Judge: Theresa M. Traber, Case: 24STCV00385, Date: 2024-05-16 Tentative Ruling

Case Number: 24STCV00385    Hearing Date: May 16, 2024    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     May 16, 2024             TRIAL DATE: NOT SET

CASE:                         Enterprise Bank & Trust v. 1775 Beloit, LLC, et al.

CASE NO.:                 24STCV00385           

MOTION TO APPOINT RECEIVER

MOVING PARTY:               Plaintiff Enterprise Bank & Trust

RESPONDING PARTY(S): No response on eCourt as of 5/13/24.

CASE HISTORY:

·         01/05/24: Complaint filed.

·         03/15/24: Default entered against LLC Defendants 1775 Beloit, LLC, Adam GTS 2018, LLC; Alan GTS 2018, LLC; and Alexander GTS 2018, LLC.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is an action for collection on a mortgage secured by a parcel of real property.

Plaintiff moves for appointment of a receiver over the assets of Defendant 1775 Beloit, LLC.

TENTATIVE RULING:

            Plaintiff’s Motion for Appointment of Receiver is GRANTED.

DISCUSSION:

Plaintiff moves for appointment of a receiver over the assets of Defendant 1775 Beloit, LLC.

Service on Parties

            Plaintiff did not file proof of service with this motion. Four Defendants: 1775 Beloit, LLC, Adam GTS 2018 LLC, Alan GTS 2018 LLC, and Alexander GTS 2018 LLC were defaulted on March 15, 2024. With respect to the remaining Defendants, consisting of Alan, Adam, and Alexander Shekhter, and their associated Generational Trusts Dated December 3, 2018, Plaintiff filed proofs of service on January 24, 2024 stating that these Defendants had been served with process on January 22, 2024 by substituted service. (See January 24, 2024 Proofs of Service.) Now, however, Plaintiff contends that it was not successful in serving these Defendants because they no longer live or conduct business at that address. (Declaration of Claudia M. Coleman ISO Mot. ¶ 8.) Plaintiff states that it has discovered Defendants live or conduct business in locations which are gated, preventing Plaintiff’s process servers from reaching the individual Defendants to effect service. (Id.) Thus, Plaintiff did not file a proof of service with this motion because all other parties in the action have either not yet been served with process or have been defaulted. As the party targeted for receivership, 1775 Beloit, LLC, has been defaulted, the Court will therefore consider the motion on its merits, notwithstanding the absence of proof of service.

Legal Standard

Code of Civil Procedure section 564 provides that “[a] receiver may be appointed, in the manner provided in this chapter, by the court in which an action or proceeding is pending in any case in which the court is empowered by law to appoint a receiver.”  (Code Civ. Proc., § 564(a).)  Subdivision (b) of section 564 lists the circumstances under which a receiver may be appointed, including, inter alia, upon application of a party whose has a probable right or interest in the property and where it is shown that the property is in danger of being lost, removed, or injured, or where it is otherwise necessary to protect the property or rights of any party. (Code Civ. Proc. § 564(b)(1), (3), (9).)  after a judgment to enforce the judgment.  (Id., § 564(b).)

Analysis

            Plaintiff seeks an order appointing a receiver with respect to the assets of Defendant 1775 Beloit, LLC to manage the dealings of the LLC and preserve the value of the property secured as collateral for the Promissory Note at issue in this case.

            Defendant 1775 Beloit, LLC entered into a Construction Loan Agreement with Plaintiff’s predecessor in interest on September 29, 2020 for the principal sum of $15,254,000 plus interest for the construction and improvement of a 16-unit multifamily development located at 1775 Beloit Ave, Los Angeles, California. (Complaint ¶¶16-21, Exhs. 1-6.) Plaintiff’s predecessor in interest, First Choice Bank, obtained a security interest in the development in exchange for that loan. (Id.) First Choice Bank merged with Plaintiff on January 22, 2021. (Complaint ¶ 3; see also Declaration of Jon Hustedt ISO Mot. ¶ 3, Exh. A.) Plaintiff contends that although the total balance on the loan as of January 3, 2024 was $16,055,356.92, the property, as of March 14, 2024, is valued between $7 million and $9 million, compared to its 2020 appraised value of $22.2 million. (Hustedt Dec. ¶¶ 21-2, Exhs. B-C.) Plaintiff also contends that, as of February 1, 2024, only four tenants were occupying the property and paying rent for only 4 units out of 48 rental units, bringing in only $7,229 in rent out of an anticipated total of $176,336.57. (Id. ¶ 25.) Plaintiff has thus demonstrated that the value of the collateral is rapidly declining, and that receivership is appropriate to manage the LLC’s assets and prevent a further loss in value.

            Plaintiff offers Stephen J. Donell, President of FedReceiver, Inc., as a candidate for receiver. Mr. Donell has provided his curriculum vitae and attests to his experience as a receiver in other actions and his experience in residential real estate. (Declaration of Stephen J. Donell ISO Mot. ¶¶ 2-5, Exh. 1.) Mr. Donell also declares that he has no interest in this action, no relation to any judge of the court, and has no contract, agreement, or understanding with any party regarding the administration of the receivership estate. (Id. ¶¶ 7-8.) Mr. Donell has attached a copy of his fee schedule. (Id. ¶ 11, Exh. 2.) After reviewing Plaintiff’s filings, the Court finds Stephen J. Donell to be an appropriate choice for receiver in this matter.

CONCLUSION:

            Accordingly, Plaintiff’s Motion for Appointment of Receiver is GRANTED.

            Moving Party to give notice.

IT IS SO ORDERED.

Dated:  May 16, 2024                         ___________________________________

                                                                                    Theresa M. Traber

                                                                                    Judge of the Superior Court

            Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.