928 N.W.2d 1
Iowa2019Background
- Jason and Analia Retterath, Florida domiciliaries, hold membership units in Homeland Energy Solutions, an Iowa LLC formed in Iowa; Jason originally acquired units individually and later transferred them to himself and Analia, marking "Joint Tenants with Right of Survivorship" on the transfer form.
- Wells Fargo Equipment Finance, Inc. (WFEFI) obtained two Florida judgments against Jason, filed and registered those judgments in Iowa, and sought a charging order under Iowa Code § 489.503 to reach Jason’s membership interest in Homeland.
- The Iowa district court entered a charging order directing Homeland to remit distributions otherwise payable to Jason to WFEFI; the Retteraths moved to vacate, asserting the units were held as tenancy by the entireties under Florida law and raising notice and due process challenges.
- WFEFI moved for summary judgment arguing Iowa law governs and Iowa does not recognize tenancy by the entireties; the district court granted summary judgment for WFEFI (except on an asserted fraudulent-conversion issue) and denied the Retteraths’ motions.
- On appeal the Retteraths argued (1) Florida law applies and protects the units as tenancy by the entireties, (2) the foreign judgments/charging order were not properly registered/issued, and (3) the registration and charging procedures violated due process.
- The Iowa Supreme Court affirmed: it held membership interests for charging-order purposes are located where the LLC was formed (Iowa), tenancy by the entireties is not recognized in Iowa, the registration/notice irregularity was not jurisdictionally fatal, and UEFJA procedures satisfied due process.
Issues
| Issue | Retterath(s)' Argument | WFEFI's Argument | Held |
|---|---|---|---|
| Choice of law / situs of LLC membership interest | Homeland units are intangible personal property; situs is owner’s domicile (Florida), so Florida law (including tenancy by the entireties) governs | Membership transferable interest in an LLC is located at the state of formation; charging-order remedies are governed by the LLC’s formation state (Iowa) | Held: Membership interests for charging-order enforcement are located where the LLC was formed (Iowa); Iowa law governs |
| Tenancy by the entireties defense to charging order | The Retteraths acquired the units jointly and claim tenancy by the entireties under Florida law, which would shield the interest from Jason’s individual creditors | Even if Florida law applied, the couple failed to prove the required unities (e.g., unity of time/title); Iowa also does not recognize tenancy by the entireties | Held: No tenancy by the entireties recognized under Iowa law; even under Florida law unity of time/title lacking; defense fails |
| Registration / notice of foreign judgments (UEFJA) | Clerk failed to note mailing of filing as required; registration defective and district court lacked jurisdiction to enter charging order | WFEFI filed required affidavits and mailed the charging-order application and affidavits to Jason; clerical docketing error not jurisdictionally fatal | Held: Substantial evidence shows Jason received notice; clerical irregularity was not fatal and registration/charging order were valid |
| Procedural due process challenge | UEFJA’s notice-by-mail-without-proof scheme violates due process (citing cases criticizing mailbox notice) | Prior adjudication in Florida afforded notice and hearing; UEFJA procedures to enforce a valid foreign judgment are constitutionally sufficient | Held: Due process satisfied—prior adjudication protected the judgment and UEFJA enforcement procedures are adequate |
Key Cases Cited
- Judy v. Beckwith, 114 N.W. 565 (Iowa 1908) (situs of certain intangible property follows owner’s domicile historically)
- JPMorgan Chase Bank, N.A. v. McClure, 393 P.3d 955 (Colo. 2017) (analyzing where LLC membership interests are located and charging-order concerns)
- War Eagle Village Apartments v. Plummer, 775 N.W.2d 714 (Iowa 2009) (holding certified-mail original notice without signed receipt may violate due process)
- Fay v. Smiley, 207 N.W. 369 (Iowa 1926) (Iowa does not recognize tenancy by the entireties)
- Gedeon v. Gedeon, 630 P.2d 579 (Colo. 1981) (enforcement of valid foreign judgments by charging order satisfies due process when prior notice and hearing occurred)