Judge James C. Chalfant, Case Number: 25STCV03752, Date: 2025-06-03 Tentative Ruling

U.S. Bank National Association v. Javier Marquez, et al., 25STCV03752

Tentative decision on motion for appointment of receiver: granted

Plaintiff U.S. Bank National Association (“U.S. Bank”) moves for an order appointing a general purpose receiver for the property located at 3524 Union Pacific Avenue, Los Angeles, CA 90023 (“Property”), and for a preliminary injunction prohibiting Defendants Javier Marquez (“Marquez”) and Los Angeles County Department of Child Support Services (“DCSS”) from interfering with the receiver.

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

Plaintiff filed the Complaint on February 10, 2025 alleging causes of action for (1) judicial foreclosure; (2) specific performance, accounting, appointment of receiver; and (3) injunction in aid of receiver. The Complaint alleges in pertinent part as follows.

On or about August 18, 2009, U.S. Bank provided a loan to Marquez in the principal amount of $1,912,500 (“Loan”), evidenced by a Small Business Administration Note executed on August 18, 2009 for the same principal amount (“Note”). Compl., ¶7, Ex. 1. The Loan was collateralized by a Deed of Trust encumbering the Property (“DOT”) recorded on August 28, 2009 as Instrument No. 20091327049. Compl., ¶8, Ex. 2.

U.S. Bank advanced all sums due and performed all terms and conditions under the Note, the DOT, and all other documents executed in connection with the Loan (collectively, “Loan Documents”). Compl., ¶9. Marquez defaulted under the Loan Documents by, inter alia, failing to make payments due, failing to pay property taxes, and failing to provide required reporting information. Compl., ¶10.

On or about February 28, 2023, U.S. Bank notified Marquez of the default under the Loan by letter, demanding a cure and advising them of U.S. Bank’s election to accelerate the outstanding balance under the Note if Marquez failed to cure by March 28, 2023. Compl., ¶11, Ex. 3. Marquez did not cure by March 28, 2023. Compl., ¶11.

As of January 28, 2025, U.S. Bank has been damaged by Marquez’s defaults in an amount not less than $1,502,899.05: $1,216,565.49 in principal, $219,004.14 in interest, $59,935.98 in appraisal-related charges, and $7,393.44 in insurance charges. Compl., ¶12. This amount does not include fees and costs incurred by the Limited Purpose Receiver, attorney fees and costs, and other fees and costs incurred. Compl., ¶12. Interest, attorney fees and costs, and other fees and costs continue to accrue pursuant to the Loan Documents. Compl., ¶12.

On or around August 25, 2023, U.S. Bank began attempting to contact Marquez and his broker to request access to the Property to allow U.S. Bank to have an appraisal and environment inspection. Compl., ¶13. Marquez did not provide access, which constituted an additional default. Compl., ¶¶ 13-14.

Because of the defaults and Marquez’s continued non-communication, U.S. Bank filed a petition seeking appointment of a receiver for the limited purpose of conducting an appraisal and environment inspection in U.S. Bank National Association v. Javier Marquez, et al. (“Prior Action”), case no. 23STCV29651. Compl., ¶15.

On April 30, 2024, the court approved the appointment of David Stapleton (“Stapleton”) as Limited Purpose Receiver. Compl., ¶16. Stapleton achieved the limited purpose and so the court dismissed the action without prejudice and discharged him on September 24, 2024. Compl., ¶16.

Since the dismissal, U.S. Bank has made further unsuccessful attempts to contact Marquez regarding the Loan and Property. Compl., ¶17. On November 22, 2024, U.S. Bank notified Marquez that it would file this Complaint seeking judicial foreclosure and deficiency and appointment of a receiver with power to market and sell the Property, among other remedies. Compl., ¶18, Ex. 4. Marquez continues to be in default. Compl., ¶19.

U.S Bank seeks: (1) a judgement that Marquez’s rights, claims, and ownership are subject to the liens of the DOT; (2) a judgment for the foreclosure sale of the Property; (3) an order permitting U.S. Bank to become a purchaser at the foreclosure sale; (4) an order that, when the time for redemption has lapsed, the commissioner or trustee shall execute a deed to the purchaser of the Property at the foreclosure; (5) damages in the amount of the deficiency, together with fees, and expenses incurred in connection with the Prior Action and late charges, fees, and interest on the Loan according to proof; (6) attorney fees and costs of collection; (7) all costs incurred in connection with the sale and foreclosure; and (8) such other and further relief as the court may deem just and proper.

Proofs of service on file show Defendant Marquez was served by substituted service on April 3, 2025 and Defendant DCSS was served by personal service on March 21, 2025.

Proof of service on file shows Marquez and DCSS were served with the moving papers for this application by regular mail on April 22, 2025.

On May 13, 2025, Defendant DCSS disclaimed any interest in the Property and expressed no objection to U.S. Bank’s motions for appointment of a receiver and for a preliminary injunction.

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.

Once appointed, a receiver has, under the control of the court, power to bring and defend actions in his own name, as receiver; to take and keep possession of the property, to receive rents, collect debts, to compound for and compromise the same, to make transfers, and generally to do such acts respecting the property as the court may authorize. CCP §568.

An injunction is a writ or order requiring a person to refrain from a particular act; it may be granted by the court in which the action is brought, or by a judge thereof; and when granted by a judge, it may be enforced as an order of the court. Code of Civil Procedure (“CCP”) §525. An injunction may be more completely defined as a writ or order commanding a person either to perform or to refrain from performing a particular act. See Comfort v. Comfort, (1941) 17 Cal.2d 736, 741. McDowell v. Watson, (1997) 59 Cal.App.4th 1155, 1160.[1] It is an equitable remedy available generally in the protection or to prevent the invasion of a legal right. Meridian, Ltd. v. City and County of San Francisco, et al., (1939) 13 Cal.2d 424.

The purpose of a preliminary injunction is to preserve the status quo pending final resolution upon a trial. See Scaringe v. J.C.C. Enterprises, Inc., (1988) 205 Cal.App.3d 1536. Grothe v. Cortlandt Corp., (1992) 11 Cal.App.4th 1313, 1316; Major v. Miraverde Homeowners Assn., (1992) 7 Cal.App.4th 618, 623. The status quo has been defined to mean the last actual peaceable, uncontested status which preceded the pending controversy. Voorhies v. Greene (1983) 139 Cal.App.3d 989, 995, quoting United Railroads v. Superior Court, (1916) 172 Cal. 80, 87. 14859 Moorpark Homeowner’s Assn. v. VRT Corp., (1998) 63 Cal.App.4th 1396. 1402.

A preliminary injunction is issued after hearing on a noticed motion. The complaint normally must plead injunctive relief. CCP §526(a)(1)-(2).[2] Preliminary injunctive relief requires the use of competent evidence to create a sufficient factual showing on the grounds for relief. See e.g. Ancora-Citronelle Corp. v. Green, (1974) 41 Cal.App.3d 146, 150. Injunctive relief may be granted based on a verified complaint only if it contains sufficient evidentiary, not ultimate, facts. See CCP §527(a). For this reason, a pleading alone rarely suffices. Weil & Brown, California Procedure Before Trial, 9:579, 9(ll)-21 (The Rutter Group 2007). The burden of proof is on the plaintiff as moving party. O’Connell v. Superior Court, (2006) 141 Cal.App.4th 1452, 1481.

A plaintiff seeking injunctive relief must show the absence of an adequate damages remedy at law. CCP §526(4); Thayer Plymouth Center, Inc. v. Chrysler Motors, (1967) 255 Cal.App.2d 300, 307; Department of Fish & Game v. Anderson-Cottonwood Irrigation Dist., (1992) 8 Cal.App.4th 1554, 1565. The concept of “inadequacy of the legal remedy” or “inadequacy of damages” dates from the time of the early courts of chancery, the idea being that an injunction is an unusual or extraordinary equitable remedy which will not be granted if the remedy at law (usually damages) will adequately compensate the injured plaintiff. Department of Fish & Game v. Anderson-Cottonwood Irrigation Dist., (1992) 8 Cal.App.4th 1554, 1565.

In determining whether to issue a preliminary injunction, the trial court considers two factors: (1) the reasonable probability that the plaintiff will prevail on the merits at trial (CCP §526(a)(1)), and (2) a balancing of the “irreparable harm” that the plaintiff is likely to sustain if the injunction is denied as compared to the harm that the defendant is likely to suffer if the court grants a preliminary injunction. CCP §526(a)(2); 14859 Moorpark Homeowner’s Assn. v. VRT Corp., (1998) 63 Cal.App.4th 1396. 1402; Pillsbury, Madison & Sutro v. Schectman, (1997) 55 Cal.App.4th 1279, 1283; Davenport v. Blue Cross of California, (1997) 52 Cal.App.4th 435, 446; Abrams v. St. Johns Hospital, (1994) 25 Cal.App.4th 628, 636. Thus, a preliminary injunction may not issue without some showing of potential entitlement to such relief. Doe v. Wilson, (1997) 57 Cal.App.4th 296, 304. The decision to grant a preliminary injunction generally lies within the sound discretion of the trial court and will not be disturbed on appeal absent an abuse of discretion. Thornton v. Carlson, (1992) 4 Cal.App.4th 1249, 1255.

A preliminary injunction ordinarily cannot take effect unless and until the plaintiff provides an undertaking for damages which the enjoined defendant may sustain by reason of the injunction if the court finally decides that the plaintiff was not entitled to the injunction. See CCP §529(a); City of South San Francisco v. Cypress Lawn Cemetery Assn., (1992) 11 Cal.App.4th 916, 920.

On or about August 18, 2019, U.S. Bank loaned Marquez $1,912,500 secured by a DOT for the Property. Parra Decl., ¶¶ 3-4, Exs. 1-2.

On or around February 28, 2023, U.S. Bank notified Marquez by letter that he was in default under the Loan Documents for (1) failing to make payments due on the Note, (2) failing to pay property taxes, and (3) failing to provide required reporting information. Parra Decl., ¶5, Ex. 3. U.S. Bank demanded that Marquez cure the defaults by March 28, 2023 or it would elect to accelerate the Loan. Parra Decl., ¶5. Marquez did not cure, and U.S. Bank accelerated the Loan. Parra Decl., ¶5.

U.S. Bank filed the petition initiating the Prior Action. Parra Decl., ¶6. On April 30, 2024, the court approved the appointment of Stapleton as Limited Purpose Receiver. Parra Decl., ¶7. Under Stapleton’s direction, the appraisal and environment inspection occurred, and the Property was observed to be occupied by tenants. Parra Decl., ¶7. Having achieved its purpose, the receivership was discharged and the Prior Action dismissed without prejudice on September 24, 2024. Parra Decl., ¶7.

On November 22, 2024, U.S. Bank notified Marquez that it intended to file this Complaint seeking, inter alia, judicial foreclosure and deficiency and appointment of a general purpose receiver. Parra Decl., ¶8, Ex. 4. Based on communication with the Los Angeles County Tax Collector’s office (“Taxing Authority”) and public information made available through the Taxing Authority website, Marquez owes $282,069.51 in defaulted taxes on the Property through February 19, 2025. Parra Decl., ¶9. The Property may be auctioned by the Taxing Authority as early as April of 2025. Parra Decl., ¶9. Based on a title search, Marquez has allowed DCSS to place a lien on the Property. Parra Decl., ¶10.

Marquez continues to be in default under the Documents by (1) failing to make payments due on the Note beginning with the payment due in November of 2022, (2) failing to pay property taxes, (3) failing to provide required reporting information to U.S. Bank, (4) failing to remit rents collected in connection with the Property, (5) failing to provide evidence of insurance insuring the Property against damage or loss by casualty and, as a result, U.S. Bank has been required to obtain insurance on the Property for two years, and (6) failing to make all payments necessary to prevent the filing of liens against the Property. Parra Decl., ¶11.

As of January 28, 2025, U.S. Bank has been damaged by Marquez’s defaults under the Loan Documents in the sum of not less than $1,502,899.05, comprised of $1,216,565.59 in principal, $219,004.14 in interest, $59,935.98 in appraisal-related charges, and $7,393.44 in insurance charges. Parra Decl., ¶12. This sum does not include fees and costs incurred by Stapleton as Limited Purpose Receiver, and attorney fees and costs. Parra Decl., ¶12. Interest, attorney fees and costs, and other fees and costs continue to accrue pursuant to the Loan Documents. Parra Decl., ¶12.

Stapleton is available and prepared to act as a receiver for the Property. Stapleton Decl., ¶2. Stapleton is currently serving or has served as receiver in a variety of similar assignments, and is familiar with the processes and requirements of environmental testing of real property similar to the Property. Stapleton Decl., ¶3. Stapleton actively participates in the California Bankruptcy Forum, California Receiver’s Forum and Turnaround Management Association. Stapleton Decl., ¶4. He is also a featured speaker at various restructuring and real estate events. Stapleton Decl., ¶4.

Stapleton is not a party in this action, a person interested in this action, or related to any judge or commissioner of the court, and thus can be appointed as the receiver in this matter without written consent from the parties. Stapleton Decl., ¶5. Stapleton and his staff charge between $200 and $550 per hour to serve as receiver. Stapleton Decl., ¶6.

Plaintiff U.S. Bank moves for appointment of Stapleton as a general purpose receiver with authority to market and sell the Property. U.S. Bank relies on CCP section 564(b)(1), (2), and (9). Marquez does not oppose.

CCP section 564(b) provides that the court has authority to appoint a receiver (1) in an action by a creditor to subject any property or fund to the creditor's claim where it is shown that the property or fund is in danger of being lost, removed, or materially injured, (2) in an action by a secured lender for the foreclosure of a deed of trust and sale of property where it appears that the property 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.

U.S. Bank presents evidence that, on or about August 18, 2019, it loaned Marquez $1,912,500 secured by a DOT for the Property. Parra Decl., ¶¶ 3-4, Exs. 1-2. On or around February 28, 2023, U.S. Bank notified Marquez by letter that he was in default under the Loan Documents for (1) failing to make payments due on the Note, (2) failing to pay property taxes, and (3) failing to provide required reporting information. Parra Decl., ¶5, Ex. 3. U.S. Bank demanded that Marquez cure the defaults by March 28, 2023 or it would elect to accelerate the Loan. Parra Decl., ¶5. Marquez did not cure, and U.S. Bank accelerated the Loan. Parra Decl., ¶5.

U.S. Bank points out that Marquez is in default under the Loan Documents by virtue of his failure to: (1) make payments on the Loan as and when due; (2) pay property taxes; (3) maintain insurance on the Property; (4) provide Plaintiff with required reporting information; and (5) remit rents collected in connection with the Property. Mot. at 10.

U.S Bank shows that its security interests in the Property is being lost, removed, and materially injured as a result of Marquez’s failure to pay property taxes, thus allowing Los Angeles County’s tax liens to have priority to the DOT. If tax liens are foreclosed via tax sale, U.S. Bank’s security interest in the Property will be eviscerated. In addition, interest on the defaulted and delinquent taxes continues to accrue. Marquez is also putting the Property at significant risk by failing to insure it. U.S. Bank has had to place insurance on the Property for the last two years in order to protect it. Mot. at 12. Finally, Marquez has been allowing the occupation of the Property, and presumably collecting rents for the Property without remitting them to U.S. Bank in contravention of the DOT which expressly provides for the assignment of rents to U.S. Bank. Mot. at 12.

U.S. Bank notes that Marquez agreed to the appointment of a receiver in the event of his default in the DOT. This agreement constitutes a prima facie showing of entitlement to a receiver. Barclays Ciena of California v. Superior Court, (1977) 69 Cal.App.3d 593, 602. Mot. at 10.

U.S. Bank does not explain why it does not simply pursue a non-judicial foreclosure, but apparently it wants to pursue a deficiency judgment. That is its right. The motion for appointment of a receiver is granted. U.S. Bank nominates Stapleton, who is well qualified and is appointed as Receiver. A preliminary injunction in aid of the Receiver shall also issue. Bonds are required for the Receiver and the preliminary injunction. CCP §§ 529, 571. The court will discuss the necessary amounts with counsel at hearing.

U.S. Bank is directed to file a proposed Receiver appointment order on the appropriate Judicial Council form within the next three court days. A Receivership status conference is set for October 2, 2025 at 9:30 a.m. Receiver shall file a status report three court days beforehand.

[1] The courts look to the substance of an injunction to determine whether it is prohibitory or mandatory. Agricultural Labor Relations Bd. v. Superior Court, (1983) 149 Cal.App.3d 709, 713. A mandatory injunction — one that mandates a party to affirmatively act, carries a heavy burden: “[t]he granting of a mandatory injunction pending trial is not permitted except in extreme cases where the right thereto is clearly established.” Teachers Ins. & Annuity Assoc. v. Furlotti, (1999) 70 Cal.App.4th 187, 1493.

[2] However, a court may issue an injunction to maintain the status quo without a cause of action in the complaint. CCP §526(a)(3).

[3] U.S. Bank requests judicial notice of the following exhibits: (1) the petition filed on December 4, 2023 commencing the Prior Action (RJN Ex. 1); (2) an April 30, 2024 order in the Prior Action approving the appointment of Stapleton as a Limited Purpose Receiver (RJN Ex. 2); (3) a September 24, 2024 order dismissing the Prior Action without prejudice and discharging Stapleton as receiver (RJN Ex. 3). The requests are granted. Evid. Code §452(d).