Case Number: VC056465 Hearing Date: August 22, 2017 Dept: SEC

HELLYAR v. HELLYAR

CASE NO.: VC056465

HEARING: 08/22/17

JUDGE: RAUL A. SAHAGUN

#3

TENTATIVE RULING

The application for an award of additional fees and costs by Judgment Creditor and former Receiver David Pasternak and against Judgment Debtor Adesorn Hemaratanatorn is GRANTED. The Court AWARDS Receiver Pasternak an additional $ 59,513.06 in fees and costs incurred in connection with the receivership.

Moving Party to give Notice.

The application by Receiver Pasternak seeks an order awarding him additional fees and costs against the Judgment Debtor. The application indicates that the Receiver incurred the fees and costs he seeks to have reimbursed in connection with his defense of proceedings in Bankruptcy Court attacking the November 1, 2012 fee award entered by the Court and Judge McKnew. The application indicates that the Judgment Debtor’s application was successfully defended before both the Bankruptcy Court and the applicable federal appellate bodies. The Court has received no responsive briefing.

Part of the Court’s discretionary control over its receiver arises from the receiver’s duties to account and the Court’s role in scrutinizing those accounts. Seccombe v Dionne (1935) 3 Cal.App.2d 731, 734. Awards for the compensation and reimbursement of a receiver are committed to the sound discretion of the trial court. Venza v. Venza (1951) 101 Cal.App.2d 678, 680. When examining requests for compensation, the receiver is assumed to be honest until the contrary appears and the requests are reviewed in a spirit of equity. People v. Riverside University (1973) 35 Cal.App.3d 572, 586. A party challenging the receiver’s final account bears the burden of substantiating their challenge. MacMorris Sales Corp. v. Kozak (1967) 249 Cal.App.2d 998, 1003-1004.

The application of Receiver Pasternak seeks $ 59,513.06 in additional fees and costs associated with his defense of the Court’s November 1, 2012 Order discharging the receiver and awarding him fees. The Court has twice awarded the Receiver fees and costs in connection with his defense of the Court’s discharge order in the California state appellate courts, awarding fees and costs against the Judgment Debtors jointly and severally in the amounts of $ 22,734.78 on January 12, 2015 (Pasternak Decl., Exh. 5), and $ 94,074.01 on August 26, 2015 (id., Exh. 6). The current application for fees and costs concerns Judgment Debtor Hemaratanatorn’s foray into federal Bankruptcy Court to attack the discharge order. On February 7, 2016, the Judgment Debtor filed a motion with the United States Bankruptcy Court seeking to vacate the Superior Court’s discharge order and fee award (id., Exhs., 7-9). The Bankruptcy Court denied the motion to vacate on April 15, 2016 (id., Exh. 10). The Judgment Debtor appealed the Bankruptcy Judge’s order to the Bankruptcy Appellate Panel of the Ninth Circuit (id., Exhs. 11-13). On November 9, 2016, the Panel issued a decision unanimously denying the appeal (id., Exh. 14). The Judgment Debtor then appealed the Panel’s decision to the Ninth Circuit Court of Appeals (id., Exh. 15). The Receiver declares that the appeal before the Ninth Circuit was dismissed, following the Judgment Debtor’s failure to file an opening brief.

The Receiver’s request for an award of additional fees and costs derives from ¶ 10 of the Court’s 2012 discharge order. The order reads as follows, in relevant part (Pasternak, Exh. 2):

Parties Anette Hellyar, Michael Hellyar, Cindy Lujan, Brian Rayner, and Adesorn Hemaratanatorn jointly and severally shall defend and indemnify the Receiver against any claims, demands, debts, etc. which may arise from this receivership.

The instant request for fees and costs are a result of Judgment Debtor Hemaratanatorn’s vigorous but ill-fated attempts to have the Court’s 2012 discharge order set aside in the MBE Digital bankruptcy proceedings (id., Exhs. 7-15). The Receiver’s opposition to these challenges to the Court’s order are a necessary aspect of his role and therefore “arise from [the] receivership.” People v. Riverside University, 35 Cal.App.3d at 587 (“[T]he cost of defending against an unfounded challenge to a receiver’s account is regarded as a necessary expense incurred in the course of his official duties for which he is entitled to reimbursement out of the estate”). As a result, the Receiver is entitled to seek reimbursement from the Judgment Debtor for the expenses incurred in defending his appeals.

As noted above, a receiver comes before the Court with a presumption of honesty, and the burden of establishing the contrary is placed upon the party objecting to the account. People v. Riverside University, 35 Cal.App.3d at 586; MacMorris Sales Corp., 249 Cal.App.2d at 1003-1004. Here, the application is unopposed. Therefore, the Court should find that the presumption of regularity and honesty applies. In the absence of challenge, the Court awards the Receiver the requested additional fees and costs in the requested amount of $ 59,513.06.