Case Number: SC128569 Hearing Date: January 12, 2018 Dept: O

SC128569

HOLLY HILL INVESTMENTS, LLC v. FLAHERTY ET AL.

Plaintiff’s Motion for Appointment of Receiver is DENIED.

ANALYSIS: Plaintiff seeks appointment of receiver over the subject property in order to preserve and protect the Property, to prevent its use and marketing for rent by Defendants Vince, Loriann and Michael Flaherty, and to collect any and all rents and profits from the Property until further order of this Court. Plaintiff purchased the property in September 2017 and demanded that Defendants turn over the property in November 2017. Defendants have refused and continue to rent the commercial property to third parties. Defendants have rented the property to third parties in despite having been divested of title for four years. US Bank purchased it in 2012 and Defendants have continually rented it out for four years since that time.

Plaintiff seeks appointment of a receiver pursuant to CCP §564(b)(7), which specifically provides that a court may appoint a receiver in an unlawful detainer action. Plaintiff is not entitled to self-help. Plaintiff therefore asks that this Court appoint a receiver so that the rents and profits from the Property that rightfully belong to Plaintiff are not taken by Defendants.

CCP § 564(b)(7) expressly authorizes the appointment of a receiver in unlawful detainer actions. The only essential allegation for a § 564(b)(7) receivership is that the proceeding in which the remedy is sought is “an action of unlawful detainer.” CCP § 564(b)(7). “Though the basic pleading requirements for appointment of a receiver are less burdensome in UD actions (CCP § 564(b)(7)), receivership is viewed as a “drastic” remedy and is likely to be granted only upon a showing that allowing the tenant to remain in control of the property pending resolution of the unlawful detainer will cause plaintiff damage other than and in addition to damages suffered because of nonpayment of rent.” Friedman, et al., California Practice Guide–Landlord-Tenant, 8:93 (Rutter Group, September 2017).

A receivership should only be imposed where absolutely necessary and no other less harsh remedy, such as an injunction or appointment of a provisional director would be appropriate. See Weil & Brown, California Practice Guide: Civil Procedure Before Trial, ¶9:743. The supporting papers must contain competent and admissible evidence (i.e., not conclusions or hearsay) based upon the declarant’s personal knowledge. See McCaslin v. Kenney (1950) 100 Cal.App.2d 87, 94.

The appointment of a receiver rests within the discretion of the trial court and the power to determine its necessity is broad. See Gold v. Gold Realty Co. (2003) 114 Cal.App.4th 791, 807-808. “Receivers are often legal luxuries, frequently representing an extravagant cost to a losing litigant. When it appears that no reasonably certain benefit will result to one litigant, and a distinct disadvantage will result to another, courts should weigh carefully the propriety of appointing a receiver.” City & County of San Francisco (1993) 16 Cal.App.4th 734, 744. Thus, while the availability of other remedies does not, in and of itself, preclude the use of a receivership, a trial court must consider the availability and efficacy of other remedies in determining whether to employ the extraordinary remedy of a receivership. See Gold v. Gold Realty Co. (2003) 114 Cal.App.4th at 807; City & County of San Francisco, supra, 16 Cal.App.4th at 745; Jackson v. Jackson (1967) 253 Cal.App.2d 1026, 1040 (receivership is a drastic remedy).

“Decisions upholding the denial of a receiver tend to emphasize the extraordinary nature of the remedy. It is said to be “harsh” and “drastic,” to be granted only in cases of extreme necessity, when no other legal or equitable remedy is available and the need is great. Hence, while it is a discretionary remedy, the discretion to deny is much more likely to be upheld than the discretion to grant.” See 6 Witkin, Cal. Proc. (4th 1997) Prov Rem, § 417, p. 339.

Plaintiff fails to demonstrate the need for the appointment of a receiver, an extremely harsh and expensive remedy. Plaintiff alleges that without a receiver Defendants will continue to lease out the property and retain rents and profits therefrom that rightfully belong to Plaintiff.

Plaintiff fails to allege any injury to the property itself or any injury apart from loss of rental payments. Defendants have been leasing the premises out consistently for four years since being divested of title. Given these facts, there is no danger of the property suffering injury or any exigent or emergent circumstances that requires appointment of a receiver to protect the underlying property. A UD action is an expedited proceeding and if Plaintiff obtains an order of eviction, it will achieve the ends Plaintiff seeks by way of this request for receiver and Plaintiff can pursue the wrongfully retained rents and profits by way of an ordinary civil action. For this reason, the request for receiver is denied.