## Facts

- Dakem & Associates, LLC held a money judgment against Joeann McClandon that was entered in Nevada in 2005.
- Dakem domesticated the Nevada judgment in Florida in 2008 and pursued post-judgment collection.
- McClandon owned controlling interests in eleven limited-liability companies (LLCs).
- In proceedings supplementary, Dakem sought to reach distributions payable to McClandon from those LLCs to satisfy the judgment.
- The trial court entered a charging order against McClandon’s transferable interests in the LLCs, directing that distributions otherwise payable to her be paid to Dakem.
- As part of the same enforcement effort, the trial court appointed a receiver over four of the LLCs, giving the receiver control of their finances as a de facto chief financial officer and authorizing financial-management decisions.
- McClandon appealed the portion of the order appointing and authorizing the receiver; she did not challenge the charging order itself.

## Issues

1. Under section 605.0503, Florida Statutes, may a court enforcing a charging order appoint a receiver with broad authority over LLC finances and financial-management decisions, or is the creditor limited to the debtor-member’s distribution rights?

## Decision

- Affirmed the charging order against McClandon’s transferable interests.
- Reversed the portion of the order that appointed a receiver with expansive CFO-like authority over the LLCs’ finances and financial-management decisions.
- Remanded for further proceedings consistent with section 605.0503’s limits.

## Legal Principles

- Section 605.0503 authorizes a charging order against a judgment debtor’s transferable interest in an LLC, requiring the LLC to pay to the judgment creditor any distribution that would otherwise be paid to the debtor.
- In a multi-member LLC context, section 605.0503(3) provides that a charging order is the sole and exclusive remedy to satisfy a judgment from the debtor’s LLC interest or rights to distributions.
- Section 605.0503(7) preserves certain equitable doctrines and the court’s continuing jurisdiction to enforce a charging order, but only in a manner consistent with the statute.
- Enforcement tools may be used to help capture distributions subject to the charging order, but they may not confer management powers or operational control over the LLC merely because a member’s economic interest is subject to collection.
- A receivership order that effectively places a creditor (through a receiver) in control of an LLC’s finances and financial decisions goes beyond diverting distributions and exceeds what section 605.0503 permits.

## Conclusion

McClandon holds that while a Florida court may enter and enforce a charging order to divert distributions payable to a judgment debtor from her LLC interests, the court exceeds the statutory remedy when it appoints a receiver with broad authority to run or control LLC finances; any equitable enforcement must remain limited to collecting the debtor-member’s distribution rights, not taking over LLC management.


McClandon v. Dakem & Associates, LLC, 219 So. 3d 269 (2017)