Judge James C. Chalfant, Case Number: 24STCV32273, Date: 2025-04-08 Tentative Ruling

U.S. Bank v. Jamison 16530 Venture, LLC, 24STCV32273

Tentative decision on OSC re: confirmation of receiver: granted

Plaintiff U.S. Bank National Association, as trustee of a commercial mortgage pass through trust (“U.S. Bank”), by and through loan servicer Rialto Capital Advisors (“Rialto”), seeks confirmation and expansion of the court’s March 18, 2025 order appointing Kevin K. Rede (“Rude”) as Receiver for commercial property owned by Defendant Jamison 16530 Ventura, LLC (“Jamison”).

The court has read and considered the moving papers (no opposition was filed) and renders the following tentative decision.

Plaintiff U.S. Bank filed the Complaint on December 6, 2024, alleging causes of action against Jamison for appointment of receiver and injunctive relief. The Complaint alleges in pertinent part as follows.

On December 12, 2013, German American Capital Corporation (“GAC”) loaned Jamison the principal amount of $21,000,000 (“Loan”). Compl., ¶10. On the same date, Jamison executed a Promissory Note (“Note”) and Loan Agreement with GAC. Compl. ¶11. The Note was secured by a Leasehold Deed of Trust, Assignment of Leases and Rents and Security Agreement (“DOT”), also dated December 12, 2013. Compl., ¶12. The DOT granted GAC a first-priority lien and security interest against land and improvements at 16530 Ventura Bouevard, Encino, California 91436 (“Property”), as well as related personal property. Compl., ¶12.

U.S. Bank now holds all rights and benefits of GAC under the Note, Loan Agreement, and Deed of Trust (collectively, “Loan Documents”). Compl., ¶13.

The Loan Agreement defines an Event of Default, in part, as a failure to pay all obligations by January 6, 2024 (“Maturity Date”). Compl., ¶ 15-16. Jamison failed to pay all obligations by the Maturity Date. Compl., ¶16. Rialto sent Jamison a letter (“Default Letter”) notifying Jamison of the Event of Default on January 8, 2024. Compl., ¶17. Jamison failed to make payments demanded by the Default Letter. Compl., ¶18.

The Deed of Trust grants U.S. Bank the right to apply for a receiver, and the right to enter and take possession of the Property as a remedy for an Event of Default. Compl., ¶¶ 19, 20. A receiver is necessary to preserve U.S. Bank’s rights in the Property by managing and operating the property, including by executing leases, enforcing, cancelling, and modifying existing leases, and collecting rents, income, earnings, and profits. Compl., ¶¶ 24-26.

U.S. Bank seeks the appointment of a receiver to take possession and manage the Property, collect rents and profits from the Property, market and sell the Property, and contract professionals to assist the receiver in the same. Prayer, First Cause of Action, ¶ 1-2. U.S. Bank also seeks an order enjoining Jamison from interfering with U.S. Bank or the receiver in managing the Property. Prayer, Second Cause of Action, ¶1. U.S. Bank further seeks any other relief the court deems just and proper. Prayer, All Causes of Action, ¶11.

A proof of service on file reflects service of the Complaint and Summons on Defendant Jamison by substituted service on January 27, 2025.

On March 18, 2025, the court granted U.S. Bank’s ex parte application for the appointment of Rude as Receiver and a temporary restraining order (“TRO”) in aid of Receiver, but only for the Property’s rents and profits. The court set a hearing date of April 8, 2025 for an order to show cause re: confirmation of the appointment of Receiver and foro expansion of Receiver’s duties to those of a capital receiver (“OSC”).

On March 24, 2025, Rude executed and filed his Oath of Receiver and posted his bond in the amount of $100,000.

On March 25, 2025, U.S. Bank filed a $15,000 undertaking for the TRO and a separate $15,000 undertaking for the ex parte application.

Receivers are agents of the court and may be appointed only when authorized by statute. Weil & Brown, California Procedure Before Trial, 9:734, 9(ll)-B (The Rutter Group 2018); see Marsch v. Williams, (1994) 23 Cal.App.4th 238, 245. The principal source of authority to appoint a receiver is Code of Civil Procedure section 564.[1] Marsch v. Williams, (1994) 23 Cal.App.4th 238, 245. Section 564(b) authorizes appointment of a receiver, inter alia, (1) “[i]n an action … between partners or others jointly owning or interested in any property or fund, … where it is shown that the property or fund is in danger of being lost, removed, or materially injured.”; (2)“[i]n an action by a secured lender for the foreclosure of a deed of trust or mortgage and the sale of the property upon which there is a lien under a deed of trust or mortgage, where it appears that the property is in danger of being lost, removed or materially injured.”; (6)“[w]here a corporation is insolvent, or in imminent danger of insolvency, or has forfeited its corporate rights.”; (9) “[i]n all other cases where necessary to preserve the property or rights of any party.”; and (11)“[i]n an action by a secured lender for specific performance of an assignment of rents provision in a deed of trust, mortgage, or separate assignment document”.

Upon default of the assignor under the obligation secured by the assignment of leases, rents, issues and profits, the assignee shall be entitled to enforce the assignment in accordance with Civil Code section 2938, including the appointment of a receiver. Civil Code §2938(c)(1).

The appointment of a receiver rests largely in the discretion of the trial court. Maggiora v. Palo Alto Inn, Inc., (1967) 249 Cal.App.2d 706, 710. Because the appointment of a receiver is a drastic remedy, courts will carefully weigh the propriety of such appointment, particularly if an alternative remedy is available. Hoover v. Galbraith, (1972) 7 Cal.3d 519, 528; City and County of San Francisco v. Daley, (1993) 16 Cal.App.4th 734, 745.

Whenever a receiver is appointed on an ex parte basis, the matter must be made returnable on an OSC why the appointment should not be confirmed. The OSC must be returnable no earlier than 15 days, and no later than 22 days, from the date the order was issued. CRC 3.1176(a).

The Property is located at 16530 Ventura Bouevard, Encino, California 91436. Touma Decl., ¶4. Jamison holds leasehold ownership of the Property. Touma Decl., ¶5.

On December 12, 2013, GAC loaned Jamison the amount of $21,000,000. Touma Decl., ¶6. Jamison executed the Note and the Loan Agreement between Jamison and GAC on the same day. Touma Decl., ¶6. The Note was secured by the DOT, both of which are dated December 12, 2013. Touma Decl., ¶¶ 6-7. The DOT granted GAC a first-priority lien and security interest against the Property, as well as related personal property. Touma Decl., ¶7.

Based on a May 6, 2024 assignment from GAG, U.S. Bank is the assignee and current beneficiary under the Loan Documents. Touma Decl., ¶9.

Jamison failed to pay the Loan on the January 6, 2024 Maturity Date, an Event of Default under the Loan Documents. Touma Decl., ¶¶ 11-12. Rialto provided the Default Letter to Jamison on January 8, 2024. Touma Decl., ¶12.

The Property has necessary maintenance estimated at or above $1,000,000. Touma Decl., ¶13. The Property and its rents are insufficient to satisfy the outstanding balance. Touma Decl., ¶13. Prior to the Default, the rents were insufficient to service the monthly debt payments and the Property operating expenses. Touma Decl., ¶13. U.S. Bank and Jamison have been unable to resolve the matter. Touma Decl., ¶13.

Rude has filed a declaration stating his qualifications as a receiver. Rude Decl., ¶¶ 6-8, Ex. A.

Jamison has indicated that it will consent to the appointment of a receiver. Touma Decl., ¶13.

Plaintiff U.S. Bank seeks confirmation of the court’s March 17, 2025 order appointing Rude as Receiver for the Property owned by Defendant Jamison for rents and profits, and for expansion of the Receivership to a capital receivership. No opposition is on file.

U.S. Bank relies on CCP section 564(b)(11), which authorizes the appointment of a receiver for collection of rent “[i]n an action by a secured lender for specific performance of an assignment of rents provision in a deed of trust, mortgage, or separate assignment document.” Mem. at 4.

U.S. Bank provides evidence that Jamison failed to pay the Loan by the Maturity Date, an Event of Default. As consideration for the Loan, Jamison executed the DOT in which it absolutely and unconditionally assigned the rents from the Property for the term of the Loan. Touma Decl., Ex. 4 §1.02. GAC then granted Jamison a revocable license to collect the rents so long as it was not in default under the Loan Documents. Id. Once Jamison defaulted, its right to collect rents was automatically revoked, and U.S. Bank now has the right to have those rents collected by a receiver who will manage the Property. See Touma Decl., Ex. 4, §7.01(j); Mem at 7.

U.S. Bank also relies on CCP section 564(b)(9), which empowers the court to appoint a receiver “where necessary to preserve the property or rights of any party.” See e.g., Rosenthal v. Rosenthal, (1966) 240 Cal.App.2d 927, 933 (recognizing that where a party’s conduct threatens to dissipate and waste assets, a receiver may be appointed). Mem. at 5.

The DOT expressly contemplates the appointment of a receiver upon an Event of Default by Jaison. Touma Decl., Ex. 4, §7.01(j). U.S. Bank provides evidence that Jamison failed to pay the Loan by the Maturity Date, an Event of Default. Additionally, Jamison has failed to properly maintain the Property and this lack of proper maintenance threatens to substantially and irreparably injure the Property’s value. Touma Decl., ¶13.

The Property is in danger of materially injured. Jamison has failed and continues to fail to perform necessary Property maintenance.

U.S. Bank contends that Rude is well qualified to act as Receiver. Mem. at 7. Jamison has not opposed, and has indicated consent to, the appointment of a Receiver. Touma Decl., ¶13.

The appointment of Rude as Receiver and expansion of the Receivership to a capital receivership is confirmed. U.S. Bank has not submitted a proposed receivership order for the expanded Receivership and is ordered to do so in two court days. A receivership status conference is set for October 9, 2025 at 9:30 a.m. U.S. Bank or Receiver shall file a status report two court days before the status conference.

[1] All further statutory references are to the Code of Civil Procedure unless otherwise stated.