Judge: Michael Shultz, Case: 22CMCV00293, Date: 2023-10-05 Tentative Ruling
INSTRUCTIONS: If the parties wish to submit on the tentative ruling and avoid a court appearance on the matter, the moving party must:
1. Contact the opposing party and all other parties who have appeared in the action and confirm that each will submit on the tentative ruling.
2. No later than 4:00 p.m. on the court day before the hearing, call the Courtroom (310-761-4302) advising that all parties will submit on the tentative ruling and waive hearing; and
3. Serve notice of the Court's ruling on all parties entitled to receive service.
If this procedure is followed, when the case is called the Court will enter its ruling on the motion in accordance with its tentative ruling. If any party declines to submit on the tentative ruling, then no telephone call is necessary, and all parties should appear at the hearing. If there is neither a telephone call nor an appearance, then the matter may either be taken off calendar or ruled on.
TENTATIVE RULINGS -- http://www.lacourt.org/tentativeRulingNet/u
Case Number: 22CMCV00293 Hearing Date: November 3, 2023 Dept: A
[TENTATIVE] ORDER OVERRULING DEMURRER AND MOTION TO QUASH SERVICE OF SUMMONS ON DEFENDANT MICHAEL COHEN
[TENTATIVE] ORDER TAKING OFF CALENDAR AMENDED DEMURRER AND DENYING AMENDED MOTION TO QUASH SERVICE OF SUMMONS ON DEFENDANT MICHAEL COHEN
[TENTATIVE] ORDER
MOTION FOR AN ORDER TERMINATING RECEIVERSHIP ESTATE, DISCHARGING RECEIVER, AND
EXONERATING RECEIVER’S BOND; APPROVING RECEIVER’S COUNSEL NUNC PRO TUNC AND
APPROVING RECEIVER’S FINAL REPORT AND ACCOUNT
The City of Compton brought this action to abate a nuisance created by Defendants’ operation of a business distributing illegal narcotics. Plaintiff alleges claims for abatement, injunction, equitable relief, and civil penalties. On January 10, 2023, the Court entered default against Defendants, Howard Ly, Mainline Property Management and Hotbox. Defendant, Nora Natarajan, answered the complaint on November 22, 2022.
The Court has reviewed the demurrer and motion to quash service of summons filed on August 16, 2023, by Defendant, Michael F. Cohen. The motion to quash is DENIED as Cohen made a general appearance on March 28, 2023, by and through his counsel, Robert Arthur Bailey, at the Case Management Conference. Defendant cannot challenge service of summons where Defendant has made a general appearance, which occurs when a party, “either directly or through counsel, participates in an action in some manner which recognizes the authority of the court to proceed. It does not require any formal or technical act." (Mansour v. Superior Court (1995) 38 Cal.App.4th 1750, 1756).
The demurrer is untimely filed as Defendant Cohen was served by substituted service on September 1, 2022. (Proof of Svc. filed 10/26/22.) Defendant was required to file a demurrer within 30 days after service of process. (Code Civ. Proc., § 430.30.) Defendant filed his demurrer on August 16, 2023.
Defendant filed an amended demurrer and motion to quash on October 26, 2023, which is equally defective. The amended motion to quash is DENIED as Defendant made a general appearance. The amended demurrer is equally untimely filed and is TAKEN OFF CALENDAR as there is no proof of service indicating that all parties were given timely notice of the amended demurrer.
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City of Compton v. Hotbox, et al.
November 3,
[TENTATIVE] ORDER
MOTION FOR AN ORDER TERMINATING RECEIVERSHIP ESTATE, DISCHARGING RECEIVER, AND
EXONERATING RECEIVER’S BOND; APPROVING RECEIVER’S COUNSEL NUNC PRO TUNC AND
APPROVING RECEIVER’S FINAL REPORT AND ACCOUNT
The City of Compton brought this action to
abate a nuisance created by the operation of an illegal drug distributing
business on the premises. Plaintiff alleges claims for abatement, injunction,
equitable relief, and civil penalties. On January 10, 2023, the Court entered
default against Defendants, Howard Ly, Mainline Property Management and Hotbox.
Defendant, Nora Natarajan, answered the complaint on November 22, 2022.
The Court appointed Ryan C. Baker as
receiver on September 14, 2022. The receiver requests an order terminating the
receivership having completed all his duties, for an order approving the
Receiver’s final report, to appoint Buchalter as Receiver’s counsel, and for
payment of remaining fees, costs, and expenses. The balance from the sale of
the property will be deposited with the Court.
Defendant Natarajan contends that she
holds a first priority lien against the property to secure a $330,000 debt. The
Receiver took the property subject to Defendant’s lien. The super-priority lien
has been paid off. Any other fees and costs should be allocated as direct
liabilities of the parties who created the conditions, namely the owner
Mainline Property Management and its principal, Howard Ly. The Receiver did not
obtain an order approving counsel.
In reply, the Receiver contends that the
Court’s order appointing receiver authorized the Receiver to retain counsel.
Defendant never objected to the Receiver’s six reports. The Receiver’s fees and
counsel’s fees are entitled to super-priority status.
The Court initially heard this matter on
October 5, 2023, and after taking the matter under submission, continued the
hearing to permit the Receiver to provide further evidence and declarations to
substantiate the attorney fee request.
Defendant, Nora Natarajan, filed a
response to the Receiver’s supplemental declarations and evidence, arguing that
the Receiver improperly attempts to cure other defects in the motion that go
beyond the scope of the Court’s order. In response, the Receiver states
Defendant Natarajan did not serve the Receiver with her response (although the
Receiver was able to file a reply brief). The Receiver also objects to the
improper formatting of Defendant’s evidentiary objections.
IV. DISCUSSION
A
receiver may request a discharge, provide a final account and report, and
request exoneration of the Receiver’s surety. (Cal.
Rules of Court, Rule 3.1184.) A memorandum of points and authorities is not
required. (Id.) The power to discharge a receiver is a “necessary
adjunct” to the power of appointment and is addressed to the court’s sound
discretion. (Sly
v. Superior Court of California (1925) 71 Cal.App. 290, 294.) The
court controls the order of proof at the hearings for approval of the
receiver’s account. (Macmorris
Sales Corp. v. Kozak (1967) 249 Cal.App.2d 998, 1003 [“The
petition, which was verified, and which contained the receiver's report and
accounting in detail, constituted such evidence.”].)
Receivers
are entitled to compensation for their own services as well as those of its
counsel, which are generally paid from the property in the receivership
estate.” (City
of Chula Vista v. Gutierrez (2012) 207 Cal.App.4th 681, 685.) A
receiver cannot employ an attorney without Court approval. (California
Rules of Court, Rule 3.1180.) The Court authorized the Receiver to “retain
legal counsel to represent him and assist him with the performance of his
duties as set forth herein. All reasonable expenses incurred in connection with
the hiring and retention of such personnel and counsel shall be expenses of and
paid for by the Defendants.” (Ord. filed
9/14/22, 4:25-28.)
Defendant
complains that the Receiver did not make a separate motion for appointment of
Receiver’s counsel pursuant to California Rules of Court. However, the Receiver
gave notice to all interested parties of each of his reports of fees incurred
by its counsel, Buchalter, and included Buchalter’s invoices. (See for
example Initial Report, filed 10/13/22.; Second Report filed 11/18/22;
Third Report filed 12/21/22); Fourth Report, filed 1/31/23.) There is no record
that Defendant objected to the hiring of Receiver’s counsel. (County
of Sonoma v. Quail (2020) 56 Cal.App.5th 657, 676 ["where a
receiver is lawfully appointed at the instance and for the benefit of lien
creditors, all proper charges, expenses, and liabilities incurred as incident
to duly conferred receivership powers and duties are a charge on the earnings
and corpus of the property superior to the lien creditors, who take part in, or
expressly or impliedly consent to, or acquiesce in, the receivership
proceedings’”].) Sonoma acknowledges that the Receiver’s charges and
expenses are “superior” to lien creditors.
The
Receiver was also authorized to borrow funds to pay for repairs and to correct
the conditions which debt may be secured with a lien on the real property. Health
& Saf. Code, § 17980.7 (c)(4)(G). The recorded Certificate secures a
first priority lien on the property for the amount borrowed. (Id.,
5:25-6:2.) As shown previously, Defendant Natarajan received notice of the
Receiver’s application for appointment of a receiver including authority to
retain legal counsel and was given notice that all reasonable fees and expenses
would be paid for by the receivership estate. (POS filed 9/9/22.) Objections to
interim accounts and reports must be made within 10 days of notice. (California
Rules of Court, 3.1183.) There is no record that Defendant filed an
objection to any of the Receiver’s reports or the order appointing receiver and
permitting employment of counsel.
The
Receiver’s certificate for $75,000 is entitled to super priority status.
Defendant argues the Receiver should have obtained an increase in the amount of
the certificate to secure any liens in excess of $75,000 which he did not.
Therefore, Defendant argues that the Receiver’s remaining and unsecured fees
and costs are not entitled to the same priority and are subject to Defendant’s
existing lien.
Defendant
relies on County
of Sonoma v. Quail (2020) 56 Cal.App.5th 657 which is inapposite.
There, the court held that while the County was instrumental in bringing an
enforcement action to abate conditions on real property, its fees and costs
were not payable on equal footing as the Receiver’s, whose fees and costs were
entitled to super priority. The statute authorizing a receiver to secure a debt
for moneys owed with a lien on the subject property does not extend to payment
of governmental costs of enforcement, which are payable by the owner. (County
of Sonoma v. Quail (2020) 56 Cal.App.5th 657, 687.) The case does not
address whether the Receiver’s fees and costs in excess of the Receiver’s
Certificate are entitled to super priority status.
Schreiber
v. Ditch Road Investors (1980) 105 Cal.App.3d 675 is instructive.
The Schreiber court acknowledged that a receiver takes control of
property subject to the interests therein which existed before the Receiver’s
appointment. (Schreiber
at 679.) However, the court found that the trial court did not err when
it gave precedence to the costs of the receivership over a creditor’s secured
interest where the lien creditors “take part in, or expressly or impliedly
consent to, or acquiesce in, the receivership proceedings." (Id.) Since the creditor participated in the
proceeding with knowledge of the powers conferred on the receiver, and availed
itself of the receivership “as a means of enforcing its security interest,” the
creditor impliedly consented that the operating expenses of the receivership
would be given priority over its security interest. (Schreiber
at 679.) As in Schreiber, Defendant’s assertion that its lien
has priority “came too late.” (Id.)
The
Court has considered the Receiver’s supplemental declarations in support of the
attorney’s fees request as well as Defendant Natarajan’s evidentiary objections
to the supplemental declarations. All objections are OVERRULED as the
supplemental declarations are relevant to determine whether the fee request is
reasonable and necessary.
To
determine whether fees are reasonable, the court begins with the lodestar,
which is the number of hours reasonably spent multiplied by the reasonable
hourly rate. (PLCM
Group v. Drexler (2000) 22 Cal.4th 1084, 1095.) The court
considers a number of factors including "the nature of the litigation, its
difficulty, the amount involved, the skill required in its handling, the
skill employed, the attention given, the success or failure, and other
circumstances in the case.’” (PLCM
Group at 1096.) The lodestar figure can be adjusted based on the
factors specific to the case. (Id.)
To
determine a reasonable market rate, "the courts will look to equally
difficult or complex types of litigation.” (Syers
Properties III, Inc. v. Rankin (2014) 226 Cal.App.4th 691, 700.)
The “market rate” is generally based on the rates prevalent in the community
where the court is located. (Id.) The trial court is in the best
position to value the services rendered by the attorneys in his or her
courtroom for the type of litigation at issue. Detailed time records are not
required; the request can be based on counsel’s declarations. (Raining
Data Corp. v. Barrenechea (2009) 175 Cal.App.4th 1363, 1375.) The
court can reduce the award based on evidence showing duplicative efforts.
Plaintiff is entitled to reasonable compensation; ‘padding’ in the form of
inefficient or duplicative efforts is not subject to compensation." (Ketchum
v. Moses (2001) 24 Cal.4th 1122, 1132.)
Oren
Bitan declares he is one of the primary attorneys representing the Receiver. He
has over 15 years’ experience as an attorney. He submits a 2022 Real Rate
Report, which analyzes law firm rates in different cities, trends, and
practices according to years of practice. (Bitan declaration, Ex. 6. The Court
finds that his hourly rate of $795 per is reasonable for a litigation partner. (Id.,
.pdf page 54.)
William
Miller has been practicing law for more than 20 years with significant
experience representing receiver. The Court finds that Mr. Miller’s rate of
$700 per hour, which is below the median, is reasonable.
Anita
Barooni and Tia Gonzalez, are associates with the law firm. The Court finds
that Ms. Barooni’s hourly rate of $375 per hour and Ms. Gonzalez’s hourly rate
of $395 per hour are well below the median rate for Los Angeles and are
reasonable. (Bitan decl., .pdf p. 55.)
Defendant
contends counsel duplicated the work and padded the bills. However, the records
reflect that while Mr. Miller drafted the legal briefs, Mr. Bitan reviewed them
and prepared for the hearing. (See for example, time entries for 10/12/22
through 10/19/22.) This does not reflect billing for overlapping work; rather "[i]t
is not at all unreasonable, however, to interpret this sequence of time records
as reflecting completely ordinary practice in a law firm handling a case of
this magnitude: The opposition points and authorities are delivered to the
senior partner, who reviews the document and makes notes for a meeting with his
subordinates. At that meeting, he or she assigns one attorney to research and
draft a reply to the opposition and a third attorney to edit and cite check the
reply before it goes out. (Horsford
v. Board of Trustees of California State University
(2005) 132 Cal.App.4th 359, 397.)
V. CONCLUSION
Based
on the foregoing, the Receiver’s motion is GRANTED.