Rice v. Downs
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Glaser Weil, former counsel of plaintiff William Rice, appeals from an order disgorging a $450,000 payment to Glaser Weil by Triton, an entity owned and controlled by Rice. The trial court concluded that the payment should instead have gone to Defendant Gary Downs, who had obtained an order charging Rice's interest in Triton to satisfy an earlier judgment entered in Downs' favor.
In the published portion of the opinion, the Court of Appeal agreed with the trial court that when Rice, as sole managing member of Triton, directed the company to disburse funds to pay his legal bills, it constituted a distribution to him subject to the charging order. However, the court disagreed with the trial court on the lien priority question and held that Glaser Weil's security agreement, perfected by the filing of a financing statement, has priority over the later charging order. The court reversed and remanded for further proceedings.
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