Judge: Curtis A. Kin, Case: 23STCV06620, Date: 2024-02-06 Tentative Ruling
Case Number: 23STCV06620 Hearing Date: February 6, 2024 Dept: 82
MOTION FOR ORDER
APPROVING RECEIVER’S FINAL REPORT
Date: 2/6/24
(1:30 PM)
Case: Zions
Bancorporation, National Association v. DSWR Inc. et al. (23STCV06620)
TENTATIVE RULING:
Receiver Theodore Lanes’ Motion for Order Approving
Receiver’s Final Report and Accounting, Terminating Receivership, Discharging
Receiver, Exonerating Bonds, Awarding Receiver’s Fees and Dissolving Injunction
is GRANTED IN PART.
Receiver Theodore Lanes (“Receiver”) moves for an order: (1)
terminating the receivership; (2) approving Receiver’s Final Report and
Accounting; (3) discharging Receiver; (4) exonerating all bonds and
undertakings in connection with the receivership; (5) dissolving any injunction
imposed by the Receiver order; (6) approving Receiver’s fees and expenses; (7) authorizing
Receiver without further order of the Court to pay all final receivership
administrative expenses; and (8) approving the payment of cash remaining in the
receivership estate to plaintiff as the proceeds of plaintiff’s collateral.
I.
BACKGROUND AND PROCEDURAL HISTORY
On March 24, 2023, plaintiff Zions Bancorporation, National
Association dba California Bank & Trust filed a Verified Complaint against
defendants for breach of contract, common counts, conversion, appointment of a
receiver, breach of guaranty, and other claims.
On April 20, 2023, the Court having previously denied an ex
parte application for appointment of a receiver, the Court heard an order to
show cause re: appointment of a receiver. The Court granted petitioner’s motion
for a receiver and preliminary injunction only with respect to property located
and held in California.
The Court’s order for the appointment of Receiver and
granting of preliminary injunction was filed April 25, 2023 (“Appointment
Order”). The Appointment Order directed Receiver to locate, take possession of
and liquidate the Receivership Property, as defined in the Appointment Order. (Lanes
Decl. ¶ 2 & Ex. 1 at 1:6-23.) The Appointment Order also enjoined
defendants from disposing of or encumbering the Receivership Property. (Id.
at 9:11:24.)
On April 25, 2023, plaintiff filed an undertaking of $10,000
for the preliminary injunction.
On June 9, 2023, Receiver filed his oath and first report. On
July 21, 2023, Receiver filed a second report.
On August 3, 2023, the Court (Hon. James C. Chalfant)
granted plaintiff’s ex parte application for approval of the sale of two
automobiles from the receivership estate.
On August 4, 2023, Receiver filed an undertaking for himself
in the amount of $10,000.
On December 4, 2023, Receiver filed and served the instant
motion. No opposition has been received.
II.
APPLICABLE LAW
In order to terminate and discharge the receivership,
Receiver must prepare, serve and file (by noticed motion or stipulation of all
parties) a final account and report, a request for discharge, and a request for
exoneration of the receiver's surety. (Rule of Court 3.1184(a).) Notice must be
provided to every person or entity known to the receiver to have a substantial,
unsatisfied claim that will be affected by the order, “whether or not the
person or entity is a party to the action or has appeared in it.” (Rule of Court
3.1184(c).) “If any allowance of compensation for the receiver or for an
attorney employed by the receiver is claimed in an account, it must state in
detail what services have been performed by the receiver or the attorney and
whether previous allowances have been made to the receiver or attorney and the
amounts.” (Rule of Court 3.1184(d).)
III.
ANALYSIS
1.
Notice
According to the proof of service attached to the motion,
Receiver provided notice to plaintiff and defendants. Because all proceeds of
the receivership are subject to plaintiff’s secured claim and all liabilities
of the receivership will be paid, it appears that there are not any other
persons or entities known to the Receiver to have a substantial, unsatisfied
claim that will be affected by the order. (Lanes Decl. ¶ 4 [averring that
plaintiff is senior secured lender].)
2.
Merits
In a declaration, Receiver summarizes the work he has
performed pursuant to the Appointment Order. (Lanes Decl. ¶¶ 6-10.) Receiver attempted
to recover defendants’ books and records but was unable to obtain useful
records. (Lanes Decl. ¶ 6.) Receiver was unable to recover funds from accounts
receivable due to passage of time and the inability to recover customer files. (Lanes
Decl. ¶ 7.) Receiver attempted to recover on an insurance policy issued to
defendants, but the carrier denied coverage and there were no reasonable
grounds to challenge the denial. (Lanes Decl. ¶ 9.) Receiver was able to
recover $14,000 from the sale of two automobiles. (Lanes Decl. ¶¶ 10, 11.)
Plaintiff paid Receiver’s fees and expenses except for
$2,210.00 in administrative expenses. (Lanes Decl. ¶ 12.) Receiver seeks the
payment of the administrative expenses from the sale of the automobiles. (Lanes
Decl. ¶¶ 11, 12.)
No objection has been received. The Court approves
Receiver’s final accounting and Receiver’s request for reimbursement of administrative
expenses. Receiver is entitled to discharge and termination of the Appointment
Order. (Vitug v. Griffin (1989) 214 Cal.App.3d 488, 494 [“As a general
proposition a receiver has no official duties and is not a proper party to any
action after being discharged by the court”].) The Court will exonerate
Receiver’s bond.
Receiver also requests an order exonerating “all bonds and
undertakings in connection with the receivership,” which includes the
undertaking filed by Plaintiff related to the preliminary injunction. Rule
3.1184 only authorizes the Court to exonerate the “receiver’s surety.” Counsel
should address this issue at the hearing.
IV.
CONCLUSION
Subject to argument, the motion is DENIED to the extent it
seeks an order exonerating plaintiff’s undertaking herein.
The motion is GRANTED in all other respects. The injunction
imposed by the April 25, 2023 Appointment Order is dissolved.