Judge: Stephen P. Pfahler, Case: 21STCV32652, Date: 2024-04-22 Tentative Ruling

Case Number: 21STCV32652    Hearing Date: April 22, 2024    Dept: 68

Dept. 68

Date: 4-22-24 c/f 4-16-24

Case #21STCV32652

Trial Date: N/A

RECEIVER

MOVING PARTY: Plaintiff/Judgment Creditor, 608 Mateo, LLC

RESPONDING PARTY: Defendant/Judgment Debtor, Arts District Patients Collective, Inc.

RELIEF REQUESTED

Motion for Appointment of Receiver

SUMMARY OF ACTION

On September 2, 2021 and September 8, 2021, Plaintiff 608 Mateo, LLC filed a complaint and first amended complaint for unlawful detainer against Arts Districts Patients Collective, Inc., et al. regarding 608 South Mateo St. and 609 Imperial St., Los Angeles. On January 3, 2022, the court granted summary judgment in favor of Plaintiff in part. On January 24, 2022, the court entered judgment against James Shaw, Arts District Patients Collective, Inc., and AWA Oasia, LLC, whereby the court both granted possession and entered holdover damages in the amount of $208,840.41. On March 7, 2022, the court awarded Plaintiff $40,860 in attorney fees. The court entered an amended judgment for $251,224.31 on March 22, 2022. Plaintiff, Judgment Debtor claimed an additional $28,895.13 in post judgment costs.

On February 3, 2023, the court denied the motion for assignment order and/or turnover order in aid of execution of judgment and for restraining order. A notice of stay was filed by Arts Patient Collective, Inc. on February 8, 2023. The stay was lifted on November 7, 2023, following the dismissal of the bankruptcy.

RULING: Denied.

Evidentiary Objections to the Declaration of James Shaw: Overruled.

Plaintiff/Judgment Creditor 608 Mateo, LLC (608 Mateo) moves for appointment of a receiver against Defendant/Judgment Debtor, Arts District Patients Collective, Inc. The motion also contains a request for injunctive relief preventing “ADPC and Shaw and those acting in concert 6 with them from interfering with the Receiver's ability to collect 7 the Income and the assets of ADPC to the extent they exist.” Defendant/Judgment Debtor Arts District Patients Collective, Inc. challenges the necessity of the appointment of receivership. Plaintiff in reply reiterates the prior court tentative ruling “granting” the unopposed motion, and the necessity of a receiver. Plaintiff/Judgment Creditor also engages in a challenge to the authority cited in opposition. Plaintiff concludes with any denial of the necessity for a bond.

The request arises due to stymied efforts at collection on the judgment. 608 Mateo represents only successfully collecting $298 in total. 608 Mateo cites to the prior court tentative ruling, whereby the court issued a “Granted” order, but the court docket shows the motions in fact went off-calendar. [Declaration of Steven Revitz, Ex. 6.] The court declines to defer to the prior tentative ruling, and instead reviews the motion under its own criterial.

608 Mateo cites to the necessity of the receiver pursuant to Code of Civil Procedure section 708.620, which states: “The court may appoint a receiver to enforce the judgment where the judgment creditor shows that, considering the interests of both the judgment creditor and the judgment debtor, the appointment of a receiver is a reasonable method to obtain the fair and orderly satisfaction of the judgment.” (Code Civ. Proc., § 708.620.)

Missing from the motion is any actual authority regarding the basis for the receiver. Notwithstanding, a receiver may be appointed “after judgment, to carry the judgment into effect.” (Code Civ. Proc., § 564, subd. (b)(3).) (Plaintiff references “CCP section 564(a)(4)” in reply (6:7-12).)

Plaintiff also disputes the argument in opposition regarding the potential for reversal of the judgment. The court declines to consider this collateral consideration, and instead addressees the criteria for appointment of a receiver assuming an enforceable judgment

The appointment of a receiver is an equitable remedy, and should be used only when necessary and where other legal remedies are unavailable. (Rogers v. Smith (1946) 76 Cal.App.2d 16, 21).  Receivership is a provisional remedy, in which a court appoints an officer and agent of the court to take charge of and actually manage property involved in litigation, in order to preserve it for disposition in accord with the final judgment.  (Shannon v. Superior Court (1990) 217 Cal.App.3d 986.)  Appointment of a receiver is a drastic provisional remedy that the court should only grant when facts are presented by admissible evidence that clearly establish a receiver is necessary to protect the property and maintain the status quo. (Barclay Bank of California v. Superior Court (1977) 69 Cal. App. 3d 593, 597; City and County of San Francisco v. Daley (1993) 16 Cal.App.4^th 734, 744).

It’s not clear what other means were utilized for said collection from the application. 608 Mateo concedes that Judgment Debtor likely lacks assets sufficient for satisfaction of the debt, but references a pending cannabis license, which may hold some value. Judgment Debtor in fact presents a very extensive declaration regarding an uncollected $45,000,000 judgment held by judgment debtor, as well as other liens taking unchallenged precedence over the instant judgment. [Declaration of James Shaw.]

Even with the admission regarding the unlikelihood of collection, the court also finds a glaring concern from the lack of any indication or identification of what entity the receiver would oversee. Other than a request for a receiver and identification of a nominated person, the motion lacks basic information on the intended target of the receivership.

Even assuming 608 Mateo generally means for the receiver to somehow manage the business entity identified as Arts District Patients Collective, Inc. in some capacity, the court still finds the admission regarding the lack of any real assets rendering the receivership an overly expensive appointment with no net benefit in the form of collection on the judgment. (Alhambra-Shumway Mines, Inc. v. Alhambra Gold Mine Corp. (1953) 116 Cal.App.2d 869, 873-874; see Santacroce Bros. v. Edgewater-Santa Clara Inc. (1966) 242 Cal.App.2d 584, 586–587.) Again, the opposition lists extensive, unchallenged pre-existing debts taking priority. The reply lacks any dispute to the subject representations. The court declines to consider creditor priority or other potential means allowing judgment creditor to potentially improperly wedge ahead of other superseding creditors.

Again, even if the court still considered the motion, the paucity of information prevents the court from considering any order appointing a receiver, including the bond amount. (Code Civ. Proc. 567; Cal. Rules of Court, rule 3.1178; Southern California Sunbelt Developers, Inc. v. Banyan Limited Partnership (2017) 8 Cal.App.5th 910, 928-929.) The dismissal of the bond requirement in the reply due to the lack of any “ongoing business” entity [9:1-2] directly relates back to the fundamental question of what the receiver will oversee.

The motion for preliminary injunction also lacks any cited authority. Judgment Debtor only apparently seeks a prohibitory injunction.

“[T]he general rule is that an injunction is prohibitory if it requires a person to refrain from a particular act and mandatory if it compels performance of an affirmative act that changes the position of the parties.” (Davenport v. Blue Cross of California (1997) 52 Cal.App.4th 435, 446.) “An injunction designed to preserve the status quo as between the parties and to restrain illegal conduct is prohibitory, not mandatory, and does not require heightened appellate scrutiny.” (Oiye v. Fox (2012) 211 Cal.App.4th 1036, 1048.) “The granting of a mandatory injunction pending trial is not permitted except in extreme cases where the right thereto is clearly established.” (Teachers Ins. & Annuity Assn. v. Furlotti (1999) 70 Cal.App.4th 1487, 1493.)

The court considers both irreparable harm and the likelihood of prevailing on the merits. (Millennium Rock Mortg., Inc. v. T.D. Service Co. (2009) 179 Cal.App.4th 804, 812.) “An evaluation of the relative harm to the parties upon the granting or denial of a preliminary injunction requires consideration of: ‘(1) the inadequacy of any other remedy; (2) the degree of irreparable injury the denial of the injunction will cause; (3) the necessity to preserve the status quo; [and] (4) the degree of adverse effect on the public interest or interests of third parties the granting of the injunction will cause.’” (Vo v. City of Garden Grove (2004) 115 Cal.App.4th 425, 435.) “‘[T]he more likely it is that plaintiffs will ultimately prevail, the less severe must be the harm that they allege will occur if the injunction does not issue .... [I]t is the mix of these factors that guides the trial court in its exercise of discretion.’” (Right Site Coalition v. Los Angeles Unified School Dist. (2008) 160 Cal.App.4th 336, 342.) “The ultimate questions on a motion for a preliminary injunction are (1) whether the plaintiff is 'likely to suffer greater injury from a denial of the injunction than the defendants are likely to suffer from its grant,’ and (2) whether there is ‘a  reasonable probability that the plaintiffs will prevail on the merits’” (Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400, 408. Procedurally, an application for a preliminary injunction, must be based upon sufficient evidence.  (CCP §527(a); Bank of America v. Williams (1948) 89 Cal.App.2d 21, 29.)

In summary, the motion lacks insufficient support given the admitted lack of collectible assets, necessity of the receiver given the lack of collectible assets, an unidentified entity for the receiver to oversee, improper dismissal of the bond requirements, and otherwise insufficient description of any threat to corporate assets for purposes of the prohibitory injunction, especially given the lack of any “ongoing business.”

The motion is therefore denied in its entirety.

Plaintiff to give notice.