Be Careful of Other Rules When Enforcing a Charging Order

Be Careful of Other Rules When Enforcing a Charging Order

      A recent decision from Mississippi is a helpful reminder that, when seeking to enforce a charging order, it is necessary to pay attention to other rules. PNC Bank, National Association v. Walnut Grove Office Gardens, LLC. No. 3:17-MC-17-DMB, 2018 WL 4855212 (N.D. Miss. October 5, 2018).

      PNC had made a series of loans to various LLCs, all personally guaranteed by Walter D. Wills, III. All of the loans went into default. Judgment was entered in favor of PNC against each of the borrower LLCs and Wills in his capacity as guarantor. That happened on September 28, 2017. Then, on October 4, 2017, the court entered an amended judgment. That all happened in the Western District of Tennessee. On November 2, 2017, PNC registered the amended judgment in the Northern District from Mississippi and then, some seven months later, filed an application for a charging order. It was whether that charging order could be issued that is the subject of this decision.

      Under 28 U.S.C. § 1963, a judgment from one court (in this instance, the Western District of Tennessee) may be registered in another court (in this instance, the Northern District of Mississippi) “when the judgment has become final by appeal or expiration of the time for appeal.” Wills never appealed the judgment holding him and the various LLCs liable to PNC Bank. In consequence, the question was whether there had occurred the “expiration of the time for appeal”? As to this point, the court relied upon Federal Rule of Appellate Procedure 4(a)(1)(A), which provides that a notice of appeal “must be filed with the district clerk within thirty (30) days after entry of the judgment or order appealed from.” The amended decision in this case was issued on October 4, 2017. It was registered in Mississippi on November 2, 2017. In consequence, less than 30 days had passed from the date of the amended order of the Tennessee court and its registration in Mississippi.

      On that basis, the Mississippi court refused to issue the requested charging order, writing:

Accordingly, the registration was premature and may not form the basis for the enforcement PNC Bank seeks here.

      PNC was granted leave to reregister the amended judgment from the Tennessee court.