Wells Fargo v. Barber: Why a Nevis LLC Did Not Protect a Florida Resident

The Middle District of Florida’s decision in Wells Fargo Bank, N.A. v. Barber, 85 F. Supp. 3d 1308 (M.D. Fla. 2015), established that an LLC membership interest is intangible personal property that follows the owner. A Florida resident who forms an LLC in a foreign jurisdiction receives no protection from that jurisdiction’s laws when a creditor sues in Florida.

Sabrina Barber, whom Alper Law represented, faced a $62.5 million deficiency judgment. The court applied Florida creditor remedies to her Nevis LLC interest despite Nevis law’s exclusive-remedy provisions, and two later decisions—Schanck v. Gayhart and Shim v. Buechel—closed a workaround that emerged from the opinion’s reasoning.

The Facts

Wells Fargo and Regions Bank held a deficiency judgment against Sabrina Barber for $62,491,162.98, entered by a Florida state court on October 3, 2013. Before the judgment, Barber had made a series of transfers.

Barber received approximately $1 million from the sale of her marital home and deposited the funds into a bank account. She later transferred $870,000 to a TD Ameritrade account under Blaker Enterprises, LLC, a single-member Nevis LLC she had formed in January 2011. Additional transfers moved funds between AIG Bank and TD Ameritrade, all flowing through or into Blaker Enterprises.

Wells Fargo pursued three remedies: foreclosure on Barber’s membership interest, a charging order against it, and avoidance of the transfers as fraudulent under FUFTA. Barber moved to dismiss, arguing that the court lacked jurisdiction over a Nevis-organized LLC.

LLC Membership Interests Are Intangible Personal Property

The Barber court rejected the jurisdictional argument by distinguishing LLC membership interests from corporate stock. Barber relied on Sargeant v. Al-Saleh, 137 So. 3d 432 (Fla. 4th DCA 2014), where the Fourth District held that a Florida court could not order turnover of stock in a foreign corporation because the court lacked in rem jurisdiction over property located abroad.

The court found Sargeant inapplicable. Corporate stock certificates are tangible personal property located wherever the physical certificates are held. An LLC membership interest is different. It is intangible personal property that has no physical form and no fixed location. Under established conflict-of-law principles, intangible personal property follows the person of the owner.

Because Barber resided in Florida, her membership interest in Blaker Enterprises was located in Florida. The court had in rem jurisdiction over the interest regardless of where the LLC was organized. The Nevis formation was irrelevant to the jurisdictional analysis.

Florida Law Applies to a Nevis LLC’s Membership Interest

Having established jurisdiction, the court addressed which law governed the creditor’s remedies. Florida’s LLC Act provided two avenues: a charging order under § 608.433(4) and, for single-member LLCs, foreclosure under § 608.433(6). Nevis law allowed only a charging order and made it the sole and exclusive remedy.

The court found the two sets of statutory remedies were not substantially similar. Florida allowed foreclosure; Nevis did not. Nevis allowed a non-charged member to redeem a charged member’s interest; Florida did not. Because the remedies differed, the court conducted a traditional conflict-of-laws analysis.

The analysis turned on the nature of the property. Membership interests are personal property. Florida’s choice-of-law rule provides that the law of the situs governs personal property. Since the membership interest was located with Barber in Florida, Florida law controlled. The court applied § 608.433(6) and permitted foreclosure because Barber was the sole member of Blaker Enterprises.

Nevis law’s exclusive-remedy provision, its three-year limitation, its bond requirement, and its beyond-reasonable-doubt burden of proof never entered the analysis. None of those protections applied in a Florida courtroom against a Florida resident.

Six Badges of Fraud

The court denied Barber’s motion to dismiss the fraudulent transfer claims. Wells Fargo alleged actual fraud under FUFTA, which authorizes courts to avoid transfers made with intent to hinder, delay, or defraud creditors. The statute lists badges of fraud that courts consider in determining intent.

Six badges appeared in Barber’s transfers. The transfers were made to an insider (Barber was the sole member). Barber retained control of the funds. The transfers occurred after a summary judgment was entered against her. The transfers constituted substantially all of Barber’s assets. Barber received no consideration from Blaker Enterprises. Barber was insolvent when the transfers were made, given the $62.5 million judgment.

These six factors established a prima facie case of actual fraud. The fraudulent transfer claims survived dismissal and proceeded to litigation on the merits.

The Certificated-Interest Workaround and Its Failure

After Barber, a potential distinction emerged in the court’s reasoning. The opinion emphasized that LLC membership interests are intangible personal property, unlike stock certificates in a corporation, which the court treated as tangible property with a fixed physical location.

The theory was that if a debtor issued physical membership certificates and kept them in a foreign jurisdiction, the interest might be reclassified as tangible property located outside the court’s reach, similar to the corporate stock in Sargeant. This became known as the certificated-interest workaround.

The workaround failed quickly. In Schanck v. Gayhart (Fla. 1st DCA 2018), where Alper Law served as co-counsel, the court ordered cancellation and reissuance of membership certificates that a debtor had moved to Canada. The court held that § 678.1121(5) authorizes any remedy in law or equity to aid a creditor, including reissuance of certificates, regardless of where the debtor moved them.

The Florida Supreme Court eliminated any remaining uncertainty in Shim v. Buechel (Fla. 2022). The Court overruled Sargeant and held that § 56.29(6) authorizes courts to compel debtors to surrender foreign assets through in personam jurisdiction. Any asset in the debtor’s hands or under the debtor’s control is reachable regardless of location.

The three decisions form a closed sequence. The Barber court established that LLC interests follow the owner. The Schanck court killed the certificated-interest workaround. The Shim court eliminated the Sargeant precedent entirely. No asset that a Florida debtor owns or controls is beyond the reach of a Florida court.

The Holding Depends on Florida Residency

The holding in Barber hinges on one factual requirement: the LLC member must reside in Florida. The court’s entire jurisdictional analysis rested on the principle that intangible personal property follows the person of the owner. Because Barber lived in Florida, her membership interest was Florida property subject to Florida law.

When the member resides elsewhere, the jurisdictional foundation collapses. In O’Neal v. CDB American Franchise System, Inc., 2021 WL 3709716 (M.D. Fla. 2021), the same court declined to apply Barber against a Kansas resident who held membership interests in Missouri LLCs. The court found that the membership interests were not sufficiently domestic to Florida to establish in rem jurisdiction. The member’s non-Florida residency was dispositive.

Other states have reached the opposite conclusion on the underlying question entirely. In JP Morgan Chase Bank v. McClure, 393 P.3d 955 (Colo. 2017), the Colorado Supreme Court held that a membership interest exists in the state where the LLC was formed, not where the member resides. Under Colorado’s analysis, a Colorado LLC’s membership interest would remain Colorado property regardless of the member’s residency.

The split means Barber‘s holding is strongest in its home jurisdiction. A Florida resident who forms an LLC anywhere—Nevis, Wyoming, Delaware—will have that membership interest treated as Florida property in a Florida court. A non-Florida resident who forms a Florida LLC, or a Florida resident sued outside Florida, faces a different analysis.

What Barber Means for Foreign LLC Planning

The holding in Barber extends to every foreign-organized LLC, not just Nevis entities. A Florida resident who forms a single-member LLC in Wyoming, Nevada, Delaware, or any other state receives that jurisdiction’s charging order protections only if the litigation occurs there. When a Florida creditor sues a Florida resident in Florida, the court applies Florida law to the membership interest because the interest is located with the owner.

Wyoming’s exclusive-remedy statute does not help. Nevada’s charging order protections do not apply. Nevis law’s bond requirement and beyond-reasonable-doubt standard are irrelevant. The debtor’s membership interest is Florida personal property, and Florida’s creditor remedies govern.

The only structure that moves assets beyond a Florida court’s effective enforcement power is an offshore trust with an independent foreign trustee who is not subject to U.S. jurisdiction. The trustee, not the debtor, holds legal title. A Florida court can order the debtor to repatriate assets, but if the trustee is independent and the debtor lacks the power to compel compliance, the court’s order has no practical effect on the trust’s assets.

That structural distinction—between assets the debtor controls and assets an independent trustee controls—is what Barber, Schanck, and Shim collectively confirm as the dividing line in Florida asset protection case law.