Judge: Melissa R. Mccormick, Case: "Cheu v. Red Sun, LLC", Date: 2023-05-18 Tentative Ruling
Plaintiff The-Show Cheu’s Motion to Vacate Jury Trial or, in the alternative, for Bifurcation
Plaintiff The-Show Cheu moves for an order vacating the jury trial and setting the case for a court trial or, in the alternative, for an order bifurcating the court trial on the first cause of action for dissolution from the jury trial on the second and third causes of action for breach of fiduciary duty and breach of contract. The court addressed these issues in its May 11, 2023 order granting defendants’ motion for relief from waiver of a jury trial. See 5/11/23 Order. Plaintiff’s motion is denied as moot.
Defendants to give notice.
Plaintiff The-Show Cheu’s Motion to Appoint Receiver
Plaintiff The-Show Cheu moves for an order immediately appointing a receiver to administer defendant Red Sun, LLC. Plaintiff contends defendant The-Ming Cheu (plaintiff’s brother) has violated various provisions of the operating agreement of defendant Red Sun, LLC and has misappropriated funds from Red Sun. For the following reasons, plaintiff’s motion is denied.
The appointment of a receiver is a drastic remedy to be employed only in exceptional circumstances after a showing of compelling need. Hoover v. Galbraith (1972) 7 Cal.3d 519, 528; IFS Indus., Inc. v. Stephens (1984) 159 Cal.App.3d 740, 756 (the “provisional remedy of receivership is utilized sparingly and only upon a compelling showing of need” for the receiver). Because a receiver can represent an extravagant cost to a losing party, a court should carefully weigh whether appointing a receiver will yield a reasonably certain benefit to the requesting party. City & County of San Francisco v. Daley (1993) 16 Cal.App.4th 734, 744.
A court may appoint a receiver only on a ground specified by statute. Marsch v. Williams (1994) 23 Cal.App.4th 238, 245-48. An order appointing a receiver that is not based on statutory grounds exceeds the court’s jurisdiction and is void. Turner v. Superior Court (1977) 72 Cal.App.3d 804, 811.
California Civil Procedure Code § 564 sets forth the conditions under which a receiver may be appointed. Baron v. Fire Ins. Exch. (2007) 154 Cal.App.4th 1184, 1191. Plaintiff moves pursuant to sections 564(b)(1), 564(b)(6) and 564(b)(9).
Section 564(b)(1) provides that a court may appoint a receiver in an action between partners or others jointly owning or interested in any property or fund, on the application of the plaintiff or of any party whose right to or interest in the property or fund, or the proceeds thereof, is probable, and where it is shown that the property or fund is in danger of being lost, removed, or materially injured. The party seeking the appointment of a receiver must show “at least a probable right or interest in the property sought to be placed in receivership,” and that the property is in danger of destruction, removal or misappropriation. Maggiora v. Palo Alto Inn (1967) 249 Cal.App.2d 706, 711.
Section 564(b)(6) provides that a court may appoint a receiver where a corporation is insolvent, or in imminent danger of insolvency, or has forfeited its corporate rights.
Section 564(b)(9) provides that a court may appoint a receiver “[i]n all other cases where necessary to preserve the property or rights of any party.” Section 564(b)(9) cannot be invoked where the facts alleged bring the case within one of the other specific subsections of section 564. Dabney Oil Co. v. Providence Oil Co. (1913) 22 Cal.App. 233, 237; see also Marsch, 23 Cal.App.4th at 246 n.8 (“[section 564(b)(9)] has been given a sharply restricted interpretation and it may not be used to avoid a limitation imposed under another applicable subdivision of section 564”).
Plaintiff has not shown the necessary conditions for appointment of a receiver pursuant to sections 564(b)(1), 564(b)(6) and/or 564(b)(9). Plaintiff’s evidence, which consists of plaintiff’s sparse declaration and five exhibits, does not demonstrate exceptional circumstances and a compelling need for immediate appointment of a receiver. Hoover, 7 Cal.3d at 528; IFS Indus., 159 Cal.App.3d at 756.
Plaintiff’s request for judicial notice, set forth in plaintiff’s brief, is denied. See Cal. R. Ct. 3.1113(l) (“Any request for judicial notice must be made in a separate document listing the specific items for which notice is requested and must comply with rule 3.1306(c).”).
Plaintiff’s evidentiary objections were not material to the disposition of the motion.
Defendants to give notice.