Case Number: EC060548 Hearing Date: April 18, 2014 Dept: A

STAS Group v Fowler

EX PARTE APPLICATION TO APPOINT RECEIVER
EX PARTE APPLICATION FOR WRIT OF ATTACHMENT

Calendar: add-on
Case: EC060548
Date: 4/18/14

MP: Plaintiff, STAS Group, LLC
RP: Defendants, Kymry Fowler and Post Speech Pathology, Inc.

RELIEF REQUESTED:
1. Order appointing receiver for Post Speech Pathology, Inc., Tustin Speech and Language, and Tustin Autism Services for Kids, LLC
2. Writ of Attachment for $490,719.27 on property of Kymry Fowler

DISCUSSION:
This case arises from the Plaintiff’s claim that the Defendants have breached an agreement under which the Plaintiff loaned $400,000 to the Defendants and assisted the Defendants with operating a speech therapy business.
Trial is set for May 19, 2014.

On April 16, 2014, the Plaintiff appeared with an ex parte application for the appointment of a receiver and a second application for a writ of attachment. The Court continued the hearing to April 18, 2014.

Plaintiff does not demonstrate good cause for these applications to be made in an ex parte proceeding. Under CRC rule 3.1202(c), an applicant for any ex parte relief must “make an affirmative factual showing in a declaration containing competent testimony based on personal knowledge of irreparable harm, immediate danger, or any other statutory basis for granting relief ex parte.”
The Plaintiff offers a declaration from its managing director, Clinton Sallee. He makes no affirmative factual showing of irreparable harm, immediate danger or any other statutory basis for appointing a receiver or issuing a writ of attachment in an ex parte proceeding.
This is grounds to deny both ex parte applications.

1. Motion for Appointment of Receiver
CRC rule 3.1175 specifically requires an ex parte application for appointment of receiver to provide facts regarding the nature of the emergency and the reasons irreparable injury would be suffered by the applicant during the time necessary for a hearing on notice. The Plaintiff’s motion makes no showing of any emergency or reasons that irreparable injury would be suffered by the Plaintiff during the time necessary for a noticed hearing. This is grounds to deny the ex parte application for the appointment of a receiver.
In addition, CRC rule 3.1175 requires the ex parte application for appointment of a receiver to include the following:

1) The names, addresses, and telephone numbers of the persons in actual possession of the property for which a receiver is requested, or of the president, manager, or principal agent of any corporation in possession of the property;
2) The use being made of the property by the persons in possession; and
3) If the property is a part of the plant, equipment, or stock in trade of any business, the nature and approximate size or extent of the business and facts sufficient to show whether the taking of the property by a receiver would stop or seriously interfere with the operation of the business.

The Plaintiff’s ex parte application does not include any facts, detailed or otherwise, regarding these requirements. This is grounds to deny the ex parte application for appointment of a receiver.

Further, the moving party has the burden of showing that there is a danger of irreparable injury to the moving party and that the receivership is necessary to prevent the injury. Alhambra-Shumway Mines, Inc. v. Alhambra Gold Mine Corp. (1953) 116 Cal. App. 2d 869, 873-874. In determining whether to appoint a receiver, the Court considers the availability and efficacy of other remedies in determining whether to employ the extraordinary remedy of a receivership. Id. Ordinarily, if there is any other remedy, less severe in its results, which will adequately protect the rights of the parties, a Court should not take property out of the hands of its owners. Id.
The Plaintiff’s motion does not make an affirmative showing of irreparable injury or the necessity of a receiver to prevent injury. The Plaintiff claims that the Defendant, Kymry Fowler, breached a promissory note by failing to repay amounts due and that the corporation, STAS Group, LLC, breached a guaranty.
The Plaintiff provides the Certificate of Dissolution that shows that a “Scott Post” filed a Certificate of Dissolution for the corporation, Post Speech Pathology, Inc. The Plaintiff offers no facts regarding Scott Post.
Under CCP section 565, upon the dissolution of any corporation, the Court, on application of any creditor, may appoint a receiver “to take charge of the estate and effects thereof and to collect the debts and property due and belonging to the corporation, and to pay the outstanding debts thereof, and to divide the moneys and other property that shall remain over among the stockholders or members.” (italics added for emphasis).
The term “may” in CCP section 565 indicates that the Court has discretion to appoint the receiver. The Plaintiff has not offered any facts to demonstrate that the Court should exercise its discretion and grant the extraordinary remedy of a receiver. The Plaintiff has not provided any facts to show that the appointment of a receiver is necessary to prevent injury.

Finally, a review of the order reveals that it seeks a receiver for two other business entities, Tustin Speech and Language and Tustin Autism Services for Kids, LLC. There are no facts regarding these two other business entities and no affirmative showing of any basis for appointing a receiver to take over these other business entities.

Accordingly, the Court will deny the ex parte application for a receiver. Instead, the Plaintiff should file a properly noticed motion for a receiver and demonstrate that there is good cause to grant the extraordinary remedy of a receiver to the Plaintiff and that it is necessary to appoint a receiver to prevent injury to the Plaintiff in the time remaining before trial, which is approximately one month.

2. Application for Writ of Attachment
The Plaintiff seeks a writ of attachment for $490,719.27 the property of Defendant, Kymry Fowler. This amount includes estimated attorney’s fees of $100,000.

This is the Plaintiff’s second application for a writ of attachment. The Court denied the first on August 5, 2013. Since the Plaintiff is seeking the same relief in a subsequent motion, the Plaintiff must comply with the procedural requirements of CCP section 1008, e.g., a declaration including facts regarding the prior motion and identifying new facts, circumstances, or law upon which the subsequent motion is based. Otherwise, CCP section 1008(e) states that the Court is without jurisdiction to hear the subsequent motion.
The Plaintiff does not comply with this requirement. There is no declaration that includes facts regarding the prior motion or identifying a new fact, circumstance, or law for renewing the application for a writ of attachment on the property of Defendant, Kymry Fowler.

The Court denied the prior application because the Court found that the Plaintiff’s complaint seeks a transfer of stock so that the Plaintiff may take control of Post Speech Pathology. The Court found that the Plaintiff has not offered sufficient evidence that it was seeking to recover the debt, as opposed to using the writ of attachment as a method by which it can compel the Defendants to transfer the stock in order to remove the attachments on their property.

The pending application for a writ of attachment offers no new facts, circumstances, or law that demonstrates any grounds to change this finding. This is grounds to deny the ex parte application for a writ of attachment because the Plaintiff’s failure to comply with CCP section 1008 causes the Court to be without jurisdiction to consider the subsequent motion for the same relief.

Further, the Attachment Law statutes are subject to strict construction, and where a court is required to exercise its jurisdiction in a particular manner or subject to certain limitations, an act beyond those limits is in excess of its jurisdiction and void. Pacific Decision Sciences Corp. v. Superior Court (2004) 121 Cal. App. 4th 1100, 1106.
CCP section 485.010(a) states that no writ of attachment may be issued through an ex parte proceeding unless it appears from facts shown by affidavit that great or
irreparable injury would result to the plaintiff if issuance of the order were delayed until the matter could be heard on notice. There is no affirmative showing regarding any recent or imminent change in Kymry Fowler’s finances, assets, or property to establish that great or irreparable injury would result to the Plaintiff if issuance of the writ of attachment were delayed until a hearing on a noticed motion.

The Plaintiff states that the Defendant has failed to pay creditors, which the Plaintiff states are the Defendant’s prior attorney, the unidentified prior owner of the business, and the Plaintiff. This offers no grounds to find that a writ of attachment must be issued in an ex parte proceeding to avoid irreparable injury.
The Plaintiff also states that a writ of attachment is necessary because the Defendant will “continue to make the assets unavailable for levy”. The Plaintiff sets forth no facts demonstrating that the Defendant is engaged in any type of conduct to make her assets unavailable for levy, e.g., fraudulent transfers to thwart her creditors.
This failure to comply with CCP section 485.010(a) is grounds to deny the ex parte application for a writ of attachment.

Therefore, the Court will deny both of the Plaintiff’s ex parte applications because the Plaintiff has not complied with the procedural requirements of CRC rule 3.1202, CRC rule 3.1175, or CCP section 485.010(a) for seeking a receiver or a writ of attachment in an ex parte proceeding. Further, the Plaintiff has not made an affirmative showing that the extraordinary relief of a receiver is required or necessary to prevent injury. Further, the Plaintiff has not complied with CCP section 1008 to establish that there are grounds to file a subsequent motion for the same relief, i.e., a writ of attachment on the property of Defendant, Kymry Fowler.

RULING:
DENY both applications.