United States District Court, W.D. Oklahoma
HEATON CHIEF U.S. DISTRICT JUDGE.
Universitas Education, LLC (“Universitas”)
obtained a money judgment against various defendants in the
United States District Court for the Southern District of New
York. Universitas registered the judgment with this court and
moved for an examination hearing of the judgment debtor, Avon
Capital, LLC. A Writ of Execution and a Garnishment Summons
were issued to SDM Holdings, LLC (“SDM”)
regarding potential Avon Capital, LLC assets. One Avon
Capital, LLC entity, a Wyoming LLC (Avon Wyoming), intervened
in this action and sought a permanent injunction to prohibit
Universitas from “attempting to enforce the New York
Judgment against SDM or another [sic] other assets solely
owned by Avon-Capital-WY.” Doc. 73, at 14.
case was referred to U.S. Magistrate Judge Suzanne Mitchell
for proceedings consistent with 28 U.S.C. § 636(b)(3).
Judge Mitchell has issued a Report and Recommendation, which
concluded that Avon Wyoming has been rendered
administratively defunct and no longer has standing to seek
injunctive relief. Avon Wyoming has objected, triggering de
was the sole beneficiary of several life insurance policies
totaling $30 million in proceeds. Universitas Educ., LLC
v. Nova Grp., Inc., 784 F.3d 99, 100-01 (2d Cir. 2015).
When the death benefits came due, however, Universitas's
claim to those benefits was denied. Id. Universitas
participated in binding arbitration with the trustee of the
benefit plan, and obtained a favorable award. Id.
The plan trustee sought to vacate the award in the U.S.
District Court for the Southern District of New York, but the
award was confirmed and judgment was entered for $30, 181,
encountered significant resistance in collecting on the
judgment. The money was transferred to various other entities
in connection with a money-laundering scheme. See
Universitas Educ., LLC v. Nova Grp., Inc., 2014 WL
388371 (S.D.N.Y. Aug. 7, 2014); see also United States v.
Daniel Carpenter, 190 F.Supp.3d 260 (D. Conn. Jun. 6,
2016). Upon finding these transfers to be fraudulent, the New
York court entered judgment in Universitas's favor
against the defendants in various amounts, including judgment
against “Avon Capital, LLC, in the amount of $6, 710,
065.92.” Doc. #1-1.
registered the judgment in this court and moved for a hearing
to examine the judgment debtor, Avon Capital, LLC, pursuant
to 12 Okla. Stat. § 842 and Fed.R.Civ.P. 64. The motion,
and the order granting it, were served on Avon Wyoming, Avon
Capital, LLC, a Connecticut LLC (“Avon
Connecticut”), and Avon Capital, LLC, a Nevada LLC
(“Avon Nevada”). SDM Holdings, LLC
(“SDM”) was subpoenaed to appear at the hearing,
as well as to produce documents related to Avon Capital, LLC.
None of the Avon Capital, LLC entities nor SDM appeared at
the hearing. Universitas filed a Motion for Contempt against
Avon Capital, LLC and SDM Holdings, LLC, and a Show Cause
Order was issued by Judge Mitchell.
thereafter, a motion to intervene was filed by Avon Wyoming
in which it asserted that it owns 100% membership interests
in SDM, but that it is not the entity referenced in the
registered judgment. Avon Wyoming argues that the judgment
applies to Avon Connecticut or Avon Nevada. The unopposed
motion to intervene was granted, and Avon Wyoming filed a
motion for permanent injunction.
Wyoming has forfeited its articles of organization in Wyoming
due to failure to file its annual report and pay its
licensing fee. The Wyoming Secretary of State issued a
delinquency notice on May 2, 2014, and Avon Wyoming was
deemed defunct sixty days later. See Wyo. Stat.
§ 17-29-705(b). Avon Wyoming had two years to apply for
reinstatement but did not do so. Its status was changed to
“Archived” in July 2016. Avon Wyoming's
motion for permanent injunction was not filed until October
parties do not dispute Avon Wyoming's status as a defunct
limited liability company (“LLC”), but they
disagree as to the consequences of that status. Universitas
argues that injunctive relief in Avon Wyoming's favor
would be moot because the entity has ceased to exist. Avon
Wyoming contends it should be regarded as a dissolved LLC
under Wyo. Stat. § 17-29-702, which would allow it to
prosecute and defend civil actions in the course of winding
up its business.
Wyoming statutes,  LLCs which are rendered defunct are not
explicitly labelled as “dissolved, ” and the
enumerated events that cause dissolution do not include
administrative default. See Wyo. Stat. §
17-29-701 (“A limited liability company is dissolved,
and its activities must be wound up, upon the occurrence of
any of the following . . . .”); see also
§ 17-29-705. Although it is logical to view §
17-29-701 as an exhaustive list, the consequence would put
defunct LLCs in some undefined category of entity (or
non-entity), with no statutory guidance as to what happens to
treating a defunct LLC as a dissolved LLC under §
17-29-702 would be more consistent with Wyoming's
treatment of corporations. In Ridgerunner, LLC v.
Meisinger, the Wyoming Supreme Court states that Wyo.
Stat § 17-16-1405(b)(v), which permits dissolved
corporations to sue or be sued, “applies whether the
dissolution is done voluntarily or administratively.”
297 P.3d 110, 116 (Wyo. 2013). And in RDG Oil & Gas,
LLC v. Jayne Morton Living Trust, the Court referred to
an authorized foreign LLC that “negligently forfeited
all of its rights and privileges to conduct any business in
Wyoming” as “administratively dissolved, ”
rather than defunct. 331 P.3d 1199, 1204 (Wyo. 2014). The
court concludes Avon Wyoming does not lack standing to seek