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Saadi v. Maroun

United States District Court, M.D. Florida, Tampa Division

February 23, 2018

EDWARD T. SAADI, Plaintiff,
v.
PIERRE A MAROUN, et al., Defendants.

          REPORT AND RECOMMENDATION

          MARKA.PIZZO, UNITED STATES MAGISTRATE JUDGE.

         Despite persistent efforts since October 2009, Edward T. Saadi has been unable to collect his $90, 000 judgment against Pierre Maroun (docs. 225, 230). But after some financial spadework, he now contends that Maroun, through a limited liability company (LLC), has an interest in a Clearwater condominium that is either ripe for a judicial sale (Saadi's main demand) or a charging order (his alternative demand). See doc. 280. Recommending the correct alternative to the district judge is what is before me, and that determination depends on the application of Fla. Stat. § 605.0503, a statute that deals with charging orders in the context of a limited liability company. In sum, if the LLC has Maroun as its only member, the Court “may” order the sale of Maroun's interest (assuming Saadi meets the statute's other predicates). See § 605.0503(4). If the LLC has more members than Maroun, then a charging order, which acts as a lien on Maroun's transferable interest in the LLC, is the sole statutory option. See § 605.0503(1). After the benefit an evidentiary hearing and the motion papers, I recommend the district judge issue a charging order as to Maroun's interest in Maroun's International, LLC.

         Discussion

         Fed.R.Civ.P. 69(a)(1) dictates that “[t]he procedure on execution - and in proceedings supplementary to and in aid of judgment or execution - must accord with the procedure of the state where the court is located[.]” And that puts Florida's Revised Limited Liability Company Act and § 605.0503 Fla. Stat. (2014) in particular front and center. That section provides generally that “a charging order is the sole and exclusive remedy by which a judgment creditor ... may satisfy a judgment” from a member's interest in a limited liability company or distributions therefrom. § 605.0503(3). That remedy “constitutes a lien upon a judgment debtor's transferable interest and requires the limited liability company to pay over to the judgment creditor a distribution that would otherwise be paid to the judgment debtor.” § 605.0503(1). And where the limited liability company has only one member, the statute allows a court to order a foreclosure sale, if a judgment creditor establishes that a charging order will not satisfy the judgment.[1] Fla. Stat. § 605.0503(4); Regions Bank v. Hyman, No. 8:09-cv-1841-T-17MAP, 2015 WL 1912251, *5 (M.D. Fla. April 27, 2015).

         No one disputes that Maroun lives at the Clearwater condominium, or that Maroun's International, LLC (“LLC”) holds the deed to the place, or that Maroun has an interest in the LLC. What is hotly disputed, however, is the LLC's makeup - is it just Maroun or do others have an interest in it too? Deciding which from the evidence is a hazy proposition. Neither side's evidence is persuasive. Complicating all this is the fact that Florida's LLC scheme does not require an LLC to publicly reveal all its members.

         Saadi says the LLC is just Maroun, relying primarily upon Florida Department of State records and Maroun's and the LLC's responses to Saadi's interrogatories. For example, the Electronic Articles of Organization for Maroun's International, LLC filed with the Secretary of State on May 6, 2006, and the annual reports for Maroun's International, LLC for the years 2007-2017 mention only Maroun and no one else. See doc. 335, Ex. 3, 4, and 5. From this, he posits the LLC is a single entity structure - and Maroun is the only stakeholder. But that conclusion assumes that Florida's LLC scheme requires an LLC to list all its members in such filings. And that is not the case. In fact, the process for setting up an LLC in Florida can be unsophisticated. Under the version of the statute applicable at the time the LLC was established, Florida required the filing of “articles of organization ... with the Department of State” ... “by one or more members or authorized representatives of the [LLC].” §608.407(1), Fla. Stat. (2006). The articles of organization were only required to include the following information:

(a) The name of the limited liability company. ...
(b) The mailing address and the street address of the principal office of the limited liability company. ...
(c) The name and street address of its initial registered agent for service of process in the state. ...

Id. Nothing in the Act required the LLC to identify in its articles of organization all its members of the LLC. Similarly, the LLC's annual reports show Maroun as the “Managing Member/ Manager” for the years 2009-2012 and the “Authorized Person” for the years 2013-2017. But as with the articles of organization, the legislative scheme did not require the LLC to list in the annual report all its members. Fla. Stat § 6-5.0212. That makes Saadi's conclusion that these filings evince a single-member LLC unconvincing.[2]

         In response to interrogatories, Maroun stated he was “sole managing member, founder, and registered agent of Maroun's International, LLC.” See doc. 335, Ex.3, 4. Bank records show too that Maroun uses the LLC's bank account to pay his rent, child support obligations, personal gifts, and the LLC's condo fees. Saadi adds that the LLC's failure to file tax returns shows that it must be singly owned since single member LLCs are not required to file tax returns; that the Defendant resides rent-free in the condo owned by the LLC; and that a multiple member LLC would not title its bank account in the manner this LLC has titled its Regions Bank account. See doc. 335, Ex. 11 and 13 (personal bank account titled “Pierre A. Maroun d/b/a MI7USA” and LLC account titled “Maroun's International LLC d/b/a/ MI7USA”).

         Maroun represented himself at the hearing; the LLC appeared through counsel. Both contend that Maroun is not the only member and presented an Operating Agreement of Maroun's International, LLC purportedly executed in Jordan on August 28, 2012. See doc. 308, Ex.A; doc. 331-1, Ex. 1. Schedule A annexed to the Operating Agreement indicates that Pierre Maroun's interest in the LLC is 21%, Omar T. Qawasmi's interest is 49%, Jian Suleiman Maroun's interest is 15%, and Ahmad S. Kamel's interest is 15%. The LLC also presented a Promissory Note with the same date (August 28, 2012) signed only by Maroun. See doc. 309, Ex. B; doc. 331-2, Ex.2. The Promissory Note provides:

I, Pierre A. Maroun, Chairman of Maroun's International, LLC, (DBA M17USA) have received a loan from Mr. Omar Toufic ElQawasmi in the amount of $300, 000.00USD (THREE HUNDRED THOUSAND USD) with the interest rate of 1.25%. This loan is to be used in business related expenses and or to invest in real estate properties.
In return, Mr. ElQawasmi will become a shareholder in the abovementioned company with 49% interest. He will enjoy the full rights of a shareholder in accordance with the articles of the attached “Operating Agreement” between the parties. In case of failure to repay said loan, Mr. ElQawasmi will have a first lien right on any or all properties, ...

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