Judge James C. Chalfant, Case 22STCV19312 2023-04-25 Tentative Ruling

Sarah Dalisay and Hun B. Park v. Myeongja Choi, 22STCV19312

Tentative decision on application for appointment of receiver: denied

Plaintiffs Sarah Dalisay (“Dalisay”) and Hun B. Park (“Park”), with Cross-Defendant Jashikdl, Inc. (“Jashikdl”), move for the appointment of a rents and profits receiver for property at 207 S. Serrano Avenue, Los Angeles, CA 90004 (“Serrano Property”).

The court has read and considered the moving papers, objection, and reply,[1] and renders the following tentative decision.

On June 13, 2022, Plaintiffs Dalisay and Park filed the Complaint against Defendant Myeongja Choi (“Choi”), alleging claims for (1) financial elder abuse (2) breach of fiduciary duty (3) fraudulent, misrepresentation, (4) unjust enrichment, (5) cancellation of written instrument, (6) quiet title, (7) imposition of constructive trust, and (8) conversion. The unverified Complaint alleges in pertinent part as follows.

Park and Choi became involved, and Park took in Choi’s eldest daughter when she studied in the United States. Compl., ¶13. Choi later lent Park $184,821 for a down payment on the Serrano Property, provided that she could live there rent-free and collect rent from other tenants. Compl., ¶14. Park has since exercised sole responsibility for its mortgage and property tax payments. Compl., ¶14.

As the two grew closer, Choi leveraged the relationship to entangle herself in Park’s other business affairs. Compl., ¶15. This started with management of Park’s property at 7310 Van Nuys Boulevard, Van Nuys, CA 91405 (“Van Nuys Property”). Compl., ¶16. When Choi learned that Park’s daughter, Dalisay, shared her concerns with him about Choi, Choi induced Park to sue Dalisay. Compl., ¶16.

On June 3, 2020, Park executed a Durable Power of Attorney appointing Dalisay as his agent upon incapacitation. Compl., ¶17, Ex. A. Choi alleges that she is Park’s authorized caretaker but has no documentation to support it. Compl., ¶18. If Park did authorize her to be his caretaker, that occurred after he became incapacitated. Compl., ¶18.

Choi worked a nine-to-five job and operated an unauthorized nursing home at the Serrano Property. Compl., ¶19. Even if Choi was Park’s authorized caretaker, she left Park alone for days at a time. Compl., ¶19. Park was found laying on the floor after he had fallen hours earlier but could not get up. Compl., ¶19. Choi also funneled money from Park’s estate for her own benefit. Compl., ¶20.

Although Park was legally incapacitated and Dalisay had power of attorney, Choi induced Park to assign property rights to her for the Serrano Property. Compl., ¶22. Choi also coerced Park into putting her name on the title to refinance the mortgage and avoid foreclosure. Compl., ¶22. The Serrano Property could not be refinanced because of an existing lien, but Choi’s name remains on the title. Compl., ¶22. Choi also induced Park to transfer significant funds to Choi’s account. Compl., ¶23.

Choi continues to exploit Park and demand her portion of the Serrano Property. Compl., ¶25.

Park once confided to Choi that he had $10,000 in cash hidden on the Serrano Property. Compl., ¶26. Choi was the only person other than Park who knew the location and it disappeared on February 7, 2022. Compl., ¶¶ 26-27. Park demanded that Choi return of the $10,000. Compl., ¶27. Choi agreed to return the money the next day, but she did not. Compl., ¶27. On May 24, 2022, Park told Dalisay and filed a police report. Compl., ¶28.

Plaintiffs seek compensatory and general damages of $575,000 along with consequential, special, incidental, and punitive or exemplary damages and attorney’s fees and costs.

On September 6, 2022, Choi filed a Cross-Complaint against Cross-Defendants Dalisay, Park, Jashikdl, Matt Ehrlich (“Ehrlich”), and NAI Capital Inc. (“NAI”). The operative pleading is the First-Amended Cross-Complaint (“FACC”) filed against Cross-Defendants on March 16, 2023 and alleging claims for (1) fraud by concealment, (2) cancellation of written instrument, (3) common counts, (4) quiet title, and (5) declaratory relief. The unverified FACC alleges in pertinent part as follows.

Since July 1, 2019, Choi has been the owner of the Serrano Property and has held title jointly with Jashikdl. On January 21, 2022, Cross-Defendants forged Choi’s signature on a California Residential Purchase Agreement and Joint Escrow Instructions (“Purchase Agreement”) for the sale of the Serrano Property for $1,400,000 to Ronen Henn (“Henn”). Park signed on behalf of Jashikdl.

Ehrlich executed the Purchase Agreement, purporting to be Choi’s agent acting on behalf of Choi’s broker, NAI. Choi never signed the Purchase Agreement or engaged Ehrlich and NAI as agent and broker, respectively. Choi does not know who forged her signature but suspects Cross-Defendants.

Choi seeks $286,992.86, plus 10% prejudgment interest from January 1, 2016. Choi also seeks general, special, and punitive damages plus restitution and declaratory relief. Choi also requests attorneys’ fees and costs.

On September 6, 2022, Choi filed an Answer to the Complaint and served her Cross-Complaint via email.

On October 5, 2022, the court denied Dalisay’s ex parte application for a Temporary Restraining Order (“TRO”) and Order to Show Cause (“OSC”) for a preliminary injunction enjoining Choi from contacting Park and ordering that she deposit all rent from the Serrano Property into escrow.

On February 14, 2023, Department 40 (Hon. Anne Richardson) sustained a demurrer to three causes of action in the Cross-Complaint and overruled a demurrer to the other five causes.

On March 2, 2023, Department 86 (Hon. Mitchell Beckloff) denied Plaintiffs’ ex parte application for appointment of a receiver for the Serrano Property for lack of emergency, noting that they could file a noticed motion.

CCP section 564(b) provides that the court has authority to appoint a receiver in any of the following pertinent circumstances: (1) in an action by a vendor to vacate a fraudulent purchase of property, or by a creditor to subject any property or fund to the creditor's claim, or between partners or others jointly owning or interested in any property or fund, on the application of the plaintiff, or of any party whose right to or interest in the property or fund, or the proceeds thereof, is probable, and where it is shown that the property or fund is in danger of being lost, removed, or materially injured; and (9) in all other cases where necessary to preserve the property or rights of any party.

The appointment of a receiver is a drastic remedy to be utilized only in “exceptional cases.” As such, a receiver should not be appointed unless absolutely essential and because no other remedy will serve its purpose. City & County of San Francisco v. Daley, (1993) 16 Cal.App.4th 734, 744. A plaintiff who seeks appointment of a receiver of certain property under CCP section 564(b)(1) has the burden to establish by a preponderance of the evidence that plaintiff has a joint interest with defendant in the property, that the property is in danger of being lost, removed or materially injured, and that plaintiff's right to possession is probable. Alhambra-Shumway Mines, Inc. v. Alhambra Gold Mine Corp., (1953) 116 Cal.App.2d 869, 873.

The Serrano Property has seven bedrooms. Dalisay Decl., ¶2. Park purchased the Serrano Property in July 2019 with the intent to live in part of it and rent out the other bedrooms. Park Decl., ¶2. Park agreed to let Choi live there provided she apply rent collected from the other tenants towards the mortgage payments and property taxes. Park Decl., ¶2. Choi made the mortgage payments for a while but has since stopped. Park Decl., ¶2; Dalisay Decl., ¶4. Park always paid the property taxes. Park Decl., ¶2, Ex. 2.

With the threat of foreclosure looming, Choi leveraged her relationship with Park to acquire title to the Serrano Property. Park Decl., ¶3. Choi convinced him that they could refinance the property if he added her on the title, even though Choi knew that an earlier lien would prevent a refinancing. Park Decl., ¶3. On July 1, 2019, Park recorded a grant deed identifying Choi and Jashikdi as joint tenants of the Serrano Property, each owning 50%. Park Decl., ¶3, Ex. 3.

On information and belief, the Serrano Property has four or five tenants. Dalisay Decl., ¶2. Although Jashikdi and Choi own the Serrano Property in joint tenancy, Choi has not provided Plaintiffs and Jashikdi with recent statements or accounting of its profits and expenses. Daniel Decl., ¶2. Choi also never distributed any rents, profits, or other monetary or beneficial distribution to Park, Dalisay, or Jashikdi. Daniel Decl., ¶2; Park Decl., ¶4, Ex. 4; Dalisay Decl., ¶6, Ex. 8. Meanwhile, Park has paid the invoices and receipts for insurance, maintenance, and other expenses related to the Serrano Property. Park Decl., ¶5, Ex. 5.

On June 3, 2020, Park executed a Durable Power of Attorney appointing Dalisay as his agent upon incapacitation. Dalisay Decl., ¶5, Ex. 7.

In June 2021, Choi received a 2019-2020 Delinquent Tax Notice for $961.16. Dalisay Decl., ¶7, Ex. 9. Choi did not inform Plaintiffs that this happened. Dalisay Decl., ¶7.

On December 1, 2021, Dalisay informed Choi that a mortgage payment had been reversed. Dalisay Decl., ¶10, Ex. 12.

The current balance on the mortgage is $298,953.63. Dalisay Decl., ¶4. Park and Dalisay have incurred $5,200.00 per month in mortgage costs. Dalisay Decl., ¶4.

On December 2, 2022, a Notice of Default and Election to Sell (“NOD”) was recorded on the Serrano Property’s Deed of Trust. Dalisay Decl., ¶9, Ex. 10. The NOD states a delinquency of $11,044.44. Dalisay Decl., ¶9, Ex. 10. Choi would have received the NOD because her checkbook shows she still lives in the Serrano Property. Dalisay Decl., ¶¶ 9, 10, Ex. 11. Dalisay did not learn about the NOD until March 12, 2023, when her ex-husband received a message from a foreclosure attorney. Dalisay Decl., ¶9.

The Nationwide Posting and Publication lists the sale date as May 2, 2023. Dalisay Decl., ¶9, Ex. 10.

On March 21, 2023, counsel for Choi served on opposing counsel a Notice of Unavailability of Counsel. Lee Decl., ¶6, Ex. 3. Choi’s counsel is a sole practitioner and the notice stated that he would not be available to receive notice, respond to ex parte applications, appear in court, or attend depositions between March 24 and April 4, 2023. Lee Decl., ¶6, Ex. 3.

Plaintiffs and Cross-Defendant (collectively, “Plaintiffs”) filed this motion on April 3, 2023 and served Choi that day by e-mail and personal service. Lee Decl., ¶¶ 4-5, Exs. 1-2. The process server left the motion outside of defense counsel’s office after 5:00 p.m. on April 3, 2023. Lee Decl., ¶8. He did not see the motion until several days later. Lee Decl., ¶8.

On April 7, 2023, Choi’s counsel emailed Plaintiffs’ counsel, noting that Plaintiffs’ process server just left copies of the motion outside of his office on April 3, 2023. Lee Decl., ¶7, Ex. 4. This did not comply with CCP section 1011, so counsel for Choi requested that Applicants re-serve the motion and reschedule the hearing. Lee Decl., ¶9, Ex. 4. Applicants refused and asserted that the e-service on April 3, 2023, combined with the method of personal service used, substantially complied with the relevant requirements. Lee Decl., ¶9, Ex. 4.

Choi’s counsel knew that Plaintiffs would be seeking relief because, on March 15, 2023, their attorney emailed Choi’s counsel that if Choi did not pay all delinquent amounts owed on the Serrano Property by March 17, 2023, they would file an ex parte application for appointment of a receiver. Daniel Reply Decl., ¶4, Ex. 4.

On March 24, 2023, Choi’s counsel emailed a request to meet and confer on an unrelated motion. Daniel Reply Decl., ¶3, Ex. 3.

On April 3, 2023 at 4:56 p.m., Plaintiffs’ counsel electronically served the motion. Daniel Reply Decl., ¶2, Ex. 1. The motion also was personally served on Choi’s counsel’s place of business at 5:53 p.m. Id. The law clerk left to personally serve the motion at 4:00 p.m., but he did not arrive at Choi’s counsel’s Diamond Bar office until 5:53 pm. Daniel Reply Decl., ¶2. He left the motion in front of Choi’s counsel’s door. Daniel Reply Decl., ¶2, Ex. 2.

The Serrano Property’s foreclosure date is May 2, 2023. Daniel Reply Decl., ¶5. A continuance of the motion could cause the loss of the Serrano Property before the hearing. Daniel Reply Decl., ¶7.

Plaintiffs move for the appointment of a rents and profits receiver for the Serrano Property pursuant to CCP sections 564(b)(1) and (9), which provide the court with authority to appoint a receiver (1) in an action by a vendor to vacate a fraudulent purchase of property, or by a creditor to subject any property or fund to the creditor's claim, or between partners or others jointly owning or interested in any property or fund, on the application of the plaintiff, or of any party whose right to or interest in the property or fund, or the proceeds thereof, is probable, and where it is shown that the property or fund is in danger of being lost, removed, or materially injured, and (9) in all other cases where necessary to preserve the property or rights of any party.

Choi objects solely on service grounds, noting that doing so without addressing the merits preserves the objection. See Robinson v. Woods, (2008) 168 Cal.App.4^th 1258, 1264-68 (summary judgment motion was untimely). Obj. at 3.

Unless otherwise ordered or specifically provided by law, all moving and supporting papers for a motion shall be served and filed at least 16 court days before the hearing. CCP §1005(b).

If a document may be served by mail, express mail, overnight delivery, or facsimile transmission, electronic service of that document is deemed complete at the time of the electronic transmission of the document or at the time that the electronic notification of service of the document is sent. CCP §1010.6(a)(3)(A). With some exceptions, any period of notice prescribed by statute or rule of court, shall be extended after service by electronic means by two court days. CCP §1010.6(a)(3)(B).

Personal service may be made by at an attorney’s office by leaving the notice or other papers in an envelope or package clearly labeled to identify the attorney being served, with a receptionist or with a person having charge thereof. CCP §1011(a). If there is no person in the office with whom the notice or papers may be left at the time service is to be effected, service may be made by leaving them between the hours of 9 a.m. and 5 p.m., in a conspicuous place in the office. CCP §1011(a).

Plaintiffs filed the instant motion on April 3, 2023 and served Choi the same day by both e-mail and personal service. Lee Decl., ¶¶ 4-5, Exs. 1-2. The April 3 service date was 16 court days before the hearing date of April 25, 2023. Because CCP section 1010.6(a)(3)(B) increased the required notice by two court days, the electronic service was untimely.

As for the personal service, Choi asserts that Plaintiffs should not have served the motion personally because her counsel served a Notice of Unavailability of Counsel that was still in effect. Obj. at 4; Lee Decl., ¶6, Ex. 3. As Plaintiffs note, the unavailability of counsel does not prevent service of a motion. Reply at 6. The court in Carl v. Superior Court, (2007) 157 Cal.App.4th 73, 76, rejected the view that a party can trigger a “litigation timeout” at the appellate level using such a notice. It also is an impermissible infringement of the court's inherent powers because it attempts to put control of the court's calendar in the hands of counsel. Id. at 75. Choi provides no reason that the practice should differ in trial courts. While as a matter of comity, it would have been only fair and prudent to accommodate Choi’s counsel, there was no legal requirement to do so.

Plaintiffs admit (Reply at 2) that their personal service was ineffective because their clerk delivered the motion in front of the attorney’s door at 5:53 p.m. Daniel Reply Decl., ¶2, Ex. 2. Because this was after 5:00 p.m., service was not effective that day. CCP §1011(a). This makes the motion untimely by one day.

Plaintiffs argue that Choi suffered no prejudice from the untimely service. Reply at 4. But she did. Choi has not addressed the merits of Plaintiffs’ motion, choosing to rely on her objection to service as she was entitled to do. Plaintiffs also cite the court’s authority under CCP section 1005(b) and CRC 3.1300 to prescribe shorter times than required. Reply at 5. While the court does have this authority, it cannot be used retroactively to prejudice a party who relies on the statutory time limits and could not anticipate that the court would modify the schedule.

Plaintiffs argue that forcing them to refile this motion with appropriate notice could compromise title to the Serrano Property. Reply at 5-6. Plaintiffs fail to show how. Their evidence that the Serrano Property has rental income is made on information and belief, which is not evidence of the fact. Moreover, they do not explain, or provide any evidence, how the collection of rent from room renters over a relatively brief period will enable them to avoid foreclosure by May 2, 2023. It appears that Plaintiffs will have to put up the money to avoid foreclosure if they can do so.

The motion is denied without prejudice for lack of proper notice. Plaintiffs may refile a noticed motion that complies with CCP section 1005, as statutorily extended by the manner of service. If they do, Plaintiffs must provide an attorney declaration complying with the elements of CCP section 1008(b), except that due diligence is not required to be shown.

[1] Choi failed to lodge a courtesy copy of her objection, in violation of the Presiding Judge’s First Amended General Order Re: Mandatory Electronic Filing. Her counsel is admonished to provide courtesy copies in all future filings.