Judge: Curtis A. Kin, Case: 24STCV33117, Date: 2025-04-01 Tentative Ruling
Case Number: 24STCV33117 Hearing Date: April 1, 2025 Dept: 86
MOTION FOR APPOINTMENT OF RECEIVER
Date: 4/1/25
(1:30 PM)
Case: Saluda Grade
Alternative Title Trust 2022-BC2, et al. v.
Brasada Homes Land VI, LLC et al. (24STCV33117)
TENTATIVE RULING:
Plaintiffs Saluda Grade Alternative Title Trust 2022-BC2 and
Saluda Grade Alternative Title Trust 2023-BC4’s unopposed Motion for
Appointment of a Receiver is DENIED.
I.
FACTUAL BACKGROUND
On December 13, 2024, plaintiffs Saluda Grade Alternative
Title Trust 2022-BC2 (“Saluda 2022”) and Saluda Grade Alternative Title Trust
2023-BC4 (“Saluda 2023”) (together “Plaintiffs”) filed this action against
defendants Brasada Homes Land VI, LLC (“Brasada 6”) and Brasada Homes PH9, LLC
(“Brasada 9”) (together “Defendants”) for specific performance of the terms of
a deed of trust, appointment of a receiver, and injunctive relief.
Plaintiffs allege they hold and own commercial real estate
loans secured by real property, improvements, and personal property described
in the deeds of trust subject to this action. (Compl. ¶ 1.) Specifically, a
nonparty Original Lender executed a written Loan Agreement and Promissory Note
opposite Brasada 6 on May 17, 2022 in the maximum principal amount of
$33,840,297.17 (“Brasada 6 Loan”). (Compl. ¶¶ 9-10.) As security for the
Agreement and Note, Brasada 6 signed and delivered to the Original Lender a Construction
Deed of Trust, Security Agreement, Assignment of Leases and Rents, Assignment
of Contracts and Plans, and Fixture Filing, dated as of May 17, 2022, and
recorded as Document No. 20220562928. (Compl. ¶ 11.) The complaint refers to
all the foregoing documents as the “Brasada 6 Loan Documents.” (Compl. ¶ 12.)
Saluda 2022 currently holds the Brasada 6 Loan and Loan
Documents pursuant to an Assignment dated and recorded November 26, 2024. (Id.,
¶ 13.) Brasada 6 was required to repay the Brasada 6 Loan in full on or before
August 4, 2024. (Compl. ¶ 14.) It did not, and, as of the filing of the
complaint, it had not. (Compl. ¶¶ 15-17.)
The Original Lender made a loan on equivalent terms to
Brasada 9 on September 27, 2023 (the “Brasada 9 Loan”). Saluda 2023 holds the
Brasada 9 Loan and Documents pursuant to Assignments also recorded on November
26, 2024. (Compl. ¶ 24.) The Brasada 9 Loan Documents require Brasada 9 to
perform construction on property subject to a Deed of Trust securing the
Brasada 9 Loan (“Subject Property”) according to a certain schedule. (Compl. ¶
25.) Plaintiffs allege Brasada 9 has not done so, and has not paid its contractors.
(Compl. ¶¶ 26, 28.) There are currently at least three foreclosure actions in
connection with mechanics’ liens on the Subject Property. (Compl. ¶ 28.) These
circumstances are a breach of the Loan Documents, which require Brasada 9 to
keep the Property free and clear of liens or encumbrances. (Compl. ¶ 27.)
Plaintiffs have notified Defendants of their defaults and
demanded immediate cure of the same. (Compl ¶ 30.) Defendants have not. (Compl.
¶¶ 17, 32.)
Plaintiffs brought suit on December 13, 2024. They
personally served Defendants on December 17, 2024. Defendant have filed no
answer or other response.
Plaintiffs previously brought an ex parte application
seeking appointment of a receiver, which the Court denied on the merits on
January 17, 2025, noting, among other things, that any purported harm to the
property was speculative and that there was no rent being generated because the
property was still in development.
Plaintiffs filed this noticed motion for appointment of a
receiver on February 25, 2025. They served Defendants by U.S. Mail on February
25, 2025. Defendants have filed no opposition.
II.
REQUEST TO APPOINT A RECEIVER
Pursuant to CCP § 564(b)(2),
(b)(6), (b)(9), and (b)(11), plaintiff seeks the appointment of a receiver with
respect to various real properties so that such receiver could operate the
properties and collect rents.
A receiver may be appointed in an action by a secured lender for the
foreclosure of a deed of trust and sale of the property where it appears that
the property is in danger of being lost, removed, or materially injured. (CCP §
564(b)(2).) A receiver may also be appointed where “a corporation is insolvent,
or in imminent danger of insolvency, or has forfeited its corporate rights.”
(CCP § 564(b)(6).) A court may also appoint a receiver “where necessary to
preserve the property or rights of any party.” (CCP § 564(b)(9).) Additionally,
a court may appoint a receiver “[i]n an action by a secured lender for specific
performance of an assignment of rents provision in a deed of trust, mortgage,
or separate assignment document.” (CCP § 564(b)(11).)
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.) Where, as here, a Deed of Trust contains a
provision consenting to appointment of a receiver (e.g., Altig Decl. Ex.
C at ¶ 7.2.1), such provision “has some evidentiary weight” but “is not
binding upon the courts” as to whether a receiver should be appointed. (Barclays
Bank of California v. Superior Court (1977) 69 Cal.App.3d 593, 602.)
Here, plaintiffs contend the Court should appoint a Receiver
because: (1) Defendants have defaulted on their obligations; (2) Defendants
consented to appointment of a receiver upon default in section 7.2.1 of the
Deeds of Trust; (3) Plaintiffs’ other (unspecified) efforts to resolve the
matter have been futile; and (4) “[Plaintiffs’] bargained-for property is out
of [their] control and in the control and custody of [Defendants], which have
defaulted on their obligations to [Plaintiffs].” (Altig Decl., ¶¶ 28-33.)
Plaintiffs indicate they intend to initiate nonjudicial foreclosure, and “often
times during the foreclosure process the property owner will not properly
maintain the property, which is clearly evidenced here due to the many
mechanic’s liens on the Property, which is causing lot sales to fail to close.”
(Altig Decl. ¶ 32.)
To begin with, plaintiffs previously sought appointment of a
receiver through an ex parte application on principally the same grounds, which
this Court denied on January 17, 2025.
CCP § 1008(b) states: “A party who originally made an application
for an order which was refused in whole or in part . . . may make subsequent
application for the same order upon new or different facts, circumstances, or
law, in which case it shall be shown by affidavit . . . what new or different
facts, circumstances or law are claimed to be shown.” Failure to meet such requirement deprives
this Court of jurisdiction over the subsequent application. (CCP § 1008(e)
[“This section specifies the court’s jurisdiction with respect to application
for . . . renewals of previous motions . . .”].) Here, plaintiffs assert no new facts,
circumstances, or law in support of their renewed request for appointment of a
receiver. Indeed, they do not even
attempt to do so. The Court is
accordingly without jurisdiction to entertain the instant motion.
In any event, even if this Court had jurisdiction to hear
plaintiff’s renewed request for the previously denied relief, the Court would
again find plaintiffs have not made a sufficient showing to justify appointing
a receiver. Plaintiffs assert mechanics’ liens have accrued against the
Property, but they have not explained why further liens might accrue if a
receiver is not appointed or how a receiver would be in any better position to
address the mechanics’ liens that defendants.
Indeed, if liens have accrued or continue to accrue, they would not be
released by appointment of a receiver. As for potential harm to the property, plaintiffs
have only speculated about what “often times” occurs during nonjudicial
foreclosure. They have not identified any actual, meaningful harm that might
befall the property so as to justify the extreme remedy of appointing a
receiver.
The Court also notes that Defendants have yet to appear in
this action, despite proofs of service indicating personal service on December
17, 2024. For reasons unknown,
plaintiffs have not sought the entry of default, despite the several months
that have passed. The Court also
questions the necessity of a receiver where plaintiffs have an apparent option
for expeditious resolution of this matter yet have failed to do so.
Plaintiffs’ motion is DENIED.