Judge: Joel L. Lofton, Case: EC066784, Date: 2023-12-13 Tentative Ruling

Case Number: EC066784    Hearing Date: December 13, 2023    Dept: X

   Tentative Ruling

Judge Joel L. Lofton, Department X

HEARING DATE:     December 13, 2023                             TRIAL DATE:  November 9, 2022

CASE:                         TIEN KUANG LIU, an individual; PETER Y. SHAY, as Trustee of the Shay’s family trust; CHI-JEN YU, an individual; FRANK ZENG, an individual; PHILLIP LUC, an individual; and JACK C. LEE, an individual, v. TIN Y. YUNG, aka TIN YUA YUNG, aka TIN YUNG YUNG, an individual; ENTERPRISE REALTY INVESTMENT AND DEVELOPMENT GROUP, LLC, aka ERIDG, a California limited liability company; PASADENA OFFICOTEL ENTERPRISES, LLC, aka POE, a California limited liability company; and DOES 1-60, inclusive.

CASE NO.:                 EC066784

Consolidated Cases:    Amancio Mora v. Tin Y. Yung, Case No. EC068217

                                    Twen Ma v. Tin Y. Yung, Case No. 18GDCV00183

MOTION FOR APPOINTMENT OF A RECEIVER

MOVING PARTY:               Plaintiffs Tien Kuang Liu, Peter Y. Shay, Chi-Jen Yu, Frank Zeng, Phillip Luc, Jack C. Lee, Amancio Mora, Twen Ma, Rafael Mora, and Dennis Shay

RESPONDING PARTY:      Defendant Tin Yung

SERVICE:                              Filed November 15, 2023

OPPOSITION:                       Filed November 30, 2023

REPLY:                                   Filed December 6, 2023

RELIEF REQUESTED

             Plaintiffs move for an order appointing a receiver responsible for carrying out the dissolution of POE.

BACKGROUND

            This case arises out of a real estate development project that Plaintiffs allege to be a fraudulent scheme. Plaintiffs filed a FAC with twelve causes of action for (1) Breach of Contract; (2) Negligence; (3) Fraud; (4) Breach of Fiduciary Duty; (5) Conversion; (6) Aiding and Abetting Fraud; (7) Aiding and Abetting Conversion; (8) Civil Conspiracy; (9) Intentional Interference with Prospective Economic Relations; (10) Accounting; (11) Declarative Relief; (12) Judicial Dissolution.

TENTATIVE RULING

            Plaintiffs’ motion for the appointment of a receiver is GRANTED.

DISCUSSION

            Plaintiffs move for the appointment of a receiver for the dissolution of POE.

            “Upon the dissolution of any corporation, the Superior Court of the county in which the corporation carries on its business or has its principal place of business, on application of any creditor of the corporation, or of any stockholder or member thereof, may appoint one or more persons to be receivers or trustees of the corporation, to take charge of the estate and effects thereof, and to collect the debts and property due and belonging to the corporation, and to pay the outstanding debts thereof, and to divide the moneys and other property that shall remain over among the stockholders or members.” (Code Civ. Proc. § 565.) “The superior court's discretion to determine the necessity for the appointment of a receiver to dissolve a corporation is broad.” (Gold v. Gold (2003) 114 Cal.App.4th 791, 808.)

            The parties agree that the basis for dissolution of POE has been met, and this court may appoint a receiver for purposes of dissolving POE. Plaintiffs argue that the appointment of a receiver is proper here because Defendants have failed to provide a proper accounting and pending issues of ownership interests still exist.

            In opposition, Defendant argues that there is no sufficient basis for the appointment of a receiver here, relying on Medipro Medical Staffing LLC v. Certified Nursing Registry, Inc. (2021) 60 Cal.App.5th 622 (“Medipro”). Medipro is distinguishable from the present case. While the Court in Medipro did state that the appointment of a receiver is an “extraordinary” remedy that should be used sparingly, the Court’s analysis was applied in the context of an order appoint a receiver for the collection of a money judgment. (Id. at p. 628.) The applicable rule, as stated in Medipro, is that “the appointment of a receiver to enforce a money judgment is reserved for ‘exceptional’ circumstances where the judgment creditor's conduct makes a receiver necessary—and hence ‘proper.’ ” (Ibid.) Plaintiffs here are not seeking a receiver to enforce a money judgment but rather for the dissolution of POE.

            Defendant also argues that a receiver is unnecessary because he, his sister, and Victor Vera have properly managed POE and a receiver may not do as well. Defendant argues that a receiver may render the property “no longer self-sustaining”. Defendant’s arguments are speculative. Additionally, Defendant’s arguments go against the purpose of dissolution in the present matter. As POE was ordered to be dissolved, the issue is not whether POE will continue to be “self-sustaining” but rather how to wind down POE’s operations.

Section 8.3 of the operating agreement provides, in part, that upon the occurrence of an event initiating the dissolution, POE “shall continue solely for the purpose of winding up its affairs in an orderly manner, liquidating its assets, disposing of and conveying its property, collecting and diving its assets, satisfying the claims of creditors and prescribing and defending actions by or against company in order to collect and discharge obligations.” Section 8.4 of the operating agreement provides that the managers in charge of the dissolution “shall take full account of the liabilities of Company, and its assets, shall cause its assets to be liquidated as promptly as is consistent with obtaining the fair market value thereof, and shall cause the proceeds therefrom, to the extent sufficient therefor, to be applied and distributed as next provided.”

            Based on the parties’ assertions in their moving papers, it appears that the parties are still in the preliminary stages of attempting to dissolve POE. Plaintiffs assert that Defendants have failed to obtain the information necessary to begin dissolving POE, such as an appropriate accounting and a list of all creditors. Defendants assert that they are still in the process of gathering the information and no deadline has been agreed upon. Additionally, Defendant requests that Plaintiffs bear the cost of receivership but has not provided a reason why that should be the case. “ ‘Receivers are entitled to compensation for their own services and the services performed by their attorneys. [Citation.] Generally, the costs of a receivership are paid from the property in the receivership estate.’ ” (Southern California Sunbelt Developers, Inc. v. Banyan Limited Partnership (2017) 8 Cal.App.5th 910, 922.)

            Unfortunately, the acrimonious relationship between the parties has prevented the parties from meeting and conferring in good faith regarding the pending dissolution of POE.  The appointment of a receiver would remedy this issue.  At the hearing the court will discuss the scope of the receivers’ duties.  To this effect the Plaintiff has submitted a proposed order.

CONCLUSION

            Plaintiffs’ motion for the appointment of a receiver is GRANTED.

Dated:   December 13, 2023                                       ___________________________________

                                                                                    Joel L. Lofton

                                                                                    Judge of the Superior Court