Judge: Michael E. Whitaker, Case: 22SMCV01809, Date: 2025-01-09 Tentative Ruling

Case Number: 22SMCV01809    Hearing Date: January 9, 2025    Dept: 207

TENTATIVE RULING

MOTION

This case arises from a dispute over the sale and ownership of real property.  Defendant DH Distribution (“DH”) is a California Corporation, and owner of the title to the subject property.  The principal of DH, Defendant Sergey Menshikov (“Sergey”) currently resides in Russia with his daughter, Defendant Lucy Menshikova (“Lucy”).  Sergey’s daughter, Defendant Larissa Menshikova (“Larissa”) resides in Los Angeles and has acted as agent for Sergey and/or DH in managing and controlling the property.  (DH, Sergey, Lucy, and Larissa together, “DH Defendants.”)

Defendant Fred Behfarin (“Behfarin”) was a prospective purchaser of the property.  Behfarin has sued DH, Sergey, Lucy, Larisa, and Beverly Hills Escrow in related case 23STCV00692 to enforce a contract for him to purchase the property for $1,400,000.  In connection with that action, Behfarin recorded a lis pendens against the property and a Deed of Trust, securing a Note in the amount of $665,000 in connection with the sale that fell through.  Behfarin also recorded a Memorandum of Agreement. 

Plaintiffs State of California (“State”) and City of West Hollywood (“City”) (collectively, “Plaintiffs”) assert an interest in ensuring that vacant properties, such as the subject property, are maintained in accordance with state and local laws preventing nuisances or threats the public’s health and safety.

On October 6, 2023, the Court granted Plaintiffs’ request to appoint Receiver Blake Alsbrook (“Receiver”) on the grounds that Defendants lack the ability to preserve and manage the subject property, Plaintiffs had already exhausted all lesser remedies without success, and the subject property continued to deteriorate and pose an ongoing health and safety threat to the public during the pendency of the related cases.  (See October 6, 2023 Minute Order.)  On November 16, 2023, the Court appointed the Receiver to take possession and control of the subject property.

On February 9, 2024, the Court entered an order authorizing Receiver to (1) first offer Behfarin Specific Performance to purchase the subject property for $1,400,000; and (2) if Behfarin fails to timely perform, to hire a broker to market and sell the subject property to the highest bidder on the open market, with the sale subject to the final approval of the Court.  (See Order Authorizing Receiver to Sell Receivership Real Property, February 9, 2024.)

In June 2024, finding that Behfarin failed to specifically perform the agreement and purchase the subject property for the agreed-upon $1,400,000, the Court entered an order authorizing Receiver to sell the property to a third party for $2,090,000.  (See Order, June 21, 2024.)

Receiver now moves for an order:

(1)   Approving and settling Receiver’s final report and account

(2)   Approving and Settling Final Compensation and Reimbursement Costs for Receiver and Receiver’s professionals

(3)   Exonerating Receiver’s Bond

(4)   Terminating Receivership and Discharging Receiver from any further duties or responsibilities

(5)   Retaining Jurisdiction over any matters or claims concerning the receivership

(6)   Authorizing Receiver to discard all files and records regarding the receivership without shredding them; and

(7)   For such other orders as the Court deems proper

Behfarin and the DH Defendants separately respond to the Receiver’s motion and Receiver replies.

ANALYSIS

            In support of the motion, Receiver has provided the Declaration of Blake C. Alsbrook, informing the Court that the nuisance structures on the property have been demolished and the property was sold at an overbidding auction in June to a third party for $2,090,000.  (Alsbrook Decl. ¶¶ 18-19; 21-22.) 

            In July 2024, Behfarin filed a Petition for Writ of Mandate challenging the Court’s Order expunging Behfarin’s Lis Pendens, which was ultimately unsuccessful.  (Alsbrook Decl. ¶ 20.)  Escrow closed in or about September 2024, and the Receiver’s staff removed the security fence on the property and provided the new owner’s contact information to the City for future correspondence.  (Id. at ¶¶ 24-26.)

            The current balance of the receivership bank account was $1,466,414.54 as of November 20, 2024.  (Alsbrook Decl. ¶ 32.)

            Receiver has also provided billing statements for costs and fees incurred, indicating $9,021.02 is still due and owing.  In addition, DH Distribution submitted a claim for invoices for the payment of a professional security guard on the property prior to the receivership period in the amount of $49,255 (Alsbrook Decl. ¶ 33 and Ex. 5) and the City seeks $30,030 for its attorneys’ fees incurred in this action (Id. at ¶ 34), neither of which the Receiver opposes.  The City has also submitted the Declaration of William Litvak substantiating the requested $30,030.

            Receiver requests that the Court permit the disbursement from the receivership funds the $9,021.02 to Receiver for outstanding fees and costs; the $49,255 to DH for security of the subject property; and the $30,030 to City for attorneys’ fees.  (Alsbrook Decl. ¶ 36.)  As for the remainder of the funds, the Receiver requests instructions.

            Behfarin responds that he is entitled to $1,010,237.92 from the sale, by virtue of his claims in the related case, and therefore requests that this amount be disbursed to him.

            The DH Defendants also respond, requesting that the balance of funds be deposited with the Court pending the resolution of the related case on the merits. 

            No party objects to or opposes the Receiver’s accounting or the disbursement of $9,021.02 to the Receiver, $49,255 for DH Distribution’s professional security guard, or the City’s $30,030 in attorneys’ fees. 

            In Reply, the Receiver merely reiterates Behfarin’s and the DH Defendants’ positions, and declines to opine on the appropriate disbursement instructions for the remainder of the funds.

            Because the Receiver has supported its request for the above disbursements of $9,021.02, $49,255, and $30,030, and no party has opposed or objected to these disbursements, the Court approves them.

            Regarding the remainder of the funds, in light of the fact that Behfarin and the DH Defendants are involved in the related litigation concerning the funds at issue, the Court agrees with the DH Defendants that the appropriate course of action is to deposit the funds with the Court pending the resolution of related action.

CONCLUSION AND ORDER

Therefore the Court grants Receiver’s motion in its entirety.  In addition, the Court orders the Receiver to deposit forthwith with the Clerk of the Court the remainder of the receivership funds in the related action, 23STCV00692, pending resolution. 

Receiver shall provide notice of the Court’s ruling and file the notice with a proof of service forthwith. 

DATED:  January 9, 2025                                                      ___________________________

                                                                                          Michael E. Whitaker

                                                                                          Judge of the Superior Court