Law v. Zemp

A trial court may make additional orders in aid of enforcement of a charging order under ORS 67.205 (involving limited partnerships), but may not make additional orders to enforce a charging order under ORS 70.295 (involving LLCs).

Plaintiff Law obtained a money judgment against Defendant Zemp, who did not pay. Law requested, and was granted, a charging order against four limited partnerships (ORS 70.295) and a limited liability company (ORS 63.259). The order required the companies to (1) pay Law distributions, credits, drawings, or payments due to Zemp, (2) refrain from making any loans until the judgment was paid, (3) refrain from transferring, modifying, or encumbering any partnership or membership interest without approval from the court or Law until the judgment was paid, (4) open their books and certain tax records for inspection by Law, and (5) provide future financial statements to Law. Per the order, Law could also seek modification to allow for the appointment of a receiver and foreclosure of Zemp’s interests in the companies. After their motion for reconsideration was denied, the companies appealed, arguing the trial court exceeded the scope of its authority by imposing obligations beyond paying Law any money due Zemp. Law asserted that the charging order statutes allow a trial court to enter orders that will help to accomplish the purpose of the charging order. After an analysis of the history, text and context of the statutes involved, the Court held the order to the limited partnerships to provide Law with financial information was proper, but the trial court did exceed its authority by restricting the limited partnerships from making loans and restricting the limited partners from encumbering or transferring their interests because the record did not reflect Zemp had the authority to make those directives and that those provisions may be required by the circumstances of this case. The Court also held that the OLLCA does not allow a court to enforce charging orders through ancillary orders like those that may be proper against limited partnerships, and therefore the trial court exceeded its authority by including them in the order. Reversed and remanded.