Judge: Gary I. Micon, Case: 20CHCV00724, Date: 2024-02-29 Tentative Ruling

Case Number: 20CHCV00724    Hearing Date: February 29, 2024    Dept: F43

Dept. F-43

Date: 2-29-24

Case # 20CHCV00724, City of Santa Clarita, et al. vs. Amanda Jean Bahnmaier

Trial Date: N/A

APPLICATION FOR ORDER TO CONFIRM SALE OF RECEVERSHIP PROPERTY AND TO HOLD NET PROCEEDS

MOVING PARTY: Receiver Mark Adams and California Receivership Group

RESPONDING PARTY: Interested Party Diabio LLC

RULING: The application is granted

SUMMARY OF ACTION AND ANALYSIS

On July 23, 2021, California Receivership Group, through Mark Adams as its president, was appointed by the Court as Receiver for the property located 25046 Atwood Blvd., Santa Clarita, CA. The Receiver was appointed to take full and complete possession of the property and develop an abatement plan to remedy the state and local public health, safety, and welfare violations of the property.

On October 21, 2021, the Receiver confirmed the sale of the property to Diabio LLC and Gustavo Cardenas to the Court. As a condition of the sale of the property, Diabio agreed to complete all repairs within six months of the close of escrow. Diabio did not meet the deadlines in the Sale Addendum for the property.

The Receiver represents that it has a cooperative relationship with Diabio’s lender, Aztec T.D. Service. The Receiver claims that all parties were aware that Diabio’s purchase was contingent on the representations that the work would be completed.

No work was completed by Diabio, and the Receiver had to retake the property. The Receiver worked out a deal with Aztec to provide the Receiver with the additional funds to complete the abatement work and repairs. The repairs were completed in December 2023 and were signed off on by the City of Santa Clarita.

The property was re-listed for sale for $699,999 on December 15, 2023, and the Receiver ultimately accepted the offer by Jessica Palasik for $690,000. The Receiver filed this application to request Court confirmation of that sale. There are several liens and potential claims on the title of the property, and the Receiver wishes to resolve those through the sale of the property.

The receiver is authorized to request and the Court is authorized to confirm the sale of receivership property pursuant to CCP § 568.5. Courts are afforded “considerable deference” in ordering the sale of receivership property. (City of Riverside v. Horspool (2014) 223 Cal.App.4th 670, 684.) The factors that a receiver considers in making the sale are case-dependent, and often include others beyond simply finding the highest price, as “other considerations may outweigh the need to maximize the sales price to the receivership.” (People v. Stark (2005) 131 Cal.App.4th 184, 206-07.) The manner in which the sale is conducted, as well as the price and value of the property under the receiver’s control are to be left to the discretion of the receiver. (City of Riverside v. Horspool (2014) 223 Cal.App.4th at 684.)

Further, in overseeing the Receiver, this Court has wide discretion, and “the power to order the sale of property free and clear of liens and encumbrances.” (City of Riverside v. Horspool (2014) 223 Cal.App.4th at 684 (citations omitted).)

It is clear that the Receiver has the power to sell the property. However, Diabio filed an opposition to the sale. Diabio’s opposition is based on the grounds that the sale fails to adequately compensate creditors, including Aztec. Second, it argues that there is a lack of evidence demonstrating the Receiver’s sincere efforts to sell the property at a fair market value.

The Receiver argues in its response to Diabio’s opposition that these reasons are faulty. For the first reason, Aztec does not object to the sale, nor does Diabio have standing to express concern over Aztec’s interests in the sale of the property. For the second reason, the Receiver argues that the law demonstrates that the manner of sale is under the sole discretion of the appointed Receiver, and Diabio does not offer any rebuttal evidence to show that Receiver did not put enough effort into selling the property at a fair market value. The Receiver speculates that the real issue for Diabio will be the distribution of the net proceeds, which will be decided by subsequent motion.

The Court agrees that Diabio’s reasons in opposition are faulty. Diabio does not have standing to raise objections on Aztec’s behalf. Case law shows that the Receiver has wide discretion when selling a property. Diabio failed to meet its obligations to complete the repair work as part of the sale, so the Receiver had to find another buyer. The Receiver showed that it got multiple offers for the new sale of the property and decided to go with Jessica Palasik’s offer of $690,000. This was all within the Receiver’s discretion.

The Receiver’s application for order to confirm the sale to Jessica Palasik and hold net proceeds is granted.

Moving party to give notice.