Twigg v. Opsahl

Under ORS 18.775, a court may find a garnishee liable for an amount equal to the value of unreported garnishable property held by the garnishee at the time of garnishment. According to ORS 18.615, “garnishable property” includes “monetary obligations owing to the debtor that are then in existence.”

Respondents owned and managed a general contracting company, Rainier Pacific Development, LLC (RPD). After a dispute arose out of that construction of Petitioners’ home, an arbitrator ordered RPD to pay Petitioners over $600,000. RPD dissolved shortly after the judgment issued with no remaining assets to fulfill its obligations to Petitioners. The trial court found that RPD had been consistently insolvent at all relevant times and yet made a distribution of $106,000 to Respondents’ son. Therefore, the trial court awarded $106,000 to Petitioners for the unlawful distribution claim but denied Petitioners’ remedy under the Uniform Fraudulent Transfer Act (UFTA). Both parties appealed. Under ORS 18.775, a court may find a garnishee liable for an amount equal to the value of unreported garnishable property held by the garnishee at the time of garnishment. According to ORS 18.615, “garnishable property” includes “monetary obligations owing to the debtor that are then in existence.” On appeal, the Court concluded that “a member’s liability to an LLC for unlawful distributions constitutes a ‘monetary obligation owing to the debtor,’” and “a transferee’s liability for fraudulent transfers is similarly garnishable.” Therefore, the Court affirmed the trial court’s award for unlawful distribution and remanded for further proceedings on the fraudulent transfer claim. Affirmed on appeal; reversed and remanded on cross-appeal.