Judge James C. Chalfant, Case Number: 23STCV04304, Date: 2023-07-20 Tentative Ruling

Petitioner City of Glendora (“City”) asks the court to appoint a receiver for the property located at 1717 S. Grand Ave., Glendora, Los Angeles (“Property”).

The court has read and considered the moving papers, opposition, and reply, and renders the following tentative decision.

The City filed the Complaint on February 22, 2023 against Sedrak Eikmyan (“Eikmyan”) and 1717 Grand Holdings, LLC (collectively, “Grand Holdings”), alleging (1) public nuisance per se, (2) public nuisance, (3) violation of state housing law, and (4) declaratory or injunctive relief. The Complaint alleges in pertinent part as follows.

Grand Holdings owns the Property and Eikmyan is the responsible party in charge of the Property. On October 13, 2022, the City received a call about the Property due to the graffiti, accumulation of junk, trash, and overgrown weeds. When Officer Stephanie Faulkner (“Faulkner”) contacted Eikmyan about the disrepair of the building, the graffiti, and a boarded-up door that someone pried open, he asserted that these issues were police matters and not his concern.

On October 19, 2022, Faulkner mailed Grand Holdings an administrative citation for violations of Glendora Municipal Code (“GMC”) sections 9.52.020(b) (Graffiti Prohibited) and 9.36.010(13) (Unharmonious Property). An inspection on October 26, 2022, revealed no improvement to the Property’s condition. Grand Holdings and Eikmyan did not respond to Faulkner’s attempts to contact them.

The Property violates Health & Safety (“H&S”) Code section 17980 et seq. because it is in a substandard condition that creates a nuisance. Grand Holdings also violated GMC sections 9.36.010(1) for failure to rectify dangerous and unsafe conditions of the structure at the Property, which created a nuisance; 9.36.010(2) because the Property remains in an unsanitary, blighted, dangerous, unsightly, and unmaintained condition; 9.36.010(7) because the Property remains in a state of disrepair that is detrimental to public health, safety, and general welfare and that constitutes a public nuisance as defined by Civil Code section 3480; 9.36.010(12) for accumulation of trash, debris, and other forms of junk in a manner visible from a public right of way; 9.52.020(b) because graffiti has remained on the structure for more than 48 hours; and 9.36.010(13) because the Property is unharmonious with the maintenance standards of nearby properties in a manner that has caused a substantial diminution in the enjoyment, use, and property values of surrounding property owners.

The City seeks a (1) judgment enjoining the public nuisance conditions on the Property, both per se and under Civil Code section 3480, and compelling the Grand Holdings to abate them to comply with the GMC and (2) declaration that the Property is substandard in violation of the State Housing Law. The City also asks for appointment of a receiver to correct those violations.

On March 14, 2023, the City personally served Defendants with the Complaint and Summons.

On April 20, 2023, Department 14 (Hon. Terry Green) rejected the City’s requests for default against Defendants.

On July 10, 2023, the case was reassigned to Department 14 (Hon. Cherol Nellon).

If a building is maintained in a manner that violates certain provisions of the H&S Code, the building standards published in the State Building Standards Code, or other rules, regulations or local ordinances, and the violations are so extensive and of such a nature that the health and safety of residents or the public is substantially endangered, the enforcement agency may issue an order or notice to repair or abate. H&S Code §17980.6.

A receiver may be appointed in an action or proceeding in any case in which the court is empowered by law to appoint a receiver, including where it is necessary for the preservation of the property or rights of a party. CCP §564(a). Where a property owner fails to make repairs in accordance with an order under H&S Code section 17980.6 within a reasonable time, the enforcement agency may seek the appointment of a receiver for the substandard building. H&S Code §17980.7(c). In determining whether to appoint a receiver, the court shall consider whether the owner has been afforded a reasonable opportunity to correct the conditions cited in the notice of violation. H&S Code §17980.7(c)(1).

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, (“San Francisco”) (1993) 16 Cal.App.4th 734, 744.

The court shall not appoint any person as a receiver unless the person has demonstrated to the court his or her capacity and expertise to develop and supervise a viable financial and construction plan for the satisfactory rehabilitation of the building. H&S Code §17980.7(c)(2). The petitioner must provide the court with information about its proposed receiver, thus enabling the court to determine whether the proposed receiver has the capacity and expertise to develop and supervise a viable financial and construction plan for the satisfactory rehabilitation of the building, as required by H&S Code section 17980.7(c)(2).

If a receiver is appointed, the owner and his or her agent of the substandard building shall be enjoined from collecting rents from the tenants, interfering with the receiver in the operation of the substandard building, and encumbering or transferring the substandard building or real property upon which the building is situated. H&S Code §17980.7(c)(3).

Any receiver appointed pursuant to this section shall have all of the following powers and duties in the order of priority listed in this paragraph, unless the court otherwise permits: (A) To take full and complete control of the substandard property; (B) To manage the substandard building and pay expenses of the operation of the substandard building and real property upon which the building is located, including taxes, insurance, utilities, general maintenance, and debt secured by an interest in the real property; (C) To secure a cost estimate and construction plan from a licensed contractor for the repairs necessary to correct the conditions cited in the notice of violation; (D) To enter into contracts and employ a licensed contractor as necessary to correct the conditions cited in the notice of violation; (E) To collect all rents and income from the substandard building; (F) To use all rents and income from the substandard building to pay for the cost of rehabilitation and repairs determined by the court as necessary to correct the conditions cited in the notice of violation; (G) To borrow funds to pay for repairs necessary to correct the conditions cited in the notice of violation and to borrow funds to pay for any authorized relocation benefits and, with court approval, secure that debt and any moneys owed to the receiver for services performed pursuant to this section with a lien on the real property upon which the substandard building is located. The lien shall be recorded in the county recorder’s office in the county within which the building is located; (H) To exercise the powers granted to receivers under CCP section 568. H&S §17980.7(c)(4). The receiver shall be entitled to the same fees, commissions, and necessary expenses as receivers in actions to foreclose mortgages. H&S Code §17980.7(c)(5).

If the conditions of the premises or the repair or rehabilitation thereof significantly affect the safe and sanitary use of the substandard building by any tenant, to the extent that the tenant cannot safely reside in his or her unit, then the receiver shall provide relocation benefits in accordance with H&S Code section 17980.7(d)(3)(A). H&S Code §17980.7(c)(6). The relocation compensation provided for shall not preempt any local ordinance that provides for greater relocation assistance. H&S Code §17980.7(c)(7).

In addition to any reporting required by the court, the receiver shall prepare monthly reports to the state or local enforcement agency which shall contain information on at least the following items: (A) The total amount of rent payments received; (B) Nature and amount of contracts negotiated relative to the operation or repair of the property; (C) Payments made toward the repair of the premises; (D) Progress of necessary repairs; (E) Other payments made relative to the operation of the building; (F) Amount of tenant relocation benefits paid. H&S Code §17980.7(c)(8).

The receiver shall be discharged when the conditions cited in the notice of violation have been remedied in accordance with the court order or judgment and a complete accounting of all costs and repairs has been delivered to the court. Upon removal of the condition, the owner, the mortgagee, or any lienor of record may apply for the discharge of all moneys not used by the receiver for removal of the condition and all other costs authorized by this section. H&S Code §17980.7(c)(9).

Separate from the H&S Code, substandard housing conditions may constitute a public or private nuisance. Civil Code section 3479 defines “nuisance” as including anything injurious to health. A “public nuisance” must affect an entire community or neighborhood, or a considerable number of persons, although the extent of the annoyance or damage upon individuals may be unequal. Civ. Code §3491. A “private nuisance” is any other nuisance. Id. By ordinance, a city legislative body may declare what constitutes a nuisance. Government Code (“Govt. Code”) §38771.

The Property is vacant and in a commercial zone of the City. Dahlstein Decl., ¶5. Grand Holdings owns the Property, and Eikmyan is the responsible party in charge of the Property. Faulkner Decl., ¶4, Ex. A.

On October 13, 2022, the City’s Code Enforcement Department received a call about the Property due to the graffiti, accumulation of junk, trash, and overgrown weeds. Faulkner Decl., ¶5. Faulkner inspected the Property and observed graffiti on two sides of the building. Faulkner Decl., ¶6, Ex. B. One of the boarded-up doors was also pried open. Faulkner Decl., ¶6, Ex. B. Faulkner contacted Eikmyan and informed him of these issues, but Eikmyan ended the conversation. Faulkner Decl., ¶6.

On October 19, 2022, Faulkner mailed Grand Holdings and Eikmyan an administrative citation for violations of GMC sections 9.52.020(b) (Graffiti Prohibited) and 9.36.010(13) (Unharmonious Property). Faulkner Decl., ¶7, Ex. C.

On October 20, 2022, two more people reported to Faulkner their concerns about the building’s condition and the Property’s secondary impacts on the neighborhood. Faulkner Decl., ¶8. An inspection on October 26, 2022, revealed no improvement to the Property’s condition from October 13. Faulkner Decl., ¶9. Grand Holdings and Eikmyan did not respond to Faulkner’s attempts to contact them. Faulkner Decl., ¶9.

On October 31, 2022, a resident called Faulkner and reported a transient encampment at the Property. Faulkner Decl., ¶10. On November 2, 2022, Faulkner inspected the Property again and found it in worse condition with more graffiti than last time. Faulkner Decl., ¶11. She issued a second administrative citation on November 2, 2022. Faulkner Decl., ¶11, Ex. D.

Another inspection on December 5, 2022 caused Faulkner to discovery more graffiti and issue a third citation. Faulkner Decl., ¶12, Ex. E.

On December 12, 2022, Faulkner received two complaints about lack of maintenance of the Property. Faulkner Decl., ¶13. She inspected the Property again, discovered that its condition had not improved, and issued a fourth citation. Faulkner Decl., ¶13, Ex. F.

The City’s Code Enforcement Department received additional calls about the graffiti on December 19 and 21, 2022. Faulkner Decl., ¶¶ 14-15. Faulkner’s inspection on January 3, 2023 confirmed that graffiti remained on the Property. Faulkner Decl., ¶16. She issued a fifth citation. Faulkner Decl., ¶16, Ex. G.

When Faulkner inspected the Property again on January 17, 2023, she discovered that Grand Holdings “haphazardly” attempted to paint over some of the graffiti. Faulkner Decl., ¶17, Ex. H. The paint just made it worse, and someone had added graffiti over that. Faulkner Decl., ¶17, Ex. H.

On January 31, 2023, Faulkner posted a Notice to Abate on the Property under H&S Code section 17980.6 (“Notice to Abate”) and mailed copies to each Defendant. Patel Decl., ¶18, Ex. I. The Notice to Abate cited GMC sections 9.36.010(1), (2), (7), (12), (13) and 9.52.020(b) and H&S Code section 17920.3. Patel Decl., ¶18, Ex. I. The City gave Grand Holdings until March 2, 2023 to bring the Property into compliance. Patel Decl., ¶18, Ex. I. The Notice to Abate also informed Grand Holdings that taxable deductions may not be allowed for the taxable years in which the unlawful conditions exist. Patel Decl., ¶18, Ex. I.

On March 2, 2023, City Community Preservation Officer Dillon Dahlstein (“Dahlstein”) inspected the Property. Dahlstein Decl., ¶5. He found that there was still an accumulation of trash and debris, damages light fixtures, graffiti, and overgrown weeds. Dahlstein Decl., ¶5. This meant the Property was still in violation of the GMC in the same ways it had been on October 23, 2022. Dahlstein Decl., ¶5.

Because numerous attempts to obtain full and continued compliance with the GMC failed, the City determined that receivership was the last viable option. Faulkner Decl., ¶20.[1] On April 14, 2023, the City’s attorney sent Grand Holdings notice that it intended to file an action for a receivership. Patel Decl., ¶3, Ex. J.

The proposed receiver, Mark Adams (“Adams”), is the President of the California Receivership Group, PBC (“CRG”). Adams Decl., ¶2, Ex. K. Adams has been appointed receiver for 229 properties by 134 different superior court judges and one federal district court judge. Adams Decl., ¶2, Ex. K. CRG’s policy is to assign each receivership activity to the most inexpensive member of the team with the necessary skill set. Adams Decl., ¶3. Hourly rates range from $151 to $465. Adams Decl., ¶3, Ex. L.

On August 31, 2021, Grand Holdings purchased the Property for $2,100,000 with the intent to construct an automated exterior car wash. Ekimyan Decl., ¶¶ 2-3. In September 2021, Grand Holdings retained licensed architects to prepare various architectural plans. Ekimyan Decl., ¶4. The architects finished three proposed site plans on September 20, 2021. Ekimyan Decl., ¶4, Ex. A.

Grand Holdings then needed to take multiple steps with the City to obtain pre-approval for the project before it could demolish the current building and replace it with the car wash. Ekimyan Decl., ¶4.

In January 2023, the architects submitted additional architectural plans. Ekimyan Decl., ¶5, Ex. B. By February 2023, Grand Holdings was close to finalizing the design plans to ensure a smooth permitting and build phase. Ekimyan Decl., ¶6.

On February 28, 2023, Grand Holdings signed a demolition contract for the Property with National Construction and Remediation, Inc. (“NCR”). Ekimyan Decl., ¶6, Ex. C. By March 2023, NCR finalized the scope of work for the structural demolition, interior demolition, and disaster clean-up in and around the Property. Ekimyan Decl., ¶7, Ex. D.

On May 9, 2023, while NCR worked to finalize the demolition plans, Grand Holdings submitted a service request to utility company Southern California Edison (“SCE”) to deactivate the power to the Property to avoid delay once the demolition plans were ready. Ekimyan Decl., ¶8, Ex. E.

From May 10 to 16, 2023, NCR Director Robert Ackerman exchanged emails with the City’s Building Division about submission of the demolition plans and payment of fees. Ekimyan Decl., ¶9, Ex. F. On May 16, the Building Division said that the demolition plan would undergo review that could take up to 30 days. Ekimyan Decl., ¶9, Ex. F.

On May 18, 2023, Grand Holdings detailed its efforts to pursue the project and requested the City to continue the hearing on this motion, then set for June 8. Boniadi Decl., ¶2, Ex. 1. Grand Holdings noted that appointing a receiver would complicate matters and cause delay, while approval of the demolition plans in the next few days would eliminate the building that the City asserted was a nuisance. Boniadi Decl., ¶2, Ex. 1.

On June 13, 2023, SCE informed Grand Holdings that the building’s source of electricity was underground, not overhead. Ekimyan Decl., ¶10, Ex. G. This meant that the company needed to create a work order to have service removed. Ekimyan Decl., ¶10, Ex. G. SCE promised to sent a submittal package for Grand Holdings to fill for that work order. Ekimyan Decl., ¶10, Ex. G. While removal of electricity would have taken two weeks if the source was overhead, it would now take two to three months after SCE received a completed package from Grand Holdings. Ekimyan Decl., ¶10, Ex. G. When Grand Holdings informed SCE about these proceedings and asked for an expedited timeline, SCE explained that this was a busy time of year with the heat storms. Ekimyan Decl., ¶10, Ex. G.

On June 17, 2023, SCE sent the submittal package for the underground work order. Ekimyan Decl., ¶12, Ex. H. Grand Holdings signed and returned it that day. Ekimyan Decl., ¶12, Ex. H.

On June 22, 2023, Grand Holdings informed the City that because SCE would take months to complete its work, the demolition could not proceed. Boniadi Decl., ¶3, Ex. 2. Grand Holdings’ counsel asked the City to continue the hearing on this motion, then set for July 20, by three months. Boniadi Decl., ¶3, Ex. 2.

Also on June 22, 2023, SCE requested additional information for the submittal package. Ekimyan Decl., ¶13, Ex. I. Grand Holdings had selected both options on the design option letter and left the bottom portion of the Customer/Project Information Sheet blank. Ekimyan Decl., ¶13, Ex. I.

On June 28, 2023, the City called this unacceptable in light of the “egregious” conditions at the Property and refused to continue the hearing. Boniadi Decl., ¶4, Ex. 3.

Also on June 30, Grand Holdings’s counsel emailed the City that it has been diligent in efforts to move forward with the demolition. Boniadi Decl., ¶5, Ex. 4. Counsel explained that SCE did not inform Grand Holdings about the problems with the submitted package until June 22. Boniadi Decl., ¶5, Ex. 4. In any case, a receiver would do nothing to change the months-long timeframe for cutting power to the building before demolition can occur. Boniadi Decl., ¶5, Ex. 4. A receiver would slow down as events as Grand Holdings informed him or her about the situation. Boniadi Decl., ¶5, Ex. 4.

The City moves for appointment of a receiver for the Property as a substandard building pursuant to H&S Code section 17980.7(c) and CCP section 564.

Where a property owner fails to make repairs in accordance with an order under H&S Code section 17980.6 within a reasonable time, the enforcement agency may seek the appointment of a receiver for the substandard building. H&S Code §17980.7(c). In determining whether to appoint a receiver, the court shall consider whether the owner has been afforded a reasonable opportunity to correct the conditions cited in the notice of violation. H&S Code §17980.7(c)(1).

The City’s evidence is weak. The Property is a fenced in and boarded up commercial building. Faulkner Decl., Ex. H. Although the City’s declarant Faulkner states that the Property “appears to be attracting transients” (Faulkner Decl., ¶4), there is no evidence of that fact. The declarant states that there are “boarded up doors that appear to be pried open” but provides no photographs showing the same. In fact, the photographs taken on January 13, 2023 show the building as boarded up. Faulkner Decl., ¶17, Ex. H. The declarant states that there is an “accumulation of” junk and trash but provides no details and again no supporting photographs. See Faulkner Decl., ¶5. The declarant states that her January 17, 2023 inspection showed a “haphazard” attempt to paint over the graffiti but the photographs show graffiti painted over. Faulkner Decl., ¶17, Ex. H. There is nothing haphazard about it.

Stripped of its conclusions, the City’s evidence consists of Inspector Faulkner’s observations of weeds and graffiti beginning October 13, 2022 through January 17, 2023 with five citations for the same. Faulkner Decl., Exs. C-G. Based on these two facts, Faulkner posted a Notice to Abate on January 31, 2023 pursuant to H&S Code section 17980.6. Patel Decl., ¶18, Ex. I. Although the Notice to Abate cites H&S Code section 17920.3 and GMC sections 9.36.010, it provides no additional facts. Patel Decl., ¶18, Ex. I. A subsequent inspection on March 2, 2023 revealed that the building’s violations had not been rectified and there was a damaged light fixture on the exterior of the Property. Dahlstein Decl., ¶5.

These facts do not justify a receiver under H&S Code section 17980.6. The City has not shown that the Property’s graffiti and weeds are of such a nature that the health and safety of residents or the public is substantially endangered. H&S Code §17980.6. The City attempts to argue that the Property is substandard under H&S Code section 17920.3 by arguing that it has the following conditions: (a)(14) lacks a sewer connection, (c) any nuisance, (g)(2) defective weather protection, (j) accumulation of weeds, (k) unsafe building due to inadequate maintenance, and(n) occupied for living when not designed for that purpose. Mot. at 14. Of these conditions, only (c) any nuisance and (j) accumulation of weeds are even arguably shown. The Property may well be a public nuisance, but it is not a property for which a receiver must be appointed under H&S Code section 17980.6.[3]

Additionally, a receiver should not be appointed unless it is essential because no other remedy will serve its purpose. San Francisco, supra, 16 Cal.App.4th at 744. There are two reasons why a receiver is an inappropriate remedy in this case.

First, the City has available a mandatory preliminary injunction for compliance with the Notice to Abate for the removal of graffiti and weeds. This remedy would be far more cost effective and efficient than a receiver.

Second, Grand Holdings’ evidence suggests that a receiver is not necessary because the building soon will be demolished. Grand Holdings bought the Property to construct an automated exterior car wash and hired architects to draft plans soon after. Ekimyan Decl., ¶¶ 2-4, Ex. A. Grand Holdings finalized the plans in February. Ekimyan Decl., ¶¶ 5-6, Ex. B. Grand Holdings then signed a contract with NCR for the demolition of the old building. Ekimyan Decl., ¶6, Ex. C. NCR finalized the demolition plans in March 2023. Ekimyan Decl., ¶7, Ex. D. On May 16, 2023, the City’s Building Division confirmed their submission and said that review would take up to 30 days. Ekimyan Decl., ¶9, Ex. F.

The City asserts that Grand Holdings did not respond to any of the administrative citations or communicate its plans for the Property until a May 2023 email after this motion was filed. Ekimyan Decl., ¶9, Ex. F. Reply at 2.

Perhaps not, but Grand Holdings now has shown that the only limiting factor for demolition is SCE’s deactivation of power to the building. On June 13, 2023, SCE informed Grand Holdings that it would need to complete and return a submittal package that SCE would provide. Ekimyan Decl., ¶10, Ex. G. Removal of electricity would then take another two to three months. Ekimyan Decl., ¶10, Ex. G. On June 17, 2023, SCE sent Grand Holdings the submittal package for the underground work order. Ekimyan Decl., ¶12, Ex. H. Grand Holdings signed and returned it that day. Ekimyan Decl., ¶12, Ex. H.

On June 22, 2023, Grand Holdings asked the City to continue this hearing to give SCE time to complete the deactivation of power. Boniadi Decl., ¶3, Ex. 2. That same day, SCE informed Grand Holdings that the submittal package had not been properly completed and it needed more information. Ekimyan Decl., ¶13, Ex. I.

On June 28, 2023, the City called Grand Holdings’ failure to properly complete the SCE submittal unacceptable in light of the “egregious” conditions at the Property and refused to continue the hearing. Boniadi Decl., ¶4, Ex. 3.

Grand Holdings submitted the requested supplemental information at SCE’s main office in person on June 30, 2023. Ekimyan Decl., ¶13. It is projected that it will take two to three months from June 30 that SCE will take to finish the underground work to de-energize the Property. Ekimyan Decl., ¶13. As Grand Holdings’ counsel told the City, a receiver can do nothing to accelerate the timeline on SCE’s approval once it receives a completed package. Boniadi Decl., ¶5, Ex. 4. This is a compelling reason not to appoint a receiver.

[1] Faulkner’s declaration cites to photographs in Exhibit B as all the photographs she took of the Property. Faulkner Decl., ¶19, Ex. B. These pictures – which do not show much of anything -- are marked October 13, 2022.

[2] The City contends that a building is subject to appointment of a receiver if it is substandard, citing H&S Code section 1790(c)(1). Mot. at 13. Not so. A substandard building is only subject to appoint of a receiver if it is substandard under H&S Code section 17920.10, which describes a building that contains lead hazards. Otherwise, a substandard building must endanger the health and safety of residents or the public under H&S Code section 17980.6.

[3] The City also argues that the Property is substandard because the City has authority to declare what is a nuisance by ordinance (Govt. Code §38771), the City has declared certain property conditions to be substandard and a public nuisance (GMC §9.36.010, 9.52.020), and therefore the Property is substandard under H&S Code section 17920.3. Mot. at 15-16.

Pursuant to Govt. Code section 38771, the City has authority to declare what constitutes a public nuisance, but it does not have authority to declare what property is substandard under section H&S Code section 17920.3. In any event, as stated ante a substandard building must be also be shown to substantially endanger the public in order to justify appointment of a receiver.