Judge James C. Chalfant, Case Number: 25STCV04262, Date: 2025-03-18 Tentative Ruling

Wilmington Trust Nat’l Assoc. v. Macerich SMP LP, 25STCV04262

Tentative decision on OSC re: confirmation of receiver: granted

Plaintiff Wilmington Trust National Association (“Wilmington”) seeks confirmation of the court’s February 24, 2025 order appointing Trigild IVL, LLC (“Trigild”) as Receiver for commercial property owned by Defendant Macerich SMP LP (“Macerich SMP”).

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

Wilmington commenced this proceeding on February 13, 2025, alleging causes of action for judicial foreclosure, appointment of receiver and injunctive relief, and specific performance. The verified Complaint alleges in pertinent part as follows.

On December 4, 2017, Wells Fargo Bank, National Association (“Wells Fargo”) loaned Macerich SMP in principal amount $300,000,000 (“Original Loan”). Compl., ¶9. Wells Fargo and Macerich SMP memorialized the Loan’s terms in a written agreement (“Original Loan Agreement”). Compl. ¶9; Ex. A.

On the same day, Macerich SMP executed and delivered to Wells Fargo a promissory note (“Note”) payable to Wells Fargo in the total amount, bearing interest and secured by property. Compl., ¶10; Ex. B. The Note is secured by the Fee and Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Finding (“Deed of Trust”) for several parcels of commercial real property in Santa Monica, CA (APN: 4291-026-026, 4291-026-023, 4291-026-025, 4291-026-916, and 4291-026-917) (the “Property”) owned by Macerich SMP. Compl., ¶6. The Deed of Trust was recorded on December 5, 2017 in the Official Records for the County of Los Angeles at Document No. 20171402898. Compl., ¶11; Ex. C. The Note is further secured by the Assignment of Leases and Rents from Macerich SMP to Wells Fargo and its successors and assigns, also recorded on December 5, 2017 at Document No. 20171402899. Compl., ¶12; Ex. D.

The Deed of Trust also serves as a security agreement and fixture filing under the Uniform Commercial Code for personal property located on or related to the property. (“Additional Collateral”). Compl., ¶13. Wells Fargo perfected its interest in the Additional Collateral by filing UCC-1 and UCC-3 Financing Statements. Compl., ¶13.

On or about December 4, 2017, The Macerich Partnership, L.P. (“Macerich Partnership”) executed a Guaranty of Recourse Obligations (“Guaranty Agreement”) with Wells Fargo. Compl., ¶14; Ex. E. Under the Guaranty Agreement, Macerich Partnership guaranteed to Wells Fargo and assigns payment and performance, as well as some of Macerich SMP’s obligations under the Original Loan Agreement. Compl., ¶14; Ex. E.

On December 21, 2017, Wells Fargo assigned the Loan to Wilmington with all its rights, obligations, and security interests including, but not limited to, the Note, the Deed of Trust, and the assignment of rents. Compl. ¶15; Ex. F. The assignment documents were recorded on January 5, 2018 at Document No. 20180016098. Compl., ¶15.

On December 9, 2022, Wilmington and Macerich SMP executed a Loan Modification and Extension Agreement, wherein, inter alia, they extended the Loan’s maturity date through December 2023, with two additional one-year extension options (“Loan Modification”). Compl., ¶16; Ex. G. Wilmington and Macerich SMP subsequently agreed to an additional extension through December 9, 2024, (“Maturity Date”). Compl., ¶17.

Macerich SMP failed to make multiple payments when due. Compl., ¶18. On May 23, 2024, Macerich SMP and Wilmington entered into a Cooperation Agreement. Compl., ¶18; Ex. H. The Cooperation Agreement provides that “In response, and giving due consideration to the needs of the Property, Lender is willing, subject to the terms herein, to fund the Lease-Related Expenses from Cash Collateral Funds, notwithstanding the Current EODs and Future EODs and its rights in relation thereto under the Loan Agreement.” Compl., ¶19; Ex. H. Wilmington did not release any rights relating to Macerich SMP’s existing or future defaults, but rather expressly is allowed to exercise its remedies for defaults at any time. Compl., ¶19. The Cooperation Agreement also provides that Macerich SMP will not oppose or object to Wilmington seeking and filing for appointment of a receiver for the Property. Compl., ¶19. Macerich SMP and Wilmington stipulated to a proposed order for appointment of the receiver. Compl., ¶19.

The Property includes substantial retail space, for which Macerich SMP has executed several leases (“Tenant Leases”) to several tenants (“Tenants”). Compl., ¶ 23-23. Macerich SMP is obligated under the Tenant Leases to make various improvements to the Property. Compl., ¶25. Failure to fulfill these obligations would allow Tenants to terminate their leases at no cost, which would significantly impact the value of the Property. Compl., ¶25.

In March 2024, Macerich SMP told Wilmington in writing that Macerich SMP would not make any further payments on the Loan, including not paying for landlord improvements as obligated under the Tenant Leases. Compl., ¶26.

On April 9, 2024, Macerich SMP missed its April 2024 Loan payment. Compl., ¶27. On April 23, 2024, Wilmington sent Macerich SMP a Notice of Default. Compl., ¶27; Ex. I. The Loan matured on December 9, 2024, and Macerich SMP has not repaid the loan. Compl., ¶28. Macerich SMP currently owes at least $335,893,029.65, exclusive of accruing interest, fees, attorney fees, and costs. Compl., ¶28.

A receiver is necessary in order to preserve the value of the property by fulfilling the landlord obligations under the Tenant Leases, as well as promptly accepting new lease requests in light of the Palisades Fire. Compl., ¶ 29-31. Based on Macerich SMP’s defaults, Wilmington is immediately entitled to collect rents and profits. Compl., ¶35.

On February 10, 2025, Wilmington and Macerich SMP stipulated for the immediate appointment of Trigild as Receiver.

On February 13, 2025, Wilmington filed the Complaint. Macerich SMP’s counsel accepted service of and received all pleadings. Beehler Decl., ¶3.

On February 24, 2025, this court heard Wilmington’s Ex Parte Application for, inter alia, immediate appointment of a receiver. The court appointed Trigild as Receiver subject to submission of an amended proposed order. The court set a hearing date of March 18, 2025 for an order to show cause re: confirmation of receiver (“OSC”).

On February 27, 2025, Wilmington filed an undertaking for $15,000 for the ex parte application as required by the court’s order.

On March 4, 2025, Trigild, by and through Neilson, filed an undertaking for $500,000 for the Receivership as required by the court’s order.

On March 5, 2025, Wilmington filed an undertaking for $15,000 for the injunctive relief as required by the court’s order.

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 or 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 this section. On and after the date the assignee takes one or more of the enforcement steps described in this subdivision, the assignee shall be entitled to collect and receive all rents, issues, and profits that have accrued but remain unpaid and uncollected . . . The assignment shall be enforced by one or more of the following: (1) 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 order to show cause (“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).

On December 4, 2017, Wells Fargo loaned Macerich SMP the Original Loan in principal amount $300,000,000. Mendelsohn Decl., ¶2. Wells Fargo and Macerich SMP memorialized the Loan’s terms in the written Original Loan Agreement. Mendelsohn Decl., ¶2; Ex. A.

On the same day, Macerich SMP executed and delivered the Note to Wells Fargo. Mendelsohn Decl., ¶3; Ex. B. The Note is secured by the Deed of Trust, recorded on December 5, 2017 in the Official Records for the County of Los Angeles at Document No. 20171402898. Mendelsohn Decl., ¶4; Ex. C. The note is further secured by the Assignment of Leases and Rents Macerich SMP executed for Wells Fargo and its successors and assigns, also recorded on December 5, 2017 at Document No. 20171402899. Mendelsohn Decl., ¶6; Ex. D.

The Deed of Trust indicates in section 1.1 that the Loan is secured by, among other things, Santa Monica Place; the ground leases thereon; all additional lands, estates and development rights acquired after execution of the Deed of Trust; improvements on and to the Property; easements on the Property; leases and rents; and equipment, fixtures, and personal property. Mendelsohn Decl., ¶5. Therefore, the Deed of Trust also serves as a security agreement and fixture filing under the Uniform Commercial Code for the Additional Collateral, for which Wells Fargo filed UCC-1 and UCC-2 Financing Statements. Mendelsohn Decl., ¶5.

On or about December 4, 2017, The Macerich Partnership, L.P. the Guaranty Agreement with Wells Fargo. Mendelsohn Decl., ¶7; Ex. E. Under the Guaranty Agreement, Macerich Partnership guaranteed to Wells Fargo and assigns payment and performance, as well as some of Macerich SMP’s obligations under the Original Loan Agreement. Mendelsohn Decl., ¶7; Ex. E.

On December 21, 2017, Wells Fargo assigned the Loan to Wilmington with all its rights, obligations, and security interests including, but not limited to, the Note, the Deed of Trust, and the ALR. Mendelsohn Decl., ¶8; Ex. F. The assignment documents were recorded on January 5, 2018 at Document No. 20180016098. Mendelsohn Decl., ¶8.

On December 9, 2022, Wilmington and Macerich SMP executed the Loan Modification and Extension Agreement, wherein they, inter alia, extended the Loan’s maturity date through December 2023, with two additional one-year extension options (“Loan Modification”). Mendelsohn Decl., ¶9; Ex. G. Wilmington and Macerich SMP agreed to an additional extension through the Maturity Date. Mendelsohn Decl., ¶9.

Macerich SMP failed to make multiple payments when due. Mendelsohn Decl., ¶10. Macerich SMP and Wilmington entered into a Cooperation Agreement on May 23, 2024. Mendelsohn Decl., ¶10; Ex. H. The Cooperation Agreement, Macerich admits defaults, including failure to make payments and to fully pay by the Maturity Date. Mendelsohn Decl., ¶10; Ex. H. The Cooperation Agreement permits Wilmington to seek appointment of a receiver, including seeking such ex parte. Mendelsohn Decl., ¶10.

The Property includes substantial retail space, for which Macerich SMP has executed several Tenant Leases to several Tenants. Mendelsohn Decl., ¶ 12-20. Macerich SMP is obligated under the Tenant Leases to make various improvements to the Property. Mendelsohn Decl., ¶13. Failure to fulfill these obligations would allow Tenants to terminate their leases at no cost, which would significantly impact the value of the Property. Mendelsohn Decl., ¶13.

On April 9, 2024, Macerich SMP missed its April 2024 Loan payment. Mendelsohn Decl., ¶15. On April 23, 2024, Wilmington sent Macerich SMP a Notice of Default indicating Macerich SMP was in continuing default. Mendelsohn Decl., ¶15; Ex. I.

A receiver is necessary in order to preserve the value of the Property by fulfilling the landlord obligations under the Tenant Leases, as well as promptly accepting new lease requests in light of the Palisades Fire. Mendelsohn Decl., ¶ 18-20, 23.

Wilmington and Macerich SMP have stipulated to the appointment of a receiver. Mendelsohn Decl., ¶21.

Plaintiff Wilmington seeks confirmation of the court’s February 24, 2025 order appointing Trigild as Receiver for the Property owned by Defendant Macerich SMP. No opposition is on file and, in fact, Macerich SMP stipulated to appointment of the Receiver.

Wilmington 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 18.

The Deed of Trust expressly contemplates the appointment of a receiver upon an Event of Default by Macerich SMP. Mendelsohn Decl., Ex. C (Deed of Trust) §7.1(g). Macerich SMP not only admits that it caused—and continues to cause—an Event of Default by its failure to make monthly Loan payments, it has also made clear that it will not satisfy its obligations under the Loan Documents or the third party leases on the Property that require it to make those certain Landlord Improvements. (See Mendelsohn Decl., ¶14. These Events of Default will substantially and irreparably damage the Property’s value if those high-value anchor tenants, like Club Studio, terminate their leases for Macerich SMP’s failure to perform Landlord Improvements. See id., ¶¶ 22, 23. Thus, Wilmington is entitled to appointment of a receiver to manage the Property. Mem. at 20.

Wilmington also relies on CCP section 564(b)(11), which explicitly authorizes the appointment of a receiver for collection of rent: “In 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 20.

As consideration for the Loan, Macerich SMP executed the Deed of Trust in which it absolutely and unconditionally assigned the Rents from the Property for the term of the Loan. Mendelsohn Decl., at ¶4. Original Lender then, in turn, granted Macerich SMP a revocable license to collect the Rents so long as it was not in default under the Loan Documents. Id. Once Macerich defaulted, its right to collect rents was automatically revoked, and Wilmington now has the right to have those rents collected by a receiver who will manage the Property. See Mendelsohn Decl., Ex. C §§ 7.1(e), (h)). Mem. at 21.

Wilmington further relies on CCP section 564(b)(2), which provides that a lender may obtain appointment of a receiver “[i]n an action by a secured lender for the foreclosure of a deed of trust or mortgage and sale of 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, or that the condition of the deed of trust or mortgage has not been performed, and that the property is probably insufficient to discharge the deed of trust or mortgage debt.” Receiverships, Cal. Prac. Guide Civ. Pro. Before Trial Ch. 9(11)-B, (June 2024 Update) (recognizing appointment of a receiver is appropriate and material harm or injury may be found “[w]here mortgaged property is being foreclosed and … is probably insufficient to pay the debt.”). Mem. at 22.

The Property is in danger of being lost, or materially injured. Macerich SMP has indicated it does not intend to perform under its third-party leases. If it fails to complete construction and deliver the leased premises to Club Studio, then this key tenant would have a right to terminate the Lease, thus causing tens of millions of dollars in damage to Lender’s collateral. Furthermore, Macerich SMP failed to diligently pursue requisite approvals from the City of Santa Monica and Costal Commission for digital signage, which represents a significant amount of potential revenue for the Property. Mem. at 22.

Last, Wilmington contends that Trigild is well qualified to act as Receiver. Mem. at 21-22.

The appointment of Trigild as Receiver is confirmed. A receivership status conference is set for September 9, 2025 at 9:30 a.m.

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