LA County Superior Court Judge David P. Yaffe Discusses Receivership Law and Additional Issues By Rense, Kirk* The Honorable David P. Yaffe, Los Angeles County Superior Court Judge and mainstay of the Central District Writs and Receivers Department relishes the “extraordinary” diversity of matters brought for rulings to his specialized courtroom during his eleven years in that Department. “It is tremendously interesting sitting in the Writs and Receivers Department. The ordinary judge sitting in a trial department gets appealed fewer times in a lifetime than a writs and receivers judge gets appealed in a year – by a wide margin,” he commented. “My rulings result in between 40-50 detailed appellate decisions a year – full blown opinions by the Court of Appeals, although mostly not published. We are much more closely watched than trial judges” Judge Yaffe stated. Judge Yaffe was appointed to the California Superior Court Bench by former Governor George Deukmejian on September 17, 1987, and sat in a civil department beginning in 1991. He moved to his current Department 86 in 1997. He was in private practice with the Los Angeles firm Monteleone & McCrory from 1959 (shortly after its founding) until 1987, when he was appointed to the California Superior Court. A quick internet search produces many, many newspaper articles and opinions about the high-profile and often fundamentally important issues Judge Yaffe was called upon to rule on in recent years – and some inevitable criticism from losing parties. The extension of Los Angeles’ “Living Wage” ordinance, the need for transparency in the LA City Planning Commission agendas, term limits for city officials, appropriate format of proposed ballot initiatives and enforceability of terms of aged deeds of trust are illustrative of the crazy-quilt of issues he has addressed. Judge Yaffe was born in Decatur, Illinois, but still may be counted as a son of Los Angeles in that he attended elementary, junior high and high school (Hamilton High) in Los Angeles, before earning his BA from the University of California at Los Angeles and LL.B. from the UCLA Law School. Judge Yaffe served in the US Marine Corps Reserve beginning in 1958, then was discharged by the Corps to allow him to accept a commission in the U.S. Army Reserve Judge Advocate General Corps, serving from 1963 to 1967. The Judge met his wife, the former Cecile Kopman, while both were attending UCLA. They were married in Beverly Hills in 1960. Their daughters Sharon Marlene (Kane) — a CPA and mother of Judge Yaffe’s two grandchildren Dustin Kane (14) and Melanie Kane (10) — and Nancy Ellen Yaffe, an attorney in the Los Angeles office of San Francisco firm Folger Levin & Kahn, also reside in the Southland. Judge Yaffe mentions cycling as a continuing hobby. Though 74 years old, Judge Yaffe still rides his bicycle on occasion, but not as avidly as on his 60th birthday, when, following in Hannibal’s footsteps, he scaled the Alps on his road bike. ******************** RN asked Judge Yaffe about a number of issues of interest to our readers. RN: Have you seen any increase in the number of judicial foreclosures, in light of the present economic freneticisms? Judge Yaffe: I haven’t, which is perhaps surprising in light of the problems in the real estate industry we have been seeing in the last year. There aren’t nearly as many as we were seeing in the late 1980’s and early 1990’s, the last significant real estate collapse. It seems that the financial institutions are not resorting to rents and profits receiverships as much as the last time. Back then banks would attempt to keep their bad loans off the books by having a receiver appointed at the same time as initiating a non-judicial foreclosure, and would let the receiver remain in place for extended periods, apparently hoping that prices would increase or the housing industry would get better. The object of the process seemed to be to park the properties off the list of foreclosures as long as possible. I am not sure how banks are handling these problems today. RN: Are there recurring problems you see in cases seeking an injunction or appointment of a receiver? Judge Yaffe: I am still surprised that attorneys seeking injunctions or the appointment of a receiver are not prepared to discuss the amount of the bonds to be required by the Court, especially injunction bonds. Lawyers often find to their great surprise that there is a substantial undertaking bond required to be posted to protect the defendant against the harm that an injunction may cause. The lawyers usually haven’t thought about it at all, and have no information to furnish to the Court to assist it in determining the amount of bond to require. Often the initial reaction to my inquiry is that no bond should be required because the defendant is going to lose the litigation. They don’t seem to be aware that the Court is required by law to presume that the defendant will prevail in estimating the potential damage the injunction may cause. Counsel must come prepared with facts to argue the appropriate amount of the bond to be required. Counsel trying to do everything on an ex parte basis is another common problem, as is the failure to give adequate notice as required by State Court Rule 3.1184(c). This Rule states that notice of the hearing on a receiver’s request for approval of the final account and report must be given to everyone who might be affected by such an order, whether a party to the underlying action or not. I think this rule is applicable to other receivership motions as well, where the requested ruling can or might affect persons who are not parties to the suit or are not before the court. An example is junior lienholders where the court is asked to approve some disposition of property in the receivership estate. I usually deny without prejudice such motions brought without sufficient notice to all such persons, so the moving parties can give the appropriate notice. RN: There seem to be more receiverships being imposed under California’s Health and Safety Code Sections 17910 et seq. dealing with “substandard” residential buildings. Have you seen this? Judge Yaffe: Yes, there are more Health and Safety Code receiverships being imposed. It seems to have taken awhile for people and municipalities to find the law. I’m seeing one each month, or so. Funding these receiverships is a problem. Counsel sometimes attempt to have receivers’ certificates issued with super-priority over existing encumbrances. I ask these attorneys to give me a plan to redevelop the property showing the court that it is likely that the lien holders whose counsel is asking the court to subordinate will be paid in full when the plan is completed – a plan to show that existing lenders will be paid. Frankly, I don’t know that I have the power to subordinate other lenders where there is no reasonable showing that they will be repaid in spite of the requested subordination. RN: Does the Court have authority to order the real property in a Health & Safety Code receivership to be sold? Judge Yaffe: I think the Court has the power to approve a recommendation by the receiver to sell the real property, but it has to be sold in a commercially reasonable manner, subject to the existing encumbrances. It isn’t very likely that a sale of the property will provide any equity for the receivership estate, however. These receiverships can be pursued by public entities and tenant groups or associations, but there seems to be little coordination between these in this area. RN: What has experience taught you about appointing receivers? Judge Yaffe: Over time I have become much more concerned with the question of whether the imposition of a receivership will do anyone any good, except the receiver. I address this issue with counsel at the time of hearing on the application to appoint a receiver — I will not appoint a receiver unless I am satisfied that it will benefit the parties to the case. I have seen too many cases where the receivership ultimately was of no apparent benefit to the parties. Having said this, there are always cases that arise where a receiver must be appointed over a business to keep peace between the warring parties, where the only rational thing that I can do is to appoint someone to take over to keep the parties from stealing from one another. RN: May these applications for instructions (and other applications) be brought on an ex parte basis? Judge Yaffe: I am an avowed enemy of ex parte applications, for instructions or otherwise. To haul people down to court on an ex parte basis with virtually no time to prepare affects the fairness of the hearing and should not be done except for the most routine of matters, free of any controversy. I prefer that counsel seek an order shortening time if there is an emergency situation so I can set a fair date and give the opponent some time to fashion its opposition. RN: Do you still see receiverships sought by regulatory agencies to remedy perceived violations of applicable laws? Judge Yaffe: I haven’t seen a new one in years (apart from Health & Safety Code applications). When a regulatory agency seeks appointment of a receiver there is no real alternative but to appoint. Budget problems with state agencies may have limited their ability to take enforcement actions, I do not know. The only agency receiverships I see are nuisance abatement receiverships, often where a property is being used to sell drugs, for example, and Health & Safety Code matters. RN: Do you permit or encourage your receivers to seek to promote settlement between the parties? Judge Yaffe: I don’t expect my receivers to address settlement of the underlying case – I think a receiver who does so is going beyond the scope of the appointing order. But the receiver should seek to promote agreement on issues affecting the administration of the receivership, to seek and obtain consensus from competing parties on how matters that arise ought to be resolved. I expect my receivers to do so. RN: Are you generally pleased with the knowledge and professionalism of the receivers you deal with? Judge Yaffe: The overwhelming majority of the receivers appearing before me are very knowledgeable, prepared and helpful to the Court. They do a good job, and it is a real pleasure working with them. I want them to know the extent to which this court appreciates their professionalism. In this same vein, I regard the receiver as my receiver. I rely on the receiver’s judgment tremendously in administering the receivership estate. The receiver is the only neutral who can dispassionately advise the court on the issues to be decided. I encourage my receivers to seek instructions from the court – I don’t mind a bit. It is better to err on the side of asking for instructions than taking a risk that may be beyond the boundaries of the authority conferred by the receivership order. The receiver has to recognize that in many ways he or she is a participant in the case and is certainly subject to due process. For example, I don’t call receivers up and have ex parte communications. I make sure that all interaction between this court and its receivers takes place in the presence of the parties, with appropriate opportunity to comment and present their views. ******************** When the RN asked Judge Yaffe very generally about whether receivers possibly take advantage of the relative lack of knowledge and understanding of receiver and receivership law of judges sitting in some outlying courts, Judge Yaffe recalled an interesting reminder that relationships between receivers and judges haven’t always been as they ought to be: “Years ago for my birthday I was given a reprint of the front page of the Los Angeles Times as it appeared on my birthday, November 21, 1933. It wasn’t a very eventful day – nothing of major note was featured in the headline story, as I recall, Judge Yaffe said. “But I noticed a small item toward the bottom of the page – it stated that four judges of the Los Angeles County Superior Court had been recalled from office and kicked out of this court for taking kickbacks from receivers.” ******************** The RN sincerely thanks Judge Yaffe for the opportunity to chat and to illuminate a side of him not easily visible from the counsel table. |