complaint, Neil Burkholz of Boca Raton, Florida, and Frank Bianco, of Pembroke Pines, Florida, through their companies Palm Financial Management LLC and Shore Management Systems LLC, solicited investors by falsely representing that their proprietary options trading strategies were highly profitable. In reality, as alleged in the complaint, defendants invested less than half of investor funds, and those investments resulted in near-total losses. The complaint alleges that defendants misappropriated the remaining funds by using them to repay other investors and by transferring approximately $880,000 of investor funds to themselves and their spouses for personal use. According to the SEC’s complaint, the defendants sent false reports to investors to conceal their fraudulent conduct and give the investors the false impression they were generating positive returns.

The SEC’s complaint, filed in federal court in Miami, Florida on Nov. 14, and unsealed Monday, Nov. 18, charges the defendants with securities fraud and seeks certain emergency relief, as well as permanent injunctions, return of allegedly ill-gotten gains with prejudgment interest, and civil penalties. The complaint names Burkholz’s wife, Rhoda Burkholz, and Bianco’s wife, Suzanne Bianco, as relief defendants.

Recently, the Securities and Exchange Commission charged a South Florida attorney with aiding and abetting, through the issuance of fraudulent opinion letters, a previously-charged $322 million fraud allegedly perpetrated by a now bankrupt Florida-based cash advance company, 1 Global Capital LLC, its former CEO, and its former CFO on 3,600 retail investors. The SEC also previously charged an unregistered broker for his allegedly unlawful sale of 1 Global securities.

According to the SEC’s complaint, filed in federal district court in Miami, Jan D. Atlas, while a partner at a Fort Lauderdale-based law firm that was acting as outside counsel to 1 Global, drafted two opinion letters in which he knowingly falsified or omitted important facts and offered the opinion that 1 Global’s notes likely were not securities. The complaint alleges that 1 Global used the opinion letters to falsely represent to a network of external sales agents that its notes were not securities and that its offering did not have to be registered with the SEC. 1 Global then allegedly induced thousands of retail investors to invest hundreds of millions of dollars in its notes. According to the complaint, Atlas received a percentage of the commissions generated on the sale of 1 Global’s notes, which totaled more than $600,000.

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True investment advisers have fiduciary obligations that they owe to their clients.  As such, they have an obligation to make full and fair disclosure to clients and prospective clients concerning their material conflicts of interest, including conflicts arising from financial incentives, and to act consistently with those disclosures. This principle is reflected in Form ADV, which reminds advisers of their general obligation to fully disclose material facts relating to their advisory business and specifically requires disclosure concerning the compensation and fees that advisers and their supervised persons receive, including from asset-based charges and service fees.

The chance of a conflict of interest arising increases based upon the number of rolls that a professional assumes in dealing with a client. This is especially true for attorneys. Some attorneys attempt to provide estate and tax planning advice to clients and then offer investments to those clients through broker/dealer or investment advisory firms with which they are associated.  When does the attorney’s legal advice end and his investment activities commence?  This is a question that is difficult to answer. Every factual situation will be different.  If you have any questions concerning an investment that you have made based upon the recommendation of your attorney/advisor, please feel free to contact us.

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The State of Florida has adopted its own version of the Uniform Commercial Code (UCC). The UCC, for most people including some lawyers, is not a easy statute to understand. Thus, if you believe that you have a claim under the UCC, prudence would suggest that you contact a qualified professional to represent your interests. For example, to state a claim for breach of an express warranty under the Florida UCC, the complainant must allege and prove (1) the sale of goods;(2) the express warranty; (3) breach of the warranty; (4) notice to the seller of the breach; and, (5) the injuries sustained by the buyer as a result of the breach of the express warranty.
Please keep in mind that the above information is being provided for educational purposes only. It is not designed to be complete in all material respects. If you have any questions relative to the contents of this post, you should contact a qualified professional.
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A Pure Bill of Discovery is an equity pleading which is granted pursuant to the Court’s auxiliary jurisdiction.  A Court’s jurisdiction usually consists of the right to decide a case or controversy between parties;  however, Florida Courts, also have the auxiliary power and jurisdiction to enter orders that a person or organization provide documents, submit to depositions or to otherwise comply with the Florida Rules of Civil Procedure presuit.  A Pure Bill of Discovery can be utilized for a number of reasons.  For example, in a recently filed case a company had its computer system hacked.  Someone, then currently unknow, was able to access the company’s bank account electronically and directed the company’s bank to send two wire transfers to two seperate bank account created, by unknown parties, at a nationwide banking institution.  Both the company’s bank and the bank that received the funds into these third party accounts refused to provide, to the company, any of the written communications between the banks relative to this matter and the receiving bank has refused to provide any information to the company about who ownes the accounts that received the funds.  Hence, the necessity of filing a Pure Bill of Discovery so that this information can be discovered and acted upon by the company.  Obviously, time is of the essence in this type of circumstance.

A suit for discovery is initiated by a party filiing a “Complaint For Pure Bill Of Discovery” with either the county or circuit court as appropriate.  The complaint should allege the following: (1) the matters concerning which the discovery asked for is sought; (2) the interests of the several parties in the subject of the inquiry; (3) the complainant’s right to have the relief prayed, its title and interest and what the relationship of the same is to the discovery claimed and that the discovery so attempted to be had is material to the complainant’s rightss that have been duly brought into litigation on the common-law side of the couurt under circumstnaces that entitle the complainant to a disclosure of what is necessary to maintain its own claim in that litigation, and not that of the defendant in the case.  If the Complaint is granted, then the plaintiff, in this case the comapny, can ask the court for leave to conduct discovery using any of the methods allowed by the Florida Rules of Civil Procedure.

Please keep in mind that the above information is being provided for educational purposes only.  It is not designed to be complete in all material respects.  If you have any questions concerning the contents of this post you should contact a qualified professional. 

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