Judge: Peter A. Hernandez, Case: 19PSCP00027, Date: 2023-10-04 Tentative Ruling

Case Number: 19PSCP00027    Hearing Date: October 4, 2023    Dept: K

Background   

Petitioner City of Claremont (“City”) alleges that the property located at 1978 N. Indian Hill Boulevard in Claremont (“subject property”) is in a perpetual state of disrepair and requires a receiver to take possession and remedy compliance issues which property owner Respondent Sandblossom, LLC (“Respondent”) has failed to voluntarily abate.

On January 4, 2019, City filed a “Petition and Motion for an Order Appointing a Receiver to remedy Substandard Conditions (Health & Safety Code § 17980.7)” against Respondent. The court denied said petition, without prejudice, on March 11, 2019.

On February 10, 2020, the court granted City’s “Ex Parte Application for an Order Appointing a Receiver.” On February 13, 2020, Respondent filed a “Notice of Appeal” as to the February 10, 2020 order. On October 26, 2021, the remittitur was filed (affirmed).

On March 15, 2023, the court granted Receiver Mark Adams’ and California Receivership Group, BC’s request for discharge and exoneration of surety, awarded repayment of fees and costs in part and awarded attorney’s fees.

Legal Standard

“The following acts or omissions in respect to a court of justice, or proceedings therein, are contempts of the authority of the court: . . . (5) Disobedience of any lawful judgment, order, or process 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).)

“The facts essential to jurisdiction for a contempt proceeding are (1) the making of the order; (2) knowledge of the order; (3) ability of the respondent to render compliance; (4) wilful disobedience of the order.” (In re Liu (1969) 273 Cal.App.2d 135, 140 [internal quotations and citation omitted].)

“When the contempt is not committed in the immediate view and presence of the court or judge, a warrant of attachment may be issued to bring the person charged to answer, or, without a previous arrest, a warrant of commitment may, upon notice, or upon an order to show cause, be granted; and no warrant of commitment can be issued without such previous attachment to answer, or such notice or order to show cause.” (Code Civ. Proc., § 1212.)

Discussion

Respondent moves the court for an order to show cause re: (1) holding the Receiver in contempt for willfully violating the court’s March 15, 2023 order, (2) releasing the Receiver’s May 9, 2023 deed of trust recorded in violation of the court’s March 15, 2023 order and (3) awarding attorneys’ fees and imposing fines against the Receiver.

On March 15, 2023, the court granted the Receiver’s request for discharge and exoneration of surety and granted its request for an order directing repayment of fees and costs in part. The court’s March 15, 2023 order states, in relevant part, as follows:

            Despite the lack of court authorization, the court is inclined to grant the

reimbursement for the property taxes paid in the amount [of] $36,731.06. . . The

court is not inclined to order reimbursement during the period of time after

Respondent posted the undertaking on February 21, 2020. This pre-stay amount

totals $21,716.07 and is reflected in Exhibit No. 1 in the February 2020 Monthly Accounting report filed by the Receiver.[] As a result, the court will reduce the following fees and costs in addition to the repayment of the property taxes to $58,447.13 and

order, if necessary, that the Receiver’s Certificate be increased from $25,000.00 to

reflect the new amount. . .

The court determines that the charging affidavit is insufficient to issue an Order to Show Cause Re: Contempt. Ultimately, Respondent and the Receiver disagree as to the scope of the court’s order. Respondent argues that the court ruled on the amount of principal and interest that was owed to the lender on the Receiver’s Certificate and that the court authorized the Receiver to increase the Receiver’s Certificate to $58,447.13. The Receiver, in turn, argues that the court did not rule on the amount of principal and interest owed on the Receiver’s Certificate, that there is no language in the order supporting that any such ruling was made and that the court authorized the Receiver to increase the Receiver’s Certificate by an additional $58,447.13.

The court construes the instant motion as seeking clarification of the court’s March 15, 2023 order. First, the court’s language that “the Receiver’s Certificate be increased from $25,000.00 to reflect the new amount” stated therein was intended to convey that the Certificate be increased to $58,447.13 total, not by $58,447.13. The amount of $58,447.13 was comprised of $36,731.06 in property taxes, plus $21,716.07 in costs and fees incurred by the Receiver prior to the stay, as reflected in the February 2020 Monthly Accounting report filed by the Receiver. All other requests for monies were denied.

The Receiver’s “Motion for Discharge of Receiver, Exoneration of Surety, and Order Directing Repayment of Fees and Costs” sought “an order to discharge the Receiver, settle all accounts, and exonerate the surety.” (Motion, 1:24-25). The court notes that the Receiver lodged a “(Proposed) Order Discharging Receiver” in connection with the February 6, 2023 proceedings, which does not appear to make any express reference to principal and interest owed on the Receiver’s Certificate. Further, the Receiver represents that “[t]he Court could not have issued an order on the amount of principal and interest owed to the lender because that issue has never been before the Court. Again, the Receiver’s Motion for Discharge requested repayment of $98,257.71 in unpaid fees and costs owed to the Receiver. It did not request the determination of the principal and interest that is owed to the lender on the duly recorded Receiver’s Certificate.” (Opp., 4:3-7.)

However, “[a]s a court officer, [a receiver] ha[s] the duty to inform the court of all claims affecting the receivership before obtaining a discharge of h[is] liabilities.” (Vitug v. Griffin (1989) 214 Cal.App.3d 488, 495.) “[A]ll issues concerning the receiver’s actions are fully adjudicated as part of the final accounting.” (Southern California Sunbelt Developers, Inc. v. Banyan Limited Partnership (2017) 8 Cal.App.5^th 910, 926.) “[T]he last chance to challenge the receiver’s actions, management, and omissions is at the time of the final accounting.” (Id. at 926-927). As Respondent argues, “[i]f the court were to accept the Receiver’s logic. . ., then a receiver can encumber a property with third party liens through a receiver’s certificate, seek only the Receiver’s fees and costs, leave the liens unaddressed, and the receiver’s final accounting and discharge motion would not fully resolve all issues concerning the receiver’s actions as required under California law.” (Reply, 4:6-10).