Judge: Michael E. Whitaker, Case: 24SMCV02422, Date: 2024-09-23 Tentative Ruling

Case Number: 24SMCV02422    Hearing Date: September 23, 2024    Dept: 207

TENTATIVE RULING

BACKGROUND

This case arises from a dispute regarding competing claims on the property located at 9996 Sunset Boulevard.  On May 21, 2024, Plaintiff 9996 Sunset Properties, LLC (“Plaintiff”) filed suit for declaratory relief against Defendants 9996 Sunset Loan Acquisition, LLC and Fidelity National Title Company. 

On July 18, 2024, Defendant 9996 Sunset Loan Acquisition filed a cross-complaint against Cross-Defendant LACC 9996, LLC and Plaintiff for (1) judicial foreclosure; (2) specific performance; and (3) injunctive relief.

On July 23, 2024, pursuant to the parties’ stipulation, David Stapleton was appointed as receiver over the property.

Defendant and Cross-Complainant 9996 Sunset Loan Acquisition, LLC (“Defendant”) moved ex parte for an order to show cause re contempt against the occupants/trespassers on the property (1) Kayasan Ghassemi-nejad; (2) Behnam Ghassemi-nejad; and (3) K3B Enterprises, LLC for failure to comply with the July 23, 2024 receivership order, which the Court granted and set the order to show cause for hearing.

On August 21, 2024, the non-party occupants Behnam Ghasseminejad; Kaysan Ghassemi-Najad; and K3B Enterprises LLC (collectively, “Occupants”) moved to intervene, to vacate the order appointing a receiver, and to dismiss the case.  Defendant and Cross-Complainant opposes the motion to intervene, vacate, and dismiss.  The Receiver and Cross-Defendant LACC 9996, LLC have each filed joinders in the opposition.  The Occupants have replied.

LEGAL STANDARD – CONTEMPT

Disobedience of any lawful judgment, order, or process of the court constitutes contempt of the legal authority of the court.  (Code Civ. Proc., § 1209, subd. (a)(5).)

“When the contempt is not committed in the immediate view and presence of the court, or of the judge at chambers, an affidavit shall be presented to the court or judge of the facts constituting the contempt, or a statement of the facts by the referees or arbitrators, or other judicial officers.”  (Code Civ. Proc., § 1211, subd. (a).) 

“Upon the answer and evidence taken, the court or judge shall determine whether the person proceeded against is guilty of the contempt charged, and if it be adjudged that the person is guilty of the contempt, a fine may be imposed on the person not exceeding one thousand dollars ($1,000), payable to the court, or the person may be imprisoned not exceeding five days, or both. In addition, a person who is subject to a court order as a party to the action, or any agent of this person, who is adjudged guilty of contempt for violating that court order may be ordered to pay to the party initiating the contempt proceeding the reasonable attorney’s fees and costs incurred by this party in connection with the contempt proceeding.”  (Code Civ. Proc., § 1218, subd. (a).) 

“The judgment and orders of the court or judge, made in cases of contempt, are final and conclusive.”  (Code Civ. Proc., § 1222.) 

“Where the primary object of contempt proceedings is to protect the rights of litigants, the proceedings are regarded as civil in character. On the other hand, where the object of the proceedings is to vindicate the dignity or authority of the court, they are regarded as criminal in character even though they arise from, or are ancillary to, a civil action.”  (In re Nolan W. (2009) 45 Cal.4th 1217, 1236.)  Thus, “[c]ivil contempt is a forward-looking remedy imposed to coerce compliance with a lawful order of the court.”  (Ibid.)  By contrast, “criminal contempt may be used to punish past conduct in violation of a court order.”  (Id. at p. 1237.)

DISCUSSION

            The Court’s July 23, 2024 Order Appointing Receiver provides, “Subject to the requirements in this Order, the Receiver shall have the power to take all lawful actions necessary to seek and/or effectuate the removal of any and all unauthorized occupants on the Property, including, but not limited to, lawsuits to remove such occupants.”  (Minute Order, Jul. 23, 2024 at p. 4.)   The Order further provides:

All Parties, and/or current owners or occupants of the Property, their agents, servants, employees or representatives, or all persons or entities acting under or in concert with them, now in possession of any part of the Property and not holding under valid leases, or rental agreements, shall forthwith surrender their possession thereof to said Receiver, and that all tenants or lessees in possession of any part of the Property, and such other persons or entities as may be lawfully in possession thereof, are hereby directed to attorn as tenants, or lessees to said Receiver, and until further order of this Court, to pay over to said Receiver all rents, issues, income profits, revenues, and lease payments of the Property now due and unpaid or that may be hereafter become due, and all persons and entities liable for such rents, issues, income, profits, revenues, royalties or lease payments are hereby enjoined and restrained from paying any rents, issues, income, profits, revenues, royalties, storage unit rentals or lease payments for the Property to any Party or owner of the Property, their agents, servants, or attorneys. 

Access:

All persons occupying the Property, including, without limitations, any lawful tenant or otherwise, shall immediately provide Receiver and its officers, employees and agents, access to the Property to enable them to view and inspect Property for the purposes of appraisal, marketing and potential sale.

[…]

            IT IS FURTHER ORDERED that all Parties or owners or occupants of the Property, and their agents, employees and representatives, and all persons or entities acting under or in concert with them, are restrained and enjoined from engaging in or performing, directly or indirectly, any or all of the following acts:

            Committing or permitting any waste on the Property or any act on the Property in violation of law or removing, encumbering, or otherwise disposing of any of the fixtures on the Property;

            Demanding, collecting, receiving or in any other way diverting or using any of the rents, issues, income, profits, revenues, royalties or lease payments emanating from the Property;

            Interfering with or hindering in any way whatsoever the Receiver in the performance of the Receiver’s duties herein described and in the performance of any duties incident thereto;

            Interfering in any manner with the Property, including their possession;

            Being on the Property or communicating with any staff, vendors, employees etc. of the Receiver in connection with the Property without the Receiver’s written consent, which consent will not be unreasonably withheld after no less than twenty-four (24) hours’ prior written notice to the Receiver;

            Transferring, conveying, assigning, pledging, deeding, selling, renting, leasing, encumbering, changing ownership of, vesting of title to, or otherwise disposing of the Property without a prior order from this Court;

            Terminating or otherwise adversely affecting any of the utilities which service the Property; and/or

            Doing any act that will impair the preservation of the Property or Lender’s interest in the Property.

(Minute Order, July 23, 2024, at pp. 10-12.)

In support of Defendant’s request for contempt, Defendant has provided the Declaration of Michael A. Abromson, which provides:

6. Shortly after entry of the Order, the Receiver signed the retainer agreement with my office in the form that this Court approved in the process of the Receiver’s appointment, and I am therefore currently employed by, and currently act as counsel for the Receiver for the purposes set forth in the Order, i.e., to take any and all actions to remove any and all unauthorized persons in possession of the Property.

7. Since my engagement as counsel, I have worked with David Keiffer, the Receiver’s Senior Managing Director, and Justin Picardi, the Receiver’s Associate Director, in connection with the Receiver obtaining immediate turnover of the Property (as described in Pages 3 and 4 of the Order). The Order directs the Receiver to take all lawful actions to remove any and all unauthorized occupants on the Property; and provides powers for the Receiver to access to the Property.

8. To that end, the Receiver has undertaken implementing the injunctive relief as set forth on Pages 9 through 12 of the Order to aid in the conduct of the receivership. Specifically, for parties and third parties with notice of the Order, it requires “immediate turnover of possession of the Property to the Receiver,” to allow the Receiver’s “inspection, appraisal, and marketing for potential sale.” See Order (Ex. 1), Page 10, lines 14-25 & 27-28, and Page 11, line 1-2.

[…]

10. On July 30, 2024, the Receiver requested that licensed process server “ASAP Legal” (“ASAP”) serve the Order (Ex. 1) and a Notice of Inspection on any occupants of the Property (the “Notice of Inspection”). A true and correct copy of the Notice of Inspection is attached hereto as Exhibit 2.

11. On July 30, 2024, ASAP served the Order and Notice of Inspection by posting at the Property. A true and correct copy of ASAP’s proof of posting these documents is attached hereto as Exhibit 3.

12. Later that day, the Receiver and counsel for Plaintiff received a letter from attorney Anthony Egbase, stating that his office was retained by Kaysan Ghassemi-nejad, Behnam Ghassemi-nejad, and K3B Enterprises, LLC (the “Occupants”). A true and correct copy of that letter is attached as Exhibit 4. Attorney Egbase confirms in Paragraph 2 of his letter (Ex. 4) that the Occupants did in fact “receive” the 24-hour Notice of Receiver’s Intent to Enter and the Order, and he confirms that each of the Occupants are “in possession” of the Property.

Meet & Confer with Occupants’ Counsel to Obtain Access and Turnover of the Property is Unsuccessful.

13. On or about 5:30 p.m. on July 30, 2024, I called Mr. Egbase and left a detailed voicemail requesting his and his clients’ cooperation with the Property inspection which was noticed by the Receiver for the next morning, July 31, 2024. I embodied that voicemail in my

email sent to Mr. Egbase at approximately 6:14 p.m. A true and correct copy of that email is attached hereto as Exhibit 5. I stated that the Receiver sought compliance with the Order, specifically turnover of the Property and immediate access thereto for purposes of inspection. I

offered to coordinate a different date if July 31, 2024 was not available. I stated that, in any event, the inspection would need to take place on or before August 2, 2024 (see Ex. 5).

14. At or about 9:30 a.m., on July 31, 2024, I received a return call from the Occupants’ counsel, Mr. Egbase. I again advised him that the Receiver would be at the Property at 10:00 a.m. that day, per the Notice. I asked him whether his clients would cooperate and he responded that he would call his clients to ask.

15. Approximately 15 minutes later, Mr. Egbase called me back and said the Occupants would not permit access. I asked him for an alternative date for inspection and turnover, and he did not respond. I further asked him to identify who occupied the Property, whether there was any lease to any occupant and whether the Property generated any income. He responded that he did not know the names of the other parties occupying the Property, but believed that they were “family members” of his clients, and that none were paying any rent.

16. I then wrote Mr. Egbase an email confirming our July 31, 2024 conversation. I attached another copy of the Receiver’s Order to that email. Attached hereto as Exhibit 6 is a true and correct copy of my July 31st email to Mr. Egbase. Attached as Exhibit 7 is a true and correct Proof of Service reflecting the additional service of the Order upon the Occupants.

17. In my July 31, 2024 email, I again reiterated the Receiver’s requests for: (1) an insurance certificate; (2) identification by name of all other occupants in the Property; and (3) a description of all business-related activities taking place on the Property.

18. Despite this detailed meet & confer, I did not receive any further response from Mr. Egbase on July 31st or at any time thereafter.

The Occupants Refuse Access to the Property.

19. As he noticed that he would do, the Receiver’s representatives did in fact arrive at the Property at 10:00 a.m., July 31st, as per the Notice (Ex. 2). As set forth in the Picardi Decl., the Receiver’s representatives attempted at that time to gain entry to the Property, but the Occupants refused to allow access. Picardi Decl., ¶¶ 2-9. This was despite the fact that the Receiver’s representatives saw a car parked in the drive-way of the Property. Id., ¶ 6.

A Third Attempt to Obtain Agreement for Access is Unsuccessful.

20. Having not received any response or any alternative inspection dates from Occupants’ counsel on July 31 or August 1, I wrote a third meet & confer email to Mr. Egbase, on August 2, 2024. A true and correct copy is attached hereto as Exhibit 8. In that email, I once again reiterated the Receiver’s requests for turnover of the Property, insurance information, the names of all occupants, an immediate inspection date, and other relevant information per the Order. I also highlighted the Occupants’ refusal to permit the inspection and refusal to provide alternative dates.

21. I stated clearly that the deadline for receipt of this information was the morning of Monday, August 5, 2024. That date has come and gone without any response or inspection dates from the Occupants or their counsel.

22. Having received no cooperation (or even a response), the Receiver understands that the Occupants are willfully refusing to comply with the Order despite adequate notice and knowledge of their obligations thereunder.

23. Based upon the Occupants’ outright refusal to comply with any of the terms of the Order, the Receiver requested that the party which sought his appointment and issuance of the Order – defendant and cross-complainant Sunset – seek enforcement of the Order by way of a contempt action against the intransigent and uncooperative Occupants. This Declaration (as well as the Picardi Decl.), are provided at Sunset’s request to facilitate Sunset’s pursuit of appropriate relief to effectuate the purposes of the Order.

A Fourth Attempt to Identify the Occupants is Unsuccessful.

24. I again wrote the occupant’s counsel on August 7, 2024 demanding cooperation in identifying all occupants on the Property. I also called Mr. Egbase and had a further meet and confer conversation at noon on August 7th. I again asked Mr. Egbase to perform whatever investigation was necessary in order to identify the occupants of the Property. He stated it was “not his duty to investigate.” He further stated he had transmitted my requests to his clients for response. I have not received any response.

25. I also pointed out there was evidence of video streaming on the Property and “gaming” as noted in the Picardi Decl.

26. I also sent Mr. Egbase a further fourth demand to cooperate, investigate and provide the names of all occupants. A true and correct copy of the email is attached hereto as Exhibit 9. In that email I also demanded that any video streaming, gaming, and any other such activities cease at once. I received no response to that email.

(Abramson Decl. ¶¶ 6-8, 10-26.)

            Defendant has also provided the declaration of Justin Picardi, the Associate Director of Stapelton Group, the receiver, which provides:

3. As set forth in the Order, the Receiver is charged with various critical duties with respect to the Property, including the responsibility to take immediate possession, management, and control of the Property. See Order, at page 3 lines 19-20. Additionally, the Receiver is charged with collecting any and all income from the Property, taking proper care of the Property, and the removal of all unauthorized occupants, and ultimately marketing and sale of the Property. See id., Ex. 1, Order, page 3, line 27 and page 4, lines 1-28.

4. To that end, the Receiver on July 30, 2024 employed a licensed process server to serve the Order and a Notice of Inspection on the occupants of the Property. A copy of that Notice of Inspection is attached to the Abramson Decl., as is the Proof of Service thereon, as Ex. 3 thereto. The inspection was set for the next day, July 31, 2024.

5. I arrived at the Property at approximately 10:00 a.m. on July 31, 2024, which was the time stated on the Notice of Inspection. I was accompanied by my colleague, Mr. Chase Stroman, the Appraiser Jonathan Goldrich, the listing broker, Ms. Ginger Glass, and her driver.

6. All parties mentioned above arrived to the property in one car and I pressed the call button on the gate to ring any occupants at the property. When we arrived there were several vehicles – including two Mercedes Benzs, a Range Rover, and a Jeep Wrangler parked in the driveway on the enclosed side of the gate. After about 5 minutes of ringing the gate with no answer, I recorded myself making an announcement to the call box (this recording may be made available to the Court for listening in the event that the Court would find that helpful). I identified myself as an agent of the Receiver and asked that the occupant respond and grant us access for the appraisal. We had still not received a response so all of us got out of the car and took a few pictures of the outside of the property and street while the driver turned the car around. True and correct copies of those pictures are attached as Exhibit A to this declaration. I then called my supervisor, David Kieffer to see if we could get on the phone with the occupant’s attorney. David Kieffer informed me that our attorney was on the phone with the occupant’s attorney and that we would not be getting access. After about 25 minutes attempting to get access, I left a copy of the Order with my business card in the mailbox, we all got back in the car and left the property (again, without gaining any access or a response).

7. After waiting 25 minutes, and after the Receiver’s attorney spoke with the Occupants’ attorney, still, no access was permitted.

8. In order for the Receiver to comply with the Order and properly care for, maintain, and ultimately market the Property, there must be unimpeded access. The normal statutory procedure under Civ. Code sec 1954 is to permit an owner to enter a dwelling unit in order to make necessary repairs, exhibit Property to prospective purchasers, workers or contractors. Indeed, Code Civ. P., § 1954(a)(4) specifically permits entry “Pursuant to court order.” (Emphasis added.)

9. For the occupants and their attorney to refuse entry and to further refuse to provide alternative dates makes it impossible for the Receiver to discharge his duties under the Order. Such refusal by the occupants completely negates the entire purpose and effect of the Court’s Order.

The Receiver is Not Receiving Any Income From this High-Value, Luxury Property.

10. Based on consultations with the broker and rental comparison websites such as Redfin, Zillow, and Realtor.com, the Receiver is informed and believes that current estimated monthly rental value for the Property is at least $60,000.

11. As stated in the Abramson Decl., the Occupants’ own counsel will not confirm whether or not there are any leases for any occupant of the Property, but despite knowing that action may be taken to remove the Occupants, he has not come forward with any lease. There is also no payment of any rent by any of the Occupants. Indeed, some of those Occupants’ identities are currently unknown and are being withheld from the Receiver and his attorney. See Abramson Decl.

12. Because the Receiver has a duty to sell the Property, and cannot do so when the occupants block all access, the Receiver requires immediate relief from the Court. The occupants must be ordered to leave immediately and turn over possession per the Order.

13. Alternatively, the occupants should be ordered to post a bond to protect the Receiver for the amount of reasonable monthly rental (at least $60,000 per month).

Evidence of Unlicensed “Gaming” and Web Streaming Activities on the Property.

14. The Receiver has thoroughly researched the occupant of the property, Kaysan Ghassemi-nejad, and determined that he is a professional web streamer that goes by the name “FaZe Kaysan.” He is a part of the professional esports and entertainment organization called “FaZe Clan.” I have personally viewed Kaysan’s streams of himself playing video games, DJing, and hanging out with friends on internet platforms such as Twitch, YouTube, and Tik Tok.

15. My search and review of Kayson’s Tik Tok and Twitch accounts clearly show videos of Kaysan streaming himself and friends at the Property playing video games, basketball, and performing loud DJ music sets. In recent streams from the Property, Kaysan broadcasted that he was being filmed on the Property for a documentary he is working on. This type of activity (widespread public disclosure of his activities on the Property) is potentially dangerous and could lead to liability for injury to persons or property. It is completely incompatible with proper residential use of the Property (which, even itself, would be unauthorized).

(Picardi Decl. ¶¶ 3-15.)

            Thus, Defendant has provided evidence that the Occupants continue to occupy the premises in violation of the Court’s July 23, 2024 Order.

            The Occupants challenge that order and seek to intervene in this matter on the grounds that they are the rightful owners of the property, and the order appointing the receiver violated their due process rights, as they were not named as parties to this litigation, and were not given notice or an opportunity to be heard before the receiver was appointed. 

            In support, the Occupants point to Orange County case number 30-2023-01329501-CU-BC-CJC, where the Occupants contend they have filed a cross-complaint against Sunwest Bank, Preferred Mortgage Bank, Villa Villamar (loan broker), Defendant 9996 Sunset Loan Acquisitions LLC; and Plaintiff 9996 Sunset Properties, LLC, alleging violations of the Truth in Lending Act, fraud, and California’s Unfair Competition Law, “arising form the wrongful classification of a consumer loan as a business loan, fraudulent conduct, and failure to make required disclosures” under the Truth in Lending Act.

            Defendant points out in opposition that their counter-claims filed in the Orange County matter were filed after the receiver was appointed in this matter.

            Plaintiff’s verified complaint in this action provides:

2. In early 2019, Benham Ghasseminejad and his son Kaysan Ghasseminjejad wanted to purchase the Sunset Property, a lavish six-bedroom, 7,885-square-foot house for approximately $13 million. The Ghasseminejads, however, lacked sufficient capital to achieve their goal, so they sought and obtained financing from Defendant’s predecessor in interest, Preferred Bank (“Preferred”). Upon information and belief, before Preferred financed the Ghasseminejads’ purchase, Preferred required Kaysan Ghasseminjad to form a limited liability company that would own the Sunset Property. At Preferred’s instructions, Kaysan Ghassminejad formed the single purpose real entity, K3B Enterprises, LLC, and elected himself as its sole member and manager. With this new entity formed, Preferred structured two residential loans, disguised as business purpose loans, to facilitate the Ghasseminejad’s purchase of the Sunset Property.

3. Preferred Bank made a $7,800,000 first loan (“Preferred First Consumer Loan”) memorialized by a business loan agreement and promissory note from Kaysan Ghasseminejad’s entities (“Preferred First Loan Borrowers”): K3B, VIP Hospice Care, Millenium Hospice Care, Inc., Blue Heaven Hospice & Palliative Care, Inc., and Toluca Hospice Care, Inc. Kaysan Ghasseminejad guaranteed Preferred’s First Consumer Loan. K3B secured Preferred’s First Consumer Loan with a Deed of Trust recorded on May 14, 2019, with the Los Angeles County Recorder’s Office as Instrument Number 20190438998.

4. Preferred Bank made a $2,000,000 second loan (“Preferred Second Consumer Loan”) memorialized by a business loan agreement and promissory note from Kaysan Ghasseminejad’s entities (“Preferred Second Loan Borrowers”): VIP Hospice Care, Millenium Hospice Care, Inc., Blue Heaven Hospice & Palliative Care, Inc., Hollywood Health Services, Inc., Med Plus Hospice Care, Inc., Toluca Hospice Care, Inc., and Relyable Hospice Care, Inc. K3B and Kaysan Ghasseminejad guaranteed Preferred’s Second Consumer Loan. K3B secured its guaranty obligations with a Deed of Trust dated recorded on May 16, 2019, with the Los Angeles County Recorder’s Office as Instrument Number 20190450126.

5. Upon information and belief, neither the Loans’ Borrowers nor the Loans’ Guarantors had any operating income to service Preferred’s Consumer Loans. As such, the Sunset Property was Preferred Bank’s primary repayment source for Preferred’s Consumers Loans.

6. Two years after the Ghasseminejads obtained the Preferred’s Consumer Loans, the Ghasseminejads sought financing to purchase a commercial building located at 17835 Ventura Boulevard, Encino, CA 91316 (“Encino Property”). The Ghasseminejads formed another single-purpose real estate entity, Encino Towers, LLC, and purchased the Encino Property. To finance the purchase, Encino obtained two purchase money loans from 9996 Sunset Properties’ predecessor in interest, Sunwest Bank. This action concerns Sunwest’s second loan.

7. Sunwest made a $4,939,000 short-term bridge loan (“Sunwest Loan”) memorialized by another business loan agreement and promissory note from Encino. To secure Sunwest’s Loan, Sunwest received a Deed of Trust dated July 8, 2021, encumbering the Encino Property and recorded it on August 31, 2021, as Instrument No. 20211333337. To further secure Sunwest’s Loan, Sunwest received executed Commercial Guarantees from Millennium Hospice Care, Inc., Toluca Hospice Care, Inc., Relyable Hospice Care, Inc., Merit Hospice Care, Inc., Med Plus Hospice Care, Inc., Hollywood Health Services, Inc., Grove Hospice Care, Inc., Golden Hills Healthcare Services, Inc., Especial Care Hospice, Inc., Blue Heaven Hospice & Palliative Care Inc., AIM Hospice Care Inc., and Kaysan Ghasseminejad.

8. On March 6, 2023, after Encino defaulted on Sunwest’s Loan Documents, Sunwest and Encino entered into a Forbearance Agreement. Among other inducements in the Forbearance Agreement, Encino Towers agreed to deliver K3B’s executed Deed of Trust dated March 9, 2023, and recorded on March 16 2023 as Instrument No. 202330169741 against the Sunset Property. Encino also agreed to sell the real property securing its obligations under Sunwest’s Loan and repay both loans by July 10, 2023. Encino breached the Forbearance Agreement before July 10, 2023, prompting Sunwest to commence a judicial foreclosure action and record Notices of Default against the Encino and Sunset Properties. K3B also defaulted on Preferred’s Consumer Loan Documents.

9. Unable to repay Sunwest’s Loan or Preferred’s Consumer Loans, K3B tried to delay Sunwest’s foreclosure with a frivolous bankruptcy filing. On July 10, 2023, K3B filed a voluntary Chapter 11 bankruptcy petition to delay Sunwest’s foreclosure. The Bankruptcy Court dismissed K3B’s Chapter 11 bankruptcy case on November 3, 2023, with a 180-day refiling bar.

10. Once K3B exited bankruptcy, Preferred sought to exercise its rights and remedies under its Consumer Loan Documents. On November 20, 2023, Preferred commenced its nonjudicial foreclosure proceeding against the Sunset Property with a recorded Notice of Default under its second priority Deed of Trust. Preferred later sold all of its interest in its First and Second Loan Documents to Defendant, which took over Preferred’s nonjudicial foreclosure. K3B tried to delay Defendant’s foreclosure with another frivolous bankruptcy filing. On April 25, 2024, the Bankruptcy Court dismissed K3B’s second bankruptcy case, clearing the way for Sunwest and Preferred to foreclose on the Sunset Property.

11. On May 2, 2024, Defendant recorded Notices of Trustee Sale on its first and second Deeds of Trust with a trustee’s sale date scheduled for May 29, 2024. The next day after Defendant recorded these trustee’s sale notices, Sunwest assigned its interests in its first and second Loan Documents to Plaintiff. Plaintiff commenced the first nonjudicial foreclosure on the Sunset Property: it held a Trustee’s Sale on May 10, 2024, and tentatively won with a $3,000,000 credit bid. This Trustee’s Sale will not be finalized until June 24, 2024, under Civil Code section 2924m. Seeking to protect Plaintiff’s interest in the Sunset Property, Plaintiff requested that Defendant provide reinstatement amounts for Defendant’s Consumer Loans. Defendant’s $2,234,891.65 reinstatement demand (“Reinstatement Amount”) included: (1) $639,376.29 in default accrued interest on Defendant’s First Consumer Loan; (2) $176,203.32 in default accrued interest on Defendant’s Second Consumer Loan; (3) a $35,000 servicing fee; and (4) $33,903.74 in late charges. Since Defendant issued its reinstatement demand, Plaintiffs and Defendant have been embroiled in actual controversy over Defendant’s default interest calculations in its reinstatement demand. Plaintiff asked Defendant to briefly postpone its Trustee’s Sale so the parties could resolve Defendant’s reinstatement demand, but Defendant refused. Defendant agreed to extend Plaintiff’s reinstatement deadline under Civil Code section 2924c(e) to May 24, 2024. With less than five days left before Plaintiff’s reinstatement deadline expires, Plaintiff brings this action against Defendant regarding two actual controversies between the Parties.

(Verified Complaint, ¶¶ 2-11.)

            Thus, as a threshold matter, Occupants Behnam Ghasseminejad and Kaysan Ghassemi-Najad never had a legal interest in the subject property, only K3B Enterprises LLC did so.  The Occupants argue in reply that they have an equitable interest in the property, by virtue of their roles as managing members and beneficiaries of K3B Enterprises, LLC.  In support, the Occupants cite to Corporations Code section “177701.”  No such section of the Corporations Code exists.  To the extent Occupants intended to cite to sections 17701 et seq., those sections encompass the entire Uniform Limited Liability Company Act and simply outline the law governing limited liability companies generally.  Those sections do not provide that a managing member of an LLC has an automatic equitable interest in real property owned by the LLC by virtue of his status as managing member.

Further, K3B Enterprises LLC’s legal interest in the subject property terminated in connection with the May 10, 2024 trustee’s sale.  Although finalization of that sale was subject to the 45-day bidding period, pursuant to Code of Civil Procedure section 2924m, subd. (c)(4), that 45-day period concluded on June 24, 2024.  Occupants also reference their right to rescission under 15 U.S.C. § 1635, but pursuant to subdivision (f) of that section, the right of recission expires “three years after the date of consummation of the transaction [secured by the property] or upon the sale of the property, whichever occurs first[.]”  Here, the property has already sold. Occupants further reference certain redemption rights available under Code of Civil Procedure section 2924m for fifteen days following the sale, but provide no evidence that they timely exercised those redemption rights.

Ultimately, none of the moving Occupants have provided any evidence that they offered a winning bid during that 45-day period, that they timely exercised their right of redemption or rescission, or any other independent basis to support their claim of an ownership interest in the subject property, other than their contentions that the underlying loans were fraudulent and/or in violation of TILA’s disclosure requirements.  But because the property has apparently already been sold to Cross-Defendant LACC 9996, LLC, and there is no evidence that the Occupants offered a winning bid during the 45-day period or otherwise timely exercised any right to rescission or redemption, at this point, the Occupants’ recourse, if any, would not include the reversion of any interest in the subject property. 

In reply, Occupants emphasize that K3B still had a legal interest in the property on May 21, 2024, when this case was filed, by virtue of the 45-day bidding period.  However, Occupants challenge the appointment of the receiver, which did not occur until July 23, 2024 – a month after the conclusion of that 45-day bidding period.  Thus, the Occupants have not established that any of them still had any legal interest in the property at the time the receiver was appointed.  Therefore, their due process rights were not violated by virtue of not having received prior notice of that hearing.

            Therefore, the Occupants have not provided any evidence demonstrating they currently have or had at the time the receiver was appointed, any ownership interest in the subject property to warrant their intervention in this matter, the vacation of the order appointing a receiver, or dismissal of this action. 

However, in light of the Occupants’ apparent good faith challenge to the Court’s order, the Court will continue the Order to Show Cause re Contempt to provide the Occupants another opportunity to comply with the Court’s July 23, 2024 Order appointing the Receiver, David Stapleton, by either vacating the subject property or, at minimum, permitting the Receiver access to the subject property to complete an inspection. 

CONCLUSION AND ORDER

Therefore, for the foregoing reasons, the Court denies the Occupants’ motion to intervene, vacate order appointing receiver, and dismiss this action in its entirety.

Further, the Court continues the Order to Show Cause re Contempt to October 14, 2024 at 8:30 A.M. in Department 207.  Defendant, and all parties who have joined with Defendant, and Occupants may file supplemental papers in support of, or in opposition to, the Order to Show Cause on or before October 7, 2024. 

Defendant shall provide notice of the Court’s ruling to all parties including counsel for the Occupants, and file the notice with a proof of service forthwith. 

DATED:  September 23, 2024                                               ___________________________

                                                                                          Michael E. Whitaker

                                                                                          Judge of the Superior Court