Judge: Kerry Bensinger, Case: 21STCV25790, Date: 2025-01-07 Tentative Ruling

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Case Number: 21STCV25790    Hearing Date: January 7, 2025    Dept: 31

Tentative Order

Judge Kerry Bensinger, Department 31

HEARING DATE:     January 7, 2025                                             TRIAL DATE:  N/A

CASE:                                Old Goat Farms, LLC v. Alkhemist DM, LLC

CASE NO.:                      21STCV25790

MOTION FOR ORDER APPOINTING RECEIVER

MOVING PARTY:              Plaintiff Old Goat Farms, LLC

RESPONDING PARTY:     No opposition

I.          INTRODUCTION

This is a breach of contract and conversion case.  Plaintiff Old Goat Farms (Plaintiff or Old Goat) operates a cannabis cultivation farm.  Defendant Alkhemist DM, LLC (Defendant or Alkhemist) is in the business of “trimming” marijuana.  Plaintiff and Defendant entered into an oral and implied in fact contract.  The terms of the contract included: (1) in exchange for payment, Alkhemist would trim Old Goat’s cannabis product, which included accurately categorizing the product; (2) Alkhemist would account for and inventory the product; and (3) Alkhemist would store the cannabis safely and in a manner to prevent spoilation.  In early 2021, Old Goat suspected a significant inventory shortage and sued Alkhemist for missing and damaged product.

On July 13, 2021, Old Goat sued defendant Alkhemist.  The case was tried before the court in December 2023.  On August 15, 2024, the court rendered judgment against Alkhemist on both claims and awarded Old Goat compensatory damages, interest, and costs for a total judgment of $603,385.88.  Plaintiff is the judgment creditor and Defendant is the judgment debtor.

On September 3, 2024, Old Goat’s counsel requested payment of the judgment. In response, Alkhemist’s counsel stated only that Alkhemist would appeal.

On September 11, 2024, Alkhemist filed a Notice of Appeal.  Bond has not been posted.

On October 18, 2024, Old Goat filed this Motion for Order Appointing Receiver.

The motion is unopposed.

II.        LEGAL STANDARD

A receiver may be appointed by the court in which an action or proceeding is pending after judgment, to carry the judgment into effect or after judgment, to dispose of the property according to the judgment, or to preserve it during the pendency of an appeal, or pursuant to the Enforcement of Judgments Law (Title 9 (commencing with Section 680.010)), or after sale of real property pursuant to a decree of foreclosure, during the redemption period, to collect, expend, and disburse rents as directed by the court or otherwise provided by law.  (Code Civ. Proc. (CCP) § 564(b)(3)-(4).)  

The court may appoint a receiver to enforce the judgment where the judgment creditor shows that, considering the interests of both the judgment creditor and the judgment debtor, the appointment of a receiver is a reasonable method to obtain the fair and orderly satisfaction of the judgment.  (CCP § 708.620.)   

The Law Revision Commission[1] to CCP section 708.629 provides, in part:  

Section 708.620 supersedes portions of section 564 that authorized the appointment of a receiver to enforce a judgment.  It eliminates as a prerequisite to the appointment of a receiver a showing that a writ of execution has been returned unsatisfied or that the judgment debtor refuses to apply property in satisfaction of the judgment as formerly required by subdivision 4 of Section 564.  (See Olsan v. Comora (1977) 73 Cal.App.3d 642, 647.) 

A receiver may be appointed to sell real property under court supervision to enforce a judgment.  (Wells Fargo Financial Leasing. Inc. v. D & M Cabinets (2009) 177 Cal.App.4th 59, 70; People v. Riverside University (1973) 35 Cal.App.3d 572, 583.)  However, 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 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 court may not appoint a receiver to aid in the collection of a money judgment unless the record contains evidence that the judgment debtor has obfuscated or frustrated the creditor’s collection efforts and less intrusive collection methods were inadequate or ineffective.  (Medipro Medical Staffing, LLC v. Certified Nursing Registry, Inc. (2021) 60 Cal.App.5th 622, 624-25, 628 (Medipro).)  “In light of the sheer number of enforcement mechanisms to collect money judgments under the Enforcement of Judgments Law appointment of a receiver is rarely a ‘necessity’ and, … ‘may not ordinarily be used for the enforcement of a simple money judgment.’”  (Id. at p. 628.) 

III.       DISCUSSION

             Plaintiff and Judgment Creditor Old Goat applies for the appointment of a receiver pursuant to CCP section 564, after judgment, to carry the judgment into effect (subdivision (b)(3)) or pursuant to the Enforcement of Judgments of Law.  Old Goat argues the court should exercise its discretion to appoint the receiver because: (1) Alkhemist is an operating business that does not appear to own any real estate; (1) Alkhemist operates a cash business that is barred from depositing its funds into a financial institution where they could be subject to execution or levy; (3) Alkhemist’s business does not require much personal property of significant value, and (4) Old Goat has propounded post-judgment written discovery to ascertain whether Alkhemist has other assets or means to satisfy the judgment but does not expect to receive Alkhemist’s responses to that discovery.  (See Shuman Decl., ¶¶ 3-6.)  Accordingly, Old Goat contends a receiver is needed to assess whether Alkhemist’s assets would be sufficient to satisfy the judgment, or whether satisfaction of the judgment is best accomplished by a receiver keeping the business in operation and using any available portion of its income stream to satisfy the judgment.

            Upon review, the court finds “exceptional circumstances” exist to appoint a receiver.  Old Goat demonstrates, and Alkhemist does not dispute, that (1) Alkhemist does not possess real property which could be subject to execution or levy, and (2) Alkhemist’s marijuana trimming business is cash based and is thus precluded from depositing such funds into a financial institution which could likewise be subject to execution or levy.  Old Goat demonstrates there is no less intrusive collection methods available.  (Medipro, supra, 60 Cal.App.5th at pp. 624-25, 628.).  Further, the appointment of a receiver would serve Alkhemist’s interests in allowing Alkhemist to continue its business operations while steadily satisfying the judgment from Alkehmist’s income stream as opposed to obtaining any and all current assets of Alkhemist which could satisfy the judgment.

IV.       CONCLUSION 

Accordingly, the unopposed Motion for Order Appointing Receiver is GRANTED.

Moving party to give notice.

Dated:   January 7, 2025