Judge: Cynthia A Freeland, Case: 37-2021-00000775-CU-OR-NC, Date: 2024-05-17 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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SOUTH BUILDING TENTATIVE RULINGS - May 16, 2024

05/17/2024  01:30:00 PM  N-27 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Cynthia A. Freeland

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Civil - Unlimited  Other Real Property Motion Hearing (Civil) 37-2021-00000775-CU-OR-NC CITY OF SAN MARCOS VS LEDGARD [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion - Other, 04/19/2024

Richardson Griswold (the 'Receiver')'s motion for additional receivership funding is granted in part and denied in part.

On April 22, 2022, the court appointed the Receiver to take full control and possession of Defendant W.K. Ledgard, Jr. aka Ken Ledgard ('Defendant')'s property located at 0 Denise Court, San Marcos, CA 92078 (the 'Property') and to take such actions as necessary to abate the public nuisances at the Property and remedy all local housing code violations (the 'Appointment Order'). See Griswold Decl., ¶¶ 1-2; ROA No. 65. In pertinent part, the Appointment Order grants the Receiver the following powers and duties: Borrow funds necessary to pay for all of Receiver's expenses in the execution of his duties under this Appointment Order and to pay the debts of the receivership estate. All funds borrowed by Receiver on behalf of the receivership estate shall be entitled to become first priority liens against the Property superseding all other interest subject to this Appointment Order. Receiver may issue and record Receiver's Certificates of Indebtedness ('Certificates') to evidence and secure the debts of the receivership estate. The debt evidenced by the Certificates shall be due and payable upon completion of Receiver's duties hereunder with respect to the rehabilitation of the Property. If the Certificates cannot be immediately satisfied when they become due, Receiver may apply to this Court to sell the Property free and clear of all subordinate liens and encumbrances pursuant to Code of Civil Procedure section 568.5.

See Appointment Order, ¶ 3(g).

The Second District Court of Appeal has explained: Courts also have substantial discretion to authorize a receiver to borrow money to fund the preservation and management of property in the receivership estate, particularly where, as here, the estate does not produce income. In that circumstance, the receiver may ask the court to authorize the issuance of a receiver's certificate to the lender as security for money loaned to the estate. Typically, such a receivership certificate will have priority over all other liens – even preexisting liens.

City of Sierra Madre v. SunTrust Mortgage, Inc. (2019) 32 Cal. App. 5th 648, 657. California courts agree that the court has 'authority to fund a receivership on a super-priority basis in the appropriate circumstance.' County of Sonoma v. Quail (2020) 56 Cal. App. 5th 657, 673. Indeed, 'there can be no question of the right of the court to give priority to certificates issued to enable the receiver to carry out Calendar No.: Event ID:  TENTATIVE RULINGS

3098669 CASE NUMBER: CASE TITLE:  CITY OF SAN MARCOS VS LEDGARD [IMAGED]  37-2021-00000775-CU-OR-NC the primary object of [the receiver's] appointment, viz., the care and preservation of the property.' Title Ins. etc. Co. v. California Dev. Co. (1915) 171 Cal. 227, 231.

Before the Receiver's appointment, Defendant had hired an engineer to assist him in preparing the necessary plans that must be submitted to the City of San Marcos (the 'City') and approved prior to the start of the remediation work. See Griswold Decl., ¶ 3. On April 28, 2022, the Receiver, consistent with ¶ 2 of the Appointment Order, filed a $10,000.00 bond with the court to secure the faithful performance of his duties. See ROA No. 68. On April 20, 2023, the court granted the Receiver's ex parte application to fund a Receiver's Certificate in the amount of $21,000.00 to pay for a required geotechnical report and other receivership fees and costs, which Certificate was recorded against the Property as a super-priority lien. See Griswold Decl., ¶ 5; ROA No. 99. Defendant's engineer recently resubmitted plans to the City with required corrections. The plan check fee of $890.72 is outstanding. See Griswold Decl., ¶ 4. Once the plans are approved, the Receiver will obtain bids for the authorized scope of work and present the court with the remediation plan. Ibid. As of April 1, 2024, the Receiver's outstanding fees and costs total $5,860.80. Ibid., ¶ 6, Ex. A. The ongoing receivership fees and costs total $10,000.00.

Ibid., ¶ 8. The Receiver thus seeks an additional $17,000.00 in receivership funds ($890.72 plan check fee + $5,860.80 in outstanding fees and costs + $10,000.00 in ongoing and future fees and costs = $16,751.52) to be secured by a super-priority lien on the Property. Ibid.

The court construes Defendant's lack of opposition as a concession of the motion's merits. See San Diego Rules of Court, Rule 2.1.19.B. In this case, however, the court finds that the Receiver has not demonstrated good cause to grant the requested relief in its entirety. The court accepts the Receiver's representations and proffered evidence that: (1) Defendant has ceased making periodic payments towards the Receiver's fees and costs; (2) the $890.72 plan check fee remains outstanding; and (3) the Receiver's outstanding fees and costs total $5,860.80. On that basis, the court will permit the Receiver to obtain an additional $6,751.52 in receivership funding ($5,256.22 of which was authorized by virtue of the court's May 15, 2024 Order). However, the Receiver has not provided the court with sufficient evidence explaining: (1) the necessity of an additional $10,000.00 in 'ongoing and future fees and costs', and (2) why the previously authorized funds in the amount of $21,000.00 were insufficient to complete the tasks contemplated under the Appointment Order.

In light of the foregoing, the court grants the motion in part and authorizes the Receiver to obtain an additional $6,751.52 in receivership funding to be secured by a super-priority lien against the Property (which amount includes the $5,256.22 previously authorized by the court on May 15, 2024). The Receiver's request for an additional $10,000.00 in receivership funding for ongoing and future fees and costs is denied.

This is the tentative ruling for the hearing at 1:30 p.m. on Friday, May 17, 2024. If no party appears at the hearing, this tentative ruling will become the order of the court as of May 17, 2024. If the parties are satisfied with the court's tentative ruling or do not otherwise wish to argue the motion, they are encouraged to give notice to the court and each other of their intention not to appear, though this notice is not required.

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3098669