Judge: Barbara M. Scheper, Case: 22STCV24463, Date: 2022-10-19 Tentative Ruling
Case Number: 22STCV24463 Hearing Date: October 19, 2022 Dept: 30
Calendar No.
Xelan Prop 1,
LLC, et. al. vs. Receivership Specialists, Inc., et. al., Case No. 22STCV24463
Tentative Ruling re:
Defendants’ Motion to Transfer Venue
Defendants Receivership Specialists
Inc., Kevin Singer, Ervin Cohen & Jessup LLP, and Blake C. Alsbrook
(collectively, Defendants) move to transfer venue to the San Francisco Superior
Court, and for an award of attorney’s fees and costs. The motion is granted.
On timely motion, the court must order a transfer of venue
“when the court designated in the complaint is not the proper court.” (Code
Civ. Proc., §§ 396b, 397(a).) A motion to transfer venue on grounds the
designated court is not proper must be filed and served before or at the time
of filing an answer, demurer, or motion to strike. (Code Civ. Proc., §
396b.) “Venue is determined based on the complaint on file at the time
the motion to change venue is made.” (Brown v. Superior Court
(1984) 37 Cal.3d 477, 482; Haurat v. Superior Court for Los Angeles County (1966) 241
Cal.App.2d 330, 337 [“Venue is determined on the basis of the complaint as it
stands at the time the motion to change is made, and the plaintiff is not
permitted to make a subsequent election of theories by proposed amendments
thereto”].)
The general venue
rule is that “the superior court in the county where the defendants or some of
them reside at the commencement of the action is the proper court for the trial
of the action.” (Code Civ. Proc., § 395(a).) Additionally,
“when a plaintiff brings an action against several defendants, both individual
and corporate, in a county in which none of the defendants reside, an
individual defendant has the right to change venue
to the county of his or her residence.” (Fontaine v. Superior Court (2009) 175 Cal.App.4th 830, 837.) In an action involving personal injuries, venue is proper
where a defendant resides or where the injuries occurred. (Code
Civ. Proc., § 395(a).)
The burden is on the moving
party to establish facts justifying the transfer. (Mission Imports, Inc.
v. Superior Court¿(1982) 31 Cal.3d 921, 928.) Absent “an affirmative
showing to the contrary, the presumption is that the county in which the title
of the action shows that it is brought is, prima facie, the proper
county for the commencement and trial of the action.” (Ibid.; Fontaine
v. Superior Court¿(2009) 175 Cal.App.4th 830, 836.) The moving party
may submit declarations containing admissible evidence in support of the motion
to transfer venue. (Mission Imports, supra, 31 Cal.3d at p.
928.)
Plaintiff Anne Kihagi is the owner
of a number of multifamily apartment buildings in San Francisco, which are held
by the plaintiff LLCs in this action. (Alsbrook Decl. ¶ 3.) In 2015, the City
of San Francisco filed suit against Kihagi and the corporations in San
Francisco Superior Court (the Receivership Action) based on Kihagi’s misconduct
as landlord. Following trial, in addition to a money judgment against the
defendants, the Court issued an injunction mandating that Kihagi employ a
neutral, third party property manager for the properties. (Alsbrook Decl. ¶ 5.)
On July 29, 2019, after finding
that Kihagi and the entities intentionally violated the injunction, the Court
entered an order appointing Defendant Kevin Singer as Receiver for the
properties. (Defendants’ RJN, Ex. A.) Plaintiffs’ claims in this action are
based on Defendants’ alleged misconduct in conducting the Receivership.
Under Code Civ. Proc. § 568, “The
receiver has, under the control of the Court, power to bring and defend actions
in his own name, as receiver; to take and keep possession of the property, to
receive rents, collect debts, to compound for and compromise the same, to make
transfers, and generally to do such acts respecting the property as the Court
may authorize.”
Section 568 “has uniformly been interpreted as requiring a claimant
suing a receiver to seek court permission.” (Vitug
v. Griffin (1989) 214 Cal.App.3d 488,
493.) “The rule that claimants must apply to the court before suing a
receiver is founded upon notions of judicial economy. In most cases a claimant
can obtain appropriate relief in the receivership action; therefore an
independent action will not be necessary. . . . But the court may not refuse
permission where the effect would be to cut off plaintiff's rights. If the
court cannot afford plaintiff the same relief in intervention as he is entitled
to in an independent action, refusal to permit the lawsuit to proceed will
constitute an abuse of discretion.” (Ibid.)
On December 21, 2020, Plaintiffs filed
a Motion to Sue Receiver in the Receivership Action, requesting permission to
sue the Receiver and his agents in an independent action in Los Angeles County.
(Defendants’ RJN, Ex. D.) On April 27, 2021, presiding judge Hon. Charles
Haines issued an order stating that Plaintiffs “may file a complaint against
the receiver in this action (CGS-15-546152) as to this action’s receivership.”
(Defendants’ RJN, Ex. G.)
Because the Court in the
Receivership Action has directed Plaintiffs to file their claims in that
action, venue in this Court is improper. While Plaintiffs argue that the order
only provided that Plaintiffs’ lawsuit “may” be filed in the Receivership
Action, in the context of Plaintiffs’ “Motion to Sue Receiver in Independent
Action in Los Angeles County,” it is clear that the intent and effect of the
Court’s order was to deny Plaintiffs’ request to file suit in Los Angeles
County.
It is also
unavailing to Plaintiffs that the rule requiring claimants to apply to the
court before suing a receivership is not jurisdictional. Under section 568,
“notions of judicial economy” are sufficient to support the receivership Court’s
power to direct the filing of Plaintiffs’ suit, and Plaintiffs have not shown
that filing their claims in the Receivership Action, rather than in this court,
will “cut off [their] rights.” (Vitug, 214 Cal.App.3d at 493.)
Accordingly,
the motion to transfer venue is granted.
Plaintiffs
state in the Opposition that Judge Haines, around September 2022, denied
Defendants’ motion to terminate the receivership “in light of the instant
action at [LASC],” and that “[h]e is not expecting, requiring or ordering
Plaintiffs’ new independent action to be transferred to San Francisco Superior
Court." (Opposition pp. 9-11.) This
assertion is without merit and extremely misleading. (Reply pp. 8-9.)
The Order issued by Judge Haines on September 27, 2022,
supports Defendants’ claim that the decision to not terminate the Receivership
was made in anticipation of attorney’s fees or receiver’s fees that would need
to be paid out of the Receivership. (Defendants’ Supp. RJN, Ex. I.) That Order
first provides, “in light of the pending litigations involving the receiver and
the case law requiring/authorizing the receiver to be paid out of the
receivership estate, the receivership will remain in place.” There are then
handwritten notes which appear to read in part, “…Either side or the Receiver
may bring a future motion to close out the receivership (additional accounting
will be required) when the issue of attorney’s fees/receivership fees is
resolved (e.g. litigation concluded/the Court in pending actions determines
that receiver is not entitled to payment, etc.)” The order in no way supports Plaintiffs’
claim that the receivership was held open to allow Plaintiffs to proceed with
this action in this venue.
Attorney’s Fees
The court
may award reasonable expenses and attorney’s fees to the prevailing party on a
motion to transfer. (Code Civ. Proc. § 396b, subd. (b).) “In determining
whether that order for expenses and fees shall be made, the court shall take
into consideration (1) whether an offer to stipulate to change of venue was
reasonably made and rejected, and (2) whether the motion or selection of venue
was made in good faith given the facts and law the party making the motion or
selecting the venue knew or should have known. As between the party and his or
her attorney, those expenses and fees shall be the personal liability of the
attorney not chargeable to the party.” (Ibid.)
The Court
awards attorney’s fees to Defendants as the prevailing parties, as Plaintiffs
did not select this venue in good faith based on the applicable facts and law. Plaintiffs
filed the current action knowing that Judge Haines had already expressly denied
their motion to file suit in Los Angeles Superior Court. Venue in this Court is
clearly improper. Plaintiffs have not presented any legal authority that would support
a good faith basis for filing suit in this Court after expressly being directed
by the Receivership Court to file their claims in that action.
Defendants
request sanctions in the amount of $4,322.50, based on a rate of $475 per hour,
for 9.1 hours to research and prepare this motion and the related documents.
(Alsbrook Decl. ¶ 23.) The requested sanctions are granted. Plaintiffs’ counsel is ordered to pay
Defendants’ counsel $4,322.50 within thirty (30) days of today’s date.
Conclusion:
The Court
grants the motion to transfer venue to San Francisco Superior Court, and awards
attorney’s fees to Defendants in the amount of $4,322.50.