In re Ehmann v. Fiesta Investments

319 B.R. 200 (2005)

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In re Ehmann v. Fiesta Investments

United States Bankruptcy Court for the District of Arizona
319 B.R. 200 (2005)

KS

Facts

Gregory L. Ehmann, along with other members of his family, were members of Fiesta Investment, LLC (defendant), a limited-liability company (LLC). Ehmann filed for Chapter 7 bankruptcy. Louis A. Movitz (plaintiff) was named trustee for Ehmann’s bankruptcy estate. Fiesta never paid distributions to its members; however, the LCC had made loans and disbursements to specific members. Movitz’s attempts to obtain information or distributions from Fiesta were unsuccessful. Movitz sued Fiesta, seeking (1) a declaration that as trustee of Ehmann’s bankruptcy estate, he was a member of Fiesta; (2) a determination that Fiesta’s assets were being improperly dispersed; and (3) an order of dissolution and liquidation of Fiesta. Fiesta filed a motion to dismiss alleging that as trustee, Movitz possessed only the right to receive a distribution if Fiesta decided to issue a distribution and that Movitz was entitled to no other control over Fiesta. Fiesta claimed its operating agreement was an executory contract and that Ehmann’s rights could not be assigned to another party, even in bankruptcy proceedings.

Rule of Law

Issue

Holding and Reasoning (Haines, J.)

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