Case Number: KC069803 Hearing Date: May 22, 2018 Dept: J

Re: City of Azusa, etc. v. Richard Francis Hall, et al. (KC069803)

MOTION FOR THE APPOINTMENT OF A RECEIVER AND OTHER RELIEF

Moving Party: Plaintiff City of Azusa

Respondents: No timely opposition filed (due 5/9/18)

POS: Moving OK

Plaintiff City of Azusa (“City”) seeks to enforce state housing laws and seeks the appointment of a receiver over the real property located at 1010 North Alameda Avenue in Azusa. The complaint, filed 11/16/17, asserts causes of action against Defendants Richard Francis Hall, Alice June Hall, Provident Funding Associates, L.P., Mortgage Electronic Registration Systems, Inc. and Does 1-50 for:

Violation of State Housing Laws

A Case Management Conference is set for 5/22/18.

Plaintiff City of Azusa (the “City”) moves the court for an order: (1) Declaring that the conditions on the parcel of real property located at 1010 North Alameda Avenue in Azusa, 91702 (“subject property”) violate state and local laws and that such violations are so extensive and of such a nature that the health and safety of residents and the public is substantially endangered; (2) Appointing court receiver Mark Adams (“Receiver”) of California Receivership Group as the court’s receiver over the subject property pursuant to Health & Safety Code § 17980.7(c); (3) Granting the Receiver the authority to manage and oversee the rehabilitation of the subject property pursuant to Health & Safety Code § 17980.7(c)(4) and CCP § 568; (4) Authorizing the Receiver to secure funding for the receivership estate through the issuance of receiver’s certificates that may be recorded as first priority liens on the subject property pursuant to Health & Safety Code § 17980.7(c), jurisprudence, and equity; (5) Enjoining defendants (i.e., Richard Francis Hall, Alice June Hall, Provident Funding Associates, L.P. and Mortgage Electronic Registration Systems, Inc. (“defendants”) from collecting income or rent from the subject property pursuant to Health & Safety Code § 17980.7(c)(3); (6) Enjoining defendants from interfering with the Receiver in the operation of the subject property pursuant to Health & Safety Code § 17980.7(c)(3); (7) Enjoining defendants from encumbering or transferring any interest in the subject property pursuant to Health & Safety Code § 17980.7(c)(3); (8) Authorizing the recovery of the City’s costs, expenses, and attorneys’ fees out of the receivership estate, to be secured as a first priority lien on the subject property the same as all other receiver’s certificates, as authorized by Health & Safety Code § 17980.7(c)(11) and (d)(1), jurisprudence, and equity.

The motion is made on the grounds that the subject property, which consists of a single-family residential structure, contains numerous substandard and extremely dangerous violations of state and local laws which substantially and immediately endanger the lives of residents in the surrounding homes and the community. City has ordered defendants to abate the unlawful condition of the subject property, but they have not done so, despite having more than reasonable opportunity.

NOTICE:

Health and Safety Code § 17980.6 provides that “[a]ny order or notice pursuant to this subdivision shall be provided either by both posting a copy of the order or notice in a conspicuous place on the property and by first-class mail to each affected residential unit, or by posting a copy of the order or notice in a conspicuous place on the property and in a prominent place on each affected residential unit.” Community Improvement Manager Rick McMinn (“McMinn”) attests that the “Notice and Order to Repair or Abate” (“N&O”) was posted on the subject property and mailed to all interested parties, including all named defendants, on 9/12/17. (McMinn Decl., ¶¶ 25-26, Exhibit “F”). He further attests that the N&O was recorded as a Notice of Pendency of Action on record title against the subject property on 12/4/17. (Id., ¶ 26).

Also, a petition for appointment of a receiver must include proof that notice of the petition was served at least three days before filing of the action (pursuant to CCP § 415.10 et seq.) on all persons with a recorded interest in the real property on which the substandard building is located. (Health & Safety Code § 17980.7(c); City of Santa Monica v. Gonzalez (2008) 43 Cal.4th 905, 921; see also Health & Safety Code § 17980.7(c)(14)—owner’s due process right to notice of claimed violation and reasonable period of time to comply with agency’s abatement orders.). Paragraphs 20 and 27 of the verified complaint filed 11/16/17 state that this notice was provided and attach a copy of same as Exhibit “C” thereto. (See also Halstead Decl., ¶ 6). R. Hall and A. Hall were personally served with the summons and complaint on 11/18/17; Provident and MERS were personally served with same on 11/17/17. (Id., ¶ 7).

REQUEST FOR JUDICIAL NOTICE:

City’s Request for Judicial Notice (“RJN”) is ruled on as follows: Grant as to Exhibit “A” (i.e., grant deed recorded 6/27/68); grant as to Exhibit “B” (i.e., deed of trust recorded 6/29/01); grant as to Exhibit “C” (i.e., City Administrative Hearing Determination dated 2/8/11 and City Administrative Appeal Determination dated 9/28/16); grant as to Exhibit “D” (i.e., notices and citations issued by City); and grant as to Exhibit “F” (i.e., N&O dated 9/12/17).

“If any building is maintained in a manner that violates any provisions of this part, the building standards published in the State Building Standards Code relating to the provisions of this part, any other rule or regulation adopted pursuant to the provisions of this part, or any provision in a local ordinance that is similar to a provision in this part, and the violations are so extensive and of such a nature that the health and safety of residents or the public is substantially endangered, the enforcement agency may issue an order or notice to repair or abate pursuant to this part. Any order or notice pursuant to this subdivision shall be provided either by both posting a copy of the order or notice in a conspicuous place on the property and by first-class mail to each affected residential unit, or by posting a copy of the order or notice in a conspicuous place on the property and in a prominent place on each affected residential unit. The order or notice shall include, but is not limited to, all of the following:

(a) The name, address, and telephone number of the agency that issued the notice or order.

(b) The date, time, and location of any public hearing or proceeding concerning the order or notice.

(c) Information that the lessor cannot retaliate against a lessee pursuant to Section 1942.5 of the Civil Code.” Health & Safety Code § 17980.6.

“If the owner fails to comply within a reasonable time with the terms of the order or notice issued pursuant to Section 17980.6, the following provisions shall apply:… (c) The enforcement agency, tenant, or tenant association or organization may seek and the court may order, the appointment of a receiver for the substandard building pursuant to this subdivision. In its petition to the court, the enforcement agency, tenant, or tenant association or organization shall include proof that notice of the petition was served not less than three days prior to filing the petition, pursuant to Article 3 (commencing with Section 415.10) of Chapter 4 of Title 5 of Part 2 of the Code of Civil Procedure, to all persons with a recorded interest in the real property upon which the substandard building exists.

(1) In appointing a receiver, the court shall consider whether the owner has been afforded a reasonable opportunity to correct the conditions cited in the notice of violation.

(2) The court shall not appoint any person as a receiver unless the person has demonstrated to the court his or her capacity and expertise to develop and supervise a viable financial and construction plan for the satisfactory rehabilitation of the building. A court may appoint as a receiver a nonprofit organization or community development corporation. In addition to the duties and powers that may be granted pursuant to this section, the nonprofit organization or community development corporation may also apply for grants to assist in the rehabilitation of the building.

(3) If a receiver is appointed, the owner and his or her agent of the substandard building shall be enjoined from collecting rents from the tenants, interfering with the receiver in the operation of the substandard building, and encumbering or transferring the substandard building or real property upon which the building is situated.

(4) Any receiver appointed pursuant to this section shall have all of the following powers and duties in the order of priority listed in this paragraph, unless the court otherwise permits:

(A) To take full and complete control of the substandard property.

(B) To manage the substandard building and pay expenses of the operation of the substandard building and real property upon which the building is located, including taxes, insurance, utilities, general maintenance, and debt secured by an interest in the real property.

(C) To secure a cost estimate and construction plan from a licensed contractor for the repairs necessary to correct the conditions cited in the notice of violation.

(D) To enter into contracts and employ a licensed contractor as necessary to correct the conditions cited in the notice of violation.

(E) To collect all rents and income from the substandard building.

(F) To use all rents and income from the substandard building to pay for the cost of rehabilitation and repairs determined by the court as necessary to correct the conditions cited in the notice of violation.

(G) To borrow funds to pay for repairs necessary to correct the conditions cited in the notice of violation and to borrow funds to pay for any relocation benefits authorized by paragraph (6) and, with court approval, secure that debt and any moneys owed to the receiver for services performed pursuant to this section with a lien on the real property upon which the substandard building is located. The lien shall be recorded in the county recorder’s office in the county within which the building is located.

(H) To exercise the powers granted to receivers under Section 568 of the Code of Civil Procedure…

(11) The prevailing party in an action pursuant to this section shall be entitled to reasonable attorney’s fees and court costs as may be fixed by the court…

(d) If the court finds that a building is in a condition which substantially endangers the health and safety of residents pursuant to Section 17980.6, upon the entry of any order or judgment, the court shall do all of the following:

(1) Order the owner to pay all reasonable and actual costs of the enforcement agency including, but not limited to, inspection costs, investigation costs, enforcement costs, attorney fees or costs, and all costs of prosecution…” Health & Safety Code § 17980.7.

“Receivers are agents of the court and may be appointed only when authorized by statute. [Marsch v. Williams (1994) 23 Cal.App.4th 238, 246…].” Weil & Brown, et al., CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2017) ¶ 9:734. “The moving papers must allege facts establishing one of the statutory grounds for appointment of a receiver. [Miller v. Oliver (1917) 174 Cal. 407, 410].” Id. at ¶ 9:759.

“Enforcement agencies, tenants and tenant associations may seek receiverships for substandard buildings, provided the owner has been afforded a reasonable opportunity to correct the cited violations. Appointed receivers may, among other things, take control of substandard property, manage the buildings, pay expenses, collect all rents and income for rehabilitation purposes and repairs and, with court approval, secure debts and any monies owed for the receiver’s compensation with a real property lien. [See Health & Saf.C. § 17980.7; City of Chula Vista v. Gutierrez (2012) 207 Cal.App.4th 681, 693].” Ahart, CAL. PRAC. GUIDE: ENF. J. & DEBT (The Rutter Group 2017) ¶ 4:866.1.

The City submits the following evidence:

Defendants R. Hall and A. Hall (collectively, “Owners”) hold title to the subject property as joint tenants pursuant to a grant deed recorded 6/27/68. (McMinn Decl., ¶ 3, Exhibit “A;” Halstead Decl., ¶ 2, Exhibit “A;” RJN, Exhibit “A”). Defendants Provident and MERS each hold a recorded interest in the subject property pursuant to a deed of trust. (Halstead Decl., ¶ 3, Exhibit “B;” RJN, Exhibit “B”). Owners’ adult son, Glenn Hall (“Occupant”), resides at the subject property with Owners. (McMinn Decl., ¶ 4).

City’s code enforcement efforts have been ongoing since at least 1993. (McMinn Decl., ¶¶ 4-5). After many years of code enforcement efforts, on 2/8/11, City held an administrative hearing regarding the unlawful nuisance conditions on the property, which was attended by the Occupant and A. Hall. (Id., ¶ 6). At the conclusion of the administrative hearing, the neutral hearing officer issued an Administrative Order on 2/8/11, declaring the subject property a public nuisance and ordering Owners to abate the nuisance conditions by 3/10/11. (Id., ¶ 6, Exhibit “C”). The Administrative Order was served on the Occupant and Owners. (Id., ¶ 7). There was no compliance. (Id., ¶ 8). On 1/11/12, City offered to remove any liens against the subject property if all the trash and debris were cleared by 2/21/12, but the Owners failed to comply. (Id., ¶ 9). On 8/28/13, 9/4/13, 10/24/13 and 11/18/13, McMinn conducted inspections of the subject property and confirmed that the violations and substandard conditions continued to exist on the subject property and that the trash and debris remained unabated. (Id., ¶ 10).

In September 2013, City sent Owners and the Occupant a letter demanding that the violations be corrected by 10/23/13 and warning Owners that City would be forced to take legal action if they failed to comply. (Id., ¶ 11, Exhibit “D”). After the letter was issued, city inspectors spoke with the Occupant on numerous occasions. (Id., ¶ 12). The Occupant requested additional time to comply. (Id.). City inspectors offered to put the Occupant in contract with a local charity that could assist him with the clean-up of the subject property, but the Occupant refused to accept any help and the condition of the subject property continued to worse. (Id.).

On 11/18/13, McMinn conducted a follow up inspection of the subject property. (Id., ¶ 13). No changes had been made, and the violations continued to exist. (Id.). On 11/21/13, City obtained an Abatement Warrant to abate the violations existing on the subject property. (Id., ¶ 15). The Occupant was notified of the Abatement Warrant, which the City did not execute in order to encourage the Occupant’s efforts to abate the violations on his own. (Id.). For the next several months City inspectors conducted weekly check-ins with the Occupant to monitor his progress. (Id., ¶ 16). Follow up inspections revealed there had been no substantial change to the subject property. (Id.).

Subsequent inspections of the subject property on 8/28/14, 9/24/14 and 2/12/15 revealed no changes had been made and that the subject property remained in violation. (Id., ¶ 17). On 2/26/15, McMinn was contacted by a local church offering to assist with the clean up at the subject property; although City put the Occupant in contact with the pastor from the church, the Occupant purportedly refused any assistance from the church. (Id., ¶ 18).

On 9/27/16, City held a second administrative hearing regarding the unlawful nuisance conditions on the subject property, which the Occupant attended on behalf of Owners. (Id., ¶ 20). At the conclusion of the administrative hearing, the neutral hearing officer issued an Administrative Order on 9/28/16, declaring the subject property a public nuisance and ordering Owners to abate the nuisance conditions by10/28/16. (Id., ¶ 20, Exhibit “C”).

On 5/10/17, McMinn re-inspected the subject property and confirmed that numerous dangerous conditions and violations of law continued to exist. (Id., ¶ 21). On 5/26/17, City served a “Notice to Cease and Desist Violations of Azusa Municipal Code,” which listed numerous violations of law identified during the 5/10/17 inspection and warned Owners and the Occupant that City would be forced to take legal action if they the subject property was not brought into full compliance by 6/5/17. (Id., ¶ 22, Exhibit “D”).

On 7/11/17, McMinn re-inspected the subject property along with several other City inspectors. (Id., ¶ 23). McMinn observed 28 illegal conditions, which are set forth at length on pages 5-11 of his declaration (including, but not limited to, general dilapidation or improper maintenance, accumulation of junk, trash and debris, inadequate means of ingress and egress, accumulation of combustible items, improper use of extension cords, lack of smoke alarms and carbon monoxide detectors, water damage, rodent and insect infestation, improper water heating facilities, improper kitchen sink, improper ventilation system improper window treatments, unsanitary kitchen, dilapidated roofing elements, unpermitted construction [patio covering], unlawful construction [shed], overgrown and dead vegetation, offensive animal odors and waste, dilapidated interior surfaces and inoperable motor vehicles). (Id., ¶¶ 23-24). Photographs of the subject property taken on 7/11/17 are attached as Exhibit “E” to the Appendix of Exhibits. (Id., ¶ 23).

On 9/12/17, City issued an N&O, citing 28 violations of law on the subject property and ordering rehabilitation of the subject property to begin within 10 days and to be completed within 30 days, or by 10/12/17. (Id., ¶ 25, Exhibit “F”). The N&O also warned that failure to comply could result in the appointment of a receiver. (Id.).

McMinn re-inspected the subject property on 10/24/17 and 11/8/17 and confirmed that the subject property continues to deteriorate and that none of the violations listed in the N&O have been abated or brought into compliance with the law. (Id., ¶ 32). Photographs of the subject property taken on 10/24/17 and 11/8/17 are attached as Exhibits “G” & “H” to the Appendix of Exhibits. (Id.). During the 11/8/17 inspection, McMinn confirmed that the Occupant and Owners continue to occupy the subject property. (Id., ¶ 33).

On 1/30/18, City received a complaint from a neighboring property regarding the condition of the subject property, which caused McMinn to conduct a public right-of-way inspection on 1/31/18. (Id., ¶ 34). During that inspection, McMinn observed a significant amount of junk, trash, and debris piled in the front yard of the subject property. (Id.). Photographs of the subject property taken on 1/31/18 are attached as Exhibit “I” to the Appendix of Exhibits. (Id.).

On 3/5/18, City received a complaint from a neighboring property regarding the condition of the subject property, specifically the accumulation of junk, trash and debris in the read yard of the subject property, which caused McMinn to conduct another public right-of-way inspection, on 3/6/18. (Id., ¶ 35). McMinn observed that conditions continue to deterioriate on the subject property and that no change has been made to the read yard since the issuance of the N&O. Photographs of the subject property taken on 1/31/18 are attached as Exhibit “J” to the Appendix of Exhibits. (Id.).

McMinn opines that “the conditions on the subject property are so extensive and of such a nature so as to post an immediate and substantial danger to the health and safety of the residents and the public,” and that “the appointment of a receiver is warranted in this case to address the serious and persistent violations on the subject property.” (Id., ¶¶ 37 & 38). City Building Official Tony Meyers is in accord. (Meyers Decl., ¶¶ 10 and 13).

City has also furnished declarations from Fire Inspector Evette Almarez (“Almarez”) and attorney Trica Halstead (“Halstead”) in support of its motion. Almarez was present during the 11/8/17 re-inspection of the subject property and attests as to the presence of numerous Fire Code violations. (Almarez Decl., ¶¶ 5-6). Halstead attests as to her multiple unsuccessful communications with the Occupant and the Owners to bring the subject property into compliance.

The evidence demonstrates that the City gave Owners and the Occupant multiple notices for the subject property violations; Owners and the Occupant had a reasonable opportunity to bring the property into the City Code and State law compliance; and that Owners and the Occupant failed to remediate the problems. The evidence also demonstrates that City has served all persons with recorded interest in the subject property with notice of the instant motion. It appears that the substandard conditions on the subject property pose an immediate danger to public health and safety and thus, an appointment of a receiver is necessary to abate the conditions.

City has provided a declaration from Receiver, in which he attaches his curriculum vitae and detailing his receivership experience and qualifications. Thus, the motion for appointment of a receiver is granted.

REQUEST FOR INJUNCTIVE RELIEF:

“The appointment of a receiver pursuant to § 17980.7(c) operates to enjoin the owner [or agent] from collecting tenant rents, interfering with the receiver in operation of the substandard building, and encumbering or transferring the building or real property upon which it is situated. [Health & Saf. C. § 17980.7(c)(3); see Erlach v. Sierra Asset Servicing, LLC [(2014)] 226 Cal.App.4th [1281,] at 1294).” Friedman, Garcia and Hoy, CAL. PRAC. GUIDE: LANDLORD-TENANT (The Rutter Group 2017) ¶ 3:72.5.

City’s request for injunctive relief is granted.

REQUEST FOR AUTHORIZATION OF RECEIVER’S CERTIFICATE AS FIRST LIEN ON THE SUBJECT PROPERTY:

“With court authorization, a receiver may be authorized to issue receivership certificates as security for cash loaned to the receivership estate.” Miller & Starr, 12 Cal. Real Est. (4th ed. 2017) § 41.12; see also, Dorn v. Crank (1892) 96 Cal. 381, 382-384 and Title Insurance and Trust Co. v. Cal Development Co. (1915) 171 Cal. 227. A receiver’s certificate becomes a first lien on the property with priority overall all other preexisting liens if the court authorizes as much. Id. at 231.

City’s request for authorization of receiver’s certificate as first lien on the subject property is granted.

REQUEST FOR ATTORNEYS’ FEES/COSTS:

City is statutorily entitled to recover its inspection costs, investigation costs, enforcement costs, court costs, and attorney’s fees pursuant to Health & Safety Code § 17980.7(c)(11)&(d)(1).

Although City seeks an award of enforcement costs and reasonable attorneys’ fees, the amount sought is not specified in the motion. Thus, City should bring a separate motion for the costs and fees sought.