Judge: Deirdre Hill, Case: 19TRCV00310, Date: 2023-04-14 Tentative Ruling

Case Number: 19TRCV00310    Hearing Date: April 14, 2023    Dept: M

Hearing Date:                         April 14, 2023

Moving Parties:                      Receiver Stephen J. Donell

Responding Party:                  None

Motion by Receiver for Order Authorizing Receiver to Sell Real Property and Confirming Sale

            The court considered the moving papers.  No opposition was filed.

RULING

            The motion is GRANTED.  Receiver Stephen Donell is authorized to sell the property at 2905 and 2909 N. Sepulveda, Manhattan Beach to Benjamin Soleimani in accordance with the proposed Purchase and Sale Agreement and such sale is confirmed in accordance with CCP §568.5.

BACKGROUND

On March 27, 2019, Carol Jean Thompson, derivatively on behalf of McEntyre Family Properties, LLC, filed a complaint against Delmer James McEntyre for partition and declaratory relief.

On June 4, 2019, plaintiff filed a FAC.

On July 23, 2019, defendant Delmer James McEntyre filed a cross-complaint for breach of contract.

On September 3, 2019, the court found the herein case related to YC072864 and YC072863.

On September 30, 2020, plaintiff filed an amendment designating Mary Elaine Henry-Tavares as Doe 1.

On August 10, 2021, the court granted the motion for appointment of receiver.  The court ordered the parties to meet and confer on proposed receiver Stephen Donell.  Moving party was to file the proposed receiver’s CV and proposed rates.

On August 23, 2021, the court entered the order appointing receiver Stephen Donell.

DISCUSSION

            Receiver Donell requests that the court authorize the sale of the property known as 2905 and 2909 N. Sepulveda Blvd., Manhattan Beach to Benjamin Soleimani pursuant to the terms and conditions set forth in the Purchase and Sale Agreement and to confirm the sale to the buyer.

            As background, on August 23, 2021, the court entered an order appointing Stephen Donell as receiver.  He was granted additional duties, including to list and market the properties for sale with a real estate broker, and with prior court approval, to sell the properties at 2905 and 2909 North Sepulveda Blvd., Manhattan Beach.

            On November 9, 2022, Receiver Donell filed a status report stating that the property has been listed for sale with a highly qualified local broker.  Earlier in the year, the property was in contract to be sold but the prospective purchaser exercised his contractual rights to terminate the transaction due to issues relating to his inability to develop the property according to his plans.  Subsequently, the Receiver “entered into serious negotiations with a second interested party, but those negotiations did not result in that party entering into a contract.”  He also states that “[t]his past year has been a period of turmoil in the commercial real estate market.”  He states that mortgage rates have increased dramatically, and developers have been reluctant to commit to purchase a property that must be demolished and developed from the ground up.  Two of the three units have paying tenants and the property has sufficient cash flow and is being properly maintained and preserved. 

            On December 2, 2022, cross-complainant filed a status report stating that the parties and receiver agreed that due to the current real estate market further efforts should be delayed until after the new year.

            In the herein motion, the Receiver asserts that the terms of sale are “as is with all faults,” to Benjamin Soleimani as approved by the court, for a total purchase price of $4,415,000 cash at closing, with a closing date of 61 days after notice of entry of the order.  The Receiver is represented by Arbor Realty, which is to receive a commission of 4% and the buyer is not represented by a broker.  The Receiver proposes to hold the net sale proceeds, after payment of broker’s commissions and closing costs, in trust pending further order of the court.

            According to the Receiver’s declaration, the real property went on the market with Arbor Realty in the third week of December 2022 with an asking price of $3,750,000.  By January 20, 2023, he had received six offers to purchase the property at prices ranging from $2,750,000 to $3,900,000.  He selected a non-contingent offer at $3,800,000.  Another offeror increased its price to $4,000,000 and removed most of the contingencies but those negotiations did not progress quickly. While those negotiations were ongoing, the broker was contacted by three additional interested parties.  The Receiver and the brokers reviewed, analyzed, and ultimately settled on the current non-contingent buyer at a purchase price of $4,415,000, and the brokerage fee was reduced by 1%, yielding a total net of $159,150 more than the next highest offer.  The Receiver opines that it is in the best interests of the receivership estate and all parties for the sale to be confirmed and that the sale will generate the most amount of money for the receivership estate in the least amount of time.

            CCP §568.5 states, “A receiver may, pursuant to an order of the court, sell real or personal

property in the receiver's possession upon notice and in the manner prescribed by Article 6 (commencing with section 701.510) of Chapter 3 of Division 2 of Title 9.  The sale is not final until confirmed by the court.” 

“In effect, the directions in the order of sale with regard to the manner in which it should be made, are merely instructions to the receiver -- his procedural directions.  They do not go to the substantive rights of the parties.  Of course they are binding upon the receiver, and while, for some purposes, they may be final, yet the main function of the court is to manage or dispose of the estate in the best manner possible and for the best interest of the parties concerned.  To effectually perform that duty necessarily requires some flexibility and continuity of jurisdiction in giving instructions to the receiver as to the manner in which the property should be sold to meet exigencies as they may arise.”  Lesser & Sons v. Seymour (1950) 35 Cal. 2d 494, 499.

“A receiver’s sale is a judicial sale as distinguished from a sale under execution.  . . . A receiver, on the other hand, is an agent of the court and the property in his hands is really under the control and continuous supervision of the court.  Consequently, unless regulated by statute, the court has full power to order the receiver to dispose of property in such manner as the court may deem to be in the best interest of the parties concerned and the advice of the receiver and his opinion in regard to the value of the property, the manner, time and place of its disposition are entitled to great respect and weight.”  People v. Riverside University (1973) 35 Cal. App. 3d 572, 583 (citations omitted).

            In consideration of Receiver Donell’s advice and opinion, the terms on which the real property is to be sold to Benjamin Soleimani are fair and reasonable under the circumstances, including that the sale is for cash with a prompt closing, and in the best interest of the parties concerned. 

            Accordingly, the motion is GRANTED.

            Receiver Donell is to give notice.