Nigri v. Lotz

453 S.E.2d 780, 216 Ga. App. 204, 95 Fulton County D. Rep. 402, 1995 Ga. App. LEXIS 59
CourtCourt of Appeals of Georgia
DecidedFebruary 1, 1995
DocketA94A2745
StatusPublished
Cited by13 cases

This text of 453 S.E.2d 780 (Nigri v. Lotz) is published on Counsel Stack Legal Research, covering Court of Appeals of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nigri v. Lotz, 453 S.E.2d 780, 216 Ga. App. 204, 95 Fulton County D. Rep. 402, 1995 Ga. App. LEXIS 59 (Ga. Ct. App. 1995).

Opinion

Andrews, Judge.

Nigri, who held a judgment debt against Lotz in the amount of $469,014.13, filed a petition pursuant to OCGA § 14-9A-52 seeking to charge Lotz’s partnership interests in two limited partnerships with payment of the unsatisfied amount of the judgment and seeking to obtain an order transferring Lotz’s partnership interests to him as a partial satisfaction of the debt. The trial court entered an order pursuant to OCGA § 14-9A-52 (a) charging Lotz’s partnership interests, but the court refused to transfer Lotz’s partnership interests to Nigri. Nigri appeals, claiming the trial court erred: (1) by holding that Lotz’s interests in the partnerships were isolated from his claim as a judgment creditor, and (2) by refusing to transfer Lotz’s partnership interests to him in satisfaction of the judgment debt.

1. As to the first enumeration of error, the trial court did not hold that Lotz’s interests in the partnerships were isolated from Nigri’s claim as a judgment creditor of Lotz. In fact, the trial court entered an order pursuant to OCGA § 14-9A-52 (a) charging Lotz’s partnership interests with payment of the unsatisfied amount of the judgment debt. The charging order provided that, Nigri be paid “distributions of money or property attributable to such interests ... as such distributions are made, up to the unsatisfied amount of the [judgment debt] . . . subject to and upon satisfaction of the rights, including secured creditors, having priority over [the charging order].”1 Accordingly, the charging order enforced Nigri’s statutory right under OCGA § 14-9A-52 (a) to collect the judgment debt against Lotz’s financial interests in the limited partnerships by diverting payments which would otherwise have been made to Lotz.2

2. In his second enumeration of error, Nigri contends that he was entitled to an order transferring Lotz’s partnership interests to him.

The charging order remedy invoked by Nigri is set forth in section 14-9A-52 of the Uniform Limited Partnership Act (ULPA) (OCGA § 14-9A-1 et seq.), which provides in part that: “(a) On due application to a court of competent jurisdiction by any judgment creditor of a limited partner, the court may charge the interest of the indebted limited partner with payment of the unsatisfied amount of the judgment debt and may appoint a receiver and make all other orders, directions, and inquiries which the circumstances of the case [205]*205may require.”

“[T]he property interest held by a limited partner is intangible personal property. A limited partner owns an interest in the legal entity but holds no title to the assets of the partnership.” Maxco, Inc. v. Volpe, 247 Ga. 212, 214 (274 SE2d 561) (1981), corrected at 251 Ga. 892; OCGA § 14-9A-49. “A limited partner shall have the right to receive a share of the profits or other compensation by way of income and to the return of his contribution as provided in Code Sections 14-9A-46 and 14-9A-47.” OCGA § 14-9A-42 (b). The charging order remedy entitles the creditor to receive the profits and surplus of the limited partnership, which the limited partner would otherwise have been entitled to receive, up to the unsatisfied amount of the judgment debt, but gives no direct remedy against specific limited partnership property.

Under the charging order entered by the trial court, Lotz remained a limited partner in the partnerships in all respects except his right to receive the distributions diverted to Nigri. Although a creditor who obtains a charging order is in a position similar to that of an assignee of the limited partner’s interest, in the sense that both have a right to receive the profits and surplus to which the limited partner would otherwise be entitled, neither has the limited partner’s information or inspection rights. See OCGA § 14-9A-50. A charging order under OCGA § 14-9A-52 is not an assignment of the limited partner’s interest to the creditor, nor does it confer upon the creditor the status of a substituted limited partner. See A. Bromberg & L. Ribstein On Partnership, Vol. I, § 3.05 (d) (3), p. 3:72; Vol. IV, §§ 13.06 (d) (2), pp. 13:33-34; 13.07 (d) (2), p. 13:51; OCGA § 14-9A-50.

In this case, in addition to entry of the charging order, Nigri sought an order from the trial court transferring Lotz’s interests in the limited partnerships to him in partial satisfaction of the debt. Under OCGA § 14-9A-52 (a), once a charging order has been entered, the trial court is authorized in aid of the order to “appoint a receiver and make all other orders, directions, and inquiries which the circumstances of the case may require.” Under this broad language, we conclude that, as an aid to enforcement of a charging order under OCGA § 14-9A-52 (a), the trial court is authorized to order that a limited partner’s charged interest be foreclosed by judicial sale at which the partnership interest may be purchased by the judgment creditor or a third party. Courts from other states and other authorities have generally agreed that the charging order provisions authorize the sale of a charged partnership interest. See Tupper v. Kroc, 494 P2d 1275 (Nev. 1972); Fed. Deposit Ins. Corp. v. Birchwood Builders, 573 A2d 182, 185 (N.J. Super. 1990); Madison Hills Ltd. Partnership II v. Madison Hills, Inc., 644 A2d 363 (Conn. App. 1994); Bromberg & Ribstein, supra at Vol. IV, § 13.07 (d) (2), pp. 13:49-51; Vol. I, § 3.05 (d) (2), [206]*206pp. 3:72-74; Gose, The Charging Order Under The Uniform Partnership Act, 28 Wash. L. Rev. 1, 10-18 (1953); Axelrod, The Charging Order-Rights of a Partner’s Creditor, 36 Ark. L. Rev. 81, 90-95 (1982).3

Accordingly, the trial court has discretion to determine whether or not a judicial sale of the partnership interest is an appropriate means in aid of the charging order. In general, a charging order is considered the primary method of satisfying the creditor’s judgment, but the further step of ordering a sale may be considered appropriate where it is apparent that distributions under the charging order will not pay the judgment debt within a reasonable period of time. See Gose, supra at 10; see also Tupper, supra; Fed. Deposit Ins. Corp., supra at 185; Madison Hills Ltd. Partnership II, supra.

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Bluebook (online)
453 S.E.2d 780, 216 Ga. App. 204, 95 Fulton County D. Rep. 402, 1995 Ga. App. LEXIS 59, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nigri-v-lotz-gactapp-1995.