Tuesday, December 29, 2020

Will No One Rid Me of This Turbulent Priest?

 Will No One Rid Me of This Turbulent Priest?

            Today marks the 850th anniversary of the murder in 1170 of Saint Thomas Becket.  This murder has always been the most serious stain upon the reign of King Henry II.

            Becket rose to be appointed Lord Chancellor of England.  While Chancellor Henry nominated Becket (who at this time was not a priest) to the position of Archbishop of Canterbury, clearly hoping that Becket would use his power as primate of England to mold ecclesiastical policy in favor of royal interests.  Becket failed to do so, rather becoming an ascetic and placing the interests of the Church over those of the crown.  Eventually he was forced to resign as Lord Chancellor.

            The contest of wills between Henry and Becket over the Constitutions of Clarendon, they seeking to increase the power of the civil state over the Church and its constituents, led to a final break in the relationship, with Becket fleeing England for France. Furthermore, several suffragan bishops crowned Henry II’s son, thereafter the “Young King” (there was a sometimes employed tradition of crowning the heir during his father’s lifetime), in defiance of the prerogative of Canterbury to perform the coronation. That led to their excommunication.  With the intercession of papal legates the terms of Thomas’ return to Canterbury were agreed upon.

            While in France and likely well into his cups, Henry made a statement (exactly what was said is lost to history – there are conflicting accounts) that was interpreted by four knights as a direction to kill Becket.  They crossed the Channel and challenged Becket in Canterbury Cathedral, there killing him.  Services in the Cathedral were suspended after its desecration.  Becket was canonized barely three years later, and the four assassins were excommunicated and ordered to go on pilgrimage to the Holy Land (there are disputed accounts that thereafter at least one became a Templar).  Henry, fearful that he himself would be excommunicated, would later do public penance at Becket’s shrine in Canterbury Cathedral. That Shrine would be stripped under King Henry VIII as part of the Dissolution of the Monasteries.

The “benefit of clergy” that was the source of the dispute was not abolished in England until the mid-19th century.

            There is a passing reference to Becket in The Lion in Winter. And don’t believe what is presented in the movie Becket – he was of Norman heritage, and was not a “Saxon.” However, for both movies Peter O’Toole was nominated for a best actor award (he received neither).

          The leading biographies of Becket are those written by Anne Duggan and Frank Barlow.  His letters were collected and edited by Anne Duggan. 

Tuesday, November 17, 2020

So Begins Gloriana

 So Begins Gloriana

       On this day in 1558 Mary Tudor, who would later have foisted upon her the moniker “Bloody,” died, leaving the English throne to her half-sister Elizabeth. Where Mary's reign of just over 5 years was one of tumult at the highest political levels, for at least a significant and perhaps a majority of the population it was a return to the preferred old ways, a view put forth expertly by Professor Scarisbrick in his The Reformation and the English People. Still, her marriage to Philip of Spain was never popular.  Elizabeth's reign would by contrast be seen as one of peace and growth, later dubbed the Gloriana.

       Elizabeth would rule until 1603.

       Today is as well the anniversary of the death of Reginald Cardinal Pole, who under Mary had been named Archbishop of Canterbury.  He was the last Catholic to hold that post.

Sunday, October 25, 2020

Saint Crispin’s Day and the Battle of Agincourt


Saint Crispin’s Day and the Battle of Agincourt

       Today is the anniversary of the Battle of Agincourt, taking place in 1415 (605 years ago) between the forces of France and her various allies and the invading English forces under the command of King Henry V. Shakespeare, by having his character Henry V repeatedly refer to the day of the battle as St. Crispin’s Day, otherwise saved this obscure saint from being lost, save for experts in hagiography, to the mist of history.

            Agincourt was the third of a trio of famous battles in the course of the 100 Years War; the other two were Crecy (1346) and Poitiers (1356).  The English won all three of these battles.  In the end they lost the war.  If you should want a comprehensive review of the 100 Years War, the four volume treatment by Jonathan Sumption (The Hundred Years War I – Trial by Battle; The Hundred YearsWar II – Trial by Fire; The Hundred Years War III – Divided Houses; and The Hundred Years War IV – Cursed Kings) is authoritative.

      The English forces, likely numbering in the range of 7,000, were compelled to do battle with a numerically superior French force likely numbering in excess of 20,000. All else being equal, the English force should have expected to be annihilated. As is typical in the case of significant historical events, however, all things were not equal. The French and their allies were disorganized, and overall command of the battlefield was never achieved.  Rather, individual nobles led their own contingents forward in a disorganized and sometimes conflicting manner.  The terrain favored the English in several ways.  The French “artillery,” crossbowmen (largely Pisan mercenaries) were not effectively deployed, and they had the unenviable task of shooting uphill.  That same terrain required the French forces, both mounted and on foot, to attack uphill over a recently plowed field that, consequent to the recent rain, was more mud than dirt. The French knights and men at arms, slogging their way uphill, were a “target rich environment” for the rain of arrows let loose by the English longbows; assuming Henry’s forces numbered 7,000, likely 5,800 were longbowmen, each releasing four to six arrows a minute.

      Another factor was that the very size of the French force worked to its disadvantage in that those behind continued pressing forward, hoping for their moment of glory, even while those at the front were being slaughtered. It was not quite the situation suffered by the Romans at the hands of Hannibal at Cannae, but then likely it was not hugely better.

      While comparative casualty figures are effectively impossible to ascertain, it is clear that the French were badly mauled with significantly more casualties than the English. Further, a significant number of French nobles fell in contrast to only two English nobles. Also, a significant number of French knights who has been captured in anticipation of being ransomed were executed.  The validity of the execution order, given by Henry V, is to this day debated.

      For an excellent review of the battle, see Juliet Barker's Agincourt: Henry V and the Battle That Made England. It is also covered in volume four of Sumption’s treatise.

      As invented by Shakespeare in Henry V, Scene iii, the St. Crispin’s Day speech would immortalize Henry V:

WESTMORELAND. O that we now had here

But one ten thousand of those men in England

 That do no work to-day!

 KING. What’s he that wishes so?

 My cousin, Westmoreland? No, my fair cousin;

 If we are mark’d to die, we are enow

 To do our country loss; and if to live,

 The fewer men, the greater share of honour.

 God’s will! I pray thee, wish not one man more.

 By Jove, I am not covetous for gold,

 Nor care I who doth feed upon my cost;

 It yearns me not if men my garments wear;

 Such outward things dwell not in my desires.

 But if it be a sin to covet honour,

 I am the most offending soul alive.

 No, faith, my coz, wish not a man from England.

 God’s peace! I would not lose so great an honour

 As one man more methinks would share from me

 For the best hope I have. O, do not wish one more!

 Rather proclaim it, Westmoreland, through my host,

 That he which hath no stomach to this fight,

 Let him depart; his passport shall be made,

 And crowns for convoy put into his purse;

 We would not die in that man’s company

 That fears his fellowship to die with us.

 This day is call’d the feast of Crispian.

 He that outlives this day, and comes safe home,

 Will stand a tip-toe when this day is nam’d,

 And rouse him at the name of Crispian.

 He that shall live this day, and see old age,

 Will yearly on the vigil feast his neighbours,

 And say “To-morrow is Saint Crispian.”

 Then will he strip his sleeve and show his scars,

 And say “These wounds I had on Crispin's day.”

 Old men forget; yet all shall be forgot,

 But he’ll remember, with advantages,

 What feats he did that day. Then shall our names,

 Familiar in his mouth as household words-

 Harry the King, Bedford and Exeter,

 Warwick and Talbot, Salisbury and Gloucester-

 Be in their flowing cups freshly rememb’red.

 This story shall the good man teach his son;

 And Crispin Crispian shall ne’er go by,

 From this day to the ending of the world,

 But we in it shall be remembered-

We few, we happy few, we band of brothers;

 For he to-day that sheds his blood with me

 Shall be my brother; be he ne’er so vile,

 This day shall gentle his condition;

 And gentlemen in England now-a-bed

 Shall think themselves accurs’d they were not here,

 And hold their manhoods cheap whiles any speaks

 That fought with us upon Saint Crispin’s day.


           HERE IS A LINK to Kenneth Branagh’s masterful rendition.

          Not recited in the list of nobles who were part of the battle was Edward of Norwich, the Duke of York (a grandson of Edward III)   He was killed while defending the king.

            In 1420 Isabeau of Bavaria, queen to the incapacitated Charles VI, signed the Treaty of Troyes, granting the French Crown to Henry V and his heirs in place of her son. Further to that treaty, Henry V married Catherine of Valois; she would be the mother of Henry VI with the Valois inherited mental instability that would contribute to the Cousins War (a/k/a the War of the Roses); HERE IS A LINK to a discussion of that situation. Henry V died in 1422. Joan of Arc would join the fray in 1429; while she would be in the field was than a year and a half she helped turn the tide, and the 100 Years War would end with England holding only the region of Calais.  It would be lost in the reign of Mary (a/k/a Bloody Mary).

Thursday, October 22, 2020

“Let There Be Light,” On October 22, 4004 b.c.


“Let There Be Light,” On October 22, 4004 b.c.

       The Book of Genesis begins “In the beginning God created the heavens and the earth.” Genesis 1:1.  At some time thereafter “Then God said, “’Let there be light;’ and there was light.”  Genesis 1:3. Then “God divided the light from the darkness, … called the light Day, and the darkness he called Night. And the evening and the morning were the first day.” Genesis 1:4 - :5.

      According to calculations made by James Ussher, Archbishop of Armagh, as set forth in The Annals of the World Deduced from the Origin of Time and continued to the beginning of the Emperor Vespasian’s Reign (the title goes on from there), that first moment of creation took place at the onset of evening (6 p.m.) proceeding October 23, 4004 b.c.  These calculations were made by working backwards from the birth of Jesus in 4 b.c. (Ussher accounted for Dionysius’ error in calculating the year of Jesus’ birth) based upon the ages of the Patriarchs and the Kings of Israel as set forth in the Old Testament.

      By Ussher’s calculations, October 23 would have been a Sunday, the first day of the seven day week described in Genesis that would conclude on Saturday, the Sabbath day of rest. 

      Ussher’s dating of the Exodus from Egypt to 1491 b.c. comports with the modern scholarship of its dating (to the extent it took place as a historic event) to a so called “early Exodus.”

      Ussher’s chronology achieved its fame by being incorporated into numerous Bibles, they sometimes listing its dates in marginal notes.  Numerous similar chronologies, including one by Isaac Newton and another by the Venerable Bede, failed to be so referenced and faded into obscurity. Bede placed creation in 3952 b.c., but he made no effort to determine the precise day and time.

     Of course it is all malarkey; the age of the Earth is measured in billions, not thousands, of years.  In addition, and just to be snarky, if Creation took place at 6 p.m., was that Eastern Standard Time?

      October 22 is also the anniversary of the “Great Disappointment,” the failure of the Second Coming predicted for 1844 by William Miller and certain of his disciples based upon their interpretation of Biblical texts.  When October 23, 1844, dawned the fallacy of their prediction was laid bare.


Thursday, October 15, 2020

LLC In Chapter 7 Bankruptcy Not Obligated to Remit State Taxes on Behalf of Out-of-State Members


LLC In Chapter 7 Bankruptcy Not Obligated to Remit State Taxes on Behalf of Out-of-State Members

      In Business Law Today, Jonathan M. Stemerman and I have published a short review of the decision rendered In Re: North Carolina Tobacco International, LLC, 2020 WL 4582282 (Bankr. M.D. N.C. Aug. 10, 2020), which addresses the fact situation of a state law requiring an LLC to remit estimated payments on behalf of out-of-state members when the LLC is in bankruptcy. Cutting to the chase, the court held that the LLC in bankruptcy was not subject to this obligation.

       HERE is a link to that article.

Wednesday, October 14, 2020

The Battle of Hastings


The Battle of Hastings

       Today marks the 954th anniversary of the Battle of Hastings.

       1066 has already been a tumultuous year in England. On January 5, Edward the Confessor died, leaving the English throne to Harold Godwinson (King Harold II). Harold’s family, the Godwins, were the most powerful in England. Harold was himself an earl and as well the father-in-law to Edward the Confessor, the latter having been married to Harold’s daughter Edith. William of Normandy, also known as William the Bastard, claimed that he had been designated as Edward’s successor and that Harold had once promised him that he, Harold, disclaimed any right to the throne, leaving it instead to William. In addition, Harold Hardrada of Norway asserted a claim to the English throne.

       Sometime in September, Harold Hardrada had landed his troops in the north of England. After fast marching his troops north, the army of Harold Godwinson met the invading army of Harold Hardrada (supported by Tostig Godwinson, Harold’s brother) at the Battle of Stamford Bridge (HERE IS A LINK to a posting on those events). The invading army was defeated, and Hardrada was killed. Learning of William’s invasion in the south, Harold had to turn his army around and fast march it south in order to respond to this new threat. Those forced marches were some 240 miles each way.

       For reasons that have baffled many historians, Harold, upon arriving in London, quickly turned his troops, already exhausted from the march, toward Hastings. He did this notwithstanding that reinforcements were due to arrive the following day. Still, Harold led his forces towards William’s beachhead, leaving word for the reinforcements to catch up as soon as possible. Those reinforcements included the archers.

      The Battle of Hastings proper (there was an earlier skirmish) probably began around 11 in the morning. Through most of the day the forces of Harold prevailed – his forces fought as a phalanx, and  attacks on the shield wall were not effective.  In addition, the Norman archers were not effective firing up-hill. Harold holding his own against William would have been for Harold a win. As observed by Frank McLynn in 1066-TheYear of Three Battles:

[Harold] knew he had only to hold out until nightfall when reinforcements were certain to arrive; he could play for a draw but William had to have a win.

       The Norman infantry having failed to break through, William sent in his calvary. Attacking uphill, they did not have the force necessary to break through. William’s flank (the Breton forces) started to fail and William was unhorsed and rumored to be dead. Thinking (it would appear) that things were going in their favor, Harold’s forces began an advance downhill, their shield wall still intact and functionally invulnerable. But then the advance lost its momentum, perhaps due to the death of its leader Leofwine, Harold’s brother. William’s forces pushed back and in order Harold’s forces reversed themselves back uphill. It was then a battle of attrition, and the Norman invaders were lost at a lower rate than were Harold’s forces. A combined archery and armored calvary assault finally broke the shield wall, and the battle dissolved into a melee between small units. Harold and the remaining troops around him were attacked and Harold fell to multiple sword blows and a lance through his chest.

       Maybe an hour after Harold fell, reinforcements, including additional housecarls, arrived.

       The accepted, albeit almost certainly apocryphal, story is that Harold fell after being struck in the eye with an arrow. The Bayeux Tapestry may be interpreted as saying such. However, the “King Harold was killed” heading is over two figures (neither wearing a crown), one with an arrow in his eye and the other being struck down by a sword. If the former is meant to be Harold, the famous arrow in the eye as depicted in the Bayeux Tapestry may be a later invention. It is not mentioned in the earliest accounts of the battle. In addition, in medieval iconography, an arrow in the eye is the punishment afforded a perjurer. Having gone against his oath to leave the throne to William, some might have felt it poetic justice, even if not based in reality.

       By Christmas William was crowned King of England and was in Westminster Abbey accepting pledges of fealty from England’s mobility. Still, the next two decades of his reign would see numerous rebellions and challenges, including one from his own son Robert.

       As for the Bayeux Tapestry itself, HERE IS A LINK is an animated (and translated) version.

      The English like to claim that the Norman Invasion was the last invasion of England. This is not true. For example, during the Barons War, a French force invaded and had control of a significant portion of southern England, and the Isle of Wight was invaded in 1545. But the Norman Conquest is the last successful invasion of England.

    William would reign as king of England until his death in 1087. The definitive biography of William the Conqueror is that by David C. Douglas.

Tuesday, October 13, 2020

The Beginning of the End for the Knights Templar


The Beginning of the End for the Knights Templar

      Today marks the anniversary of the widespread arrest in 1307 throughout France of the members of the Order of Poor Fellow-Soldiers of Christ and Temple of Solomon, better known as the Knights Templar.

      Founded shortly after the First Crusade as a monastic order, the mission of the Templars was to provide protection to pilgrims coming to the Holy Land and otherwise protect the Latin Kingdom.  Eventually the Order developed a rather sophisticated banking organization.  For example, one proposing to travel from England to the Holy Land could deposit funds with the Templars in England, receiving in return what was essentially a letter of credit against which the individual could make withdrawals as they travelled through Europe and ultimately to the Holy Lands.  The military component of the Order, although not large in actual numbers (never more than 1,500 to 2,000 knights), was considered highly effective – after the Battle of Hattin, Saladin ordered the execution of all captured Templars.

      With the eventual loss of the Holy Land territories by the turn of the 14th century, the Templars were without a reason for existence.  At the same time, Philip IV of France, anxious to address a depleted royal treasury by expropriating Templar property and as well exterminate his substantial debts to the Order, fabricated numerous salacious allegations against the Templars, leading to their mass arrest on October 13, 1307.  Ultimately Pope Clement V, then resident in Avignon and largely a pawn of the French crown, issued a bull directing that Templars, wherever located, should be arrested.  The remnants of the Order, other than those executed on spurious charges of heresy, were eventually either pensioned or absorbed into other military orders such as the Knights Hospitaller or the Teutonic Knights

      A papal finding (a/k/a the Chinon parchment) determined that the Templars were not guilty of the many charges against them including idolatry and heresy.  Their actual failing was having lost their mission while being at least perceived as being wealthy while a king needed funds.  Those assertions are in many instances questionable – a detailed review of the inventories of the English properties of the order demonstrated a far less than extravagant lifestyle. Although the Templars would be found innocent of heresy, as a political concession the Order was dissolved in 1312, its properties turned over to the Knights Hospitaller.

      Notwithstanding the efforts of numerous modern authors, the Templars did not possess the Holy Grail, irrespective of whether that was a physical cup or, as suggested in one particularly fanciful book, an oblique reference to Mary Magdalene and, ultimately, the line of Merovingian kings. Ignore the movies as well – Guy de Lusignan was not, as “The Kingdom of Heaven” would have you believe, a Templar. A well written introduction to the history is The Templars by Piers Paul Read.  The books by Malcolm Barber are as well worthwhile.

        Philip IV's moniker is “the Fair”; who says history does not have a sense of irony?


Thursday, October 8, 2020

The Purposeless Purpose Clause


The Purposeless Purpose Clause

      Every business organization act allows there to be defined what is the purpose of the company. All too often, something entirely generic and unspecific such as “The Company is formed for any valid business purpose” or “The purpose of the company is to engage in any business activity permitted a limited liability company formed under the Kentucky Act.” is utilized. Doing so is, essentially, a waste of perfectly good ink. By saying the company can do anything, essentially no information is conveyed.

      Peter Mahler, in his blog New York Business Divorce, recently published a posting titled The Purposeless Purpose Clause Rides Again (Sept. 28, 2020). Therein, Peter reviewed the decision rendered in Lazar v. Attena, LLC, 2020 NY Slip Op 33003(u), 2020 WL 5439528 (Sup. Ct. NY County Sept. 9, 2020), in which those words had the effect of rendering an application for judicial dissolution of an LLC ineffective. HERE IS A LINK to that posting, which I obviously recommend to you.

      In addition, and several years ago, I wrote an article in the Journal of Passthrough Entities addressing this same topic, namely, Purpose: If You Don’t Know Where You Are Going, How Will You Know If You Have Arrived, 20 J. Passthrough Entities 37 (Nov./Dec. 2017). HERE IS A LINK to that article.

Wednesday, October 7, 2020

No Piercing of the Veil, But Successor Liability Found

No Piercing of the Veil, But Successor Liability Found

        David Tingstad, writing on the blog of his firm Beresford Booth PLLC, has reviewed a recent decision of the Washington Court of Appeals addressing piercing the veil and successor liability, that case being Maple Valley Park Place, LLC v. Tax Resource Centers, Inc. No 78832-9-I, 2020 WL 1853575 (Wash. App. April 13, 2020). David’s review appears in a pair of posts, the first titled An Interesting Case on Piercing the Corporate Veil (Sept. 23, 2020) and Successor Liability Among Related Entities (Sept. 30, 2020). Each title is a link to the related posting.

        Very briefly, while the court did not find that the elements of piercing the veil were satisfied, and on that basis denied that relief, did find that the elements of successor liability were satisfied under both the “mere continuation” and “fraudulent purpose” theories. David provides some helpful notes as well as to the degree to which mere continuation is an uncertain legal doctrine.

A Pair of Unsuccessful Arguments with Respect to Charging Orders

A Pair of Unsuccessful Arguments with Respect to Charging Orders

      In a July decision out of Florida, the court considered and rejected a pair of novel arguments made with respect to charging orders. Chevron Corp. v. Donziner, Case No. 19-24295-MC-Ungaro/O'Sullivan, 2020 WL 3643043 (S. D. Fla. July 6, 2020).

      Chevron was seeking to collect upon a multimillion-dollar judgment against Donziner. In this particular case, they were seeking an order that certain shares in a corporation be retitled from his name to that of Chevron. In one element of his defense, Donziner asserted that the turnover of title was improper on the basis that the charging order should be the exclusive remedy as the assets of the corporation in question were in turn interests in LLCs. Essentially, he argued that the court should look through the corporation in which he owned shares and look at its assets to determine the appropriate remedy. The court rejected this argument, holding in effect the Donziner was a shareholder, not a member of an LLC, and corporate shares are subject to a turnover order and charging order protection is not available.

      In the second argument, Donziner argued that the sought turn-over order would violate the garnishment limits, asserting in effect that the dividends paid him by the corporation are wages. Whether various state and federal laws imposing limits upon garnishment are applicable with respect to charging orders is a topic that has been often discussed; I wrote a review of the topic in the (now defunct) Journal of Passthrough Entities; here is a link to that article. After considering what would be the applicable law (although curiously looking only at state law and not at the federal statute on the same topic), the court determined that the dividends paid by the corporation are not subject to garnishment limits in that they are not wages or earned income to which those limitations would apply.

Tuesday, October 6, 2020

Orders in Furtherance of a Charging Order

Orders in Furtherance of a Charging Order

           A continuing tension is the degree to which the judgment-creditor, holding a charging order, is entitled to information as to the internal activities of the LLC in order to determine whether the charging order is being satisfied. For example, what have been the actual distributions made to the judgment-debtor, and have the LLC and the judgment-debtor, in cooperation with the other members, made payments to or on behalf of the judgment-debtor that should properly be characterized as distributions paid to the account of the judgment-creditor. In a recent decision from Alabama, the court enforced the ability to subpoena LLC records to make those determinations. SC Property Holdings, LLC v. United Recovery Group, LLC, Misc. No. 14-0008-KD-MU, 2020 WL 3579210 (S.D. Ala. May 29, 2020).

         Holding the LLC and its managing member in contempt for failure to produce certain records, the court wrote that “And without access to the subpoenaed documents, neither SCPH nor this Court, for instance, it can determine whether Green & Sons, LLC is in violation of the charging orders, a definitive harm to both SCPH and this Court’s authority.”

Charging Order Denied

                                                             Charging Order Denied

            In an April decision from California, the charging order was denied a judgment-creditor when that judgment-creditor failed to demonstrate that the judgment-debtor was in fact a member of the LLC against which the charging order was sought. Perez v. Dhillon, No. 2:19-mc-00071 KJM AC, 2020 WL 1900447 (E.D. Ca. April 17, 2020.

            In this case, when the judgment-creditor sought a charging order against the judgment-debtor’s alleged interest in Hiway Farm LLC, both it and the judgment-debtor challenge that he, in fact, had an interest in that LLC. Finding that the judgment-creditor had not carried its burden of showing that the judgment-debtor was a member of the LLC, the court wrote, “Plaintiff’s motion to enforce the judgment against the defendant’s debtor interest in the Hiway Farm, LLC necessarily fails, because plaintiff has not established that defendant has any such interest.” 2020 WL 1900447, *3.

            As I and others, including Jay Adkisson, have suggested, this and similar decisions are of questionable merit.  The cost of an LLC of complying with a charging order where the judgment-debtor is not a member is nothing; there is no distribution to be diverted to the judgment-creditor.  In contrast, there can be high transaction costs in requiring the judgment-creditor to prove the judgment-debtor is in fact a member of the LLC.  Believe it or not judgment-debtors are sometimes (often) less than forthcoming in identifying their assets against which a judgment may be collected, and while it may be possible under local law to require the LLC in which the judgment-debtor may be a member to respond to discovery, that imposes additional cost upon the judgment-creditor and the LLC.  This latter class of costs is imposed irrespective of whether the judgment-debtor is or is not a member.   

Monday, October 5, 2020

A Pair of Decisions (One Recent) on Foreclosure of the Charging Order

 A Pair of Decisions (One Recent) on Foreclosure of the Charging Order

            As has otherwise been noted, a charging order is a lien issued in favor of a judgment-creditor against a judgment-debtor’s distributional interest in an LLC. As distributions are made by the LLC, pursuant to the charging order they are paid not to the judgment debtor, but rather are diverted to the judgment creditor with the aim of reducing the outstanding judgment indebtedness. Being a lien, the possibility of foreclosure exists. There are relatively few decisions on the foreclosure of a charging order; last year I reviewed the Illinois decision Preservation Holdings,LLC v. Norberg. Here are two more decisions to consider.

          The first decision, Professionals Real Estate Partnership v. Linn, No. 1970-MDA 2019, 2020 WL 3887995 (Pa. Super. July 10, 2020), involved a general partnership. In this instance, and as is seldom seen, the judgment-creditor was the partnership itself; the charging order was issued in order to enforce a judgment in favor of the partnership against one of the partners. In this instance, the partnership held certain office buildings that were occupied by the partner’s respective businesses; the judgment-debtor in this case had failed to satisfy certain obligations to the partnership. The partnership itself generated no net distributable income. On that basis, it argued that it should be able to foreclose upon the charging order in that it would not generate funds sufficient to satisfy the judgment in any reasonable period of time. The judgment-debtor asserted that foreclosure was not justified in that, once the property was sold, the judgment could be collected from his portion of the sale proceeds. This assertion was rejected by the court in that it was the judgment-debtor partner who had repeatedly interfered with the sale of the partnership’s property.

         In the second decision, the Missouri Court of Appeals was called upon to consider whether foreclosure the charging order can even take place.  DiSalvo Properties, LLC v. BluffView Commercial, LLC, No. ED 101977, 2015 WL 3795402 (Mo. App. June 16, 2015), the question presented was whether the charging order lien could be foreclosed upon. In this case, the court held that foreclosure was not possible in that the statute did not affirmatively provide for foreclosure.

Scope of Charging Order Upheld

Scope of Charging Order Upheld

        A charging order is a lien on the distributions made to a member who is a judgment-debtor.  Essentially a garnishment, it directs the LLC to pay the distributions not to the judgment-debtor, but rather to the judgment-creditor.  Those distributions are then applied against and reduce the judgment.  It is not uncommon for judgment-debtors to argue that the scope of the charging order, i.e, what will be treated as a distribution is overly broad.  In this recent decision, the court rejected that assertion.  In Johnny Thomas, Trustee of Performance Products, Inc. v. Hughes, SA-16-CV-00951-DAE, 2020 WL 5015441 (W.D. Tex. Aug. 8, 2020).

            The court wrote:

 “Plaintiffs contend they have the right to receive any distribution to which Hughes would otherwise be entitled with respect to her membership interest in M. G. & Sons and that any membership distributions, profits, cash, assets, or other monies due or that shall become due by Hughes by virtue of that membership shall be paid by Hughes, M. G. & Sons, and/or any third party to Plaintiffs through their counsel of record. Furthermore, Plaintiffs ask the Court to order that Hughes and M. G. & Sons be required to obtain leave of court before transferring any asset of M. G. & Sons to any third party, transferring any funds to any third party except for transactions in the ordinary course of business, or transferring Hughes’s interest in M. G. & Sons to any third party.”

         Implicitly the court approved of the limitations on the transfer of company assets that were not identified as distributions and the transfer of the judgment-debtors interest in the LLC, neither of which would strictly be subject to the charging order.  The court noted, in approving the language, the judgment-debtor’s “history of fraudulent transfers to avoid payment of a judgment.” Id. at *3.

Back At It On Case Law Reviews

Back At It On Case Law Reviews

       The last few weeks, the Kentucky Business Entity Law Blog has been notably deficient with respect to reviews of recent cases and other developments. Sorry, the press of work has kept me from doing any review and analysis. That is now behind me, and I hope to be catching up soon. Initially, be looking for a number of reviews of recent charging order decisions that will be released starting later today.

Friday, October 2, 2020

The Fall of Jerusalem

The Fall of Jerusalem

      October 2 marks the anniversary of the fall of Jerusalem in 1187.  Jerusalem had been captured by the Crusader forces in 1099 at the culmination of the First Crusade.

After the catastrophic loss of the Battle of Hattin the defense of the crusader kingdom failed.  As observed by Christopher Tyerman in God’s War: A New History of the Crusades at 372, “The army destroyed at Hattin had demanded had denuded the rest of the kingdom’s defenses.”  With the exception of a few castles and Tyre, the cities and fortresses of the kingdom quickly fell until Jerusalem was invested on September 20.

      For those of you who saw the movie Kingdom of Heaven, well, lets just saw the script writers did not feel themselves bound by the historic record. The movie failed to acknowledge Balian’s wife and children.  Also ignored was the fact that Balian not only fought at the Battle of Hattin but was as well captured; the movie has him staying behind in Jerusalem, coming to the battlefield only after the Crusader army had been destroyed.  At least that part is true; the Crusader army was destroyed, and the Templars were especially hit; all the captive Templers were executed.  Also, the city wall fell not from trebuchet bombardment but rather from being undermined (September 29).  As near as I can tell Balian never visited France.  He should have been in his mid- to late-40’s at the time of the fall of Jerusalem.  And just to show how far the movie departed from reality, he and Sybilla were enemies.

The loss of Jerusalem would precipitate the Third Crusade and there the exploits of Richard the Lionheart.

Monday, September 28, 2020

The Execution of Pompey Magnus

The Execution of Pompey Magnus

          Today is the anniversary of the assassination of Pompey the Great on his (almost) arrival in Egypt.  Having lost the Battle of Pharsalus (48 b.c.) to Julius Caesar, he fled to Egypt hoping for refuge and the opportunity to raise a new army.  The Egyptians, knowing that Caesar would be on Pompey’s heals, arranged for his assassination before he reached the shore.  For those of you who enjoyed the HBO series Rome, while Pompey was killed in sight of his wife, there were more assassins than the one depicted, and it took place in the boat, not as Pompey walked to shore.

            It was an ignominious end to an amazing life.  He almost defeated Caesar earlier in the year at the Battle of Dyrrhachium. Previously, with Caesar and Crassus, he had been part of the First Triumvirate.  He was three times Consul of Rome, and three times he was awarded a Triumph. According to Josephus, The Jewish Antiquities, after conquering Jerusalem and settling a dispute as to local control he entered the Holy of Holies of the Temple, but took nothing of its riches.

Today is also the anniversary in 1066 of the arrival of the troops of William of Normandy (soon to be “the Conqueror”) in England. 

Sunday, September 27, 2020

Why Bother?

Why Bother?

On this day in the year 1590, Pope Urban VII passed away. His papacy began on September 15, 1590; he had been Pope for less than 12 days. Prior to his elevation to the Holy See he had a distinguished career as a diplomat throughout Europe, and he was eminently qualified for the position.  He died of malaria.

He did, however, during his short papacy, institute a smoking ban, threatening to excommunicate anyone who “took tobacco in the porch way of or inside a church, whether it be by chewing it, smoking it with a pipe or sniffing it in powdered form through the nose.” The prohibition was ultimately repealed a century later by Pope Benedict VIII.

Urban’s successor, Gregory XIV, would see a pontificate of only ten and a half months.

Friday, September 25, 2020

The Last Viking Invasion of England

The Last Viking Invasion of England

Today is the anniversary of the battle at Stamford Bridge in 1066, it ending, for all intents and purposes, the Viking invasions of England.  Beginning in the 8th century and the famous raid of Lindesfarne (June 8, 793), England had repeatedly suffered both Viking raids and invasions/migrations.  King Canute II (one of only two English kings denominated “the Great”) was an aspect of this chain of events; he was himself Danish.

King Edward the Confessor, who was himself “English” in that he was Anglo-Saxon,  died on January 5, 1066; he was childless.  The crown was assumed by Harald Godwinson.  His dispute with William the Bastard of Normandy over whether Harald had previously agreed to surrender the crown to William would ultimately lead to the Battle of Hastings.  In the meantime, Harald Godwinson had to deal with an invasion from Norway led by another claimant to the throne, Norwegian King Harald Hardrada; Hardrada was supported in this invasion by Tostig Godwinson, Harald Godwinson’s brother. 

Two factors were crucial to the resolution of the Battle of Stamford Bridge.   First, the invading force was dispersed on both sides of the river.  Thus, when the English army attacked the Norse contingent on the south side of the river, they outnumbered their opponent.  Second, the intelligence of the Norse army failed; they did not realize the English army was already present and ready to launch an attack. Another factor whose weight is unknown is that the invading army has days earlier defeated an English army (The Battle of Fulford) led by Earls Morcar (an exiled Northumbrian) and Edwin (Mercia), possibly leading to complacency.

It being a warm day, the invading army had left much of their armor on board their ships.  Initially, the English forces largely massacred the Norse forces on the south side of the river.  They then proceeded to attack over the bridge, an effort that, in what was almost certainly an apocryphal story, was delayed by a single Viking yielding an ax who single-handedly killed some forty soldiers before he was himself slain.  With the English having now crossed the bridge, the two armies again faced one another.  Ultimately, the Norse army would collapse consequent to its lack of armor and the deaths in battle of both Harald Hardrada and Tostig.  The few Normans who survived the battle entered into a truce with Harald agreeing to leave and never return.  While the invading fleet filled some 300 ships, the Norse survivors of the battle were able to return home in only 24 of them.

Harold Godwinson must have welcomed the end of this threat to his seat on the English throne.  Then he learned that the forces of William of Normandy had landed in the south.

Tuesday, September 22, 2020

The Battle of Salamis

The Battle of Salamis

      Today is the anniversary of the Battle of Salamis, which took place in 480 B.C.

      A decade earlier Darius of Persia invaded Greece.  It was the famous victory at Marathon that put an end to that venture.

      Xerxes, successor to Darius, again invaded Greece.  Those of you who saw “The 300” know something of how part of this invasion, namely the first few days, went.  BTW, while parts of that movie conform to the sources (“then we will fight in the shade”), much of it does not.  For example, Sparta had not one but two kings, and Leonidas had already fallen before the final onslaught and destruction of the Spartan force.  Still they had achieved their objective, namely delaying the Persians at Thermophylae.

      At Salamis the Greek fleet attacked that of Persia and won a major victory.  The Persian army, fearing that it would be trapped in Greece, largely withdrew.  The remainder met the Greek army the next year at Plataea.  It was at Plataea that the exhortation with which The 300 opens and closes takes place.  That battle was not the set piece that is indicated in the movie, but it did result in a Greek victory.

      There were no more Persian invasions of Greece.

Monday, September 21, 2020

The Assassination of Flavias Aetius

The Assassination of Flavias Aetius

      Flavias Aetius was the Roman commander at the Battle of Chalons (451), where along with forces of the Visigothic Empire, it under the command of its King, Theodoric , the Huns under Attila were defeated.  Flavias had been appointed magister militum (essentially “supreme commander” of all Roman military forces) by Valentinian III, a particularly weak (and in this era that is saying something) emperor.  While Boethius is oft identified as the last gasp of the Roman Empire’s (or at least its western components’) intellectual life, Flavius Aetius can equally be described as the last of the great western Roman generals.  Gibbons called him the Last of the Romans

      Only three years after Chalons on September 21, 454, Aetius was assassinated by Valentinian.  Within the year, Valentinian would in turn be assassinated by friends of Aetius while Valentinian’s guard watched; the members of the guard had been followers of Aetius. The shrinking remnants of the Western Roman Empire would finally collapse in 476 with the deposition of the last emperor of the Western Roman Empire, Romulus Augustus.

Saturday, September 19, 2020

Theodore of Tarsus


Theodore of Tarsus

      Today marks the anniversary of the death, in the year 690, of Theodore of Tarsus. At the time of his death, he was the Archbishop of Canterbury. Probably you have never heard of him. That’s unfortunate; he led a most interesting life.

      Theodore was born in Tarsus (the same city as was born Paul the Apostle) on the southern coast of what is today Turkey. He grew up at a time of conflict between the Byzantine Empire controlled out of Constantinople and the Sassanid Empire out of what was then referred to as Persia (today’s Iran). At this time, pre-the rise of Islam, most of the Sassanid Empire was Zorastrian (the same religion as Freddy Mercury of Queen).  By the early 600s and the rise of Islam, the Sassanid Empire converted to Islam. As such, through this stage in his life, Theodore had been immersed in classical Persian and then Muslim cultures even as he studied classical Western and Christian studies. Ultimately, he relocated first to Constantinople and then to Rome, where he entered a monastery and continued his studies.

       Following the death, before consecration, of a man intended to be the Archbishop of Canterbury (a certain Wighard), Theodore was chosen by the Pope to fill that vacant See. He was consecrated as the Archbishop of Canterbury in Rome, and at some point thereafter departed for England. Once in England, he took steps with respect to a variety of issues ranging from the calculation on what day Easter should be held to a variety of matters of church discipline. He is well served as a mediator in a number of political disputes. He founded a famous school at Canterbury. Many aspects of his time as the Archbishop of Canterbury are known through Bede’s Ecclesiastical History of the English People.

       Theodore would ultimately die in Canterbury at the age of approximately 88.

      So there you have it. Theodore was born in southern Turkey, lived under both the Persian Sassanid and then the Persian Islamic Empires, studied in Constantinople and then in Rome, and spent over 20 years as the Archbishop of Canterbury. The suggesting the people in the Middle Ages did not travel far from where they were born is simply not accurate.

Saturday, September 12, 2020

Athenian Forces Defeat Invading Persians at Marathon

Athenian Forces Defeat Invading Persians at Marathon

      Today might be the anniversary of the great battle, fought in 490 b.c. at Marathon, at which the forces of Athens defeated the Persian invasion sent by Darius the Great. The exact date of the battle is subject to controversy, although there is something of an alternative consensus on the 21st.

      At the time of the battle, the Persian Empire extended from the western boundaries of what is today India across the Middle East, Turkey and to Southwest Europe.  Darius had decided that the land we refer to today as Greece, inhabited by a variety of city-states, would be next incorporated into his empire.  The fact that various of the Greek city-states were supporting rebellious territories in what is today Western Turkey and the Mediterranean probably had a big role in that decision.  An invasion fleet landed its troops some twenty-six miles northeast of Athens at the Bay of Marathon.  Working with collaborators in Athens, it was thought that the army could be drawn away and destroyed even as the collaborators led an internal revolt, taking control of the city and making it available to Darius.  It would not turn out that way.

      At news of the landing, Athens sent word to Sparta seeking its assistance, the Spartan hoplite troops being the strongest force in the region.  Famously, the Spartans were unwilling to send their forces in light of an upcoming religious festival. In consequence, Athens would stand alone.  The Athenian army, well smaller than that of the Persian forces, camped facing their enemy for over a week.  On the 8th day, seeing that the Persians were re-embarking some troops onto ships and fearing that they intended to launch a direct assault on Athens, the Greek forces attacked.  Although outnumbered, by skillful flanking maneuvers the Greeks were able to envelop the Persian forces.  While the historical records recite what must be grossly inflated figures, certainly the Persians lost in excess of 6,000 men while the Greeks lost fewer than 200.

Although not recounted in the contemporary historic record, a runner, Pheidippides, took off to announce the victory to Athens.  Just over 26 miles later, he entered the city, announced “nickomen” (“victory”) and dropped dead from exhaustion.  Meanwhile, the balance of the Persian army embarked on their ships and set out from the Bay of Marathon with the intent of directly attacking Athens.  The Athenian army force-marched itself back to the city, manning its walls as the Persian fleet approached.  The Persians decided that another attack was not in their best interest and they withdrew.  

     A decade after Marathon, the Persian forces under Xerces, son of Darius, would again invade Greece.  They would ultimately fall victim to the Spartan and allied forces at Thermopylae, the Greek naval forces at Salamis and again the allied forces at Plataea.

            As for the famous runner bring news of victory, probably not.  The runner to Athens after the Battle of Marathon is not supported in the historic record, and is first recorded in the writings of the Roman Lucian. Lucian lived in the Second Century a.d., so generously there were six hundred thirty years between the Battle of Marathon and Lucian drafting the first report of this event.

Thursday, September 10, 2020

Using Contractual Flexibility to Avoid Otherwise (Inappropriate) Fiduciary Obligations

Using Contractual Flexibility to Avoid Otherwise
(Inappropriate) Fiduciary Obligations

              A recent decision from the Delaware Court of Chancery highlights the ability of persons drafting unincorporated business entity contracts (partnerships, limited partnerships and LLCs) so as to avoid the application of Delaware's (highly questionable) decision USACafés, L.P. Litigation, 600 A.2d 43 (Del. Ch.), appeal refused sub nom. Wyly v. Mazzafo, 602 A.2d 1082 (Del. 1991). This most recent guidance was delivered in Fannin v. YMTH Land Development, L.P. (In re: United Development Funding III, L.P.), C.A. No. 12541-VCF, 2020 WL 4384230 (Del. Ch. Jul. 31, 2020).

Both this decision and USACafés involved limited partnerships. In USACafés, then-Chancellor Allen of the Delaware Chancery Court held that “directors and controllers of a corporate general partner owed fiduciary duties to the limited partnership and the limited partners.” In that case, when an opportunity was presented that could conceivably have been utilized by the limited partnership, certain principles of the corporate general partner utilized it for themselves. In this instance, the defendants argued that USACafés was incorrectly decided and should be abandoned. The court, however, found that there was no indication that USACafés was clearly wrong and noted its continued citation in both court decisions and the legal scholarship. Note, however, that the parent satisfaction with USACafés is incomplete. For example, Mohsen Manesh has cogently argued that it was incorrectly decided, and is catalog the decisions of numerous other state courts that have not followed. See Mohsen Manesh, The Case Against Fiduciary Entity Veil Piercing, 72 Bus. Law. 61 (Winter 2016-17).

        But all is not lost. Under Delaware law as well as the law of many other jurisdictions, it is possible to disclaim, modify and entirely eliminate fiduciary duties. The Fannin decision points out that this opportunity to use contract reduces the impact of USACafés. Specifically, if it is desired that those in control of the general partner of the limited partnership not owe fiduciary obligations to either the limited partnership as a whole lot to the limited partners either individually or as a class, that can be specified in the controlling agreements. “Controllers may avoid or at least minimize the duty that USACafes recognized by structuring their limited partnership agreements to eliminate fiduciary duties. Delaware limited partnership jurisprudence has long recognized broad license to limit fiduciary duty protections in limited partnership agreements.” Fannin, 2020 WL 4384230, * 18.  In that way the otherwise default application of the principles set forth in USACafés is avoided.
Of course, this means that the application of USACafés continues to exist where the drafters of the controlling agreements are unaware of this option. In those circumstances, those organizing the venture should have done a better job of hiring legal counsel who were up to date with developments in the law. More pernicious is, however, the situation of small ventures that are not in the position to draft bespoke organizational documents; they are not inexpensive. Those smaller, less sophisticated ventures will continue to bear the brunt of USACafés and its arguably invalid core holding.

Wednesday, September 9, 2020

Professional Eric Chaffee and Liberty University

Professional Eric Chaffee and Liberty University

        Last week, in a story published on Reuters titled How Jerry Falwell Jr. Mixed Personal Finances with His University’s (Sept. 4, 2020), Prof. Eric Chaffee of the University of Toledo Law School, was quoted “These sweetheart land transactions are certainly eyebrow-raising.”

         HERE IS A LINK to that story.

An LLC Is Not a Corporation

An LLC Is Not a Corporation
      An LLC is not a partnership, and it is not a corporation. Neither is it a species of either of those business organizational forms. Rather, an LLC is a unique combination of characteristics, some which have precedents in the law of corporations and partnerships and some of which are unique to limited liability companies. There are a significant number of cases addressing the challenge of whether a statute drafted long before the existence of LLCs that references, for example, “corporations” or “partnerships” should be read as including as well LLCs. In a recent decision from Texas, with respect to a particular statute, that question was answered in the negative. D. Webb Industries, LLC v. Permian Equipment Rentals, LLC, 2020 WL 4875879 (Tx. App. - Eastland, Aug. 20, 2020).

      Under Texas law, it is possible to recover attorneys’ fees against corporations and individuals in certain cases as provided for in § 38.001 of the Texas Civil Practice and Remedies code, it being helpfully labeled “Recovery of Attorney’s Fees.” In this instance, an application was made for recovery of attorney's fees against the LLC. The defense was that the statute is restricted to recovery against corporations and individuals, and an LLC is neither.

      Following a long string of prior Texas decisions that have addressed the issue, the court refused to step outside the accepted interpretation of § 38.001, holding that attorney's fees may not be recovered against an LLC in that it is neither a corporation nor an individual.

Tuesday, September 8, 2020

Choice of Law/Forum and Waiving the Right to a Jury Trial: California Courts Holds That the Former Cannot Do the Latter

Choice of Law/Forum and Waiving the Right to a Jury Trial: California Courts Holds That
the Former Cannot Do the Latter

Business Law Today, a publication of the Section of Business Law of the American Bar Association, has published a short article of mine, Choice of Law/Forum and Waiving the Right to a Jury Trial: California Courts Holds That the Former Cannot Do the Latter.  This article reviews a recent decision of a California court that is yet another cog in the disfunctional machine that is the relationship of the business law of Delaware (and by implication of every other state) and California.  In this case the plaintiff was a member of a Delaware LLC.  When he sued the LLC he claimed that he should not be required to litigate in the Delaware Chancery Court, which does not have juries, because under the California Constitution he has a right to a jury trial.

How the Delaware court will respond awaits to be seen.

            HERE IS A LINK to the article.

Friday, September 4, 2020

Different Forms Have Different Rules

Different Forms Have Different Rules

        While often times business organization forms such as the limited liability company, the corporation, the partnership and the limited partnership are lumped together as being only slightly different shades of gray, in fact they are distinct bodies of law all with their own rules. In a recent posting on the New York Business Divorce Blog, Franklin C. McRoberts has reviewed the New York law governing LLCs, corporations, partnerships and limited partnerships from the perspective of what obligations may or may not be set forth in an oral/course of conduct versus a written agreement. In that posting, he identifies a number of important points. Now, that may be the law for New York, but every state is going to have similar disparate limitations across entity acts, and they need to be recognized.

      The title of that posting is Enforceability of Oral Operating, Shareholder, and Partnership Agreements, posted August 24, 2020. HERE IS ALINK to that piece.

And So Begin the Middle Ages

And So Begin the Middle Ages

        By a certain measure, today marks the anniversary of the date in 476 from which the “Middle Ages” may be dated. On this day, the last emperor of the Western Roman Empire, Romulus Augustus, who was in his mid-teens and was completely controlled by his father, Orestes, the Magister Militum of the Roman military, was deposed by Odoacer. Orestes had little standing to complain about the over-throw of his son's reign - Orestes had revolted against the prior emperor and put his son on the imperial throne. Odoacer did not bother asserting that he was another Roman emperor; he was to be simply the King of the territories under his control.

        With Romulus' resignation the imperial regalia was packed up and shipped off to Byzantium. With this event, the Western Roman Empire ceased to exist, its fragments now under control of various “barbarian” tribes.

             The “eastern” Roman Empire centered at Constantinople (Byzantium) would survive another millennium until it fell to the Ottoman Turks in 1453.