Judge: Armen Tamzarian, Case: 22STCV32334, Date: 2023-02-15 Tentative Ruling
Case Number: 22STCV32334 Hearing Date: February 15, 2023 Dept: 52
Plaintiffs/cross-defendants Lee Ouye and Bosley Properties, LLC’s Motion for the Appointment of a Receiver
Plaintiffs/cross-defendants Lee Ouye and Bosley Properties, LLC move to appoint a receiver to handle the business affairs of the Mertz-Del Amo general partnership, to dissolve the partnership, and to sell the partnership’s real property.
Evidentiary Objections
Defendant James A. Tanner makes 21 objections to the declaration of Peter Velis, Jr. Objection Nos. 1-3, 7, and 16 are sustained. Objection Nos. 4-6, 8-15, and 17-21 are overruled.
Defendant Tanner makes 14 objections to the declaration of Lee Ouye. Objection Nos. 2, 3, 5, 13, and 14 are sustained Objection Nos. 1, 4, and 6-12 are overruled.
Analysis
Courts may appoint a receiver: (1) “In an action… between partners or others jointly owning or interested in any property… where it is shown that the property or fund is in danger of being lost, removed, or materially injured” and (9) “In all other cases where necessary to preserve the property or rights of any party.” (Code Civ. Proc., § 564, subd. (b).) “Ordinarily, if there is any other remedy, less severe in its results, which will adequately protect the rights of the parties, a court should not take property out of the hands of its owners.” (Golden State Glass Corp. v. Superior Court of Los Angeles County (1939) 13 Cal.2d 384, 393.) However, “the availability of other remedies does not, in and of itself, preclude the use of a receivership. [Citation.] Rather, a trial court must consider the availability and efficacy of other remedies in determining whether to employ the extraordinary remedy of a receivership.” (City and County of San Francisco v. Daley (1993) 16 Cal.App.4th 734, 745.)
Plaintiffs argue a receiver is necessary for four reasons: (1) to prevent the purportedly invalid management committee from acting on behalf of Mertz-Del Amo; (2) to require the partnership to sell the Del Amo Estates mobile home park and dissolve the partnership; (3) to protect Lee Ouye’s right of first refusal to purchase Del Amo Estates; and (4) to prevent purported neglect in operating Del Amo Estates.
Plaintiffs do not show that protecting these rights or protecting the property requires the drastic remedy of receivership. As to the disputed management committee, plaintiffs fail to show maintaining the current committee will risk losing or materially injuring the partnership or its property. Plaintiffs argue that, though 75% of the partnership could remove managing general partners, appointing new managing general partners requires a unanimous decision. Plaintiffs fail to show that keeping the current management committee presents a greater risk to the partnership than having no managers.
Moreover, plaintiffs have not proposed a specific receiver and have not shown that a receiver would manage the mobile home park any better than the current management committee. Managing Mertz-Del Amo’s mobile home park means operating a specific business with unique real property. That is not a task a receiver typically does or has any expertise in.
Plaintiffs’ contention about the management committee also relies on the related argument that the management committee has negligently operated Del Amo Estates. Plaintiffs’ evidence of neglect consists of several minor issues that, even in the aggregate, do not establish a danger of loss or material injury of the property. For example, plaintiffs present evidence of purported mismanagement of mobile home spaces 50, 324, and 409. (Velis Decl., ¶¶ 15.c.-e.) Del Amo Estates has 512 spaces. (Ouye Decl., ¶ 2.) Plaintiffs estimate the park is worth $80-$100 million. (Ibid.) These purported problems with three of 512 spaces are trivial.
Plaintiffs also do not show it is necessary to appoint a receiver to sell the mobile home park and dissolve the partnership. Sale of real property by a receiver requires showing both that selling is necessary and that it is necessary now. (Cal-American Income Property Fund VII v. Brown Development Corp. (1982) 138 Cal.App.3d 268, 275 & fn. 7.) Plaintiffs’ evidence does not establish that selling the mobile home park and dissolving the partnership are necessary or, if they are necessary, that either must be done now. Plaintiffs do not show a risk of imminent harm that justifies the drastic and expensive remedy of receivership to sell the property and dissolve the partnership.
Finally, receivership is not necessary to protect Ouye’s right of first refusal because other effective remedies are available. “ ‘Where an injunction will protect all the rights to which the applicant for the appointment of a receiver appears to be entitled, a receiver will not be appointed.’ ” (Alhambra-Shumway Mines, Inc. v. Alhambra Gold Mine Corp. (1953) 116 Cal.App.2d 869, 873.)
Under his right of first refusal, Ouye may purchase the mobile home park by exceeding the price of the “best offer” by $500,000. (The parties dispute whether the “best offer” means the ultimate reduced price after inspection and credits to the purchaser.) Ouye would be deprived of that right if Mertz-Del Amo sold the property to a third party without permitting Ouye the opportunity to purchase it. But plaintiffs do not show any such sale is imminent. To the contrary, plaintiffs’ motion argues a receiver should be appointed because Mertz-Del Amo is not selling the park. Assuming there is a risk of imminent sale to a third party, the less drastic remedy of a preliminary injunction prohibiting Mertz-Del Amo from selling the park would adequately protect Ouye’s right of first refusal.
Plaintiffs/cross-defendants’ motion to appoint a receiver is denied.
Defendant/Cross-Complainant
Mertz-Del Amo’s Motion for Preliminary Injunction
Defendant/cross-complaint Mertz-Del Amo, a
California general partnership dba Del Amo Mobile Home Estates moves for a
preliminary injunction.
“In deciding whether to issue a preliminary
injunction, a court must weigh two ‘interrelated’ factors: (1) the likelihood
that the moving party will ultimately prevail on the merits and (2) the
relative interim harm to the parties from issuance or nonissuance of the
injunction.” (Butt v. State of
California (1992) 4 Cal.4th 668, 677–678 (Butt).) The second factor concerns “the
comparative consequences of the issuance and nonissuance of the
injunction” before trial. (Common
Cause v. Board of Supervisors (1989) 49 Cal.3d 432, 442.) “The trial court’s determination must be
guided by a ‘mix’ of the potential-merit and interim-harm factors; the greater
the plaintiff’s showing on one, the less must be shown on the other to support
an injunction.” (Butt, supra, 4
Cal.4th at p. 678.)
This motion, however, suffers from a fatal
flaw that prevents the court from weighing the relative interim harm to the
parties. “ ‘An injunction must be narrowly drawn to
give the party enjoined reasonable notice of what conduct is prohibited.’
” (Midway Venture LLC v. County of
San Diego (2021) 60 Cal.App.5th 58, 92.) “
‘An injunction must be sufficiently definite to provide a standard of conduct
for those whose activities are to be proscribed, as well as a standard for the
court to use in ascertaining an alleged violation of the injunction.’ ” (People ex rel. Gascon v. HomeAdvisor,
Inc. (2020) 49 Cal.App.5th 1073, 1082.) “ ‘An injunction which forbids an act
in terms so vague that men of common intelligence must necessarily guess
at its meaning and differ as to its application exceeds the power of the
court.’ ” (Id. at pp. 1082-1083.)
Mertz-Del Amo’s
proposed injunction is too vague to meet this standard. The proposed injunction would enjoin Lee Ouye
(individually and as trustee of The Lee and Lorraine Ouye Trust Dated June 8,
1994) “from, during the pendency of this action: a. Interfering with the
legitimate exercise of the rights of the Management Committee … and the
legitimacy and efficacy of the decisions and actions of the Management
Committee, including, but not limited to, the Management Committee’s hiring of
J & H Asset Property Management, Inc. (‘J&H’) to manage Del Amo Mobile
Home Estates … ; b. Interfering with, threatening or otherwise harassing
J&H in its efforts to effectuate its duties and responsibilities under a
lawful Property Management Agreement … ; and c. Interfering with, impairing or
otherwise disrupting MDA’s efforts to sell the Partnership’s principal asset –
the Park – including by way of interpreting the Right of First Refusal
Agreement (‘ROFR’) between Ouye and the Management Committee in any way that
exceeds or is expansive of the plain language on the face of the ROFR.” (Prop. Order, ¶ 2.)
This proposed
injunction is not specific enough to give notice of what it enjoins and what
standard the court would use in ascertaining a violation. Each of the three parts of the proposed
injunction rely on broad concepts without definitions or clear standards: “a. Interfering
with the legitimate exercise of the rights of the Management Committee;” “b.
Interfering with, threatening or otherwise harassing J&H in its” duties;
and “c. Interfering with, impairing or otherwise disrupting MDA’s efforts to
sell” the mobile home park. Reasonable
people could disagree greatly on how to apply these orders and on what conduct
is prohibited. Such an injunction would
not give Ouye adequate notice of what he could and could not do.
Defendant/cross-complainant
Mertz-Del Amo’s motion for preliminary injunction is denied.