Judge: Mark A. Young, Case: 22SMCV01841, Date: 2023-12-12 Tentative Ruling

Case Number: 22SMCV01841    Hearing Date: December 12, 2023    Dept: M

CASE NAME:           Cutter Mill Credit LA LLC, v. Aeon Botanika Los Angeles, Inc., et al.

CASE NO.:                22SMCV01841

MOTION:                  Motion for Order Approving Final Report and Discharging Receiver

HEARING DATE:   12/12/2023

Legal Standard

            A receiver must present by noticed motion or stipulation of all parties: (1) a final account and report; (2) a request for the discharge; and (3) a request for exoneration of the receiver's surety.  (CRC 3.1184(a).)  Notice of the motion or of the stipulation must be given to every person or entity known to the receiver to have a substantial, unsatisfied claim that will be affected by the order or stipulation, whether or not the person or entity is a party to the action or has appeared in it.  (CRC 3.1184(c).) Any objections must be brought at the discharge hearing, otherwise they are waived. (Aviation Brake Systems, Ltd. v. Voorhis (1982) 133 Cal.App.3d 230, 232, 235.) The trial court has the discretion to fix the compensation for a receiver. (Melikian v. Aquila, Ltd. (1998) 63 Cal.App.4th 1364, 1368.) Generally, a receiver's compensation is chargeable on and is to be paid from the fund in the receiver's possession. (Stanton v. Pratt (1941) 18 Cal.2d 599, 603 [if the fund be insufficient, “he may then look to the parties at whose instance he was appointed”].)

Receivers are entitled to compensation for their own services and the services performed by their attorneys. (Venza v. Venza (1951) 101 Cal.App.2d 678, 680.)¿Generally, the costs of a receivership are paid from the property in the receivership estate. (Andrade v. Andrade (1932) 216 Cal. 108, 110.) In the court’s discretion, the receiver costs may be imposed on a party who sought the appointment of the receiver or who benefited from the receivership. (Baldwin v. Baldwin (1947) 82 Cal.App.2d 851, 856.)¿

Analysis

Court-appointed Receiver Ryan C. Baker moves for approval of his final report, discharge of the receivership, exoneration of the receiver’s bond and approval of the receiver’s final request for attorneys’ fees.

            The instant motion is unopposed. In the Receiver’s Final Account and Report, as well as the Receiver’s prior nine monthly reports, the Receiver demonstrates that he has fulfilled his appointed duties to safeguard and maximize value of the receivership property for the secured creditor’s benefit. Specifically, the Receiver’s declaration and reports show that he fulfilled: (1) maintaining and marketing the Licenses; (2) obtaining the City’s and the Court’s approval to sell the Licenses; (3) completing a sale of the Licenses and other personal property to a buyer who was qualified to operate a cannabis retail operations and completed construction on the Premises; and (4) administering the remaining assets by assigning such assets to the Plaintiff in partial satisfaction of its Aeon Loan. (Baker Decl., ¶ 11.) The Receiver was able to realize significant recovery for Aeon WeHo’s secured creditor. (¶ 12.) The Court concurs that without the Receiver’s actions, the Licenses would have likely had zero value to the estate.

As to fees, the Receiver’s counsel, ArentFox Schiff LLP, provided monthly invoices. Such invoices were covered by the monthly Receiver Reports and were paid without objection by the Receiver. (Baker Decl., ¶ 16.) Since the inception of the receivership case on October 13, 2022, through October 31, 2023, the Receiver incurred $216,778.07 in fees and expenses. (Baker Decl., ¶ 14.) Of these fees, $209,291.31 are paid, leaving an unpaid balance of $5,176.76. (Id.) Since its engagement in March 2023, ArentFox incurred $216,710.95 in fees and expenses. (Baker Decl., ¶ 15.) Of these fees, $214,571.45 have been paid, leaving an unpaid balance of $2,139.50. (Id.) The details of the fees and costs incurred by the Receiver and his counsel for the period October 2022 through October 2023 have been circulated to the Plaintiff through the Receiver’s monthly reports filed with the Court. As noted, there are no objections submitted to the fees and expenses of the Receiver and his counsel. Reviewing the records, and given the success of the receivership, the Court finds these fees reasonable and approves payment of the unpaid balances identified above.

The Receiver established a reserve of $800,000. The Court approves the Receiver’s authority to disburse the remaining reserve funds to Plaintiff after payment of all administrative expenses, including the Receiver’s and his professional’s fees and costs.

Receiver also demonstrates that all interested persons have been given notice of this motion. (Baker Decl., ¶ 17.)

Accordingly, the Court will approve the Final Report and Accounting, fully discharge the Receiver, and exonerate his bond as requested.