{ "id": 6778801, "name": "FIRST BANK, Plaintiff v. S&R GRANDVIEW, L.L.C.; DONALD J. RHINE; JOEL R. RHINE; GORDON P. FRIEZE, JR.; MAXINE GANER; SHARON R. SILVERMAN, EXECUTRIX OF THE ESTATE OF STEVEN S. SILVERMAN; and MARTIN J. SILVERMAN, Defendants", "name_abbreviation": "First Bank v. S&R Grandview, L.L.C.", "decision_date": "2014-03-04", "docket_number": "No. COA13-838", "first_page": "544", "last_page": "551", "citations": [ { "type": "official", "cite": "232 N.C. App. 544" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "725 S.E.2d 393", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2012, "pin_cites": [ { "page": "396" } ], "opinion_index": 0 }, { "cite": "403 S.E.2d 291", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1991, "pin_cites": [ { "page": "294" } ], "opinion_index": 0 }, { "cite": "328 N.C. 651", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2538925 ], "year": 1991, "pin_cites": [ { "page": "656" } ], "opinion_index": 0, "case_paths": [ "/nc/328/0651-01" ] }, { "cite": "606 S.E.2d 127", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2004, "pin_cites": [ { "page": "132", "parenthetical": "emphasis added" } ], "opinion_index": 0 }, { "cite": "167 N.C. App. 495", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8411756 ], "year": 2004, "pin_cites": [ { "page": "503", "parenthetical": "emphasis added" } ], "opinion_index": 0, "case_paths": [ "/nc-app/167/0495-01" ] }, { "cite": "388 S.E.2d 134", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1990, "pin_cites": [ { "page": "136", "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "326 N.C. 205", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 5307411 ], "year": 1990, "pin_cites": [ { "page": "209", "parenthetical": "citation omitted" } ], "opinion_index": 0, "case_paths": [ "/nc/326/0205-01" ] }, { "cite": "261 S.E.2d 849", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1980, "pin_cites": [ { "page": "854", "parenthetical": "internal citations omitted" }, { "page": "854" } ], "opinion_index": 0 }, { "cite": "299 N.C. 174", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8574165 ], "weight": 2, "year": 1980, "pin_cites": [ { "page": "180-81", "parenthetical": "internal citations omitted" }, { "page": "180-81" } ], "opinion_index": 0, "case_paths": [ "/nc/299/0174-01" ] }, { "cite": "553 S.E.2d 877", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 2001, "pin_cites": [ { "page": "880" }, { "page": "880" } ], "opinion_index": 0 }, { "cite": "354 N.C. 313", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 138417 ], "weight": 2, "year": 2001, "pin_cites": [ { "page": "318" }, { "page": "318" } ], "opinion_index": 0, "case_paths": [ "/nc/354/0313-01" ] }, { "cite": "548 S.E.2d 513", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2001, "pin_cites": [ { "page": "517" } ], "opinion_index": 0 }, { "cite": "353 N.C. 659", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 135857 ], "year": 2001, "pin_cites": [ { "page": "664" } ], "opinion_index": 0, "case_paths": [ "/nc/353/0659-01" ] }, { "cite": "274 S.E.2d 370", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1981, "pin_cites": [ { "page": "373" } ], "opinion_index": 0 }, { "cite": "50 N.C. App. 432", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 2677471 ], "year": 1981, "pin_cites": [ { "page": "436" } ], "opinion_index": 0, "case_paths": [ "/nc-app/50/0432-01" ] }, { "cite": "507 S.E.2d 284", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1998, "pin_cites": [ { "page": "290" } ], "opinion_index": 0 }, { "cite": "349 N.C. 290", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 571505 ], "year": 1998, "pin_cites": [ { "page": "297" } ], "opinion_index": 0, "case_paths": [ "/nc/349/0290-01" ] }, { "cite": "597 S.E.2d 717", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2004, "pin_cites": [ { "page": "721" } ], "opinion_index": 0 }, { "cite": "358 N.C. 512", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2987016 ], "year": 2004, "pin_cites": [ { "page": "517" } ], "opinion_index": 0, "case_paths": [ "/nc/358/0512-01" ] }, { "cite": "492 S.E.2d 369", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1997, "pin_cites": [ { "page": "371" } ], "opinion_index": 0 }, { "cite": "127 N.C. App. 585", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11798906 ], "year": 1997, "pin_cites": [ { "page": "588" } ], "opinion_index": 0, "case_paths": [ "/nc-app/127/0585-01" ] } ], "analysis": { "cardinality": 696, "char_count": 18561, "ocr_confidence": 0.719, "pagerank": { "raw": 1.158455170422405e-07, "percentile": 0.5834834386097414 }, "sha256": "ee7e2562f5790469aa4c646f0539045ceae8e29f2511b1c045c7fef510922959", "simhash": "1:3b6dba09d43d987e", "word_count": 2999 }, "last_updated": "2023-07-14T19:34:41.441392+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges McGEE and ELMORE concur." ], "parties": [ "FIRST BANK, Plaintiff v. S&R GRANDVIEW, L.L.C.; DONALD J. RHINE; JOEL R. RHINE; GORDON P. FRIEZE, JR.; MAXINE GANER; SHARON R. SILVERMAN, EXECUTRIX OF THE ESTATE OF STEVEN S. SILVERMAN; and MARTIN J. SILVERMAN, Defendants" ], "opinions": [ { "text": "HUNTER, Robert .C., Judge.\nDonald J. Rhine (\u201cdefendant\u201d) appeals from a charging order entered in favor of First Bank (\u201cplaintiff\u2019) charging defendant\u2019s membership interest in an LLC to satisfy payment of a judgment. On appeal, defendant argues that the trial court erred by: (1) concluding that the charging order \u201ceffectuated an assignment\u201d of defendant\u2019s membership interest in the LLC; and (2) enjoining defendant from exercising his rights as a member of the LLC and ordering that his membership rights \u201che fallow\u201d until the judgment is satisfied.\nAfter careful review, we reverse the trial court\u2019s order and remand for entry of a new charging order consistent with this opinion.\nBackground\nOn 7 September 2012, the trial court entered monetary judgment for plaintiff against defendant in excess of $3.5 million based on defendant\u2019s default on various loans and guaranty agreements. In an effort to collect on this judgment, plaintiff filed a motion seeking a charging order against defendant\u2019s membership interest in S&R Grandview, LLC (\u201cthe LLC\u201d), a limited liability company of which defendant was a member and manager. After a hearing on 18 February 2013, the trial court granted plaintiff\u2019s motion, and after concluding that the charging order \u201ceffectuate[d] an assignment,\u201d ordered the following:\n1. Defendant D. Rhine\u2019s membership interest in S&R Grandview, L.L.C. is hereby charged with payment of the unsatisfied amount of First Bank\u2019s Judgment, including interest that has accrued after the date of the Judgment.\n2. First Bank shall hereafter have the rights of an assignee of Defendant D. Rhine\u2019s membership interest in S&R Grandview, L.L.C., and all members and managers of S&R Grandview, L.L.C. shall treat First Bank as such an assignee.\n3. Until such time as the full amount of the Judgment has been paid to First Bank, Defendant D. Rhine shall be enjoined from exercising any of the rights of a member of S&R Grandview, L.L.C.\n4. First Bank shall receive any and all distributions and allocations from S&R Grandview, L.L.C. to which Defendant D. Rhine is entitled, until the full amount of the Judgment has been paid to First Bank.\n5. The members and managers of S&R Grandview, L.L.C., shall not allow any distribution or allocation to Defendant D. Rhine unless and until First Bank\u2019s Judgment has been fully satisfied.\n6. S&R Grandview, L.L.C. shall not allow Defendant D. Rhine to circumvent the terms or purpose of this Charging Order.\n7. This order does not allow First Bank to exercise any rights of a member of S and R [sic] Grandview, LLC except as set out in paragraph 4 above. Defendant D. Rhine\u2019s membership right shall lie fallow until the judgement [sic] is satisfied except as set out in paragraph 4 above.\nDefendant filed timely notice of appeal from this order.\nDiscussion\nI. Effect of Charging Order on LLC Membership Interest\nDefendant brings two related arguments on appeal: (1) the trial court erred by concluding that the charging order effectuated an assignment of his membership interest in the LLC to plaintiff, and (2) the trial court erred by enjoining him from exercising his management rights in the LLC and ruling that these rights \u201clie fallow.\u201d We agree as to both arguments and reverse the trial court\u2019s order.\nBoth issues on appeal involve interpretation of N.C. Gen. Stat. \u00a7\u00a7 57C-5-02, -03 (2011). Questions of statutory interpretation are questions of law, which are reviewed de novo by this Court. Dare Cnty. Bd. of Educ. v. Sakaria, 127 N.C. App. 585, 588, 492 S.E.2d 369, 371 (1997); Carolina Power & Light Co. v. City of Asheville, 358 N.C. 512, 517, 597 S.E.2d 717, 721 (2004). The primary objective of statutory interpretation is to give effect to the intent of the legislature. Polaroid Corp. v. Offerman, 349 N.C. 290, 297, 507 S.E.2d 284, 290 (1998). The plain language of a statute is the primary indicator of legislative intent. Begley v. Emp\u2019t Sec. Comm\u2019n, 50 N.C. App. 432, 436, 274 S.E.2d 370, 373 (1981). However, where the plain language is unclear, this Court may also glean the General Assembly\u2019s intent from legislative history. Lenox, Inc. v. Tolson, 353 N.C. 659, 664, 548 S.E.2d 513, 517 (2001). Likewise, \u201c[l]ater statutory amendments provide useful evidence of the legislative intent guiding the prior version of the statute.\u201d Wells v. Consol. Judicial Ret. Sys., 354 N.C. 313, 318, 553 S.E.2d 877, 880 (2001). Finally, statutory provisions must be read in context: \u201cStatutes dealing with the same subject matter must be construed in pari materia, as together constituting one law, and harmonized to give effect to each.\u201d Williams v. Williams, 299 N.C. 174, 180-81, 261 S.E.2d 849, 854 (1980) (internal citations omitted).\nSection 57C-5-03 allows a judgment creditor to seek a charging order against a debtor-member\u2019s interest in an LLC to satisfy the judgment. It provides:\nOn application to a court of competent jurisdiction by any judgment creditor of a member, the court may charge the membership interest of the member with payment of the unsatisfied amount of the judgment with interest. To the extent so charged, the judgment creditor has only the rights of an assignee of the membership interest. This Chapter does not deprive any member of the benefit of any exemption laws applicable to his membership interest.\nN.C. Gen. Stat. \u00a7 57C-5-03 (emphasis added). Because section 57C-5-03 states that the judgment creditor \u201chas only the rights of an assignee of the membership interest,\u201d it is proper to read section 57C-5-03 together with section 57C-5-02, which sets out the rights of an assignee of an LLC membership interest. See Williams, 299 N.C. at 180-81, 261 S.E.2d at 854. Section 57C-5-02 provides:\nExcept as provided in the articles of organization or a written operating agreement, a membership interest is assignable in whole or in part. An assignment of a membership interest does not dissolve the limited liability company or entitle the assignee to become or exercise any rights of a member. An assignment entitles the assignee to receive, to the extent assigned, only the distributions and allocations to which the assignor would be entitled but for the assignment. Except as provided in the articles of organization or a written operating agreement, a member ceases to be a member upon assignment of all of his membership interest. Except as provided in the articles of organization or a written operating agreement, the pledge of, or granting of a security interest, lien, or other encumbrance in or against, all or any part of the membership interest of a member shall not cause the member to cease to be a member or the secured party to have the power to exercise any rights or powers of a member.\nN.C. Gen. Stat. \u00a7 57C-5-02 (emphasis added). Membership interests are defined by N.C. Gen. Stat. \u00a7 57C-1-03(15) (2011) as \u201c[a]ll of a member\u2019s rights in the limited liability company, including without limitation the member\u2019s share of the profits and losses of the limited liability company, the right to receive distributions of the limited liability company assets, any'right to vote, and any right to participate in management.\u201d\nPlaintiff argues that \u201c[t]he only reasonable way to read N.C. Gen. Stat. \u00a7 57C-5-02 and N.C. Gen. Stat. \u00a7 57C-5-03 together and to give import to each of the clauses included in each statute is to conclude that the entry of a charging order amounts to an assignment of the debt- or\u2019s membership interest\u201d and after entry of a charging order \u201ca debtor ceases to be a member in the limited liability company to which the charging order applies.\u201d To reach this conclusion, plaintiff argues that: (1) a charging order assigns a debtor\u2019s economic interest in an LLC to a judgment creditor; (2) the only LLC membership rights that are freely transferable are economic rights, and thus, assignment of economic rights \u201ceffectuates a full and complete assignment of a limited liability company interest\u201d; and (3) because \u201ca member ceases to be a member upon assignment of all of his membership interest,\u201d N.C. Gen. Stat. \u00a7 57C-5-02, a charging order terminates the debtor-member\u2019s membership in the LLC.\nWe disagree with plaintiff\u2019s interpretation of these statutes. First, we do not read sections 57C-5-02 and 57C-5-03 as effectuating an assignment of the debtor\u2019s membership rights, either in whole or in part. Section 57C-5-03 clearly states that \u201cthe judgment creditor has only the rights of an assignee of the membership interest.\u201d An assignee has the right \u201cto receive, to the extent assigned, only the distributions, and allocations to which the assignor would be entitled but for the assignment.\u201d N.C. Gen. Stat. \u00a7 57C-5-02. Thus, under the plain language of these statutes, a charging order gives a judgment creditor the right to receive distributions and allocations to which the debtor-member would have been entitled until the judgment is satisfied. Nowhere in these provisions does the General Assembly mandate an assignment of membership interests from a debtor to a judgment creditor through a charging order. \u201cWhere the language of a statute is clear and unambiguous, there is no room for judicial construction and the courts must construe the statute using its plain meaning.\u201d Burgess v. Your House of Raleigh, Inc., 326 N.C. 205, 209, 388 S.E.2d 134, 136 (1990) (citation omitted). Section 57C-5-03 does exactly what it says; it \u201ccharge[s] the membership interest of the member with payment of the unsatisfied amount of the judgment with interest.\u201d Had the General Assembly intended a charging order to assign all membership interests and terminate a debtor\u2019s membership in an LLC, as plaintiff contends, it could have easily included language to that effect. Absent such language, we are bound by the words used by the General Assembly, and we hold that a charging order does not effectuate an assignment of a debtor-member\u2019s total interest in an LLC.\nRecent amendments to the North Carolina Limited Liability Company Act support our conclusion that a charging order does not effectuate an assignment. Effective 1 January 2014, the General Assembly repealed Chapter 57C and enacted a new North Carolina Limited Liability Company Act in Chapter 57D. See 2013 Sess. Laws 157, \u00a7\u00a7 1,2. N.C. Gen. Stat. \u00a7 57D-5-03 clarifies the rights of a judgment creditor seeking a charging order as follows:\n(a) On application to a court of competent jurisdiction by any judgment creditor of an interest owner, the court may charge the economic interest of an interest owner with the payment of the unsatisfied amount of the judgment with interest. To the extent so charged, the judgment creditor has only the right to receive the distributions that otherwise would be paid to the interest owner with respect to the economic interest.\n(b) A charging order is a lien on the judgment debtor\u2019s economic interest to the extent provided in this section from the time that such charging order is served upon the LLC in accordance with Rule 4(j)(8) of the Rules of Civil Procedure....\n(c) This Chapter does not deprive any interest owner of a right, including any benefit of any exemption law applicable to the interest owner\u2019s ownership interest.\n(d) The entry of a charging order is the exclusive remedy by which a judgment creditor of an interest owner may satisfy the judgment from or with the judgment debtor\u2019s ownership interest.\nN.C. Gen. Stat. \u00a7 57D-5-03 (2013) (emphasis added). Although the newly revised North Carolina Limited Liability Company Act does not apply to this case, see N.C. Gen. Stat. \u00a7 57D-11-03, the clarified portions of section 57D-5-03 support our conclusion that the General Assembly did not intend for section 57C-5-03 to effectuate an assignment, enjoin a debtor-member from exercising managerial rights, or cause the debtor-member to cease to be a member in the LLC.\nAlthough plaintiff contends that this conclusion leads to irreconcilable results, again we disagree.\nFirst, plaintiff argues that to conclude that a charging order does not effectuate a total assignment, this Court would have to reconcile \u201cwhy the interest received by a party receiving a charging order is identical to the interest received by a party who is otherwise assigned a membership interest in a limited liability company.\u201d We disagree with plaintiff\u2019s contention that these interests are identical. Section 57C-5-03 provides that a trial court \u201cmay charge the membership interest of the member with payment of the unsatisfied amount of the judgment with interest.\u201d N.C. Gen. Stat. \u00a7 57C-5-03 (emphasis added). Inherent in the concept of a charging order is that once the judgment is paid, the debtor-member\u2019s interest in the LLC is no longer charged. An assignee of a member\u2019s LLC membership interest has no such limitation. Thus, contrary to plaintiff\u2019s argument, although a judgment creditor has the economic rights of an assignee until the judgment is satisfied, the interests that the two parties have are not identical.\nSecond, plaintiff argues that because the term \u201ccharging order\u201d is not included in the last sentence of section 57C-5-02, which prescribes situations where a member loses some economic rights but retains membership in the LLC, the General Assembly could not have intended this provision to apply to charging orders. Although the term \u201ccharging order\u201d is not specifically mentioned by name, we find that it fits within the \u201cother encumbrance [s] in or against, all or any part of the membership interest\u201d for which the provision applies. See N.C. Gen. Stat. \u00a7 57C-5-02 (\u201c[T]he pledge of, or granting of a security interest, lien, or other encumbrance in or against, all or any part of the membership interest of a member shallnotcausethememberto cease tobe amember or the secured party to have the power to exercise any rights or powers of a member.\u201d) (emphasis added). Plaintiff argues that because encumbrances do not include actual transfer of rights until they are enforced, and charging orders permit the judgment creditor to actually receive distributions and allocations, charging orders cannot be encumbrances. The flaw in this logic is the assumption that charging orders are never \u201cenforced.\u201d The plain language of sections 57C-5-02 and 57C-5-03, specifically that the debtor\u2019s membership interest is \u201ccharge [d]\u201d and the judgment creditor has the right to \u201creceive . . . the distributions and allocations to which the assignor would be entitled,\u201d demonstrates a legislative intent for charging orders to act as encumbrances that are \u201cenforced\u201d whenever the debtor-member would have received distributions or allocations from the LLC. Furthermore, the General Assembly has clarified that charging orders are encumbrances, not assignments, and that the imposition of a charging order does not affect a member\u2019s managerial rights. Specifically, section 57D-5-03(b) states that \u201cA charging order is a lien on the judgment debtor\u2019s economic interest^]\u201d The subsequent amendment of the charging order statute is strong evidence that the General Assembly intended charging orders under 57C-5-03 to be encumbrances that do not affect a debtor\u2019s managerial interest, contrary to plaintiff\u2019s contention and the trial court\u2019s order. See Wells, 354 N.C. at 318, 553 S.E.2d at 880.\nThird, plaintiff argues that because section 57C-5-03 is included in the Article of the North Carolina Limited Liability Company Act entitled \u201cAssignment of Membership Interests; Withdrawal,\u201d charging orders must be interpreted to effectuate assignments. Although we agree that the title of an Article in which a statute is placed can be relevant when interpreting the statute, the placement of a statute within an Act is less probative of legislative intent than the plain language of the statute itself. \u201c[I]n interpreting a statute, we first look to understand the legislative intent behind the statute by examining the plain language of the statute.\u201d State v. Moore, 167 N.C. App. 495, 503, 606 S.E.2d 127, 132 (2004) (emphasis added) (citing Elec. Supply Co. v. Swain Elec. Co., 328 N.C. 651, 656, 403 S.E.2d 291, 294 (1991)). \u201c[W]hen confronted with a clear and unambiguous statute, courts are without power to interpolate, or superimpose, provisions and limitations not contained therein.\u201d In re Hamilton,_N.C. App._,_, 725 S.E.2d 393, 396 (2012). Here, the plain language of section 57C-5-03 unambiguously states that a charging order gives the judgment creditor the rights of an assignee. N.C. Gen. Stat. \u00a7 57C-5-03. It does not provide for actual assignment of membership rights from debtor to judgment creditor. The fact that section 57C-5-03 was placed by the General Assembly in an Article entitled \u201cAssignment of Membership Interests; Withdrawal\u201d does not change this outcome.\nConclusion\nAfter careful review, we hold that under the plain language of section 57C-5-03, a charging order does not effectuate an assignment of a debtor\u2019s membership interest in an LLC and does not cause a debtor to cease being a member in an LLC. Thus, we reverse the trial court\u2019s charging order enjoining defendant from exercising his membership rights in the LLC and ordering that his membership rights \u201clie fallow\u201d and remand for entry of a charging order consistent with this opinion.\nREVERSED AND REMANDED.\nJudges McGEE and ELMORE concur.", "type": "majority", "author": "HUNTER, Robert .C., Judge." } ], "attorneys": [ "Nexsen Pruet, PLLC, by M. Jay DeVaney and Brian T Pearce, for plaintiff-appellee.", "Wilson & Ratledge, PLLC, by Michael A. Ostrander, andSaffoLaw Firm, PC., by Anthony A. Saffo, for defendant-appellant." ], "corrections": "", "head_matter": "FIRST BANK, Plaintiff v. S&R GRANDVIEW, L.L.C.; DONALD J. RHINE; JOEL R. RHINE; GORDON P. FRIEZE, JR.; MAXINE GANER; SHARON R. SILVERMAN, EXECUTRIX OF THE ESTATE OF STEVEN S. SILVERMAN; and MARTIN J. SILVERMAN, Defendants\nNo. COA13-838\nFiled 4 March 2014\nAssignments \u2014 limited liability company \u2014 charging order does not effectuate debtor\u2019s assignment of membership interest\nThe trial court erred by concluding that a charging order effectuated an assignment of defendant\u2019s membership interest in a limited liability company (LLC) to plaintiff and by enjoining defendant from exercising his management rights in the LLC and ruling that these rights \u201che fallow\u201d until the judgment was satisfied. Under the plain language of N.C.G.S. \u00a7 57C-5-03, a charging order does not effectuate an assignment of a debtor\u2019s membership interest in an LLC and does not cause a debtor to cease being a member in an LLC.\nAppeal by defendant Donald J. Rhine from order entered 26 February 2013 by Judge Vance Bradford Long in Montgomery County Superior Court. Heard in the Court of Appeals 10 December 2013.\nNexsen Pruet, PLLC, by M. Jay DeVaney and Brian T Pearce, for plaintiff-appellee.\nWilson & Ratledge, PLLC, by Michael A. Ostrander, andSaffoLaw Firm, PC., by Anthony A. Saffo, for defendant-appellant." }, "file_name": "0544-01", "first_page_order": 554, "last_page_order": 561 }