## Facts

- Rolland P. Weddell and Michael B. Stewart worked together on multiple ventures using various entities, including Granite Investment Group, LLC (Granite), High Rock Holding, LLC (High Rock), and Stewart-related companies.
- A separate judgment creditor obtained a charging order against Weddell’s membership interests in Granite and High Rock.
- The district court treated the charging order as stripping Weddell of managerial authority, leaving Stewart as sole manager.
- Weddell claimed rights connected to an option to purchase an LLC membership interest in Empire Geothermal Power, LLC, and recorded a notice of pendency (lis pendens) against real property associated with that entity.
- Weddell also asserted an ownership interest in H2O, Inc.; Stewart contended Weddell acted only as Stewart’s agent and never acquired equity.
- After trial, the district court ruled for Stewart and related entities on all claims, canceled the lis pendens, and found Weddell held no ownership interest in H2O, Inc.
- Weddell, Granite, and High Rock appealed from the final judgment.

## Issues

1. Whether a charging order under NRS 86.401 can divest an LLC member who is also a manager of managerial rights, or whether it reaches only economic rights.
2. Whether a lis pendens under NRS 14.010 is proper when the underlying action concerns an option to purchase an LLC membership interest, even if the LLC owns real property.
3. Whether substantial evidence supported the finding that Weddell had no ownership interest in H2O, Inc. and acted only as Stewart’s agent.

## Decision

- Affirmed in part, reversed in part, and remanded.
- Reversed the portion of the judgment treating the charging order as eliminating Weddell’s managerial role; remanded for further proceedings regarding Weddell’s managerial interests (at least as to Granite).
- Affirmed the order canceling the lis pendens as unenforceable.
- Affirmed the finding that Weddell never acquired an ownership interest in H2O, Inc.

## Legal Principles

- Under NRS 86.401, a charging order gives a judgment creditor only the rights of an assignee to the member’s economic interests (profits, losses, and distributions) and does not transfer or impair managerial rights.
- A lis pendens under NRS 14.010 is proper only when the action directly involves real property, such as foreclosure or claims affecting title or possession; disputes over LLC membership interests are personal property claims and do not qualify merely because the LLC owns real estate.
- Appellate review of trial-level ownership findings applies the substantial-evidence standard; if the record reasonably supports a finding that a party acted as an agent and did not acquire equity, the finding is upheld.

## Conclusion

The court limited charging orders to economic LLC rights, rejected use of lis pendens for disputes over an option to acquire an LLC membership interest, and upheld the trial court’s determination that Weddell held no ownership interest in H2O, Inc., remanding only for proceedings on Weddell’s managerial rights unaffected by the charging order.


Weddell v. H2O, Inc., 271 P.3d 743 (Nev. 2012)