2017-00216581-CU-PT

City of Sacramento vs. Ella Mae Lofton

Nature of Proceeding: Application to Be Relieved of Duties as Receiver

Filed By: Eason, Matthew R.

Receiver has filed an Application to be Relieved of Duties as Receiver.

The application is unopposed but is denied without prejudice.

The Receiver was appointed recently, on October 3, 2017 to take over property that is substandard as defined in Health & Safety Code section 17920.3 and is therefore a public nuisance. The City of Sacramento’s unopposed motion for appointment of receiver pursuant to Health & Safety Code § 17980.7 was granted, based on a showing that the subject property located at 3631 21st Avenue in Sacramento, CA is substandard, vacant and in a dangerous condition and that the property owner was given ample opportunity to correct the problems. As recited in the prior ruling, the receiver was granted the powers requested in the motion, including the power to issue receiver certificates as first liens on the property to finance the property’s rehabilitation.

Thus, the Receiver was appointed to undertake the rehabilitation of the property. As noted above, the Order appointing the receiver contained a provision that the Receiver may record a lien to secure repayment of his compensation, costs and expenses and that this lien will be prior and superior to all pre-existing private liens and encumbrances. ((See Order filed October 3, page 4, lines 22-25, emphasis added)

The application to be relieved of duties as receiver states that Receiver has attempted to get the Receiver’s Certificate insured, but was not able to obtain insurance that its lien will take precedence over tax liens. Parenthetically, a receiver has the duty under tax laws to collect and remit taxes for property entrusted to his management. Kirk v. Kirk (1966) 243 Cal. App. 2d 580 [addressing federal and state tax liens]; see also Marshall v. New York (1920) 254 U.S. 380. Further, Receiver contends the City of Sacramento has not agreed to guaranty that the Receiver’s fees will get paid. The Receiver’s Plan contemplated the Receiver spending over $180,000 of its own funds on the rehabilitation of the property. Receiver contends that without the ability to get title insurance, or a guaranty from the City, the Receiver is unwilling to advance its funds and thus seeks to withdraw. No alternate Receiver is proposed.

This, of course, begs the question: the property remains a nuisance, as averred by the City, so what happens if the receiver is relieved and no new receiver is proposed? Normally, a receivership terminates upon completion of the duties for which the receiver was appointed; or at any other time upon court order.” (Ahart, Cal. Practice Guide, supra, ¶ 4:940, p. 4.170.9.) Indeed, the City applied for and obtained a receiver to rehabilitate the property. The receiver agreed to this duty. The receiver is the agent of the court and not of any party, and as such [Cal. Rules of Ct., Rule 3.1179(a)] is neutral, acts for the benefit of all who may have an interest in the receivership property, and holds assets for the court and not for the plaintiff or the defendant. As an experienced receiver, it is unclear why these issues were not recognized and addressed prior to the initial application. Presumably the receiver and the City have addressed similar issues as to similar properties before; what makes this case different? None of this is addressed in the papers.

Precedent to any discussion of the merits of the application, however, it must be noted the statements in the application are not supported by admissible evidence. Below the signature of the attorney is the following signature of the Receiver’s representative:

I, Dennis Lanni declare as follows: I have personal knowledge of each of the matters stated in paragraphs 1 to 7 above, and if called to testify could testify competently to each of them. Executed this day of December 11, 2017, at Sacramento, California

Lanni’s statement does not comply with CCP 2015.5

Given that the receiver is an officer of the Court, and given that there is no information provided as to the amount of any tax liens on the property [and keeping in mind that the receiver should know that the law sedulously guards and protects the proceeds of municipal taxation so that they may primarily serve the purposes for which they are exacted], and no information is provided regarding any “guaranty”, the application is denied without prejudice to submitting a more complete application accompanied by admissible evidence and points and authorities. There were no points and authorities submitted with this application addressing the issues involved in the requested relief. CRC Rule 3.1113.