Case Number: KC066983    Hearing Date: August 04, 2014    Dept: O

The Bank of New York Mellon v. Phu, et al. (KC066983)

OSC RE: TEMPORARY RESTRAINING ORDER

TENTATIVE RULING

Plaintiff The Bank of New York Mellon’s application for an order appointing receiver is GRANTED. The court will hear from the parties regarding an appropriate bond amount.

A receiver may be appointed by the court in which an action or proceeding is pending, or by a judge thereof, in the following cases… (1) In an action by a vendor to vacate a fraudulent purchase of property, or by a creditor to subject any property or fund to the creditor’s claim, or between partners or others jointly owning or interested in any property or fund, on the application of the plaintiff, or of any party whose right to or interest in the property or fund, or the proceeds thereof, is probable, and where it is shown that the property or fund is in danger of being lost, removed, or materially injured. (2) In an action by a secured lender for the foreclosure of a deed of trust or mortgage and sale of property upon which there is a lien under a deed of trust or mortgage, where it appears that the property is in danger of being lost, removed, or materially injured, or that the condition of the deed of trust or mortgage has not been performed, and that the property is probably insufficient to discharge the deed of trust or mortgage debt… (9) In all other cases where necessary to preserve the property or rights of any party… (11) IN AN ACTION BY A SECURED LENDER FOR SPECIFIC PERFORMANCE OF AN ASSIGNMENT OF RENTS PROVISION IN A DEED OF TRUST, MORTGAGE, OR SEPARATE ASSIGNMENT DOCUMENT. The appointment may be continued after entry of a judgment for specific performance if appropriate to protect, operate, or maintain real property encumbered by a deed of trust or mortgage or to collect rents therefrom while a pending nonjudicial foreclosure under power of sale in a deed of trust or mortgage is being completed. (12) In a case brought by an assignee under an assignment of leases, rents, issues, or profits pursuant to subdivision (g) of Section 2938 of the Civil Code. (CCP 564(b).)

Showing Required: The applicant must show, by declarations or verified pleading: 1) the nature of the emergency and the reasons irreparable injury would be suffered if no receiver was appointed; 2) a description of the property and the names and addresses of the persons in possession; 3) if the property is used as a business, facts sufficient to show the impact which appointment might have on the business, and reasonable diligence to ascertain any of the above matters if such matters have not been fully ascertained. (CRC 3.1175.)

Plaintiff presents evidence that Defendants failed to pay monthly payments on the Note. The unpaid principal balance due under the note is approximately $198,331.15. (Radtke Decl., Par. 4(g).) The property is located at 783-789 North Loren Avenue, Azusa, California. The Deed of Trust authorizes the appointment of a receiver “to take possession of all or any part of the Property, with the power to protect and preserve the Property, to operate the Property preceding foreclosure or sale, and to COLLECT THE RENTS from the Property and apply the proceeds, over an above the cost of the receivership, against the Indebtedness.” (Radtke Decl., Ex. C, Deed of Trust, Page 5.)

In opposition, Defendants contend that the Loren property generates no rent or income to support the appointment of a receiver. However, “such a showing is not required where the creditor, as here, seeks to specifically enforce a provision of the mortgage or deed of trust assigning the rents and profits from the security to the creditor upon default or specifically providing for the appointment of a receiver to take possession of the security and collect the rents and profits therefrom.” (Turner v. Superior Court (1977) 72 Cal.App.3d 804, 811.) Defendants fail to account for the fact that a receivership may be based on contractual grounds, as opposed to purely equitable grounds. Here, the parties explicitly contracted to appoint a receiver and assign rents in the event of a default. Defendants do not dispute that they are in default on the Note.

Application is GRANTED.

Bond: Upon appointment, the Receiver must post a separate undertaking to faithfully discharge his or her duties and obey court orders. (CCP 567.) The receiver’s bond is usually fixed high enough to cover the value of any cash or transferable personal property coming into the receiver’s possession. It is the applicant’s responsibility to propose the amount of the bond, but the opposing party may propose a higher amount. (CRC 1902.5.) Wherever possible, counsel should submit affidavits stating facts justifying the amount of bond.

The court will hear from the parties regarding an appropriate bond amount.