Judge: Stephen I. Goorvitch, Case: 23STC19050, Date: 2024-11-20 Tentative Ruling

Case Number: 23STC19050    Hearing Date: November 20, 2024    Dept: 82

McKenna Capital, LLC, et al. v. Eng Taing, et al.

Case No. 23STC19050

[Tentative] Order Granting in Part and Denying in Part

 Defendants’ Motion to Modify Order Appointing Receiver

            On September 16, 2024, the court granted Plaintiffs’ motion for appointment of a receiver.  The court granted a limited purpose receiver to do the following: (1) Determine the status and create an inventory of all bitcoin miners; (2) Locate and create an inventory of all existing liquid assets; (3) Locate and create an inventory of all hard assets; (4) To safeguard any assets which are in jeopardy of being lost (though the receiver may not initiate litigation without approval of this court); (5) To report the status of the assets/investments to the court and the parties; and (6) To make any recommendations to the court concerning additional duties for the receiver that would be necessary to protect assets and/or avoid waste, fraud, or abuse (including recommendations of how to generate income with the assets).  The court incorporates its order of September 16, 2024, by reference. 

            Approximately one month later, on October 18, 2024, Defendants filed a motion to modify the order appointing the receiver.  This motion was improperly noticed for hearing in Department 39, so the court transferred the motion to Department 82.  Now, the court denies the motion.  As an initial matter, Defendants cite an unpublished case—Vail Lake Rancho California v. Sundance International, Case No. E027601, 2002 WL 86888 (Cal. Ct. App. Jan. 23, 2023)—in violation of California Rules of Court, rule 8.1115.  That alone is a basis to deny the motion.

            Reaching the merits, however, Defendants do not articulate good cause.  It is true that parties—or receivers themselves—may file motions to modify appointment orders based upon new facts or circumstances.  In this case, however, Defendants merely seek to re-litigate the prior motion, seeking to prevent the receiver from determining whether Eng Taing and Touzi Capital LLC have any assets at issue in this case.  As such, it is an improper motion for reconsideration under Code of Civil Procedure section 1008 and is denied on that basis.  Regardless, the court finds good cause to include Eng Taing and Touzi Capital LLC because they are defendants in this case and allegedly managed and operated the funds. 

            Defendants also identify alleged vagueness in the order, arguing that the definitions of “liquid assets” and “hard assets” are unclear.  Terms shall be afforded their ordinary meanings, and any ambiguity should be resolved in the most inclusive and expansive manner.  Nevertheless, to address Defendants’ concerns, the court modifies Paragraph 2 and 3 as follows: “The receiver shall locate and create an inventory of all assets—including but not limited to liquid assets, hard assets, intangible assets—and anything else of value.”  The court also defines the terms “assets which are in jeopardy of being lost” as assets that, in the opinion of the receiver, may be transferred, concealed, or destroyed.  The Receiver may seek clarification of any term if there is confusion in the context of a real—rather than a hypothetical—situation. 

            Defendants’ counsel argues that Defendant Eng Taing cannot cooperate with the Receiver without waiving his Fifth Amendment rights.  The court’s order does not require Defendant Eng Taing waive his Fifth Amendment rights.  To the contrary, Defendant Eng Taing retains his Fifth Amendment rights provided that he clearly and affirmatively exercises them.  To that end, if he does not wish to communicate with the receiver, he may file a declaration, signed under penalty of perjury and notarized, stating that he is refusing to respond to specific inquiries (or all inquiries) from the receiver in exercise of his rights under the Fifth Amendment of the U.S. Constitution.  Similarly, if he does not wish to produce any documents to the receiver, he may do the same thing, either identifying the specific document requests to which he is not responding or stating generally that he will not produce any documents.  If Defendant Eng Taing does so, there will be no good cause for the receiver to file an ex parte application for an order to show cause why Defendant Eng Taing shall not be held in contempt for failing to cooperate with him.

            Plaintiff’s counsel shall provide notice and file proof of service with the court.