Judge: Curtis A. Kin, Case: 23STCV28386, Date: 2025-06-03 Tentative Ruling

24STCP02299  Luchia Tsegaberhan
The Petition will be granted.  A copy of the signed decree will be available in Room 112 of the clerk’s office seven days after the date of the hearing.

Case Number: 23STCV28386    Hearing Date: June 3, 2025    Dept: 86

MOTION FOR APPOINTMENT OF RECEIVER AND FOR PRELIMINARY INJUNCTION

Date:               6/3/25 (1:30 PM)

Case:               Marlos Wilver Merlos v. Eric J. Merlos et al. (23STCV28386)

TENTATIVE RULING:     

Plaintiff Marlos Wilver Merlos’ moves for appointment of a Receiver for real property located at 4928 W. 20^th Street, Los Angeles, CA 90016 and a “temporary restraining order” in support of the receiver.

I.                   BACKGROUND

On March 19, 2004, Decedent Maria Ofelia Merlos (“Decedent”), Douglas A. Merlos, and Aura Cecilia purchased the subject property located at 4928 W. 20th Street, Los Angeles, CA 90016 (the “Property”) (Marlos Decl. ¶¶ 2-3.) Through two refinances, Douglas A. Merlos and Aua Cecilia were removed from the loan and title of the Property, and, for the second refinance, Decedent obtained a loan with a variable interest rate, causing her payments to increase and leading her to default. (Marlos Decl. ¶¶ 4-7.) On July 29, 2021, Decedent refinanced the Property for a third time and added her grandson, defendant Eric J. Merlos, on the loan and on title.  (Marlos Decl. ¶ 9.)  According to plaintiff, Eric Merlos was added to the loan and on title in order to obtain more favorable financing, and his addition was only meant to be temporary. (Marlos Decl. ¶¶ 8, 10.) On December 16, 2022, Decedent signed and recorded a Quit Claim Deed intending to sever the joint tenancy with defendant. (Marlos Decl. ¶ 12.)

Decedent obtained a Quit Claim deed that was signed and notarized by Eric Merlos on June 1, 2023. (Marlos Decl. ¶ 13 & Ex. A.) Decedent, however, did not record that Quit Claim deed before she passed on June 11, 2023. (Marlos Decl. ¶ 14.)

Because Decedent lacked a testamentary instrument or trust at the time of her passing, Decedent’s estate proceeded through probate. (Marlos Decl. ¶ 16.) Plaintiff Marlos Wilver Merlos petitioned to be appointed as the administrator of Decedent’s estate, and, on October 13, 2025, the petition was granted and letters of administration were issued. (Marlos Decl. ¶¶ 16-17 & Ex. B.)

Plaintiff contends that defendant entered into leases for the Property to unknown individuals and has been collecting rent for his own benefit. (Marlos Decl. ¶¶ 19-20, 24.) Plaintiff further contends that not all of the rents are being accounted for and believes that the money is being misappropriated. (Marlos Decl. ¶ 21.) Plaintiff has learned that some mortgage payments for the property have not been made.  (Marlos Decl. ¶ 23 & Ex, C.) As of January 19, 2025, the past due amount on the mortgage was $3,935.22, with a total amount of $7,870.44 due by February 1, 2025. (Marlos Decl. ¶ 23 & Ex, C.)

Plaintiff believes that it is necessary to appoint a Receiver to manage, control, and preserve the Property because defendant has collected approximately $5,000 in rent, put none of it toward the mortgage, and has refused to provide an accounting. (Marlos Decl. ¶ 24.)  Plaintiff proposes Matthew Taylor as the Receiver. (Marlos Decl. ¶ 25.)

Defendant has not opposed the motion.

II.                APPOINTMENT OF A RECEIVER

A receiver may be appointed in an action by a party whose right to or interest in property or proceeds of the property is probable and where the property is in danger of being lost, removed, or materially injured. (CCP § 564(b)(1).)

A receiver should not be appointed unless absolutely essential, because no other remedy will suffice. (City & County of San Francisco v. Daley (1993) 16 Cal.App.4th 734, 745.) This is so because the appointment of a receiver is recognized as a drastic, time consuming, expensive, and potentially unjust remedy to be used as a final resort. (See Weil & Brown, Civ. Proc. Before Trial § 9:743 et seq.; see also Alhambra-Shumway Mines v. Alhambra Gold Mine Corp. (1953) 116 Cal.App.2d 869, 873.) “The appointment of a receiver is a drastic remedy and is one which should not be invoked unless there is an actual or threatened cessation or diminution of the business.” (In re Jamison Steel Corp. (1958) 158 Cal.App.2d 27, 35.)

Here, plaintiff, as the administrator of Decedent’s estate, has an interest in the Property. (Prob. Code § 9650(a).) Based on the unopposed showing by plaintiff, it appears that the mortgage for the property may be in default, thereby creating a risk that the Property might be lost due to foreclosure.  Further, it appears on this record that defendant may be misappropriating rents generated from the Property to which he is not entitled.  Under the circumstances, appointment of a Receiver and issuance of a preliminary injunction in support thereof may be appropriate.  Based on his declaration and submitted professional biography, it would appear that Matthew L. Taylor is a suitable candidate if the Court were to determine appointment of a Receiver is warranted.

Appointment of a receiver, however, is a drastic and expensive remedy.  It is not altogether clear from plaintiff’s explanation and showing that appointment of a Receiver is appropriate and/or necessary to protect plaintiff’s interest in the Property.  The Court inquires whether preliminary injunctive relief to prohibit misuse of rents from the Property would be a sufficient provisional remedy. The Court also inquires whether a Receiver is needed and should be empowered to sell the property.  If the Court were to determine that a Receiver I should be appointed, the Court further inquire as to how the parties contemplate such Receiver and expenses of the Receivership Estate will be paid.  .

Lastly, the Court finds that the Proposed Order, electronically received 4/24/25, does not provide sufficient clarity, explanation, or direction concerning the Receivers’ powers, duties, and obligations, as well as the injunction in furtherance of the receivership.  An appropriate Order should be modeled after Judicial Council Form RC-310 and adjusted or amended to suit the particular circumstances here.