Case Number: KC068348 Hearing Date: March 19, 2018 Dept: J

Re: Cathay Bank, etc. v. Melrose Creations, Inc., etc., et al. (KC068348)

MOTION FOR AN ORDER: (1) APPROVING THE RECEIVER’S FINAL ACCOUNTING AND REPORT; (2) CONFIRMING THE RECEIVER’S ACTIONS AND DISCHARGING THE RECEIVER; (3) DISSOLVING THE PRELIMINARY INJUNCTION; (4) EXONERATING PLAINTIFF’S AND RECEIVER’S BONDS; AND (5) TURNOVER OF EXCESS RECEIVERSHIP FUNDS TO BANK

Moving Party: Receiver Robb Evans & Associates LLC

Respondent: No timely opposition filed (due 3/6/18)

POS: Moving OK

In this breach of contract action, Plaintiff Cathay Bank (“Bank”) alleges that Defendant Melrose Creations, Inc. (“Melrose”) defaulted on the terms of a promissory note in the sum of $2,100,000.00 (“Note 1”), by failing to pay in full on its maturity date of February 29, 2016; and that Defendant also breached the terms of a promissory note in the sum of $500,000.00 (“Note 2”), by failing to pay the full required principal payment that was due for Note 2 on February 29, 2016, in the amount of $70,000.00, as well as the payment due on March 30, 2016, in the amount of $80,891.25. Plaintiff further alleges that the officers of Melrose, who are also the guarantors of the Notes, are fraudulently transferring assets from Melrose, in order to avoid repaying the Bank. Plaintiff commenced this action on April 6, 2016. The First Amended Complaint, filed on April 8, 2016, asserts causes of action against Defendants Melrose, Hsiu Sung Huang (“Sung”), Shean Chang Lin (“Lin”), Hsiu Chun Huang (“Chun”), Hui-Wen Huang aka Hui Wen Huang individually and as trustee of The Hui Wen Huang Separate Property Trust dated 2/1/16 (“Hui-Wen”), Chun Hui-Lee Huang aka Lee Chun Hui Huang aka Chun Hui-Lee Huang individually and as trustee of The Lee Chun Hui Huang Separate Property Trust dated 2/1/16 (“Hui-Lee”) and Does 1-200 for:

Breach of Promissory Note

Breach of Promissory Note

Breach of Commercial Guaranty

Breach of Commercial Guaranty

Breach of Commercial Guaranty

Claim and Delivery

Conversion

Specific Performance for Appointment of Receiver

Fraudulent Transfer

Fraudulent Transfer

On 4/8/16, the court, upon ex parte application, issued its “Order Appointing Receiver, Temporary Restraining Order and Order to Show Cause re Confirmation of Appointment of Receiver and Preliminary Injunction,” whereby Robb Evans & Associates LLC was appointed as Receiver over Melrose. On 5/2/16, the “Order Confirming Appointment of Receiver and Preliminary Injunction In Aid of Receiver” was filed. On 5/20/16, Defendants Melrose’s and Lin’s defaults were entered.

On 9/30/16, plaintiff dismissed Defendants Melrose and Lin from the seventh cause of action, without prejudice; that day, plaintiff obtained a default judgment against Defendants Melrose and Lin.

On 7/28/17, the court granted plaintiff’s motion for terminating sanctions and ordered the answers of Sung, Chun, Hui-Wen and Hui-Lee stricken.

On 9/18/17, plaintiff dismissed its 6th-9th causes of action, without prejudice, as well as Does 1-200; that day, the “Judgment by Court After Default” was entered in plaintiff’s favor and against Sung, Chun, Hui-Wen and Hui-Lee. On 10/3/17, plaintiff filed its “Notice of Entry of Judgment” and mail-served same.

Court-appointed receiver Robb Evans & Associates LLC (“Receiver”) now moves for an order approving the Receiver’s Final Report and Accounting for the period from inception on 4/8/16 through 12/31/17 (“Receiver’s Final Accounting & Report”), confirming the actions of the Receiver, discharging the Receiver, dissolving the preliminary injunction, turnover of the estimated excess funds of the receivership estate in the approximate amount of $77,471.80 to Plaintiff Cathay Bank (“plaintiff”) and exonerating plaintiff’s and Receiver’s bonds with respect to Melrose Creations, Inc. (“Melrose”).

On 4/8/16, the court, upon ex parte application, issued its “Order Appointing Receiver, Temporary Restraining Order and Order to Show Cause re Confirmation of Appointment of Receiver and Preliminary Injunction,” whereby Robb Evans & Associates LLC was appointed as Receiver over Melrose. On 5/2/16, the “Order Confirming Appointment of Receiver and Preliminary Injunction In Aid of Receiver” was filed.

“A receiver must present by noticed motion or stipulation of all parties: (1) A final account and report; (2) A request for the discharge; and (3) A request for exoneration of the receiver’s surety.” California Rules of Court (“CRC”) Rule 3.1184(a). “No memorandum needs to be submitted in support of the motion or stipulation served and filed under (a) unless the court so orders.” CRC Rule 3.1184(b).

“’The examination of the account of a receiver is conducted in a spirit of equity, assuming the receiver to be honest until the contrary appears, and from the standpoint of benefit or injury to the estate rather than of strict and technical adherence to form.’” People v. Riverside University (1973) 35 Cal.App.3d 572, 586 (citation omitted).

Here, Brick Kane (“Kane”), Receiver’s President and Chief Operating Officer, represents that Receiver liquidated the Collateral identified in the 4/8/16 order by public auction. (Kane Decl., ¶ 2). The auction proceeds totaled approximately $86,564.08 and receivable collection totaled approximately $35,445.07. (Id., ¶ 3). There are no further management functions for Receiver; as such, the receivership aspect of this action has been rendered moot. (Id.). Receiver anticipates excess funds in the approximate amount of $77,471.80 in the receivership estate over Melrose as set forth in Receiver’s Final Accounting and Report. (Id., ¶ 5, Exhibit “1”).

The motion is granted.